Wynn Resorts Ltd. may need a few sessions of psychoanalysis as well as a corporate clean-up.
At some point, the bickering and uncertainty within the casino operator must end.
Monday’s bombshell securities filing by Elaine Wynn ended any recent detente. It also showed that the ex-wife of deposed founder and CEO Steve Wynn won’t sit back quietly and rest on her more than 9.5 million shares in the casino operator.
“This company needs a complete revamp,” said one gaming industry insider.
Since April, CEO Matt Maddox – a 16-year Wynn executive who took over after sexual harassment allegations led to Steve Wynn’s departure – cooled down the instability.
Maddox is liked by the investment community. He held a well-attended meeting with analysts, saying the company’s best days are ahead. He also participated in 15 different town hall-style meetings with employees.
Still, shares of Wynn Resorts fell more than 14 percent in June, due to uncertainty in the Macau gaming market over issues involving a trade war with China and perceived non-gaming competition from nearby Hengqin Island.
Wynn is moving forward with just one Strip development – Paradise Park, on the former Wynn Country Club site. A project for the empty Alon site was mothballed. Maddox told Massachusetts gaming regulators in April that the company’s $2.5 billion casino-resort wouldn’t carry the Wynn name and would be known as Encore Boston Harbor.
Wynn’s all-male board of directors was remade through resignations and appointments and is now 50 percent female, making it one of the top 40 S&P 500 companies for female board representation.
On Monday, Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski upgraded his view of the company, saying concerns were “overblown.” He added “we continue to see a compelling long-term case to own shares of Wynn.”
That assessment came shortly after Elaine Wynn fired her latest salvo.
The announced departure of general counsel Kim Sinatra just after July 4th set off the recent fireworks. In the filing with the Securities and Exchange Commission, Elaine Wynn, who controls 8.78 percent of the company, suggested Sinatra’s departure be termed a “for cause termination,” which would cost the executive millions of dollars in lost severance fees and lost stock options.
The exit of Sinatra, a Wynn executive since 2004 and close confidant of the CEO – his consiglieri, so to speak – was not unexpected. She was the company’s second-highest paid executive, earning almost $13.3 million in 2017. But there are unanswered questions about what Sinatra knew regarding the sexual harassment allegations against her former boss.
There are also pending investigations by Nevada and Massachusetts gaming authorities.
Meanwhile, longtime Las Vegas gaming attorney Ellen Whittemore is expected to be named Wynn Resorts’ new general counsel. It’s a smart move for the company. Whittemore is well respected and has more than 30 years’ experience in Nevada gaming law. She has represented MGM Resorts International as outside counsel for numerous gaming matters, including many of the company’s major acquisitions and developments.
In a 2009 “Nevadan at Work” interview with the Las Vegas Review-Journal, I asked Whittemore about working with the late billionaire Kirk Kerkorian. She represented the MGM when it bought Mandalay Resort Group in 2005. She called him “wonderful, gracious and intelligent.”
She added, “You can only get this from a man in his 90s. After I represented the company … he came up to me, patted me on the head and said, ‘Nice job kid.’ I smiled and said, thank you.”
Whittemore knows how to play the game, but there could be more fireworks ahead.
Elaine Wynn, who lost her Wynn board seat in 2015, wants to see another shake-up, saying in her SEC filing there should be annual elections for members.
In the spring, she actively campaigned against her ex-husband’s friend, real estate investor John Hagenbuch. Hagenbuch ultimately withdrew from the board election. Former Nevada Governor Robert Miller, one of the board’s original members, also resigned.
In a statement Monday, the company said the board “anticipates it will announce additional new members by the end of summer.”
In her SEC filing, Elaine Wynn said the current board wouldn’t consider a candidate she called “well-qualified” and who she said was known to gaming regulators. It turned out the candidate was former Harrah’s Entertainment CEO Phil Satre. He told Bloomberg News that he withdrew his name, but didn’t elaborate.
Satre, who oversaw Harrah’s gaming expansion in the 1980s and 1990s and is currently chairman of slot machine giant International Game Technology and retailer Nordstrom Inc., would have been a welcome and calming influence on a chaotic situation.
If Satre, or someone of similar stature, can’t be brought in to help the right the ship, then the company might be beyond repair.
Disclosure: Ellen Whittemore’s husband, a Las Vegas business attorney, handled a real estate matter for me in 2017.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
