Kenny Alexander pay cut unlikely to prevent GVC shareholder revolt

GVC Holdings CEO Kenny Alexander has voluntarily taken a six-figure pay cut to try and appease the growing tension between management and investors at the London-listed company.

Several key GVC backers, including Merian Global Investors, have confirmed they will vote against a pay increase at next month’s Annual General Meeting (AGM), despite Alexander reducing his annual base salary from £950k to £800k this week.

GVC confirmed the pay cut on its corporate site, reporting: “After consulting with GVC’s chairman and remuneration committee chair, GVC’s CEO has volunteered to reduce his annual salary from £950,000 to £800,000.

“This offer was made in light of recent shareholder and proxy adviser feedback on GVC’s 2018 remuneration report and on our remuneration committee chair.”

GVC CEO Kenny Alexander

Investors are reportedly unhappy that new incentive targets mean Alexander and the rest of GVC management will receive the full amount in future awards for achieving a profit figure three years from now that is below the current consensus forecast from City analysts.

One analyst speaking off the record told EGR Intel: “I can understand why the investors are angry. Why should management get full reward for ‘underperformance’?

“And the pay cut doesn’t really address that, but I’m sure Kenny’s getting pretty exasperated by it all,” the analyst added.

Last year, bonuses and incentives increased Alexander’s pay to £19.1m. The average base salary of a CEO at a FTSE 100 firm last year was £918k.

GVC dropped out of the FTSE 100 last year, so Alexander’s base pay of £950k seemed “a little high” according to one off-the-record source.

“I don’t think Alexander will be fussed over a £150k pay cut if shareholders are demanding a ‘nominal cut’,” said the source.

“He’s just cashed in £15m and more important is to get the share price up on the £4m [of incentives] he has left.”

The voluntary salary cut looks unlikely to appease investors however, who were spooked in March when Alexander, alongside chairman Lee Feldman, sold almost £15m of GVC stock, just days after Alexander labelled the business “undervalued”.

The sell-off caused GVC’s share price to drop 16%, wiping out a fifth of its market value.

If investors do revolt against the pay report at next month’s AGM in London, it will be the second year in a row that GVC has come under fire for its remuneration plans.

The share price of GVC Holdings has fallen by more than 40% in the past year, giving the company a market value of £3.3bn.