Scientific Games has adopted a Change in Control (CIC) Protection Plan designed to ensure the company’s top executives receive significant financial compensation if they are dismissed “without good reason” under a new ownership regime.
Under the plan, any executives who have their employments terminated without just cause within 18 months of a change of control at the company would be entitled to the pay-outs.
The CIC covers president and chief executive Barry Cottle, and executive vice-president, chief financial officer, treasurer and corporate secretary, Michael Eklund, as well as the business’ wider senior leadership team.
Also protected are SG Lottery chief executive Patrick McHugh; SG Gaming CEO Matthew Wilson; James Sottile, chief legal officer; and Michael Winterscheidt, senior vice-president and chief accounting officer.
The cash severance payments would comprise the sum of the base salary and a severance bonus amount multiplied by two for Cottle and Wilson, and multiplied by one-and-a-half for the other executives.
The bonus amount payable would be equivalent of the highest annual incentive compensation paid to the executive in the two most recent fiscal years, but not more than the target bonus for the then-current financial year, unless otherwise specified in the individual’s employment contract.
Upon such a termination, executives would also receive a further performance-based bonus, continued medical coverage for the length of the severance period and accelerated vesting of all equity awards.
The CIC Plan is a preventative measure after it was confirmed last month that Scientific Games’ high-profile executive chairman Ron Perelman is considering selling his entire 39% stake in the Las Vegas-based gaming tech supplier.
Perelman (pictured) issued a filing with the Securities and Exchange Commission (SEC) through his MacAndrews & Forbes Holdings investment vehicle in which he outlined the possibility of divesting his 36.8 million shares. The estimated value of his stake in the company is about $1.5bn.
In the latest Form 8-K filing with the SEC, the company stated: “For purposes of the CIC Plan, ‘change in control’ is generally defined as a third-party, excluding MacAndrews & Forbes Incorporated and its affiliates, acquiring at least 30% of the company’s common stock.”
The supplier’s revenue slumped by 13% year-on-year to $725m in the first quarter of 2020 due to the Covid-19 outbreak, with net loss rising to $159m for the period.