Entain’s bold investment in its interim leadership

Lea Hogg March 12, 2024

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Entain’s bold investment in its interim leadership

Without doubt, Entain’s decision to grant 846,067 shares to its acting CEO, Stella David, and Deputy CEO, Robert Wood, under its 2017 Long Term Incentive Plan (LTIP), is an encourging, yet somewhat bold investment strategy. Some insiders are viewing it as an audacious move.

Stella David, who assumed the role of interim CEO following the departure of Jette Nygaard-Andersen, received 526,626 shares. Robert Wood, on the other hand, was granted 307,202 shares. These shares are expected to vest on March 11, 2027, subject to continuous employment and the achievement of certain financial targets.

In addition to the LTIP awards, Wood was also granted 12,239 shares as part of his 2023 bonus under the company’s Annual and Deferred Bonus Plan (ADBP). As per Entain’s remuneration policy, half of the executive directors’ annual bonuses are deferred in shares.

Why has Entain awarded substantial shares to its interim CEO and Deputy CEO?

The year 2023 was a turbulent one for Entain, marked by a hefty financial penalty of ￡585m related to its historical activities in Turkey. This settlement with the UK’s HMRC and CPS also included a charitable donation of ￡20.0m and a contribution of ￡10.0m towards CPS and HMRC costs.

The announcement of the settlement was closely followed by the abrupt departure of CEO Nygaard-Andersen. Her exit, amid mounting pressure over her mergers and acquisitions strategy, has led to a search for a permanent successor. Despite the challenges, Entain managed to acquire Polish sportsbook operator STS Holding and Angstrom Sports in 2023.

However, the company’s performance has not been without criticism. Activist hedge fund Corvex Management, which holds a 4.4 stake stake in Entain, described Nygaard-Andersen’s departure as a “necessary” first step and called for further changes.

Despite an 11.1 percent rise in net gaming revenue in 2023, Entain reported a net loss of ￡936.5m, largely due to the settlement and increased operational costs. Yet, Chairman Barry Gibson remains optimistic about the company’s future, describing 2023 as a year of “necessary, but ultimately positive, transition.”

The decision to award a significant number of shares to its interim leadership has clearly sparked discussions among stakeholders. While some insiders view the move as a daring strategy, others are questioning its validity. The generous investment is ultimately the company’s commitment to stability and long-term growth, suggesting readiness for a positive transition.

While Entain steers through many obstacles, the tactical allocation of shares to its key leaders reflects a pledge to steadiness and enduring expansion. The journey forward is unquestionably fraught with difficulties, yet with calculated maneuvers and robust guidance, Entain stands ready to shift the momentum.