Caesars Entertainment Corp. Chairman Gary Loveman will step down from the company’s chief executive role on June 30 and will be replaced by the former chairman and CEO of Hertz Global Holdings, the casino giant announced Wednesday.
In a statement Wednesday, Caesars said Mark Frissora, who spent seven years with the automobile and equipment rental car company, will be “CEO designee” until July 1, when he formally becomes CEO.
The change comes less than a month after Caesars placed its largest operating unit into a pre-packaged bankruptcy to eliminate almost $10 billion in debt. The reorganization, overseen by the U.S. Bankruptcy Court in Chicago, may take up to a year to finalize.
Loveman, 54, whose employment agreement last year was extended through 2016, will remain as the company’s chairman.
Loveman, who has been with Caesars since 1988 and is one of the gaming industry’s longest-tenured CEOs, has been one of the highest paid casino executives in recent years. According to the company’s most recent proxy statement, Loveman earned more than $7.6 million in salary and other compensation in 2013. In 2010, Loveman earned more than $18.2 million in total compensation.
Union Gaming Group gaming analyst Chris Jones said Loveman’s impending departure shouldn’t be a surprise, given the length of his tenure with Caesars and the impending restructuring.
“There has always been some level of expectation this would happen,” Jones said. “There is still very much to be determined about how the company will look following the restructuring.”
Caesars operates almost 40 casinos in 13 states, including nine resorts on or near the Strip. Among the company’s Las Vegas holdings are Caesars Palace, Harrah’s Las Vegas, Bally’s Las Vegas, the Rio, Planet Hollywood and the Linq retail, dining and entertainment complex.
In a statement, Loveman said the time for a transition was “ripe” amid formal restructuring of its Caesars Entertainment Operating Co.
“My decision to begin to transition management now comes with the confidence that we have taken the steps necessary to ensure the company’s long-term success,” Loveman said. “I am proud of the company’s many accomplishments and grateful for the loyalty and friendship of my thousands of colleagues.”
In a statement, Frissora, 59, said he is joining Caesars at an important time for the company.
“Caesars’ network and range of offerings and amenities make it a true leader in gaming, entertainment and hospitality,” Frissora said. “I am looking forward to working closely with Gary, the board and the leadership team to ensure a smooth transition.”
Loveman, a former Harvard Business School associate professor, joined what was then Harrah’s Entertainment as chief operating officer. He became CEO in 2003, and presided over the company’s massive growth.
In 2004, Harrah’s bought both Horseshoe Gaming and the World Series of Poker. In 2005, the company spent $9 billion to acquire Caesars Entertainment.
Harrah’s took the Caesars name in 2008 and went private in a $30.7 billion transaction led by private equity firms TPG Capital and Apollo Global Management. The deal left Caesars with a gaming industry high $22.8 billion in long-term debt, which the company has tried to restructure.
Loveman is credited with overseeing development of Total Rewards, the company’s 40-million-player loyalty program, and creating Caesars Interactive, a division that houses the World Series of Poker and Caesars online and social gaming products.
In a joint statement, Apollo founder Marc Rowan and TPG founder David Bonderman credited Loveman for his “vision and passion” in building the company.
“We respect Gary’s desire to begin transitioning the management of the company at this time,” they said.
RECORD WITH HERTZ
Frissora was appointed CEO of Hertz in 2006, before the company’s initial public offering. He oversaw Hertz’s 2012 acquisition of Dollar Thrifty Automotive Group Inc., which shrank the number of major rental-car companies to three from four.
According to Bloomberg News, Frissora cited personal reasons in his resignation from Hertz last September. However, investors in the Naples, Fla.-based company reportedly pushed for his removal, citing accounting and operational missteps.
Frissora is credited with expanding Hertz from a single-brand, airport rental car company to a global organization with four retail brands and more than 3,000 off-airport locations.
Prior to joining Hertz in 2006, Frissora was Chairman and CEO of Tenneco, an auto parts maker.
“Mark has a long history of driving growth, optimizing operations and creating shareholder value,” Bonderman and Rowan said on behalf of the Board. “We are confident that his efforts combined with the restructuring … will help create long-term shareholder value at Caesars.”
Jones said there might be some initial concern that Loveman’s replacement does not have any operational gaming experience. However, because of his work with Hertz and he has four months to work with Loveman, the transition should go smoothly.
“He’s going to have to navigate a different company post bankruptcy,” Jones said. “He may not be a gaming guy, but the timing gives him a chance to understand the business.”
Loveman in the past year oversaw direct talks with lenders and bondholders that led to the Jan. 15 bankruptcy filing. The restructuring of Caesars Entertainment Operating Co. will eliminate almost $10 billion of the division’s $18.4 billion debt load. Loveman will continue to oversee the process.
Caesars is seeking court approval to convert CEOC into a publicly traded real estate investment trust. CEOC controls Caesars Palace, Caesars Atlantic City, Harrah’s Reno and more than a dozen regional properties.
The REIT concept would split CEOC into two companies, including one owning real estate for many of the company’s casinos. A second company would manage the properties and pay a rent to the ownership company.
Caesars announced the “management transition” after stock markets closed Wednesday. Shares of Caesars closed at $11.29 on the Nasdaq, up a penny, or 0.09 percent.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Follow @howardstutz on Twitter.