Kjerulf Ainsworth, the second largest shareholder in Australian slot machine supplier Ainsworth Game Technology (AGT), has promised to vote against remuneration amendments to the group’s constitution to be put forward by controlling shareholder Novomatic AG at AGT’s upcoming Annual General Meeting next week.
In the latest clash between the two, Ainsworth – who holds 8.74% of AGT shares – explained by way of a letter to shareholders that he does not believe Novomatic’s proposed amendments go far enough to prevent conflicts of interest and secret payments to company executives and officers.
Specifically, Ainsworth makes reference to a recent article in the Australian Financial Review alleging AGT Chairman Danny Gladstone and Company Secretary Mark Ludksi received undeclared bonuses of AU$10 million and AU$5 million (US$7.1 million and US$3.55 million) respectively following Novomatic’s initial acquisition of a controlling stake in AGT in 2018.
Such payments would fall outside of the scope of the proposed amendments, Ainsworth claims.
“While I support improvements in [AGT’s] governance, as more information has come to light, I have come to the view that the proposed resolution to amend the constitution’s remuneration provisions does not go far enough in the current circumstances insofar as full transparency and probity are concerned,” the letter states.
“On reflection, the proposed resolution and amendments of the constitution fall short of addressing my concerns and fail to explicitly close off opportunities for [AGT] officers and executives to receive certain types of benefits that are potentially inconsistent with minority shareholders’ interests.”
On the alleged payments to Gladstone and Luski, Ainsworth adds, “These kinds of undisclosed benefits betray the trust of shareholders and should not be permitted, but the Remuneration Amendment Resolution that Novomatic has proposed would not address them, as the benefits were provided by third parties and, in the case of the benefit to Mr Ludski, was not provided to a director.”
Novomatic has proposed amendments to five Constitution Articles, with Ainsworth calling for further enhancements to three of them.
“This is because of the … gaps in coverage and because of the risk that the changes effected by the Remuneration Amendment Resolution could be presented as fully ‘cleaning up’ any governance risk areas associated with [AGT],” Ainsworth said.
“I believe the amendment fails to rise to a level of probity that is expected of the company by regulatory bodies.”
Ainsworth, who has made no secret of his belief that AGT shares are undervalued under the majority ownership of Novomatic, recently called for the resignation of Gladstone and Ludski in the wake of a failed bid by Novomatic to take AGT private.
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