Gloves set to come off in Wynn proxy fight

11 March 2015

LAS VEGAS -- The brewing proxy fight at Wynn Resorts, Limited might be more entertaining than “Steve Wynn’s ShowStoppers,” the production of Broadway and movie songs now playing in the Encore Theater.

The boardroom extravaganza is a Las Vegas version of “The First Wives Club,” with Steve Wynn as one of the co-stars.

Less than a week after being removed from consideration for another term as a member Wynn Resorts board, Elaine Wynn announced she was undertaking a costly and potentially nasty proxy fight to retain her seat.

As a company co-founder with four decades of gaming industry experience, Elaine Wynn is going to leave Wynn Resorts only on her own terms.

There is an argument to be made that she deserves that right. Not only was she there at the beginning of Wynn Resorts in 2002, she was an integral factor in the company’s predecessors, Mirage Resorts and Golden Nugget Inc.

“She’s a major shareholder and has been a big part of (Steve’s) and the company’s success over the years,” one longtime gaming industry insider said. “It was her good taste that kept things classy all these years.”

The news shouldn’t have been a shock to Wynn Resorts Chairman and CEO Steve Wynn.

After all, when he bought the Desert Inn for $270 million in 2000, Steve Wynn said the resort was a birthday present for Elaine. The Rat Pack-era casino was eventually demolished and the site now contains Wynn Las Vegas and Encore Resort.

Through a company spokesman, Wynn said he supported his ex-wife’s return to the board, but was overruled by the panel’s Nominating and Corporate Governance Committee.

The committee, headed by ex-Gov. Bob Miller, said there were several factors keeping Elaine Wynn off the panel.

The lawsuit she filed in 2012 against her ex-husband over the language in a longstanding stockholders agreement, potential conflicts of interest, and her lack of independence under Nasdaq listing standards were the primary reasons.

Elaine Wynn poked holes in those claims in her proxy filed last week with the Securities and Exchange Commission. She said her absence would leave the board without a female presence and rob the stockholders of having a voice offered by the company’s third-largest shareholder. Elaine Wynn owns more than 9.5 million shares, a 9.4 percent stake.

“This appalling lack of diversity would be highly inappropriate at any public company, and would be especially unacceptable at Wynn Resorts,” she wrote in the proxy. “The exclusion of any diverse voices from the board is not just a symbolic misstep, it’s bad business.”

One of the most-asked questions in the past week is why Elaine Wynn, 72, is undertaking this fight.

It’s not as if she’s doing it for the money.

Elaine Wynn has a secure spot on the Forbes 400 with a net worth of $1.95 billion, thanks largely to the stock she received in her 2010 divorce. She also was the lowest-paid company board member in 2014, earning $72,000 according to an SEC filing. The highest-paid board member was Miller, who earned $506,209.

She also is not doing it for the prestige.

Elaine Wynn is widely known throughout Nevada for her philanthropy. The Elaine P. Wynn Family Foundation donates million of dollars to educational and health-related causes.

She is president of Nevada State Board of Education and is a member of boards for the Kennedy Center for the Performing Arts in Washington, D.C., the Los Angeles County Museum of Art, and the Library of Congress Trust.

Her reasoning becomes clear in the third paragraph of her proxy.

“For me, board membership isn’t some professional title; it’s a labor of love to which I am whole-heartedly devoted and have the tenure to prove,” she wrote.

Other than Steve Wynn, no one else has more institutional knowledge about the company and “the Wynn brand.”

“The company’s success has been one of my life’s main passions, and I bring that attitude to my role as a director each and every day,” Elaine Wynn said.

So, how does she win the proxy fight?

Recent history shows challenges of this nature are not often successful. Two years ago, investor Jason Ader led a well-financed and well-researched fight against IGT - International Game Technology’s board, but won just one of the three seats he sought.

Wall Street analysts are staying far away from the Wynn battle. Insiders expect the large proxy advisory firms will recommend shareholders approve the company’s slate of candidates and most institutional investors will blindly follow.

One way Elaine Wynn can gain votes is to take a tack hinted at in her proxy filing: She’s the one board member who will question Steve Wynn and will stand up to him.

With comments that she’s “unafraid” to question company management, doesn’t “simply toe the party line,” and isn’t “one of the boys,” Elaine Wynn is preparing for a battle.

Meanwhile, Steve Wynn personally picked the 17 songs in “ShowStoppers.” Time will tell if he’s still humming “Everything’s Coming Up Roses” from “Gypsy” following the April 24 shareholder meeting.

Copyright GamingWire. All rights reserved.

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