Key executives at PartyGaming, Plc. are being awarded £40 million in cash bonuses and share options despite the company's drop in share price and previously set performance targets.
The company has taken a hit in revenues and its share prices since the United States passed the Unlawful Internet Gambling Enforcement Act. Because of that, the decision to alter the bonus agreements and pay out millions to execs has caused some controversy.
The adjustments to the agreement include the company waiving the total shareholder return performance targets that were applicable to 20 million of 27 million shares over which an option was granted to Mitch Garber, PartyGaming CEO.
Along with that, the schedule to vest those shares to Garber has been sped up. He will now receive them in eight monthly installments of 1.25 million shares between May 19 and Dec. 19, 2007, with the remainder given to him April 19, 2008.
Group Finance Director Martin Weigold will also see his shares vested to him faster per the new agreement. His nearly 8.9 million shares will vest in nine equal amounts quarterly until Dec. 31, 2008.
A further £16 million in share options will be awarded to other key employees at PartyGaming as well.
PartyGaming is defending its decision with the explanation that it was necessary to mitigate some of the loss of the value on executives existing awards. For example, Garber's award package when the company was floated in June 2005 was worth approximately £40 million.
PartyGaming, which owns PartyPoker.com, has been working to stabilize once again and recently acquired a string of online gambling sites, including Fair Poker, from Empire Online and Intercontinental Online Gaming to help beef up its revenues.
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