Wynn Everett halted, board election blasted

It looks like Wynn Resorts jumped the gun, purchasing land from the MBTA without getting the go-ahead from Secretary of Energy & Environmental Affairs Matthew Beaton beforehand. Although Wynn was found to be “suitable on substantially all of the 59 conditions,” construction work has to be stopped while Beaton reviews the MBTA land transfer, suggesting that the acreage be placed in escrow in the meantime. He’s also ruled that Wynn must coordinate its vehicular-access plans with Boston‘s renovation of roads in the Sullivan Square area, a federally funded project that didn’t anticipate having a casino megaresort plopped down next door. That could be a very thorny negotiation, if it happens, seeing as Beantown Mayor Martin J. Walsh has dedicated every fiber of his being to undermining the Wynn project. As Beaton understated, “Building consensus with parties engaged in active litigation will be a significant challenge.”

Beaton is also concerned with noise- and traffic-abatement issues related to the casino. Wynn execs trying to spin his actions as a plus for their development, even as this pushes the opening in 2018. Wynn Everett President Robert DeSalvio released a statement that said, “We are disappointed that the new jobs and new tax revenues that would have helped so many people in the Commonwealth will be delayed … We’re gratified that after thousands of pages of analysis and years of review, the Secretary has generally endorsed all of our mitigation plans.” At least Wynn didn’t get spanked the way the MBTA and Department of Transportation were for the way they handled the sale.

Closer to home, Institutional Shareholder Services celebrated Easter by delivering a withering pan of Wynn Resorts’ upcoming board election. Its verdict: Vote down all three candidates, Elaine Wynn included. Damning Wynn’s corporate governance as “among the worst” in the U.S., ISS wrote that Ms. Wynn “also bears responsibility for the manifest failures of governance incidental to her arguments but nonetheless highlighted by this proxy contest … [Stockholders] may be best served by voicing their dissatisfaction with the status quo—and all nominees’ complicity in it—by voting on the management card to withhold votes from both management nominees.”

One of the critical concerns of the Wynn Resorts board is that, should Ms. Wynn prevail in a lawsuit against her ex-husband and increase the volume of shares she is allowed to sell, it will trigger a “change of control” provision that would force the company to buy back the stock at a premium. ISS was scathing in its comments on how this came about, damning the board for “stunning failure of judgment by the independent directors who approved these indentures, agreeing to this large a financial risk and simultaneously ceding—not delegating, ceding—control to two individual shareholders who, it now concedes in its proxy filings, may not be able to manage that same risk themselves if their shareholder agreement is dissolved.”

ISS expressed frustration not only with a lack of transparency at Wynncore, a nebulous plan of succession and also with “excessive aircraft use” by Steve Wynn. Contrary to Ms. Wynn’s protestations of independence and willingness to speak truth to power, “There appears to be no daylight between Elaine Wynn and the rest of the board on tolerating weak governance practices, poor pay practices, or an overall corporate governance profile that ranks among the worst, not the best, of U.S. companies.” She was further faulted for emerging only recently as a voice for diversity on the board.

ValueEdge Advisors Vice Chairwoman Nell Minow summarized the scorched-earth ISS report as, ‘All you can do is embarrass them, and that’s what we’re telling you to do.’