Tabcorp defends Gillon McLachlan’s bonus scheme

Tabcorp has defended paying chief executive Gillon McLachlan a generous bonus scheme, pointing to the company’s turnaround in the last 12 months.

According to the Australian Shareholders’ Association (ASA), the former AFL boss could be given an $18m cash bonus if Tabcorp’s pre-tax earnings rise by 10 per cent in 2027.

The betting giant posted a $36m net profit after taxes in 2024 when Mr McLachlan’s bonus was negotiated.

In response to questions about Mr McLachlan’s salary at Tabcorp’s annual general meeting on Monday, chairman Brett Chenoweth said “we are very happy with the structure of the remuneration for our chief executive and his performance”.

Ninety-six per cent of shareholders voted in support of Mr McLachlan’s bonus on Monday.

“Just to remind you when the options scheme was approved, the share price was below what it is today,” Mr Chenoweth said.

The chairman also thanked Mr McLachlan for bringing “a new energy, a sharper focus, and real clarity of purpose to Tabcorp”.

He said the business was now “back on track” and would go from a position of fixing the building to strategy growth in the future.

Mr Chenoweth emphasised that the remuneration structure reflected the board’s confidence in Mr McLachlan and the executive team’s ability to create value to shareholders over time.

In August, Tabcorp revealed group revenue was up 11.8 per cent to $2.6bn, while net profit after tax soared 76.8 per cent to $49.5m in financial year 2025.

The ASA has taken issue with Mr McLachlan’s remuneration package and its alignment with standard corporate governance practices.

It says giving a cash payout instead of shares does not align with shareholders’ best interests.

“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,” the group said.

“This illustrates the leveraged nature of options and the disconnect between executive and shareholder experience.

“This approach fails to promote the accumulation of skin-in-the-game shares by executives which conventional schemes achieve.”