Less than a week after having her request to reopen the window for Wynn Resorts board nominations rejected, the company’s largest shareholder, Elaine Wynn, has launched a campaign to withhold votes from current board member John J Hagenbuch at the upcoming election.
In a lengthy letter to shareholders which also sees her question the independence of Chairman D Boone Wayson as well as the US$24 million pay package recently approved for new CEO Matt Maddox, Elaine Wynn details her “Withhold-the-vote” campaign against Hagenbuch, who has served on the Wynn Resorts board since 2012 and is a close friend of former Chairman and CEO Steve Wynn.
In particular she calls for shareholders to withhold their vote for the re-election of Hagenbuch at the upcoming AGM in May, stating, “I believe it is time for Mr Hagenbuch’s departure from the board so that new board members can seek change, free of holdovers from the past.
“My opposition to Mr Hagenbuch’s re-election serves as a referendum on all of the longstanding legacy directors, including those who are not up for re-election because the incumbent directors refuse to declassify the board. A WITHHOLD vote with respect to Mr Hagenbuch is a first step towards a ‘New Wynn.’
“The company’s Corporate Governance Guidelines require any director in an uncontested election who fails to receive over 50% of the votes cast ‘for’ his or her election to tender his or her resignation to the board within five days of the election.
“If my proxy solicitation results in Mr Hagenbuch’s failure to receive over 50% of the votes cast for his election, then I believe the failure of the board to accept his resignation would be an egregious violation of proper corporate governance and in direct opposition to a clear shareholder directive.”
Elaine Wynn pointed to Hagenbuch’s appointment to a special committee investigating sexual misconduct allegations against Steve Wynn as a deeply troubling conflict of interest. She also raised his service on the compensation committee since 2013.
“He was on the compensation committee when Mr Wynn’s pay was called into question in 2015,” she said. “The company did not hold a say-on-pay vote in 2015 or 2016 and at last year’s annual meeting, the say-on-pay proposal received only 59% support. This puts the company in the lowest 10% of Russell 3000 companies holding say-on-pay votes in 2017.
“Mr Maddox’s recently approved $24 million pay package, which is exorbitant for a first-time untested public company CEO, demonstrates that very little has changed. It is puzzling to me that the compensation committee continues to repeat the same mistakes that have been decried in past ISS and Glass Lewis reports—large stock grants, discretionary pay and failure to disclose the metrics for performance awards.
“As a member of the compensation committee, Mr Hagenbuch should be held responsible for these continuing failures.”
Elaine Wynn also questioned the board’s response to a letter she penned last Tuesday calling for Wynn Resorts to reopen the window during which shareholders can nominate directors and to take steps to allow for a majority of the board to be comprised of new independent qualified directors effective at the 2018 annual meeting.
In a reply filed with the SEC the following day, Wayson stated that the Wynn Resorts board did not believe that reopening the advance notice nomination deadline was “appropriate or justified” – announcing instead the appointment of three new independent directors in Betsy Atkins, Dee Dee Myers and Wendy Webbas.
In her letter to shareholders overnight, Elaine Wynn questioned the speed of the board’s reply, adding, “This rushed response resulted in an extremely short solicitation period, with an annual meeting date only 28 days after the filing of the company’s proxy statement – a significantly shorter period of time than in past years (42 days in 2017 and 41 days in each of 2016 and 2015).
“The day after the company filed its proxy statement, Chairman D Boone Wayson, a childhood friend and former business partner of Mr Wynn, communicated the board’s outright rejection of my request to reopen the nomination window as neither ‘appropriate [n]or justified,’ without any further explanation.
“The board made no effort whatsoever to engage in dialogue on these critical issues for all shareholders prior to responding. Reacting in such a short timeframe, the board could not possibly have seriously considered the concerns raised. If you are concerned about the company’s governance practices, I urge you to withhold your vote from Mr Hagenbuch at this year’s annual meeting.”
In its response to Elaine Wynn’s letter to shareholders, Wynn filed a very short statement overnight which said only, “The company is continuing the positive momentum that has accompanied its recent initiatives and is focused on the future. The board is working in an orderly fashion to refresh its composition, with three new experienced and distinguished directors being named last week. The board intends to continue its work.”
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