Ardent Leisure, now called Main Event after shareholders approved the name change at its AGM yesterday, has had a series of missteps in dealing with Tuesday’s fatal accident at the Dreamworld theme park on Australia’s Gold Coast.
It went ahead with the AGM two days after four people were killed on the Thunder River Rapid ride, announcing yesterday morning that it would reopen and hold a memorial on Friday, only to reverse that decision less than 12 hours later when the Queensland Police said they hadn’t finished their investigation.
Late on Friday, the company issued a statement saying the park would not reopen until after the funerals of all four victims had been held.
Then there was the question of approving bonuses for CEO Deborah Thomas at a time when the safety record of the company was under question. (The company said the fatal ride passed a safety check just four weeks before the tragedy.)
The CEO’s short- and long-term incentives were the subject of criticism at the AGM and a key focus in questions at a subsequent media conference.
“The optics are not good, definitely,” Alan Goldin, director of the Australian Shareholders’ Association, told the AGM.
“The idea that there’s been this tragedy, four people are dead and at the same time there’s some big bonuses being paid… it’s not a good look.”
At the media briefing, Thomas was asked if she would give up her bonus in light of the tragedy.
“In terms of my performance rights, that is a question for the board, it is a question for the shareholders and it was voted today. It is not really the time to be discussing that right now under the circumstances,” she said.
“Four people died and we are all shattered by this.”
Earlier the chairman, Neil Balnaves, responded to questions about the bonus saying it was too soon “to talk about commercial matters”.
Fatal disasters at other ASX-listed companies have seen bonuses discounted or not paid at all.
At BHP, chief executive Andrew Mackenzie’s and his senior executive team didn’t get their short-term bonuses because of the fatal Samarco mine disaster in Brazil.
This wasn’t imposed on the head of the world’s biggest mining company. Mackenzie volunteered to the board and remuneration committee that he thought the short-term incentive, worth around $2.31 million, should be zero.
After Thursday’s Ardent AGM, the former Women’s Weekly editor released a statement saying she would make a personal donation of $167,500 – her entire short-term incentive payment – to the Australian Red Cross to support people affected by the tragedy.
“I have been deeply affected and saddened by the tragic deaths of Kate Goodchild, Luke Dorsett, Roozbeh Araghi, and Cindy Low at Dreamworld on Tuesday, in particular the impact of this incident on their children and families,” she said.
The shareholder vote at the AGM was 98.66% in favour of giving Thomas the short-term cash incentive of $167,500 for her performance in FY16.
She also has $860,000 in performance rights issued under the terms of a long-term incentive plan that vests over four years, starting in 2017.
The vote for long-term incentives wasn’t as decisive, with just under 60% voted in favour.
Today staff of Dreamworld had a private memorial ceremony.
“We’re all here to be part of the family, to hug each other, to provide support to each other,” Thomas said.
“Everybody has been moved by this, everybody is suffering from this and saddened. I hope that this is the start of the healing process.”
Thomas again apologised for any pain caused to the families of victims.
“We thought we were doing the right things in terms of the way we approached it through the police,” she said. “But if the families are watching, I have spoken to a number of them and we will look after them.”
While the financial impact of the tragedy has been declared off limits by the company, there are some clues from the AGM.
Credit Suisse analyst Matthew Nicholas wrote a note to clients about it.
“The company unsurprisingly flagged lower attendance volumes and highlighted that a material amount of the park’s costs are fixed,” he writes.
He is forecasting, for now, a 30% decline in Dreamworld revenues.
“So many balls in the air,” says Nicholas. “With the coroner/police involved and the incident attracting unprecedented public attention, a material amount of uncertainty is likely for the foreseeable future.”
However, he points to the amount of land Dreamworld sits on, 850,000 square metres, in a growth corridor for residential housing, as a substantial asset in the event of the unthinkable — closing the theme park.
In 2016, 28% of the company’s total earnings came from theme parks. That added up to $107.58 million in revenue from Dreamworld, Whitewater and Skypoint.
Ardent’s plan for a name change was in place well before Tuesday’s tragedy and reflects a growing focus on the US side of the business
The company has 27 Main Event entertainment complexes across the USA offering a mix of bowling, laser tag, adventure, video games and food options. Eight more centres are scheduled to open in 2017. Main Event now represents 39% of the company’s revenue and has shown strong growth over the last 18 months, with sales up nearly 31% compared to a year earlier.
Ardent also announced this week that it had completed the $260 million sale of its Goodlife Health Clubs to private equity firm Quadrant. The money was intended to go towards the Main Event expansion, but the company can expect to use some of it to shore up Dreamworld.