Steve Wynn’s control of Wynn Resorts is under threat because of new legal action taken by his ex-wife. In a filing in Nevada state court, Elaine Wynn is accusing him of “reckless, risk-taking behavior” that could harm the company and subject it to legal challenges. Ms Wynn owns 9.8% of the company, while Mr Wynn owns 11.8%. An agreement signed at the time of their 2010 divorce gives him voting control over her shares and stops her from selling them. Last year he won shareholder approval to have her kicked off the company board. If the court agrees with her allegations of corporate misgovernance and she gains the right to sell her shares, it could leave Steve as Wynn Resorts’ third largest shareholder behind two institutional investors, effectively ending his control.
The combined 21.6% Steve Wynn now effectively controls enables him to hold positions of both CEO and Chairman and to run the business as he sees fit. In addition to two casino resorts in Las Vegas and Wynn Macau, Wynn Resorts’ biggest ever project, the US$4.1 billion Wynn Palace in Cotai, is scheduled to open in June this year. A further project under planning in the US, the US$1.7 billion Wynn Boston Harbor, has made shareholders anxious given competition from proliferating gaming halls in America’s northeast.
The Wynns and Japanese pachinko king Kazuo Okada founded Wynn Resorts in 2000. Their combined ownership of 35.6% of voting shares in the company gave them unassailable control. But in 2012 after a falling out, Wynn Resorts forcibly bought out Okada’s 19.7% stake at about 30% less than the market price, in exchange for a commitment to pay him US$1.9 billion after ten years. If Wynn is ousted it will be a replay of 2000, when he was forced out of the company he founded in 1973, Mirage Resorts, following a hostile takeover by MGM.
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