A posse of institutional shareholders, led by John Sevior from Perpetual, won a major battle today when the Tabcorp board yielded to their vocal campaign and fired CEO Matthew Slatter, effective immediately.
Former ANZ banker Elmer Funke Kupper (no kidding) has been appointed acting CEO of the $9 billion company as an international search commences for a replacement.
While Slatter has battled his tormentors for six months, being Tabcorp CEO has been a richly rewarding experience for the Kiwi who was previously CFO of Axa Asia Pacific and CEO of Bank of Melbourne.
He walks out with 12 months pay or $3.21 million and will get an unspecified payment from his long-term incentive scheme but will have to repay a $5.9 million loan within 90 days. However, he will retain his $35.4 million share and option play, which would have been even richer if these same institutions hadn’t voted down an additional 2.5 million share equity incentive package at the 2006 AGM.
Slatter has fallen foul of a cabal of institutions which can loosely be described as the Perpetual alumni club, led by John Sevior but backed up by two of his predecessors, Peter Morgan from 452 and Anton Tagliaferro from Investors Mutual. Perpetual is the largest shareholder with 8.1% and Maple Brown Abbott, which is also believed to have agitated for change, is next with 6%.
Michael Robinson, the chairman of Tabcorp since it floated in 1994, delivered the bullet but is also under the pump to retire in the near future after hanging around for too long.
Investors endorsed the move as Tabcorp shares only fell 9c to $17.06 in a market that was down by 1.7%. Whilst investors who paid $2.25 to the Kennett Government should be delighted with the long-term performance, Tabcorp has drifted under Slatter’s leadership despite his rapacious approach to acquisitions which saw Jupiters and the NSW TAB swallowed in quick succession.
The stock dived 64c to $17.11 on February 21 after it reported a 22% drop in interim profit to $224 million – the final straw for the activist investors. Tough anti-smoking laws along the eastern seaboard, wagering and gaming licence renewal processes in Victoria, an expensive broadcasting fight with the thoroughbred clubs and fears PBL will win a Sydney casino license have all conspired against Slatter.
Truth be known, the company would be well advised to hire a CEO with strong Labor connections as Tabcorp is beholden to state governments on the eastern seaboard. How about Graham Richardson? He could probably stop his mate Morris Iemma from giving PBL a Sydney casino licence.