Global casino giant MGM Resorts International has entered into a voting agreement with its largest shareholder – Barry Diller and his company IAC Inc – under which IAC will be guaranteed two board seats its voting power limited under certain situations.
MGM is the controlling shareholder of Macau concessionaire MGM China and is developing the US$10 billion MGM Osaka integrated resort in Japan.
Under the terms of the voting agreement, Diller and IAC have agreed to vote any voting securities they beneficially own that are collectively in excess of 25.73% of the total voting power of the company in the same proportion as the stockholders of the company.
This applies to any time a matter is brought to a vote at an annual or special meeting of the company’s stockholders and effectively means Diller and IAC can vote freely on the first 25.73% of shares they hold. However, they must vote in proportion on any excess shares, ensuring effective control over voting is limited.
In return, Diller and IAC are entitled to have two directors appointed to the Board of Directors at all times.
In a filing, MGM said the voting agreement – which assumes Diller and IAC could increase their holding above the 25.73% threshold – will terminate if Diller and IAC collectively cease to beneficially own 17.5% or more of the voting securities of the company then outstanding, if Diller steps down from his leadership role with IAC or if IAC fails to have two directors nominated to MGM’s Board of Directors.
The move follows recent reports that Diller and IAC had increased their holding in MGM Resorts by around 1 million shares. They first invested in MGM in August 2020 and have strategically increased their holding ever since, describing the global casino giant as a “forever asset.”
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