Tabcorp investors back ‘outlandish’ payout for ex AFL boss

Former AFL boss Gillon McLachlan has received another multimillion-dollar options package from Tabcorp barely a year after shareholders waved through a deal that has gifted him stock now worth more than $17 million and led to some raising concerns about the “outlandish payouts”.

The payout for McLachlan, who is barely a year into his stint at Tabcorp, had raised the ire of the Australian Shareholders Association (ASA) with the investor advocacy group voting against the latest options plan.

However, despite the ASA’s concerns, Tabcorp shareholders overwhelmingly backed the new options package for McLachlan at the company’s annual general meeting on Monday, as the company also defended McLachlan’s pay.

McLachlan received 30 million options last year, with a strike price of 47¢, that will vest in 2027 if certain financial targets are met. The stock has soared as high as $1.09, valuing these options at more than $18.6 million at this recent share price peak.

This is on top of his pay for the 11 months he was employed as Tabcorp chief executive last year, which totalled $3.3 million. His pay packet for 2024-25 included more than $2 million in salary and cash bonuses. The final value of the options package approved on Monday will depend on the future share price, but it is expected to be in the millions.

“Options are about a growing share price,” Tabcorp chairman Brett Chenoweth told shareholders at the company’s annual meeting in Melbourne.

“We think options are perfectly aligned for growth.”

Tabcorp shares have more than doubled in the past year after the company renegotiated key wagering contracts and its profits recovered from a big loss last year, helped by cost-cutting.

McLachlan made it clear that, after a year of significant cost-cutting and consolidation, 2026 will be about pursuing growth initiatives like forming a national tote for the first time.

“At last year’s AGM, I said I supported a national tote. We are seeking to deliver it,” McLachlan told investors.

“We’re engaging with state racing bodies, and I remain optimistic we can make a national tote a reality in FY26 [the 2026 financial year ending June 30 next year].”

In its note on Tabcorp before the AGM, the ASA said it was opposed to the remuneration report for several reasons, including that McLachlan’s pay was “not reasonably within typical benchmarks”. It also criticised the design of McLachlan’s long-term bonus scheme, and it opposed the grant of long-term share options to McLachlan.

“The ASA does not favour the use of options because their pricing is opaque and can result in outlandish payouts well in excess of the ordinary shareholder’s experience,” it said.

Chenoweth on Monday, also defended the “practical settlement” last month with former Tabcorp boss Adam Rytenskild, who was abruptly sacked for allegedly making a sexually inappropriate comment about a female regulator – which he denies.

Rytenskild was responsible for the restructured racing deals in Victoria which underpinned Tabcorp’s improved earnings this year.

Tabcorp’s chairman cited McLachlan’s move to cut 230 staff and initiate a strategic reset of the business as important platforms for the rising share price.

“Twelve months ago, I said we’d focus on running a profitable, competitive business. And that’s exactly what Gill and the team have delivered this year.”

McLachlan last year stepped into a business that had reported a $1.36 billion loss after significant asset writedowns. Tabcorp is suffering from a shrinking wagering business, a tired network of TAB shops and pub outlets, and an underperforming betting app.

He promised to rejuvenate the 3700 TAB outlets and use this legacy network to take on the digital competition with an offering that uses all of its services.

This includes engineering the biggest-ever change in its commercial relationship with the hospitality industry by drastically reducing the commissions pubs receive from gambling. Tabcorp instead plans to spruce up the outlets and spend millions of dollars on advertising to lure more patrons into the pubs.

Another big drawcard of Tabcorp’s new strategy is to introduce in-play betting on pub punters’ mobile phones – a feature none of its sports betting rivals can match, which are currently being trialled in NSW.

His other major plan for this year, a national tote, would deliver a larger volume of wagering and allow more sophisticated betting options for punters. This would help Tabcorp more effectively compete against sports betting, which is growing in popularity among younger customers.

Tabcorp shares closed flat on Monday.

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