IGT’s plan for meeting curious

There are at least two particular shareholders IGT management would like to keep on the outside looking in.

How else would you explain IGT’s plan for this year’s event?

The annual shareholder meeting will be held at
7:30 a.m. March 5 inside the Canyon Gate Country Club, an enclave with a staffed security gate. Stockholders with proof of ownership can get past the guard, but they’ll have to fight for space in a clubhouse conference room the size of a postage stamp.

Past IGT shareholder meetings were held at the company’s spacious corporate offices in Reno where the manufacturer’s latest slot machines and gaming products were displayed. Employees were invited to mingle with stockholders, who were oftentimes a handful of local residents who owned a few shares.

Last year’s annual meeting was at Red Rock Resort, allowing shareholders to see IGT products in operation on the casino floor.

When I last checked, Canyon Gate didn’t have a gaming license.

Obviously, the heated proxy fight over the makeup of IGT’s eight-person board of directors is dictating the company’s actions.

Last week, the group headed by analyst-turned-investor Jason Ader and former IGT Chairman Charles Mathewson was given permission by the Securities and Exchange and Commission to solicit shareholder votes.

The group wants to replace three of IGT’s members with Mathewson and two others, including one of Ader’s business partners.

The Ader Group, which controls 3 percent of IGT’s outstanding shares, filed a lengthy “fight letter” that detailed how the company neglected its core slot machine business and “alienated” casino customers. The actions caused IGT’s financial performance to deteriorate, with the share price falling more than 20 percent during the past three years.

In IGT’s proxy statement, company leaders said the manufacturer was “positioned for sustained growth” after dealing with the “repercussions” of previous management. IGT lost 70 percent of its market capitalization between 2004 and 2009. In the recently concluded first quarter, IGT’s earnings grew 41 percent.

It will be up to the company’s shareholders to decide whether they want to stay the course or shake things up.

Gaming industry observers said proxy fights rarely succeed but often inflict damage on the existing management structure. Analysts said they want to see a business plan from the Ader group before determining if the proxy fight has any chance.

IGT’s shroud over the shareholders meeting isn’t doing the company any favors. Vice President of Corporate Communications Susan Cartwright said media won’t be allowed into the meeting.

In fairness, IGT held the company’s 2011 annual meeting at Bear’s Best Country Club in Summerlin. But that golf course is open to the public. There wasn’t anything controversial on the agenda.

Nonconfrontation is usually the course for most gaming company annual meetings. Shareholder attendance is often sparse. One casino company hosted its annual meeting a few years ago in a lavish Strip resort ballroom with a hearty buffet of food and beverages. Not one shareholder appeared.

A year later, the same company held its meeting at a regional casino. A breakfast spread was again provided. The only stockholder who showed up was an executive’s relative.

Twelve months later, the company’s shareholder meeting was held at corporate headquarters. This time, everybody brought their own coffee. A few shareholders, however, showed up looking for a free meal.

So you can’t always win.

Since the proxy fight came to light, IGT has been on a public relations blitz. Last week the company announced an agreement to provide 1,375 slot machinelike video lottery terminals to the Saskatchewan lottery.

Ten days ago, IGT said it struck a deal to provide online games in Belgium. On the same day, the company announced placement of its server-based gaming system at a casino in Uruguay, a “milestone” with more than 100 installations of that system.

Strange.

The basis for the highly touted server-based gaming system was developed during the tenure of former IGT CEO T.J. Matthews. Hart and her team threw Matthews under the bus in the company’s proxy statement last month, saying he “implemented a flawed product.”

Apparently, the product wasn’t that flawed.

IGT shareholders should expect to read and hear more during the next month as the annual meeting nears.

Good luck trying to attend.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com
or 702-477-3871. He blogs at lvrj.com/blogs/stutz.
Follow @howardstutz on Twitter.