The managing partner of an investment firm that owns 3 percent of MGM Resorts International has been appointed to the casino giant’s board of directors, it was announced late Thursday.
Keith Meister, who also serves as the chief investment officer of Corvex Management, will join the MGM Resorts board as an independent director on Friday. The Las Vegas-based company’s board was expanded from 12 to 13 members to include Meister.
The move comes as MGM Resorts faces scrutiny from activist investment groups seeking changes in the casino giant. Bloomberg News reported last week that Starboard Value, a New York-based hedge fund, built a small position in the company over the last couple of months.
Corvex, which is based in New York, is considered an activist investment hedge fund. The company made activist moves over the years with Yum! Brands, Inc. – which owns KFC – American Realty Capital Properties, Inc., and Allergan plc. In a statement from MGM Resorts, the company said Meister served as a director on the board of Yum! Brands.
Miester had previous gaming involvement with American Casino & Entertainment Properties, the previous owner of four southern Nevada casinos, including the Stratosphere in Las Vegas. American Casino was sold to Golden Entertainment in 2017.
In a statement, MGM Resorts Chairman and CEO Jim Murren said the casino operator invited Meister to join the board, saying the company “has been engaged in constructive dialogue over the last several months” with Corvex and the companies “are aligned on our strategy to increase free cash flow, continue to pursue an asset light model, drive margin improvement and position (MGM Resorts) for long term future growth.”
Shortly after New Year’s, MGM Resorts outlined a cost reduction, margin improvement plan that the gaming company said would lead to an additional $300 million in cash flow by 2021.
The plan – labeled MGM 2020, which was first discussed at an investor day last May – calls for a range of company-wide cost-cutting and efficiency measures, including $100 million in reduced labor costs.
MGM Resorts said the initiative would lead to “a more centralized organization to maximize profitability and, through key investments in technology, lay the groundwork for the company’s digital transformation to drive revenue growth.”
Murren said Meister’s “strong track record of helping companies maximize value for shareholders as well as his experience in real estate and gaming will be invaluable as we continue to optimize our business and evolve as an organization.”
In a statement, Meister said Corvex and MGM Resorts have discussed “driving profitable growth” during talks “over the last several months.”
“With my experience in the gaming industry and other similarly situated companies I can be helpful in amplifying these efforts. I expect to be a long-term investor in MGM as we work collaboratively to build an even greater company,” Meister said.
In a note to investors late Thursday evening, Jefferies gaming analyst David Katz thought the addition of an activist investor to board would be viewed as a positive move by the investment community.
“Although the company has performed solidly over the past decade, the share’s valuation level suggests the market has expected more,” Katz said. “We believe there could be incremental operating and structural opportunities to enhance value that could be more efficiently explored.”
MGM Resorts said its board can regularly evaluate its composition. Since 2017, the board has appointed four new independent directors, including Meister.
Shares of MGM closed at $27.74 on Thursday on the New York Stock Exchange, up 26 cents or 0.95 percent.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
