GVC gamble fails as investors revolt over pay

Ladbrokes' owner will on Wednesday be hit by one of the year's biggest investor revolts despite its chief executive volunteering an eleventh-hour pay cut in a bid to placate the City.

Sky News understands that GVC Holdings is braced for more than 40% of shareholders to oppose its remuneration report at its annual meeting - the second consecutive year in which it will have been embarrassed over boardroom pay.

A backlash on that scale would place GVC eighth on this year's register compiled by the Investment Association which records votes against AGM resolutions of 20% or more.

Companies which have already seen higher protest votes against remuneration reports include Lonmin, Micro Focus International, Playtech and Standard Life Aberdeen.

The fury at GVC will come despite a move - revealed last week by Sky News - to assuage investors by cutting chief executive Kenny Alexander's basic salary from £950,000 to £800,000.

That cut prompted ISS, the influential proxy voting adviser, to switch its recommendation on GVC's pay report in favour of the company.

Wednesday's revolt will come at a time of growing City unrest about GVC's governance and performance.

Shareholders were furious in March when hundreds of millions of pounds was wiped off the gambling giant's market capitalisation by the disclosure that Mr Alexander and chairman Lee Feldman had sold £20m of shares.

Sky News subsequently revealed that Mr Feldman's departure would be accelerated as a result of the row.

Mr Feldman had already been facing pressure under new corporate governance guidelines to step down in the near term, having chaired GVC since 2008.

His decision to join Mr Alexander in offloading a chunk of their shareholdings in March - just days after the chief executive insisted that the company was "significantly undervalued" - left many investors incandescent.

Mr Alexander was paid more than £19m last year, the bulk of which came in the form of long-term share awards.

A number of heavyweight City institutions, including Merian Global Investors, are unhappy that new incentive targets mean Mr Alexander and senior colleagues would receive the full amount of future awards for achieving a profit figure in three years' time that is below analysts' current consensus forecasts.

"We have discussed this extensively with the remuneration committee chair and there seems to be a complete disconnect between the 'considerable uncertainties' cited by management when in discussions with the remuneration committee and the overwhelming confidence management expresses when in conversation with us as shareholders," Richard Buxton, the head of UK equities at Merian, said last week.

"If management does only deliver the targets set by the committee, the market will be significantly disappointed."

GVC's shares have fallen by more than 40% during the last 12 months, leaving it with a market capitalisation of £3.41bn during trading on Tuesday.

A GVC spokesman declined to comment.