Wynn Resorts board of directors highest-paid on Las Vegas Strip

It pays well to be a Wynn Resorts board director.

The casino operator’s directors receive $310,000 annually, including $250,000 in the form of company stock, according to executive data provider Equilar. Wynn director compensation is the highest on the Strip and exceeds Las Vegas peers by about 50 percent.

Wynn spokesman Michael Weaver said board pay is determined by a variety of factors with the help of independent compensation consultants. The pay is overwhelmingly stock-based and thus “closely aligns the interests of the company’s directors with stockholders,” he said.

But some say higher board compensation, regardless of whether it is paid in stock or cash, is a red flag.

The Wynn board’s actions have come under scrutiny after sexual harassment allegations against its former chairman, Steve Wynn. The 76-year old businessman stepped down as chairman Feb. 6 and sold his his entire $2.1 billion stake in Wynn Resorts on March 22.

Several Wynn Resorts investors are suing the board, accusing it of failing in its fiduciary duty to protect the company, according to court filings.

The board should have known about the allegations years ago, the investors contend in their lawsuit.

“The director defendants failed to act to investigate or arrest Mr. Wynn’s frequent and egregious behavior, despite being on notice of it,” the Operating Engineers Construction Industry Pension Fund said in its lawsuit filed in February at Clark Country District Court.

$60,000 annually in cash

Directors of MGM Resorts, Las Vegas Sands, Caesars Entertainment Operating Co. and Boyd Gaming earn between $200,000 and $225,000, according to Equilar. The data are valid through 2016 and the numbers do not include additional payments to directors for work on board committees.

The median total compensation for directors at 500 of the largest U.S. companies is $245,000, according to Equilar.

Wynn directors, though, receive just $60,000 annually in cash, the least among their Las Vegas peers and a third below the $90,000 median for large public companies.

Wynn’s board might have wanted to pay more to ensure better qualified directors, but they might want to review whether that remains justifiable, said Ben Edwards, an associate professor at UNLV’s Boyd Law School who focuses on corporate governance issues.

Piggy bank
Wes Rand/Las Vegas Review-Journal

“There are good reasons for paying directors well to align their interests with the corporation,” he said, but “if directors with similar credentials serve on boards in the same industry for substantially lower pay, it raises questions about whether the firm needed to pay that amount to its directors in order to obtain competent directors.”

Higher board compensation can indicate cronyism between executives and directors, according to a study published last year by professors Mustafa Dah of the Lebanese American University and Melissa Frye of the University of Central Florida.

“Overall, our findings suggest that director excess compensation may be a sign of board entrenchment where overcompensated directors are not necessarily focused on protecting shareholder interests,” the professors said.

That is the essence of the lawsuits against the board.

“Carefully selected by Mr. Wynn, the Wynn Resorts board is composed of loyal directors unwilling to take on their friend and benefactor,” the pension fund said in its lawsuit.

Director compensation at public companies like Wynn Resorts is approved by the board itself. The Wynn board has a four-member compensation committee headed by J. Edward Virtue that makes the final pay recommendation.

Scrutiny

Calls for a shakeup at the Wynn board followed January reports that Wynn sexually harassed employees for decades.

Wynn settled a decade ago with two former employees who accused him of sexual misconduct. He called the allegations “preposterous” and said they are instigated by ex-wife Elaine Wynn, a former board member.

Until the allegations broke, shares of Wynn Resorts had historically traded at a 20 percent premium to its Las Vegas peers, a sign of investor confidence in the company.

A higher valuation doesn’t mean the board should have received above-average pay, said Jeffrey Sonnenfeld, senior associate dean at Yale School of Management.

“There is no justification for this disproportionately higher compensation for directors on the Wynn board even if their performance was admirable,” Sonnenfeld said. “Given the failure of management oversight, it suggests a possible misuse of shareholder wealth if not even tacit rewards to ignore concerns over potential management misconduct.”

Institutional Shareholder Services, which rates corporate governance risk at publicly traded companies, gave Wynn Resorts board a poor ranking of 8 and 9 over the past two years. The Institutional Shareholder Services Governance QualityScore runs from 1 to 10 with 10 representing the highest risk.

But Wynn director compensation played no role in the rating. The research company was more concerned by Steve Wynn’s dual position as chief executive office and chairman, the lack of board diversity and the decade-long tenure of several members.

The board’s ranking improved from 8 to 3 after the departure of Wynn and long-serving member Ray Irani. Wynn Resorts soon will announce new nominees to the board ahead of the annual shareholders meeting in May.

Director pay

Director pay can depend on the size of the company, its growth trajectory and on the number of board members. Companies with fewer board members might pay more to each director.

director pay

Fast-expanding and large-scale corporations might require more board monitoring and directors at such companies often command higher compensation, particularly in the form of stock, according to industry studies.

Apple, the world’s largest company by value, and Facebook, one of the fastest-growing companies, each pay their directors $350,000, according to Equilar. Facebook is also the fifth-largest U.S. company by value.

Wynn Resorts is growing faster than its Las Vegas peers in part because of its smaller scale. Wynn Resorts opened its fourth casino in 2016, driving a big jump in earnings. It will open its fifth casino next year.

Las Vegas Sands operates eight casinos while MGM runs about 20 resorts.

Las Vegas Sands has a market value of $57 billion, about three times that of Wynn Resorts and MGM.

Las Vegas Sands increased its board membership from 10 to 11 last year while MGM increased its from 11 to 12 earlier this month. Wynn Resorts had 10 members until the recent departures.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

Contact Todd Prince at tprince@reviewjournal.com or 702-383-0386. Follow @toddprincetv on Twitter.

ad-high_impact_4
Business
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like