8 thoughts on “An Open Letter to the Chair of the Board of Bragg Gaming Group”
Hopefully this should get things moving. Thanks, Jeremy!
Isn’t the below a classic illustration of the principal-agent problem? If mgmt/BOD sells, they lose out on the annuity, so no incentive for them to sell (unless they are also large equity holders). Sinecures are hard to come by!
“In FY22, our Company paid its Named Executive Officers a total of $9.5mm CAD compensation (including over $5mm CAD in cash comp); while the Directors collected another $1.5mm, mostly in cash.
Putting aside debates about the appropriateness of such excessive compensation vis-à-vis the performance of the stock price, the simple reality is any strategic acquirer could rip most all of these costs out of the business (as they would not duplicate most executive roles).
This alone creates perhaps $3-4mm in additional EBITDA to an acquirer, or a 20-25% uplift versus FY23E forecasts – value that would most certainly partially accrue to the selling shareholders via a higher sales price. “
yes, it is certainly a risk. althoguh – keep in mind I addressed the letter to the CEO and Chair who is also principal shareholder and owns 20% of the company…so he clearly is aligned with the rest of us
Excellent initiative, Jeremy. I wonder if, next time, your faithful subs can receive an early notice that you are about to send an activist letter. Thank you
i repeatedly explained the thesis here, and how i thought a sale made sense and was almost inevitable, and indeed something i would push for. i am continuing to push management in this direction and this letter is part of that strategy. but as E K says, that is as far as it goes, i am clearly not able to be more forthright than that, on names like this.
Hopefully this should get things moving. Thanks, Jeremy!
Isn’t the below a classic illustration of the principal-agent problem? If mgmt/BOD sells, they lose out on the annuity, so no incentive for them to sell (unless they are also large equity holders). Sinecures are hard to come by!
“In FY22, our Company paid its Named Executive Officers a total of $9.5mm CAD compensation (including over $5mm CAD in cash comp); while the Directors collected another $1.5mm, mostly in cash.
Putting aside debates about the appropriateness of such excessive compensation vis-à-vis the performance of the stock price, the simple reality is any strategic acquirer could rip most all of these costs out of the business (as they would not duplicate most executive roles).
This alone creates perhaps $3-4mm in additional EBITDA to an acquirer, or a 20-25% uplift versus FY23E forecasts – value that would most certainly partially accrue to the selling shareholders via a higher sales price. “
yes, it is certainly a risk. althoguh – keep in mind I addressed the letter to the CEO and Chair who is also principal shareholder and owns 20% of the company…so he clearly is aligned with the rest of us
Excellent initiative, Jeremy. I wonder if, next time, your faithful subs can receive an early notice that you are about to send an activist letter. Thank you
I would strongly suggest not receiving early notice, especially for mid/small caps
i repeatedly explained the thesis here, and how i thought a sale made sense and was almost inevitable, and indeed something i would push for. i am continuing to push management in this direction and this letter is part of that strategy. but as E K says, that is as far as it goes, i am clearly not able to be more forthright than that, on names like this.
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Happy New Year, Jeremy!
May I ask you where we are with Bragg? Did you get any feedback to your letter? Thank you for all your great work.
yes, things are moving along. will update further when i can