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Gaming Guru

Tim O'Reiley

Letter knocks Wynn board exclusion

4 November 2012

LAS VEGAS -- Although Kazuo Okada dropped his plan for a proxy battle last month, he still sent his greetings to the Wynn Resorts Holdings, LLC annual meeting on Friday.

In a letter dated Oct. 31 but released by one of Okada's law firms shortly after the meeting started, the Japanese gaming tycoon and former largest shareholder, decried the "illegal maneuver" the company took on Feb. 18 by creating an executive committee that includes the other 10 directors. According to Okada, the committee "conduct[s] all of the business of the board, effectively leaving him with a director's seat but no voice."

"The action is clearly intended to silence me as the only true independent voice on the board," Okada wrote. Later, he added, "I hope and expect that the other shareholders will take due notice at the upcoming shareholders meeting."

Contrary to the practice of many large companies, Wynn bars nonshareholders from attending its annual meeting so it is unknown if there was any reaction. The company's proxy statement devoted three sentences to the committee, but did not detail its reproducibilities.

Wynn executives did not return calls seeking comment.

The committee was created the same day that the board forcibly redeemed Okada's 19.6 percent stake, held by Aruze USA, at a 30 percent discount to market value. That followed a board-commissioned investigation that identified alleged corrupt practices used by Okada in seeking approval for a casino resort in the Philippines. This led the board to designate him as "unsuitable" and leave him off the executive committee.

Okada has objected to the company's $135 million donation last year to the University of Macau as an attempt to influence gaming regulators there.

Although Okada's letter termed the formation of the committee a violation of company bylaws, he has not raised a court challenge.

Okada did seek to have his stock reinstated at least long enough to vote for two director nominees at the annual meeting. When his argument that the forced redemption violated corporate bylaws did not sway Clark County District Judge Elizabeth Gonzalez, he dropped his campaign to get them elected.

Board committees are often formed to oversee audits, executive compensation practices and director nominations, said University of Nevada, Las Vegas management professor Joseph Gilbert. "But an executive committee of all but one would be quite unusual."

San Francisco corporate governance adviser Kristina Veaco said she has heard of committees "in situations like this. What you have to do is look at the corporate bylaws to see if it is doable."

Although Okada was stripped of the vice-chairman's title last year, he has remained on the board. His term expires at the 2013 annual meeting.
Letter knocks Wynn board exclusion is republished from