Power Struggle in Ainsworth Game Technology as Major Shareholder Counters Novomatic’s Proposed Reforms
Background of the Shareholder Conflict at Ainsworth Game Technology
Kjerulf Ainsworth, the second-largest shareholder in Ainsworth Game Technology (AGT) with an 8.74% stake, has vocalized his opposition to the proposed constitutional changes related to executive remuneration put forward by Novomatic AG, the controlling shareholder. Novomatic AG currently holds a majority ownership of 66.6% in AGT.
Concerns Raised Over Executive Payments and Governance
In correspondence addressed to fellow shareholders, Kjerulf Ainsworth expressed doubts about the sufficiency of the proposed amendments in preventing conflicts of interest and ensuring full disclosure of payments to AGT executives. He highlighted a report indicating that AGT chairman Danny Gladstone and company secretary Mark Ludski received substantial undisclosed bonuses after Novomatic acquired its controlling interest in the company in 2018. These payments amounted to AUD 10 million and AUD 5 million respectively, figures that Ainsworth believes fall outside the regulatory scope of the current proposals.
The Ongoing Ownership Battle and Share Expansion Efforts
This episode is part of a continuing power struggle within AGT. Kjerulf Ainsworth, the son of the company’s founder Len Ainsworth, increased his holdings from 7.27% to 8.74% over the past year, aiming to reach a 10% stake. This growth came after a renewed campaign launched the previous autumn to raise his shares, a goal he has yet to fulfill.
Details from Ainsworth’s Letter to Shareholders
Ainsworth acknowledged his support for improved corporate governance at AGT but criticized the proposed amendments as insufficient in their current form. He argued that these changes fail to guarantee comprehensive transparency and do not explicitly prohibit benefits to executives and officers that might conflict with minority shareholders’ interests.
Specifically referencing the alleged undisclosed bonuses to Gladstone and Ludski, Ainsworth emphasized that such payments erode shareholder trust and should be prohibited. He pointed out that the remuneration amendment proposed under Novomatic’s resolution would not cover these concerns since the payments reportedly originated from third parties and, in Ludski’s case, were not made to a director.
Implications of the Proposed Amendments
Ainsworth warned that the draft amendments contain significant gaps and cautioned that adopting the Remuneration Amendment Resolution could create a misleading impression that all governance issues within AGT have been resolved. He contended that the amendments fall short of the probity standards expected by regulatory bodies and minority shareholders alike.
Previous Attempts and Challenges Faced by Novomatic
The ongoing power tussle might have been avoided if Novomatic had succeeded in acquiring the remaining shares of AGT. However, an earlier attempt at a full takeover failed, presenting a significant barrier to Novomatic’s goal of complete control over the Australian gaming company.
