Corporate concerns cited in not renominating Elaine Wynn to board
Wynn Resorts Ltd. said Monday it could be forced to repurchase a portion of its corporate debt under unfavorable terms if now-ousted board member Elaine Wynn prevails in her lawsuit over a shareholders agreement with her ex-husband, company Chairman and CEO Steve Wynn.
In the filing of its definitive proxy materials with the Securities and Exchange Commission, Wynn Resorts said “a change in control provision” could be triggered if Elaine Wynn was allowed to “sell, gift or otherwise dispose” of some or all of her more than 9.5 million shares in Wynn Resorts.
“There can be no assurance that the company will be able to refinance the senior notes on terms as favorable as currently exist,” Wynn Resorts said. The company has $7.3 billion in long-term debt.
Wynn Resorts went into longer detail on why Elaine Wynn was not re-nominated for a seat on the board where she has sat since its founding in 2002. Instead, the company nominated two directors, John Hagenbuch and J. Edward Virtue, for three-year terms.
Wynn Resorts also filed its correspondence to shareholders asking for their vote ahead of the April 24 stockholders meeting in Las Vegas.
Separately, Elaine Wynn is seeking to regain her seat on the board that she has held since the company’s inception in 2002. In a statement Monday, she asked shareholders to wait until they receive her proxy materials before casting a vote.
The nasty proxy fight has bounced from divorce court to the boardroom. The battle pits the Las Vegas gaming and philanthropic icons, who were divorced in 2010 and are two of the three largest shareholders in Wynn Resorts, which operates hotel-casinos on the Strip and in Macau.
Elaine Wynn said her removal would eliminate “a strong, independent voice” from the board.
“I do not simply toe the party line and instead hold our management team, including our chairman and CEO, accountable to our stockholders,” she said in her statement.
In the 55-page proxy, Wynn Resorts said Elaine Wynn’s 2012 lawsuit is not in the best interest of the company’s stockholders. Under the longstanding shareholders agreement, which was first signed in 2002 and amended in 2006 and 2010, Steve Wynn has voting control over Elaine Wynn’s shares.
Based on the agreement, the pair control 19.3 percent of Wynn Resorts, the largest single stake. Investment management firm T. Rowe Price owns 17 million shares, or 16.8 percent of the company.
If Elaine Wynn gains control of her more than 9.4 percent stake, she would be company’s third largest stockholder. Steve Wynn would own 9.9 percent, or 10 million shares.
“The possibility that such dispositions by Ms. Wynn might occur and result in another person being deemed to own more shares of common stock than are attributed to Mr. Wynn,” the company said in the proxy, adding that Steve Wynn would not be able to control the stock.
In the filing, the company said board members met with Elaine Wynn last fall to discuss their concerns. A similar meeting took place on Feb. 19.
“Ms. Wynn did not assuage the (members) concerns about her effectiveness in the board room,” the filing stated. “The February meeting focused on the independent directors’ belief that Ms. Wynn’s cross claim presented risks to the company and presented a conflict of interest.”
Elaine Wynn challenged her dismissal from the board, saying the action excluded her from the board “despite my immense industry knowledge and expertise, and my role building and promoting the Wynn business and brand through the years.”
The company also challenged Elaine Wynn’s comments that her removal would leave the company with an all-male board of directors.
In the proxy statement, the Wynn board said it plans add another independent director and “intends to prioritize women and diverse candidates in its search to bring new perspectives and experience to the board.”
A Wynn spokesman said 38 percent of the corporate level directors and above positions at Wynn Resorts are held by women, including General Counsel Kim Sinatra and Linda Chen, who serves as president of Wynn International Marketing Ltd.
Wall Street analysts have not weighed in on the Wynn vs. Wynn proxy fight, which surfaced two weeks ago.
Insiders believe Elaine Wynn has an uphill battle ahead of her in order to regain her said. Many expect the large proxy advisory firms will recommend shareholders approve the company’s slate of candidates.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find him on Twitter: @howardstutz
