Elaine Wynn wants more changes to Wynn Resorts board; suggests GC’s departure is ‘for cause termination’

July 9, 2018 7:34 PM
  • Howard Stutz, CDC Gaming Reports
July 9, 2018 7:34 PM
  • Howard Stutz, CDC Gaming Reports

Wynn Resorts Ltd. shareholder Elaine Wynn wants the casino operator’s board of directors to declassify itself and amend its articles to support annual board elections.

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In a filing Monday with the Securities and Exchange Commission, Wynn, who owns 8.78 percent of the company, also wants the board to bring in “an extremely well-qualified candidate” to be either chairman or vice chairman.

Wynn also suggested that last week’s announced departure of company General Counsel Kim Sinatra should be considered as a “for cause” termination.

According to Bloomberg News, former Harrah’s Entertainment CEO Phil Satre withdrew his name from consideration for a Wynn Resorts board seat earlier this year.

Satre, 69, oversaw Harrah’s (now Caesars Entertainment) tremendous growth throughout the 1980s and 1990s. He is currently chairman of gaming equipment giant International Game Technology. He is also chairman of retailer Nordstrom Inc.

In a statement within the SEC filing, Wynn said she requested an immediate declassification of the board last week.

“After observing various actions of the current board (including the board’s response to Ms. Wynn’s good faith efforts to settle differences between Ms. Wynn and the company) and taking into account the criticisms of the special committee investigation … it is Ms. Wynn’s position that the Board needs to have a greater sense of accountability to shareholders, which would be greatly enhanced by an annual election of all directors,” according to the statement.

Elaine Wynn, the ex-wife of company founder Steve Wynn, who stepped down as chairman and CEO in February following sexual harassment allegations, challenged the Wynn board’s make-up last spring. The effort led to the resignation of two long-time board members, including one she actively campaigned against.

Monday’s SEC filing comes a few days after the company announced that Sinatra – effectively the No. 2 executive in the corporate hierarchy – would step down this week. It is unclear if she will remain with Wynn Resorts in any capacity.

CDC Gaming Reports and the Wall Street Journal reported that longtime Las Vegas gaming attorney Ellen Whittemore is expected to be named Wynn Resorts’ new general counsel.

In Monday’s filing, Elaine Wynn said she communicated to the board her concerns that it would “do something inappropriate” with respect to the terms of Sinatra’s departure. She urged the board to obtain advice “from an independent compensation consultant and truly independent legal counsel.”

Wynn urged the board to consider whether Sinatra’s departure should be considered as a “for cause” termination.

In an emailed statement Monday from the Wynn Resorts corporate communications office, the board said it “is actively continuing its work to refresh the board, including reviewing candidates submitted by Elaine Wynn. One-third of the board is new as of this year, and the board anticipates that it will announce additional new members by the end of the summer.”

In March, Elaine Wynn testified in a court hearing that nine years ago she informed Sinatra of an allegation of a 2005 sexual assault against an employee by Steve Wynn. Sinatra denied knowing about the alleged assault and said in a statement that Elaine Wynn “promised to destroy Steve Wynn and said she didn’t care if that reduced the company’s stock price to zero in the process.”

According to the Wynn Resorts 2018 proxy statement, Sinatra earned almost $13.3 million from the company in 2017, including $1 million in salary, more than $10.8 million in stock awards, and more than $1.4 million in other compensation. She is also due another $26.1 million restricted stock options.

In the SEC filing, Elaine Wynn said she sought the declassification last week when she learned the board decided not to elect an unnamed “well-qualified candidate” who is a “former Fortune 500 CEO” as vice chairman.

According to the filing, the candidate has served on the boards of at least six public companies, including as chairman of the board of three public companies. The candidate also “has extensive credibility with gaming industry regulators.”

Elaine Wynn said she would sign a “multi-year standstill” agreement with the company in exchange for the candidate’s appointment as chairman. The filing said there is “no agreement or understanding between candidate and Elaine Wynn” and they are not close associates.

D. Boone Watson is Wynn board’s current non-executive chairman. The board does not have a vice chairman. Wynn Resorts CEO Matt Maddox, who replaced Steve Wynn, is not a member of the board.

Elaine Wynn lost her seat on the Wynn Resorts board in 2015 after the board declined to nominate her and shareholders didn’t support her campaign to be reinstated.

After Steve Wynn’s departure from the company – he sold his entire 12 percent stake in March for $2.1 billion – Elaine Wynn actively began a proxy fight in the Spring.

In April the company added three women to its board – former White House press secretary Dee Dee Myers, three-time CEO Betsy Atkins, and Kestrel Advisors CEO Winifred “Wendy” Webb – who joined current board member Pat Mulroy, making Wynn among the top 40 S&P 500 companies for female board representation.

Wynn shares, which fell more than 14 percent on Nasdaq during June, closed up 2.08 percent, or $3.27 on Monday to end the day at $160.13.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.