By Kate O'Keeffe
Wynn Resorts Ltd. on Tuesday accused Elaine Wynn--the casino
operator's co-founder and third-largest shareholder--of improper
activity and sought to undercut her campaign to keep her board
seat.
The allegations, in presentation materials posted to the Wynn
Resorts website, came just after Ms. Wynn arrived in New York to
solicit support for her re-election to the board. They have raised
the stakes in an increasingly bitter battle that has pitted the
company and its chairman and chief executive, Steve Wynn, against
Mr. Wynn's former wife.
The tenor of the dispute is becoming reminiscent of the casino
operator's last epic board battle. Three years ago Wynn Resorts
ousted its then-largest shareholder, Kazuo Okada, by forcibly
redeeming his 20% stake in the company at a 30% discount and
kicking him off the board after alleging he was involved in corrupt
activity.
Mr. Okada, once close friends with Mr. Wynn, continues to fight
to get the shares back and denies allegations of wrongdoing.
Wynn Resorts' board said last month that it decided not to
renominate Ms. Wynn, who has been a director for more than a dozen
years, when her term expires April 24, coinciding with the annual
meeting. Ms. Wynn then nominated herself for the seat and began
campaigning, touting her decades of experience, passion and
independence, and her role as the company's sole female
director.
In a slide presentation posted to the Wynn Resorts website
Tuesday outlining "key considerations" ahead of the annual meeting,
the company for the first time elaborated on the board's specific
concerns with Ms. Wynn. Her representatives didn't immediately
respond to a request for comment on any of Wynn Resorts'
allegations, including one that she had sold $10 million worth of
shares through her personal foundation during a "blackout period"
ahead of the company's earnings release,during which directors are
forbidden by company policy to sell common stock.
The sale happened shortly before the company's release of its
fourth-quarter earnings last month, said a person familiar with the
matter. Wynn shares fell sharply after the company reported net
profit that missed analyst estimates due to plunging revenue across
the Chinese territory of Macau, where the casino operator derives
the bulk of its revenue.
The company also accused Ms. Wynn of improper behavior regarding
a land deal. "Over the course of several years, Ms. Wynn
participated in board meetings in which Wynn Resorts' plans to
acquire property in Las Vegas were discussed at length. 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.
Ultimately, the land that Wynn Resorts wanted was purchased by a
group that included Ms. Wynn's nephew," the company said.
Ms. Wynn's nephew Andrew Pascal, who used to be a Wynn
executive, didn't immediately respond to a request for comment.
The company also expanded on its claim that a lawsuit Ms.Wynn
had filed in June 2012 in the U.S. District Court in Nevada against
Mr. Wynn seeking to dissolve a shareholder agreement put her at
odds with the board. The pact, designed to keep Mr. Wynn in control
of the company even though he is the second-largest shareholder,
puts voting and selling restrictions on Ms. Wynn's shares.
The lawsuit, which Mr. Wynn opposes, is pending.
T. Rowe Price Associates Inc. is the company's largest
shareholder, with a 16.8% stake.
In the Tuesday presentation, the company said Ms. Wynn used the
suit against Mr. Wynn to serve litigation discovery requests on her
fellow board members, demanding they produce documents related to
the decision not to renominate her as a director.
The casino operator also sought to undercut one of Ms. Wynn's
key campaign points: that the Wynn board would be without a female
voice if she weren't re-elected.
"In response to questions from our stockholders, the Corporate
Governance Committee wants there to be no doubt that the Board is
committed to prioritizing women and diverse candidates...and will
name one or more diverse directors to the Board by the end of
2015," the company pledged Tuesday.
To keep her spot on the board, Ms. Wynn will need to get the
most- or second-most votes of the three directors up for election.
Though she owns a 9.4% stake in Wynn, she said she is already
assured of getting more than 19% of the votes because Mr. Wynn, who
owns 9.9% of the company's shares, is contractually obligated to
vote for her due to the shareholder agreement.
Garnering the rest could be an uphill battle, as some major
investors have expressed concern that, despite his obligation to
support her candidacy, Mr. Wynn actually wants his former wife off
the board and that her re-election would complicate his management
of the company.
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