MGM Mirage Chairman and Chief Executive Officer Terry Lanni will retire from the casino operator on Nov. 30 and has recommended that he be replaced by the company's chief operating officer, Jim Murren.
The MGM Mirage board of directors has to approve the executive changes, possibly by next week. Lanni, 65, wants to remain with the company as a member of the board.
"Frankly, I came very close to making this decision a year ago," Lanni told the Review-Journal Thursday. The management change was announced late in the afternoon. "The challenges that we are facing as a company I believe are best addressed by a younger person. Jim is the person to lead the company."
Lanni's resignation was announced the same day the Wall Street Journal raised questions about the gaming executive's academic credentials.
In his corporate biography on MGM Mirage's Web site, Lanni says he graduated from University of Southern California with a bachelor's in speech and a master's of business adminstration in finance.
The university, however, said it had no record of Lanni ever earning a master's degree from the school, the newspaper reported.
The Wall Street Journal quoted Lanni as saying, "I must stress that this issue has nothing to do with my decision (to resign)."
Lanni also told the Wall Street Journal he took several business classes at the university but never completed his MBA at the school because he went to work instead. He said, however, that the university awarded him an honorary MBA sometime in the 1970s, the paper said.
A university spokesman disputed that, though.
"The official records of the university of honorary degree recipients show that the last honorary MBA that we've awarded was in 1993," spokesman James Grant told the Wall Street Journal.
"While the Journal's inquiry has made us aware that his official bio was unclear, it had no bearing whatsoever on his decision to retire. This decision should, in fact, come as no surprise to anyone," MGM Mirage Senior Vice President of Public Affairs Alan Feldman said in an e-mail late Thursday.
"Terry considered retirement - and did in fact retire - almost ten years ago. It was the unparalleled opportunities presented by the mergers with Mirage Resorts (2000), Mandalay Resort Group (2005) and the initial planning and development of CityCenter that brought him back to the company.
"Further, the company has been actively implementing a succession plan for almost 2 years including the appointment of Jim Murren as COO more than a year ago," Feldman wrote.
Lanni joined the then-MGM Grand Inc. as president, CEO and a member of the board in June 1995 and steered the company's massive growth over the past 13 years, including the $6.4 billion purchase of Mirage Resorts in 2000 and the $7.9 billion buyout of the Mandalay Resort Group in 2005. Lanni is also considered responsible for implementing MGM Mirage's highly recognized corporate diversity efforts.
Prior to joining MGM Mirage, Lanni spent 18 years as a senior executive at Caesars World, including 14 years as president and COO.
Murren, 47, joined MGM Grand in 1998 as chief financial officer after spending 14 years on Wall Street as an equity analyst and managing director of Deutsche Bank. Murren was named company president in 1999, prior to the buyout of Mirage Resorts.
Last year, Murren gave up the CFO duties and took on the role of chief operating officer, overseeing the day-to-day operations of the company's hotel and casino properties and becoming the No. 2 person in the MGM Mirage hierarchy.
Lanni had a base salary of $2 million in 2007, but received total compensation of $12.7 million, which included incentives and perks. Murren's base salary was $1.5 million in 2007, but he received total compensation of $8.5 million after incentives and perks.
Lanni said he considered recommending Murren for the CEO duties last year.
"We have a management committee that is collegial and collaborates well in the decision making process," Lanni said. "I don't think you will see dramatic changes. It will be a continuation of the management that we have in place."
He, Murren, Chief Design and Construction Officer Bobby Baldwin and general counsel Gary Jacobs serve on the committee.
The surprise announcement was made at a time when MGM Mirage and the gaming industry as a whole are facing severe economic challenges.
The slowing national and global economies have reduced consumer spending. MGM Mirage saw its third-quarter profit fall 67 percent from a year ago. The company has undergone several cost reduction measures, including corporate restructuring and downsizing, and other strategic budgetary initiatives.
The change in day-to-day control also comes as MGM Mirage is completing the $9.1 billion CityCenter development. The project, which includes Aria, a 4,000-room hotel-casino, boutique hotels, high-rise residential, and a retail, entertainment and dining district, is expected to open late next year.
