Wynn Resorts Ltd. accused ousted board member Elaine Wynn of several conflicts of interest, including her participation in company discussions over potentially buying the vacant New Frontier site, which was subsequently acquired by a group that included her nephew.
The casino operator sent a letter to shareholders Tuesday, asking them to support the company’s two board nominees and ignore Elaine Wynn, company Chairman and CEO Steve Wynn’s ex-wife, who launched a proxy fight to regain her seat.
In a slide presentation for investors posted to the company’s website Tuesday, the company said Elaine Wynn, “participated in board meetings in which Wynn Resorts’ plans to acquire property in Las Vegas were discussed at length.”
One property the company looked at was the nearly 35-acre New Frontier site, across from Wynn Las Vegas. The site was in foreclosure and had been vacant since 2007. It was purchased in August by a group that included Australian billionaire James Packer, investment company Oaktree Capital Management and former Wynn Las Vegas President Andrew Pascal, who is Elaine Wynn’s nephew.
“At no time did Ms. Wynn recuse herself from the board discussions or inform the board that her nephew was involved in a competing bid,” Wynn Resorts stated. “Ultimately, the land that Wynn Resorts wanted was purchased by a group that included Ms. Wynn’s nephew.”
In October 2011, Steve Wynn discussed the New Frontier site during the company’s third-quarter conference call. The Elad Group of Israel bought the site in 2007 for $1.24 billion and planned to build a $5 billion version of New York’s Plaza Hotel.
Steve Wynn said the Elad Group had approached him “on a monthly basis” to build something on the site that could be connected to Wynn Las Vegas and Encore.
However, he declined the offer because he couldn’t determine the project’s return on investment.
A spokesman for Elaine Wynn declined to comment Tuesday on the company’s filing.
Wynn Resorts also accused Wynn of selling $10 million worth of company stock through her private foundation during a “blackout period” before the company announced earnings. The company said Wynn “took the position that her personal foundation is not subject to the company’s insider trading policy.”
In a 2012 lawsuit that remains pending, Elaine Wynn challenged a long-standing shareholder agreement with Steve Wynn, which gives him control over her 9.5 million shares in the company.
In the slide presentation, Wynn Resorts said Wynn sought an amendment to her stockholder agreement to increase the amount of stock that she is permitted to sell. The move came when the board was restructuring Steve Wynn’s compensation by providing for performance-contingent equity awards.
“These actions left the independent directors with the sense that she was acting primarily as a litigant rather than an advocate of the average stockholder of the company,” Wynn Resorts said.
The company acknowledged Wynn’s ouster would leave the board as an all-male panel. However, in the letter to shareholders, the company said it plans to expand the panel with one or more board members and “intends to prioritize women and diverse candidates in its search,” appointing new directors by the end of the year.
Both the slide presentation and the letter were filed with the Securities and Exchange Commission.
The annual shareholders meeting is scheduled for April 24 at Wynn Las Vegas.
In her proxy filing, Wynn asked stockholders to vote for her instead of John Hagenbuch. He was nominated by the company along with J. Edward Virtue. Hagenbuch and Virtue have been Wynn Resorts directors since 2012.
Wynn Resorts board members said the lawsuit was a primary reason for removing her from the board. The company outlined in an SEC filing how it could be forced to repurchase a portion of its corporate debt under unfavorable terms if Wynn prevails in her lawsuit.
Based on the shareholders agreement, Steve Wynn and Elaine Wynn control 19.3 percent of Wynn Resorts, the largest single stake.
Investment management firm T. Rowe Price owns 17 million shares, or 16.8 percent of the company.
If Elaine Wynn gains control of her more than 9.4 percent stake, she would be company’s third-largest stockholder. Steve Wynn would own 9.9 percent, or 10 million shares.