Former largest shareholder Kazuo Okada lost his bid to halt the Wynn Resorts Ltd. special shareholders meeting next week to oust him from the board of directors.
U.S. District Court Judge James Mahan ruled on Friday that Okada, the Japanese gaming magnate, had not shown the outright errors in the proxy statement that would justify court intervention. Instead of postponing the Feb. 22 meeting to fix the proxy, in which the company presents the case for dismissing him, Mahan said Okada could pursue sending a counterstatement to shareholders.
Okada attorney Marc Sonnenfeld did not say afterward whether he would pursue an appeal.
“Today was just a skirmish in a bigger war,” he said.
Wynn general counsel Kimmarie Sinatra said after the hearing, “The company is gratified that shareholders will have the opportunity to vote.”
Under Nevada rules, removing a board member requires a two-thirds vote of all shares, not just those that vote. In March 2012, shortly after forcibly redeeming Okada’s 19.7 percent stake in the company at a 30 percent discount, the company filed a preliminary proxy with the Securities and Exchange Commission to move against Okada, but did not proceed.
However, Wynn attorney James Pisanelli said the company had “quarantined” Okada by vesting all authority in an executive committee that includes all the board members except him. Since then, Okada has not participated in board business.
In challenging the validity of the latest proxy, filed Jan. 3, Sonnenfeld listed seven statements he termed “false and misleading,” aimed at casting Okada in the worst possible light. Many of them have cropped up earlier, behind closed doors or in different courtrooms, during the increasingly bitter feud between Steve Wynn and Okada. The fighting erupted nearly two years ago between the former friends and business partners.
As one example of an error in the proxy, Sonnenfeld pointed to a line that said Okada once told fellow directors that “gifts to regulators are permissible in Asia.” Okada has denied ever making such a statement, Sonnenfeld added.
What board members heard came through a translator, since Okada does not know English and the other directors don’t know Japanese.
“Nobody knows what Okada said,” Sonnenfeld said.
However, Mahan noted that board member Robert Miller has stated that he heard Okada speak that line. Because the basic contention remains in dispute, Mahan added, it did not constitute the type of clear error needed to stop the shareholders meeting.
If the proxy had called Okada Canadian, he added, when he is a Japanese citizen who resides in Hong Kong, then that would have fit the legal definition of an error.
Okada’s current term started in 2011 and will run until the 2014 annual meeting, generally held in the spring. He was stripped of the vice chairman’s title by a board vote in late 2011.
Contact reporter Tim O’Reiley at email@example.com or 702-387-5290.