Stockholder lawsuit tars shimmering world of fallen casino kingBy John L. Smith, CDC Gaming ReportsFebruary 12, 2018 at 8:35 pmThe hits kept coming last week for fallen casino king Steve Wynn.The awful details contained in The Wall Street Journal recently not only blew Wynn out of the chairman’s throne at Wynn Resorts, but the tough times continued with last week’s filing of a stockholder lawsuit alleging he breached his fiduciary duty to the corporation and “engaged in a pattern of egregious misconduct involving the Company in a position of leadership.”In response to the pressure, Wynn announced in a Friday filing with the Securities and Exchange Commission that he was giving up a civil battle over voting control of the 9 percent of the company owned by ex-wife, Elaine Wynn.The 42-page stockholder complaint carves up Wynn and takes apart his hand-picked board of directors. It was filed in district court by the Eglet Prince and Chimicles & Tikellis law firms on behalf of the Norfolk County Retirement System of Massachusetts, a Wynn Resorts investor. It’s nothing short of radioactive, and attorney Robert Eglet promised in an interview that Wynn’s sudden departure from the company wouldn’t slow the litigation.The repulsive alleged sexual harassment behavior described in the WSJ story is recounted in detail. The suspicious $7.5 million settlement Wynn secretly paid in 2005 to a former Wynn Resorts manicurist is also highlighted.“Elaine Wynn’s attorneys have argued that in making the settlement in 2005 without telling the Board, Mr. Wynn recklessly exposed the company and other directors to liability,” the complaint alleges. It depicts Wynn’s directors as overpaid lackeys.Among the board members whose names Nevadans will readily recognize: Former Gov. Bob Miller and ex-Southern Nevada Water Authority General Manager and Nevada Gaming Commissioner Pat Mulroy. They’ve been extremely well compensated, and now their legacies are on the line thanks to the cesspool swirling around Wynn.Even after the board learned of the $7.5 million settlement, it declined to act although it was clear, Elaine Wynn’s lawsuit alleges, Steve Wynn used Wynn Resorts “to fund his lavish lifestyle and personal politics” and display “reckless risk-taking behavior” that set up the company for an embarrassing crash.The suit takes a bruising turn in detailing litigious events – namely his battles with his former wife and ex-partner Kazuo Okada – that would arguably prevent the boss from devoting “sufficient attention” to business. For those following developments in those lawsuits, it’s well-trodden ground.When readers are reminded that in 2015 and 2016 Institutional Shareholder Services, Inc. (ISS) recommended withholding votes to re-elect members of the company’s board compensation committee, the complaint really bares its teeth: “ISS cited Mr. Wynn’s sizable pay packages with other CEOs and a severance agreement equating to $330 million that ‘exceeds the upper parameter of acceptable amounts,’ according to a report from ISS last year.”In 2017, ISS gave the company its worst ranking for “governance risk.”A $330 million severance package will do that.A second advisory firm, Glass Lewis & Co., recommended a no vote on the company’s executive compensation package and graded Wynn Resorts an “‘F’ for its pay-for-performance practices for the last two years.”Now that Clark County District Judge Elizabeth Gonzalez has ruled company co-founder Okada can pursue specific Wynn Resorts board members based on their decision to oust the Japanese slot manufacturer from the board in 2012, the plot is beginning to thicken.“Allegations of such egregious fiduciary misconduct by the company’s Chairman and CEO involving the company could not be ignored without an investigation by fiduciaries acting in good faith based on any proper rational business purpose,” the complaint alleges. “The Wynn Board knowingly failed to investigate the credible allegations and continued to support Mr. Wynn’s positions of leadership, compensation and suitability as a gaming operator.”The complaint quotes a former board member, “Mr. Wynn has run Wynn Resorts as a personal fiefdom, packing the Board with friends who do his personal bidding, and paying key executives exorbitant amounts for their unwavering fealty.”Nice work if you can get it, but publicly traded companies and privileged licensed industries are supposed to maintain a higher standard.In a professional corporate structure, allegedly sycophantic boards and rapacious bosses aren’t something to celebrate. They’re something to litigate.John L. Smith is a longtime Las Vegas journalist and the author of “Running Scared: The Life and Treacherous Times of Las Vegas Casino King Steve Wynn.” Contact him at firstname.lastname@example.org. On Twitter: @jlnevadasmith.