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Richard N. Velotta

Elaine Wynn: Efforts merited despite her failure to keep board seat

27 April 2015

Elaine Wynn’s uphill bid to retain a seat on Wynn Resorts Ltd.’s board of directors failed, but the longtime philanthropist and ex-wife of Chairman and CEO Steve Wynn says her efforts served their purpose.

“While I am certainly disappointed by the result of today’s vote, I am hopeful that I have once again served as an agent for change and improvement for this company which I love so deeply,” Wynn said in a statement issued Friday after the company announced the preliminary results of a proxy vote at its annual shareholders meeting.

Company officials announced preliminary results of the election Friday and said John Hagenbuch and J. Edward Virtue, the company’s recommended candidates, were re-elected to the board.

IVS Associates, the independent inspector of the election, will audit and affirm the results by Wednesday or Thursday.

The company also reiterated its pledge to expand the board with new diverse members — a position Elaine Wynn advocated in her dissident bid to retain her seat.

“I have believed all along that this board was better and would be held more responsible for its actions with me as a member of it,” Elaine Wynn said. “I am gratified to hear from so many investors that this proxy contest was a success in that it brought to light critical corporate governance concerns at Wynn Resorts such as independence, expertise and diversity in the boardroom and the impact they have on key issues that our company is facing including compensation practices and succession planning. It remains to be seen if the directors of this company will deliver on the commitments they have made to greater independence, diversity and oversight of management,” she said.

“I, however, as the third-largest stockholder, remain committed to holding all accountable and will now do so from a position of greater strength. Thank you, my fellow stockholders, for your continued support of me and the continued success of Wynn Resorts for our collective benefit.”

The company acknowledged Elaine Wynn in its statement announcing the results.

“We look forward to expanding the board with one or more qualified, diverse and independent directors by the end of 2015, which is a key step in our ongoing effort to enhance the board’s independence, broaden the skills and experience of the board and increase its effectiveness. We thank Ms. Wynn for her service on the Wynn Resorts board of directors,” the statement said.

One shareholder made a brief statement in support Elaine Wynn after the preliminary results of the election had been announced.

In a question-and-answer session with Steve Wynn, shareholder Ellyce Rumick said she flew to Las Vegas from her Deerfield, Ill., home to attend the annual meeting.

“This has been very upsetting to me, how the board ousted her from the board,” Rumick said during the meeting at the Encore Theater attended by about 200 people.

She said Elaine Wynn has been an important part of the company’s success over the years and she suggested the board reconsider its position.

Her comments elicited light applause from several people in the theater.

But shareholders apparently responded to the legal squabble between her and her ex-husband. Elaine Wynn suggested that the ongoing legal dispute between the two over her voting rights is influencing board decisions.

Elaine Wynn headed into the meeting with more than 19 percent of the votes in her corner. She and her ex-husband control that amount and he was obligated by contractual agreements to support her candidacy.

Proxy advisers were split over the Wynn nomination. Elaine Wynn last week gained the backing of Egan-Jones.

“The manner in which the existing board has handled the company’s third-largest shareholder and fellow board member, Elaine P. Wynn, the resulting proxy contest, all too public dispute and the continuing multiyear decline in the company’s stock price, compel us to support the dissident,” Egan-Jones said on April 15.

Egan-Jones in its report also recommended clients not vote for Hagenbuch and Virtue.

Glass, Lewis & Co. told clients to vote for the company’s nominees and not Elaine Wynn, saying it believed management’s position that her legal dispute is influencing her board decisions. Institutional Shareholder Services Inc., another adviser, said its clients shouldn’t vote for any of the nominees, citing what it said were longstanding problems with executive pay and perks at Wynn Resorts.

Elaine Wynn has been embroiled in litigation with her ex- husband over her 9.4 percent stake in the Las Vegas-based casino company. The dispute dates back to an agreement the couple had with Kazuo Okada, an early Wynn Resorts investor, that gave Steve Wynn control over shares held by all three.

Elaine Wynn, whose 9.54 million shares are valued at about $1.23 billion, sought to end that agreement in 2012, a move Steve Wynn is fighting. Okada’s holding was redeemed by the company in a separate dispute.

In Steve Wynn’s question-and-answer session, he told shareholders that he expects the company’s Massachusetts property to open at the beginning of the 2017 New Year’s celebration. In response to a shareholder’s question, he said he does not expect the property in Everett, Mass., would have a nightclub scene similar to the Wynn property in Las Vegas because the neighborhood is a college community with strict laws regarding the consumption of alcohol.

He said he would elaborate on progress in Macau at Tuesday afternoon’s first-quarter earnings conference call, adding that the company has continuing interest in other Asian locations, including Singapore, South Korea, Japan and Taiwan.

Wynn shares closed up $2.01, or 1.6 percent, to $130.09 on Friday in light trading on the Nasdaq.