Sex Harassment Claims Add to History of Issues With Wynn Board

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Long before allegations of serial sexual harassment against billionaire Steve Wynn reverberated from Las Vegas to Washington and Asia, the board of casino operator Wynn Resorts Ltd. had come under fire for weak corporate governance and deference to its founder and chairman.

The board, which oversees an $18.5 billion company with casinos in Las Vegas and the Chinese territory of Macau, has been criticized for overpaying Wynn and other executives while allowing perks such as corporate jets and a land deal between the company and its founder.

“A board’s governance committee, auditing committee should have been looking at him,” said Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management. “If they didn’t know this, how come they didn’t?”

Wynn Shares Underperform S&P 500

Shareholder advisory groups have criticized board’s oversight of CEO Steve Wynn and his pay

Source: Bloomberg data

Now the Wynn board’s mettle will be tested. The Wall Street Journal reported Friday that Steve Wynn paid $7.5 million in 2005 to settle a claim by a former manicurist at the company that he pressured her into having sex with him. Other former employees claimed Wynn coerced them into performing sex acts for $1,000 tips in a hotel spa and in his office.

Wynn, who turned 76 on Saturday, denied the allegations. “The idea that I ever assaulted any woman is preposterous,” he said in a statement.

Click here to see why some Republicans are troubled by Wynn donations

Even with Wynn’s denial, the effect from the news was immediate: Wynn Resorts shares slumped 10 percent on Friday, the biggest decline since December 2016. The board, saying it it is “deeply committed to ensuring the safety and wellbeing” of all employees, formed a special committee comprised of independent directors to investigate the allegations. The next day, Wynn resigned as finance chairman for the Republican National Committee — a position that U.S. President Donald Trump had personally asked him to take.

Las Vegas Legend

Wynn is a legend in the casino industry and in his hometown of Las Vegas, where he built some of the most spectacular resorts on the Strip, including the Bellagio, with its musical fountain show, and the Mirage, which hosts nightly volcanic eruptions.

Elaine Wynn, Steve’s ex-wife, has accused the board of pushing her out after she criticized the chairman. She’s suing her former husband to get back voting control of her 9 percent stake in the company.

“The Wynn board may be the most compliant board of any major public company,” Elaine Wynn said in a court filing last May. “In only three instances in the history of the company has a director voted against Mr. Wynn’s position on any issue.”

2005 Settlement

It’s unclear what the board knew about Wynn’s 2005 settlement or his behavior. The company’s outside lawyers reviewed the settlement and determined it didn’t need to be shared with the board, according to comments made by Elaine’s lawyer at a Dec. 18 hearing. Elaine’s lawyers have been trying — so far unsuccessfully — to gain access to communications between Wynn and its outside lawyers about the settlement.

With his ex-wife’s stake and his own, Wynn controls about 21 percent of Wynn Resorts. The shares are common stock, with no extra voting power.

Wynn lost control of his previous company, Mirage Resorts, after shareholder criticism of his spending on art and hotel construction hurt the stock, giving rival Kirk Kerkorian an opening to acquire it with an unsolicited offer.

Governance Issues

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