Sunday, May 18, 2003
Copyright © Las Vegas Review-Journal

NEVADAN AT WORK: JIM MURREN, President and Chief Executive Officer, MGM Mirage

Ex-Wall Street exec exits comfort zone to oversee finances at MGM Mirage

MGM Mirage CFO Jim Murren stands in front of the MGM Grand. The ex-Wall Street analyst was hired by MGM in 1998. Photo by John Gurzinski.

Jim Murren, president and chief financial officer of MGM Mirage, is something of a paradox: a former art major turned titan of finance, an unassuming New Englander in the center ring of a major Las Vegas casino operation, and a modest analyst shoved into the spotlight leading a publicly traded company.

The spotlight has been shining a lot brighter on most chief financial officers since the late 1990s when the Wall Street bubble burst in a series of infamous investigations and indictments. A rash of new rules and regulations have added compliance responsibilities, made CFOs personally liable for corporate filings and exposed them to severe penalties of up to $5 million and 20 years in federal prisons.

The role of CFOs, who on average pull in $2 million to $3 million in compensation at big companies, has undergone a radical change as they take on new watchdog responsibilities.

During the go-go years of the 1980s and '90s, they were number crunchers and guardians of treasuries.

Now, CFOs scrutinize accounts, rein in colleagues, and generally take leading roles keeping companies shipshape. As they are tasked with making their companies bulletproof, they are becoming equal co-managers with their chief executive officers.

And the pile up of new work has taken its toll on their personal lives. As hours and pay have increased, many CFOs have become absentee spouses and parents.

Murren says he is more the exception than the rule.

As CFO of a company with a capitalized value of $4.25 billion, he pulls in double the compensation of his average peer, but reflects a calm that denies the pressures many of his counterparts complain about.

And his personal life thrives, he says, on the lifestyle he has come to love living in the West.

Question: What brought you to Las Vegas?

Answer: My job. I accepted a job as CFO of MGM Grand Inc. after 14 years working on Wall Street. I'd done internships for three years in college at Connecticut Bank and Trust, and they hired me in 1984 for $21,000 to be an assistant to an equity research analyst. If it hadn't worked, I'd have gone into architecture.

But they hired me because I wrote well and had a computer background with equity experience. I loved the job and became good at it. I was a top-rated analyst for over a decade on Wall Street, more than an hour away from Fairfield, Conn. I really enjoyed Wall Street and living in New York City in the '80s and early '90s. It was very exciting.

In 1995, Terry Lanni became chairman and CEO of MGM Grand and Alex Yemenidjian president and CFO of MGM Grand. Together, they changed the face of MGM Grand.

In 1996, they decided to raise a lot of equity capital, $350 million, and they chose Deutsche Bank to lead the offering. (As the Deutsche Bank analyst), I got to spend an intense month with Alex and Terry as they raised the money and my visibility increased.

In 1997, MGM was awarded a license for a casino in Detroit. Alex was given the additional title of chief operating officer and decided he needed a dedicated CFO. Since I was well-known to them, they offered me the job and I joined in January 1998.

It was an enormous challenge. I'd had a good job that paid a lot more than MGM was offering. Second, my wife was an all-star analyst at Merrill Lynch and she was expecting our second son. Still, she convinced me to take the job.

Funny, I was in a comfort zone. But she said: "You have to take it. The worse that could happen is that they could hate you or you could stink at the job or you wouldn't like it and you could always come back to Wall Street." She'd only been here once, but convinced me to take the job and move the family out here.

In 1999, Alex Yemenidjian was appointed chairman and CEO of Metro Goldwyn Mayer, left MGM Mirage and I was promoted to president and CFO of the company.

Question: How would you describe your job?

Answer: My principle responsibilities revolve around the capital market activities of our company and the coordination of all financial responsibilities companywide. Secondly, I'm heavily engaged in development and strategic decisions as well as having operating responsibility for several subsidiaries of the company such as international (Australian) operations, human resources, internal audit, aviation, corporate resources and shared services.

Question: How have the new regulations changed your position?

Answer: They've added some work to our corporate life, but we've embraced them here. Even though a lot of them are busy work, most are very productive. It has required our company to take an even closer look at our internal workings.

Gaming is a little unique because we're already so regulated and audited. And we're also a much simpler business model than most companies because we're cash-based. Ninety-six percent of our revenue is cash so we have no revenue recognition problems that plagued companies like Tyco. ... We try to take that cash and use it to build, expand and upgrade existing properties, improve our balance sheet and repurchase shares.

We also don't have any of the off-balance sheet deals that drove down Enron. And we don't have any large inventories that aren't accounted for.

The gaming industry just has fewer opportunities for mischief than other industries. So the value of the regulations is less incrementally valuable than for other industries.

None of this has hit my personal life. I have a good one. On Wall Street, I had to travel a lot. In this one, I don't have to travel at all.

The biggest benefit is it gives my wife and me a platform to do something we're passionate about, which is the Nevada Cancer Institute. ... There is a dire need for a company of excellence. We don't have one. ... The primary reason survival rates are low is that there's no coordinated effort in the field of cancer research, detection and education. ... (After raising necessary funds and winning a congressional designation, we are building a facility) with the objective of taking cancer research from the test tube to the patient -- a one-stop resource for the research and treatment of cancer that will open in 2004. If I did not have the job I have and the visibility it affords, I doubt I could even attempt (getting this started and build) it.

Question: Where do you see yourself going?

Answer: We're spending over $500 million over the next couple of years here in Las Vegas expanding existing facilities, especially the Bellagio, dramatically, New York-New York and upgrading MGM, Treasure Island and The Mirage. Outside here, we're opening a new casino in Atlantic City called Borgata. And frankly, we see a few opportunities in the United States for new casinos, but more opportunities overseas.

Question: Personally, where are you headed?

Answer: I'm going to stay here as long as they'll have me. I'm a young guy and love my job. I can't envision having a third career in this industry. If I did something else, it'd be in the nonprofit world or another industry, but my wife and I have decided Nevada is our home and where we'd like to stay.