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Best of Howard Stutz

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Howard Stutz
 

Elaine Wynn defends fight to retain board seat

26 March 2015

LAS VEGAS -- Elaine Wynn was asked why she undertook a costly and nasty proxy fight to regain her seat on the Wynn Resorts, Limited board of directors. Instead of answering directly, she refocused the question.

“Maybe that’s something you should ask the company,” Wynn, 72, said Wednesday in a telephone interview from New York with the Las Vegas Review-Journal.

She had 10 minutes between meetings with Wynn Resorts shareholders and investment groups to discuss her effort to remain on the board despite being ousted by the panel’s nominating committee.

“I’m the one who has been put on the defensive by the company to do something,” Wynn said. “I was scheduled to be on the Class 1 slate of directors, and then, that changed. It’s not in my best interest and it’s not in the best interest of the other shareholders for me to run away.”

Elaine Wynn has challenged the company’s selection process. She is asking shareholders to return her to the board over one of its chosen candidates.

“I’m asserting my rightful position for the company that I helped found and have served for over four decades,” she said.

Elaine Wynn, a billionaire following her 2010 divorce from Wynn Resorts Chairman and CEO Steve Wynn, launched the fight this month. She has been soliciting votes ahead of the April 24 annual shareholders meeting at Wynn Las Vegas.

Last week, she mailed proxy materials to shareholders and launched a website — elaineforwynn.com. On Wednesday, she filed a letter to shareholders with the Securities and Exchange Commission, saying the company “presented a number of insinuations that are without factual basis and seem designed to distract stockholders from the real issues.”

Her goal is to gain the backing of hedge funds, investment groups and individual shareholders.

“It’s not like the Olympics, where you perform, get a rating and then medal,” she said.

She starts the battle with a 19.3 percent stake in the company; her 9.5 million shares along with the 9.9 million shares owned by Steve Wynn. A shareholders agreement between the two — a document whose validity she challenged in a 2012 lawsuit — obligates her ex-husband to vote his shares in favor of his ex-wife remaining on the board.

Wynn spokesman Michael Weaver confirmed Wednesday Steve Wynn’s shares will be cast for Elaine Wynn.

Investment management firm T. Rowe Price is the company’s largest stockholder with 17 million shares, or 16.8 percent.

The shareholder agreement, first signed in 2002 and amended in 2006 and 2010, gives Steve Wynn control over Elaine Wynn’s stock. She said the agreement was drafted to ensure Steve Wynn had “significant control over the affairs of the company” ahead of Japanese billionaire Kazuo Okada, who held a 20 percent ownership stake.

After Okada was removed from the board in 2012 and his stock was redeemed at a 20 percent discount, Elaine Wynn sought to change the agreement. If she were to regain voting control of her stock, she said the action wouldn’t trigger the change of control covenant.

“When we got divorced, it was still our desire to have the Wynn family be in control of the company, no matter what happened to be the state of the family,” Elaine Wynn said.

Once Okada was removed, she felt the shareholders agreement was no longer necessary. Steve Wynn has since remarried.

“It served its purpose,” she said.

In her Wednesday letter, Elaine Wynn told shareholders that “my net worth is intrinsically linked to the success of Wynn Resorts, and I have absolutely no incentive to put the company or its share price at risk.”

However, former Gov. Bob Miller — a Wynn board member who chairs the nominating committee — said serious concerns and discussion with Elaine Wynn about the lawsuit began in 2012. The company was still dealing with the Okada matter. Elaine Wynn was re-nominated for another term that year.

The issue continued to fester in 2014, involving meetings and written correspondence including a letter on Dec. 5 from Elaine Wynn to the independent directors regarding her concerns about the jeopardy of her re-nomination. That all came to a point in February.

“It became clear to the independent members of the board that the lawsuit benefited her alone and put the company and other shareholders at risk,” Miller said.

Elaine Wynn was disappointed that Miller, a long time friend, lead the charge for her ouster.

“Bob is a very skillful lawyer,” she said, adding that he is highest paid Wynn board member. Miller earned $506,209 for his board service in 2014 while she earned $72,000.

Elaine Wynn was disappointed the nominating committee reduced the number of board members and didn’t try to replace her with another female board member.

“Although, it would be hard to find someone equally as qualified and effective as me,” she said. “I’ll defend my credentials to serve with anyone else.”

If she loses the proxy fight, the panel will be all-male.

Wynn Resorts said its board plans to expand the panel with one or more members and “intends to prioritize women and diverse candidates in its search,” appointing new directors by the end of the year.

Wynn Resorts also accused Wynn of selling $10 million worth of company stock through her private foundation during a “blackout period” and ignoring insider trading policy to wait 15 days after quarterly earnings.

On Wednesday, Elaine Wynn said Wynn Las Vegas General Counsel Kevin Tourek knew about the stock sale and sent an instruction letter to the company’s transfer agent to help complete the transaction. Elaine Wynn said she doesn’t participate in the foundation’s decisions to to vote or sell company shares.

“Neither Elaine Wynn nor her foundation obtained preclearance for a sale by the foundation and the company was not aware of any sale until after it took place,” Weaver said.

She also disputed any conflict of interest over the sale of the 35-acre New Frontier land parcel last year the a group that 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.

The company said she participated in discussions over potentially buying the site.

“At no time during company board discussions of a possible land acquisition was I aware of any plan by my nephew to purchase that same land,” she wrote. “The company’s charge to the contrary is a fabrication.”