Could Steve Wynn be ousted as Chairman and CEO of Wynn Resorts Ltd? The possibility of one of the world’s largest casino operators being forced to move ahead without its figurehead and namesake is being mooted as a distinct possibility following allegations published in the Wall Street Journal (WSJ) over the weekend that Wynn has exhibited a “decades-long pattern of sexual misconduct.”
Wynn is currently under investigation by the Wynn Resorts board, with the company revealing over the weekend that it had formed a special committee “comprised solely of independent directors” to look into the allegations. Wynn, who owns 12% of the company, has denied any wrongdoing.
“The board is deeply committed to ensuring the safety and wellbeing of all of the company’s employees and to operating with the highest ethical standards,” Wynn Resorts stated over the weekend.
Nevertheless, such a move would impact heavily on Wynn Resorts’ Macau operations, which contribute more than 60% of the company’s annual revenue. In a Monday note, Union Gaming’s Macau-based Head of Equity Research Grant Govertsen said his company was downgrading shares in Wynn Macau today due to a confluence of factors, among them “key man risk – uncertainty surrounding recent allegations against the company’s Chairman and CEO (positions are held at both the local and parent level) and subsequent parent board investigation announcement.
“We have great confidence in the Macau operations team to manage the day-to-day business. However, given the uncertainties relating to the recent events, we expect the historical Wynn premium multiple to be removed and expect the stock to trade at an in-line market multiple until such time as there is resolution to the recent events,” he said.
Govertsen also raised the prospect of a regulatory review by Macau’s gaming regulator, the DICJ, following a similar review already announced in Massachussets of the Wynn Boston Harbor project as a result of the allegations.
Commenting on the potential for Wynn to be ousted early today, Bloomberg’s Crayton Harrison said, “His stake is a minority stake in the company, even if you include the voting shares he uses from his ex-wife so there is no reason he needs to be Chairman and CEO.
“Is there a scenario that he could be removed from the company? I think we have to start to consider that as a very real possibility now, keeping in mind that he has denied the allegations.”
Wynn Resorts Ltd President Matt Maddox has been suggested as a possible candidate for the top job should Wynn’s position become untenable.
Accused of a “decades-long pattern of sexual misconduct,” the explosive WSJ article details an alleged encounter with a former manicurist at Wynn Las Vegas in which Wynn pressured her into having sex before paying her a US$7.5 million settlement.
The settlement, the WSJ said, had previously been referenced in court hearings related to a lawsuit being brought by Wynn’s ex-wife Elaine seeking to lift restrictions on the sale of her shares in Wynn Resorts Ltd but has only been cited by Wynn’s lawyers as “allegations of assault.”
Wynn has also been accused of multiple instances of asking female staff to perform sex acts with him.
The impact of the allegations has been far reaching.
On Sunday, Wynn stepped down as Finance Chairman for the Republican National Committee, a role he assumed 12 months ago at Donald Trump’s request following Trump’s election as US President. As Finance Chairman, he has helped raise more than US$130 million for Trump during the first year of his presidency and is a renowned Republican donor, having donated around US$600,000 to Republican causes in 2017 alone.
Shares in Wynn Resorts have also taken a hit, falling by more than 10% on the NASDAQ in the wake of the news, which broke on Friday morning US time. Bloomberg has reported that Wynn Macau shares could fall by around 8% when the Hong Kong Stock Exchange opens today but cited Kingston Securities analysts as predicting the company itself would likely be somewhat shielded from any long-term damage.
“The company’s overall operation is on a good track,” he said. “Wynn’s scandal is more personal-related. The impact to the whole industry should be limited.”
Meanwhile, it has been revealed that investor rights law firm Rosen is investigating possible breaches of fiduciary duty by the management of Wynn Resorts, with the company facing allegations of having issued materially misleading information in public disclosures relating to the alleged assault and US$7.5 million settlement.
Wynn has denied the allegations, pointing instead to the bitter legal feud with his ex-wife in a lengthy statement issued over the weekend.
“The idea that I ever assaulted any woman is preposterous,” Wynn’s statement read. “We find ourselves in a world where people can make allegations, regardless of the truth, and a person is left with the choice of weathering insulting publicity or engaging in multi-year lawsuits. It is deplorable for anyone to find themselves in this situation.
“The instigation of these accusations is the continued work of my ex-wife Elaine Wynn, with whom I am involved in a terrible and nasty lawsuit in which she is seeking a revised divorce settlement. Elaine has explicitly threatened to slander and destroy me and I am surprised that the media is allowing itself to be used to advance this agenda.
“The conduct of Elaine during the course of the pending lawsuits has been shocking and deeply disturbing to me personally and as the CEO of Wynn Resorts. Despite such conduct, I have repeatedly refused to capitulate to her demands. In response, I remain focused on Wynn Resorts, our employees and our shareholders and will not be distracted from those efforts.”
Wynn Resorts also released a statement in defence of Wynn, adding that the allegations against him “reflect allegations made in court hearings by Mr Wynn’s ex-wife, Elaine Wynn, in her legal battle with him and the company.
“It is clear that Mr Wynn’s ex-wife has sought to use a negative public relations campaign to achieve what she has been unable to do in the courtroom: tarnish the reputation of Mr Wynn in an attempt to pressure a revised divorce settlement from him,” the Wynn Resorts statement continued.
“It is noteworthy that although Ms Wynn says she knew about the 2005 allegations involving Mr Wynn in 2009, she never made them known to the board of directors, of which she was then a member, and she did not raise them until after Mr. Wynn remarried and the shareholders of Wynn Resorts voted not to elect her to the board.
“Wynn Resorts is committed to operating with the highest ethical standards and maintaining a safe and respectful culture that has made Wynn Resorts the employer of choice for 23,000 employees worldwide. The Company requires all employees to receive annual anti-harassment training and offers an independent hotline that any employee can use anonymously, without fear of retaliation. Since the inception of the company, not one complaint was made to that hotline regarding Mr Wynn.”
A spokesperson for Mrs Wynn, Devon Spurgeon, stated that she has “never sought to renegotiate her divorce settlement,” with the legal dispute between the two related only to Mrs Wynn’s shareholding.
Inside Asian Gaming contacted Wynn Macau over the weekend for further comment and while the company did reply and forwarded our request to their US corporate office, no further information was received by the time this story was published.