However, CityCenter's costs have risen and the company is still attempting to secure the final financing for the project. Last year, Dubai World, the investment arm of the Persian Gulf state, spent more than $5 billion to purchase half of CityCenter and a 9.4 percent interest in MGM Mirage.
"Jim is fully equipped to lead the company through these turbulent times in the global economy and take it to new levels of growth and success," Lanni said."
Murren didn't wish to comment directly on the recommendation that he step in as Lanni's replacement until after the board acts on the recommendation. In a statement, released by the company, Murren said he was honored that Lanni was recommending him to the board.
"As a direct result of Terry's leadership, we have a remarkable depth of seasoned management." Murren said. "I am confident of our company's ability to manage through the current economy and emerge stronger, more vigorous and well-positioned to capitalize on future opportunities as the economy rebounds from its current slowdown."
JP Morgan gaming analyst Joe Greff thought Wall Street would be comfortable with Murren.
"This recommendation makes sense and would provide for a seamless transition," Greff said in a research note late Thursday. "Our sense is that investors would be very comfortable with this transition as well."
In a statement, MGM Mirage majority shareholder Kirk Kerkorian praised Lanni and said he played a key role in the casino operator's growth and expansion.
"The company will always be indebted to Terry for his many years of leadership and wisdom," said Kerkorian, a 91-year-old Los Angeles billionaire who controls about 53 percent of the company's shares. "We are delighted that he will remain as a member of the board and that the company will have available his wealth of experience and institutional knowledge."
MGM Mirage controls 10 Strip resorts, including MGM Grand, Bellagio, The Mirage and Mandalay Bay. The company operates 44 percent of the Strip's available hotel rooms, In total, MGM Mirage owns and operates 17 resorts in Nevada, Mississippi and Michigan. It has 50 percent partnerships in four other properties n Nevada, New Jersey, Illinois and Macau.
Lanni said the company's business ventures overseas, which has required him to travel to Macau, other parts of China, the Middle East and other foreign jurisdictions, has taken its toll.
"I hate to say this, but I'm 65 and the type of travel this job demands calls for a younger person," Lanni said. "I think it's time for a generational change and the torch should be passed."
Lanni maintains a permanent residence in Southern California and wants to spend more time with his wife of 29 years, Debbie, and become involved in some philanthropic measures. He said the family has started a foundation to help charitable efforts.
"We've seen a dramatic surge in need throughout the United States and I feel the need to commit to those efforts," Lanni said.
Lanni has been politically active over the years with the Republican Party. This year, he raised more than $500,000 for John McCain's presidential campaign. He has also been outspoken about Nevada's current budget crisis, calling for a broad-based business tax while saying other industries are not paying their fair share of the state's tax burden.
However, Lanni said he has no plans to seek political office either in Nevada or California.
In an e-mail to MGM Mirage's nearly 64,000 employees that was sent Thursday afternoon, Lanni said he wanted to put to rest any rumors about why he is leaving.
"This is not health related. I am working closely with our management team and board to ensure a smooth and orderly transition, one that I've been planning for some time," Lanni said. "I am not running for public office anywhere; I am not taking over any other company, gaming or otherwise; and, no, I'm not going to be on next season's тDancing with the Stars.'"
Murren helped direct much of the company's expansion on the financial side. He played roles in both the Mirage Resorts and Mandalay purchases.
Over the past two years, Murren was involved in the negotiations for the company's joint venture developments, several of which have been put on hold due to the global and national economic crisis.
Murren, who has a degree in urban studies and art history from Trinity College, is credited with coming up with the idea for CityCenter, which covers 76 acres between Monte Carlo and Bellagio. He helped negotiate several of the partnerships within the CityCenter development.
In an interview with the Review-Journal in September 2007, Murren was confident CityCenter, which has faced problems completing the final portion of its financing, would be a success.
"Until it's a success, people will give me total credit," Murren said at the time. "When it's successful, it will have many masters. But if it falls on itself, everyone will be looking at me."
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871.