One of the most disastrous flotations in City memory

Betfair floatation

Betfair floatationBetfair’s IPO late last year has been described by one writer as “one of the most disastrous flotations in City memory” as the cash windfalls enjoyed by certain bosses were revealed. Guardian reporter Simon Goodley described the public company as this after the extent to which outgoing chief executive David Yu and finance director Stephen Morana were paid last year was released.

According to the company’s first annual report since going public, Yu’s bounty increased by 125% to £824,676. This was nothing compared to Monsieur Morana. The finance director saw his pay skyrocket to £1.6m. That’s an increase of exactly 445%. We’re not even going to speculate as to what he had to do to earn an increase of that magnitude.

Yu (£300,000) and Morana (£1.2m) were the only two directors to be awarded the sums under Betfair’s “senior executives’ incentive plan (SEIP). In relation to the SEIP, the report states, “The 2010 SEIP granted certain senior employees and executive directors one-off conditional awards consisting of a cash amount and an award of nil-cost options on admission to the stock exchange.

“Under the terms of the SEIP, 50% of the options will vest and become exercisable on the first anniversary of admission and the remainder will become exercisable on the second anniversary of admission, subject to continued employment … The company does not intend to make any further awards under the SEIP.”

So everyone else…unlucky. You ain’t gonna be see no SEIP money anytime soon. Yu and Morana can continue laughing with their brown sacks o’ cash though.

A spokesman for Betfair told the Guardian “The salaries of the executive directors rose modestly and there was a significant one-off payment that was a roll-up of earlier incentive schemes designed to reflect performance over a number of years. There were no bonuses for 2010.”

It might not have been a bonus. It’s one hell of a sack and in Yu’s case represents some golden handshake. The firm’s share price was at 656.50p when this article went to press. Up slightly compared to yesterday but still almost half the original price of £13 back in October. Analysts are still very skeptical when asked about the company and with the share price at that price there is a good reason.