Big rises for Camelot shareholders and directors

Directors and shareholders of National Lottery operator Camelot have been given dramatically–increased payouts this year, despite falling ticket sales, the company's annual report showed today.

Payments to shareholders for the year ending March 31 2001 were £70 million, compared with just £21.2 million the previous year.

Chief executive Dianne Thompson, Camelot's highest paid director, received a pay rise of £38,781 over the year, from £196,333 in 2000 to £235,114 to 2001.

Her total payout for 2001 amounts to £870,000, more than twice the total annual payout her predecessor Tim Holley, who resigned on February 1 this year, was paid in 2000.

The report, released today, revealed that Camelot's chairman Sir George Russell received the same total payout as last year, of £75,000, receiving no annual bonuses.

The total payout to the directors, both executive and non–executive, including the chairman, was £3,659,000, the report said.

Camelot said a new scheme was developed by its remuneration committee on behalf of the shareholders following a review of bonus payments for staff in 1997.

It was designed to reward loyalty and success in winning a second licence and address staffing level concerns as the franchise drew to a close.

Camelot said the scheme is based on an employee's notice period and applies to all staff.

But the huge payouts come as the report admits a huge drop in the number of sales across the board of National Lottery games.

Full sales for the year were £4,983 million, down 2.1% on the previous year.

Online sales were £4,437 million, also a decline of 2.1%, but Camelot said they were disrupted by the delayed decision of who to award the next licence to as well as a delay in the launch of Lottery Extra and the lack of millennium "hype" in the run–up to the Big Draw 2001.

Overall sales of National Lottery Instants fell by 2.6% to £546 million, compared with a fall of 16% the previous year, the report said.

Good causes were awarded £1,391 million and £598 million was given to the Government in duty, Camelot said.

Total prize money handed out over the year was £2,487 million and retailer commission was £253 million.

But the operator's profit before tax dropped from £56 million to £49.1 million, largely due to costs incurred in winning the bid for the second licence, Camelot revealed.

Shareholders' payouts of £70 million comprised £51.5 million from retained

profit, with £18.5 million from the current year, the report said.

But it added that this issue would not arise during the second licence term as there were no dividend restrictions.

The total cost of retaining the operator licence for the Lottery, after a hard–fought battle against Richard Branson's People's Lottery, was £12 million.

The report showed £8.7 million of this was for staff bonuses for remaining with Camelot until the initial licence runs out in September this year and for helping to win the second licence.

The rest went towards legal fees and other restructuring costs incurred during the licence–gaining process, a total of £3.3 million.

Employees, including directors, were paid a total of £39.4 million this year, compared with £26.7 million in 2000, including wages, social security costs and pensions.

The average number of employees in 2001 was 797, compared with 778 the previous year.

But each executive director received a "win" bonus during the year following the award of the second licence, with the amount paid based on each director's notice period.

The total "win" bonuses paid was just over £1 million, the report showed.

Camelot chairman Sir George Russell said Camelot is on course to raise £1.5

billion more for good causes than anticipated when it passes the £10.5 billion

mark in returns to the National Lottery Distribution Fund in September.

He said of the staff loyalty scheme: "The scheme means that total employee costs, including director's emoluments, are higher than last year.

"Shareholders have since 1997 planned provision for the use of their own funds to meet commitments under the scheme which both I, and the shareholders, accepted as legitimate costs for bidding and winning the second licence.

"Loyalty payments under the scheme ensured key directors and staff stayed in post until the end of the first licence.

"This scheme is not based on annual sales. All old schemes have now ended and the performance based payments detailed are the last under the present scheme.

"From 2001 onwards, all incentive based rewards are limited to a maximum of 25% of salary for all staff, including directors," he added.

Camelot must install 25,000 new terminals before February 2002.

"This project and the drive to maximise returns to good causes in a socially responsible way represent Camelot's primary focus in the coming year, " Sir Russell said.

A breakdown of Dianne Thompson's total payouts for the year were: salary £235,114, compared to £196,333 last year. Pension contributions of £50,124, compared to £43,788 last year. Benefits excluding pension contributions were £14,559 compared to £14,013 in 2000 and total bonuses of £600,640, compared to £49,400 in 2000.