Wynn investor will have to wait on documents
Wynn Resorts Ltd. board member and largest stockholder Kazuo Okada will get his chance to examine normally confidential company documents, but his win comes with a large asterisk.
At a Thursday morning hearing, Clark County District Judge Elizabeth Gonzalez ruled that his position as director allows him to delve into company records as long as his requests are "reasonable."
She gave the company two weeks to review Okada's list, document by document, and either allow him access or reject it. She will then decide at a Feb. 23 hearing whether Okada has the right to see any documents Wynn deems confidential.
In wrapping up the brief hearing -- neither Okada nor company Chairman and CEO Steve Wynn were in the courtroom -- Gonzalez said she had "serious questions" about some of Okada's requests, but that others would likely pass muster. She did not tip her hand, however, about any details.
In his Jan. 11 complaint, Okada demanded documents that would trace how $120 million that he invested in the company's predecessor a decade ago was spent; the circumstances of a $135 million contribution to the University of Macau last year; and a revised 2010 shareholder agreement that followed the divorce of Steve Wynn and board member Elaine Wynn. The agreement allows Steve Wynn to vote not only his stock but also Okada's and Elaine Wynn's, about 40 percent of the total.
Okada was the lone dissenter when the 12-member Wynn board approved the University of Macau donation. The lawsuit blew into the open a boardroom dispute that had previously been shielded from outsiders. In fact, Okada's ouster as vice chairman last October, a post he had held since October 2002, was announced only the day after he filed his lawsuit.
A week after going to court, Okada upped the ante with a Securities and Exchange Commission filing that said he would nominate his own slate of three directors at the next annual meeting, plus a fourth if Elaine Wynn chose to step down.
The public relations firm that Okada retained in connection with the fight called the court ruling "a validation of Mr. Okada's role as a director."
Okada, a citizen of Japan who lives in Hong Kong, controls 19.7 percent of the Wynn stock through Aruze USA, a unit of his Universal Entertainment Corp. Universal Entertainment's website goes so far as to describe Wynn Resorts as a joint venture between it and Steve Wynn.
Wynn Resorts declined to comment Thursday. But in an interview with the Las Vegas Review-Journal on Feb. 1, Steve Wynn predicted that the case "will be easily dismissed."
Okada's representatives maintain that their client has a right to know how the company is spending his investment.
"The right to inspection is essential to good corporate governance," Okada attorney Gidon Caine argued at the hearing. Later, he added, "Mr. Okada should have the same right of inspection of the records that Steve Wynn does."
But Wynn Resorts attorney Kirk Lenhard sought to set the case in the broader context.
"What we are asking today is to protect the integrity of the board of directors," Lenhard said.
Instead of going to court, he contended that Okada should have laid out his case at the next board of directors meeting, scheduled for Feb. 24. Taking the issue to court, he said, threatens to "emasculate" the board to suit just one director and could lead to "corporate chaos" for companies incorporated in Nevada.
The subtext to the dispute, mentioned only obliquely at the hearing, is the
$2 billion Manila Bay Resorts in the Philippines. Universal Entertainment broke ground on the project last month, although Wynn Resorts has shunned any involvement out of concern that it could siphon customers away from its Macau property and future developments.
Wynn has said that Okada had "gotten himself into trouble" with Manila Bay, but has not provided details
"Mr. Okada does, in fact, have interests that are adverse to the company," Lenhard said in court.
Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com or 702-387-5290.
