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Steve and Elaine Play Family Feud

By Chuckmonster on Wednesday, 4th March 2015 10:40am
  » filed under Las Vegas  comments: 3


Wynn Resorts' has decided to eliminate Elaine Wynn from their Board of Directors. SEC filings outline four reasons why the board decided to withhold recommendation for Ms. Wynn's continuance.

Following an extensive process which included multiple meetings and the participation of Ms. Wynn, the Nominating and Corporate Governance Committee determined not to recommend that Ms. Wynn be re-nominated because of (1) concerns over actual or potential conflicts of interest, (2) potential indenture covenant violations triggered by an adverse outcome of her cross claim against the Company's CEO detailed below, (3) the impact of the pendency of that lawsuit and the underlying dispute on the atmosphere in and effectiveness of her participation on the Board, and (4) Ms. Wynn's lack of independence under NASDAQ listing standards and resulting inability to serve on key Board committees.

I'll start with item 4, first. An independent director is someone who does not have a familial or employee relationship with the company they are a director of. Ms. Wynn is not an independent director via her (complex) relationship with Steve Wynn. Ms. Wynn has been a Class I Director of the company since its inception in 2002. Suddenly, 13 years later, her independence has become a problem.

Items 2 and 3 are interrelated. In 2010, Steve and Elaine Wynn divorced for the second time. Their collective shares in Wynn Resorts were split between them with an agreement that Elaine would not sell her shares and would vote however Steve did. The agreement between the Wynn's avoided upsetting the existing partnership between Wynn and founding partner, majority shareholder and Vice Chairman of the Board, Kazuo Okada.

In 2012, after trading charges of business impropriety regarding Okada and Wynn's Philippines and Macau respective casino expansions, the relationship between the former best friends and partners quickly devolved into public slug fest and legal maneuvering. Wynn Resorts forcibly bought back Okada's 20% stake in the company at a massive discount, thereby giving majority shareholder control to the Steve/ Elaine voting bloc.

Simultaneously with Okada lawsuit, Elaine Wynn filed suit to end the agreement she has with Steve, giving her the ability vote independently and buy or sell her shares in Wynn Resorts shares at will. The function of the agreement was to ensure share consolidation and retain power-sharing agreement with Okada. With Okada now out of the picture, Elaine wants her cut and her independent voice.

2015 is the first year since the Wynn/Okada/Wynn ownership crisis that Class I directors are facing re-election, they serve 3 year terms. This is the first opportunity Wynn has had to use corporate leadership process to finalize their business divorce without threatening his control of the company. Ms. Wynn's lawsuit to have her rights as independent shareholder is still pending.

Always at the ready to publicly portray carefree powerlessness, Wynn Public Relations has released statements which claims Steve tried to defend Elaine from the Board's action.

I'll defer analysis to Vegas Gang leader Hunter Hillegas.

If you don't think The Steve is behind this board thing with Elaine, you are delusional. I don't care what the quote says..." - @hunter

Which brings us to item 1 - "concerns over actual or potential conflicts of interest." Elaine's nephew Andrew Pascal is involved in Elan Resort & Casino along with the rest of best and brightest minds who left Wynn Resorts during the post-divorce exodus. Could it be that behind the braggadocio, Steve is a little miffed about his new neighbors? And he just let the cat out of the Elan Resort investor bag.

Who doesn't love a good blood feud. And break-up sex.


Comments & Discussion:

Since 75% of the shares are held by insitutional or mutual fund owners, I would assume they'll support Steve. They don't want to rock the boat any more than it is now with this news and the problems in Macau. On a personal level, I hate to see Elaine get screwed (figuratively) by Steve.

Let's also throw in the fact that Elaine's brother, Michael Pascal, recently left Wynn Resorts (Where he was an executive host.) after working for Steve Wynn's companies for over 30 years, just days prior to the announcement regarding Elaine Wynn's position on the board. No reasons were given for his departure, from Wynn Resorts or from Pascal himself. The timing is a bit interesting to say the least and makes you wonder if the departure was not mutual.

Steve can push her out if he wants but most believe that Elaine made the empire run better. But if she and the Steve decide to get back together again they will make nice.

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