Thursday, May 22, 2003
Copyright © Las Vegas Review-Journal

Union loses challenge of Station program

The Culinary union Wednesday unsuccessfully challenged the extension of Station Casinos' stock compensation program at the company's annual shareholder meeting.

Otherwise, the meeting at Texas Station was a love fest of shareholders in a company whose stock value has soared 61 percent since it went public 10 years ago, outpacing all its gambling industry peers.

The company had proposed extending its 10-year-old stock compensation program, which is about to expire, for another 10 years.

Industry analysts and insiders, however, said the real purpose of the Culinary challenge was to indirectly raise the issue of unionizing the company through a challenge to management and its performance.

Station Casinos is nonunion except for a contract with the Teamsters Local 995, which helps manage the loading dock at Palace Station.

"In my view, the whole union proposition was an indirect way to target organizing Station employees," Deutsche Bank analyst Marc Falcone said.

"Management made their points. They have very solid cash flow and prospects for growth. Shareholders in the company have good reason to be very satisfied," he said.

"Station has one of the strongest growth stories and some of the best prospects for long-term growth in all of gaming," Falcone said.

Culinary Local 226 mailed material to all Station Casino shareholders arguing that the compensation program overwhelmingly benefited the company's top three executives and diluted the value of outside shareholders' stock holdings.

Station Casinos President Lorenzo Fertitta, however, said after the meeting that the information provided by the Culinary was "incomplete and cherry-picked."

And Glenn Christensen, the company's chief financial officer, said the opponents' loss overwhelmingly demonstrated shareholders' satisfaction with the company's management.

The motion to adopt the extension of the company's stock compensation program passed by nearly 69 percent, but with 30 percent of the company stock controlled by insiders, 44 percent of the outside shareholders opposed the motion.

Culinary research director Courtney Alexander said the issue was of importance to outside shareholders and the vote "showed there is a substantial portion of the outside investors who oppose (the executive compensation) program."

She said she hopes such votes in the future are broken down by inside and outside investors.

Station Casinos Chairman Frank Fertitta told Alexander in the meeting that she was free to vote the union's 262 shares in opposition to the compensation program, but he would vote his 5 million shares in favor of the program, adding he invited the union to increase its investment in the company if it wanted to exert more influence on the issue.

After the shareholder meeting, company executives acknowledged the interest of the union in organizing the company, but commented only on issues raised earlier.

"Look at what is happening in the rest of Corporate America today. They want executives who stay vested in their companies and who don't cash out (their stock options)," Frank Fertitta said. "We could cash out and our percentages would come in line (with what the Culinary called for), but we stay in because we're bullish on the company."

Fertitta said he is particularly bullish on growth prospects for Station Casinos in Las Vegas.