Slot machine maker International Game Technology on Friday urged shareholders to reject a slate of directors put forward by a group that includes its former chief executive, saying he used company money to fund a lavish lifestyle.
International Game Technology said on Friday that under the leadership of former CEO Charles Mathewson, the company paid for perks ranging from his country club memberships to personal training.
Ratcheting up what has become a bitter proxy fight, the dissident shareholder group that nominated Mathewson to the board issued a statement calling the company's accusations "misleading personal attacks and mischaracterizations. Shame on the IGT Board!"
In a letter to shareholders, IGT said Mathewson, who along with two others was nominated to serve on the board by investor Jason Ader, had a "decidedly 'old school' approach to corporate governance, which was driven by his own self-interests."
The company said that between 2003 and 2012, it had paid for more than $400,000 in country club memberships for Mathewson, as well as over $12,000 for personal fitness training, nearly $12 million for a life insurance policy, and nearly $64,000 of medical insurance premiums, including for one of his ex-wives.
In addition, the company said Mathewson had sought reimbursement for $18,000 in payments for his Bentley and $560,204 for maintenance of his personal airplane.
The company also said that the board's compensation committee in 1996 had backdated options for Mathewson.
Finally, it said Mathewson had attempted to influence IGT after his retirement by orchestrating the installation of his son, Robert, on the board. It portrayed Robert Mathewson as unfit for the post, saying "his entire post-college employment history from 1987 through 1992 was comprised of (i) eight months as an assistant to a securities broker, (ii) one year and five months as an intern at Harrah's and (iii) three months as a project manager at IGT." The rest of the time he was self-employed or employed by his father's consulting company, the company added.
In its statement issued several hours after IGT's letter, Ader's group did not address the individual accusations.
Ader's group, which controls about 3 percent of IGT stock, earlier this week criticized IGT's board for losing focus of its core business and saying that its $500 million acquisition of Double Down, one of the biggest providers of games on Facebook Inc was "incredibly expensive."
Ader wants IGT to consider strategic alternatives for the social gaming unit and focus instead on growing Asian markets.
In its shareholder letter, IGT said Double Down is performing better than expected and will add to earnings in 2014. It also said that the Asian market would not add value to the company, and said Ader's slate of board nominees "would seek to pursue a path that represents a large step backward for IGT."
IGT's annual meeting is scheduled for March 5 in Las Vegas.
IGT shares closed up 18 cents at $15.55 Friday on the New York Stock Exchange.
(Reporting By Nichola Groom; editing by Andrew Hay)