IGT: CEO COMP CONDUCIVE FOR SALE

Patti Hart’s employment contract rewards for change of control

CALL TO ACTION

As follow-up to our IGT recent analysis regarding IGT: A BETTER PRIVATE COMPANY, we now call subscribers attention to CEO Patti Hart’s recently revised employment contract filed via 8-K on November 15, 2013.  Hart is clearly incentivized to sell the company and may be leading the discussions with bankers and potential buyers. 

Fearing for the longevity of her employment while also wanting to catch a Golden Parachute and exit gracefully, Hart may pursue a change in control that earns an accelerated compensation payment. 

We continue to believe the Reuters story from Monday has teeth and we’re bullish on the prospects for some sort of value creating event:  a private equity or strategic buyout, some form of separation between Gaming and Interactive, or even a management change.

BACKGROUND

Patti Hart’s new employment provides for increased pay-outs “if termination of employment occurs upon or within eighteen months following certain changes in control of the Company.”  The increased payout apply to severance compensation, continued medical coverage, accelerated vesting of any time-based awards, unvested equity awards, and stock options. 

Furthermore, the following new compensation disclosures were made in the 2014 Shareholder Proxy:

  • For the “Change in Control (no termination)” the equity acceleration is $20.8 million
  • For the “Termination of Employment” section, note the $25.3 million in equity acceleration value in the new disclosure which follows a change in control