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Elaine Wynn Fights Over Board Seat; Denies Claims Of Improper Activity

Elaine Wynn
Jason LaVeris/Getty Images

Elaine Wynn attends the Los Angeles Confidential Magazine May/June issue celebration at Palihouse, May 23, 2013 in West Hollywood, Calif. Wynn is locked in a battle with the board of directors of Wynn Resorts.

Wynn Resorts Ltd. co-founder Elaine Wynn has issued a strong denial of the company’s accusations of improper activity and will continue her fight to stay on the board of the publically traded casino company.

Wynn, the gaming company’s third largest shareholder, said in a letter to stockholders that the board has “repeatedly presented a number of insinuations that are without factual basis and seem designed to distract stockholders from the real issues.”

“This pattern and practice of insinuation without factual basis is disturbing to me and misleading to you,” she said.

Wynn, 72, also wrote the materials released by the company “further seek to create a false sense of conflict between my interests and those of my fellow stockholders of Wynn Resorts.”

"On the contrary, these are not insinuations," Michael Weaver, senior vice president of marketing and communications, said in an email. "The board has articulated a number of examples which, when considered as a whole, led them to lose confidence in Elaine Wynn’s objectivity and ability to discharge her duties as a director of the company."

Weaver said it was the totality of the conflicts which led the board to believe that Elaine Wynn places her personal interests, including her litigation, ahead of her role as a director and ahead of the interests of the average stockholder."

Wynn Resorts in a Securities and Exchange Commission filing Tuesday listed among its concerns with Ms. Wynn an allegation that she sold $10 million of share through her personal foundation during a “blackout period” ahead of the company’s earnings release.

The definition of a blackout period is a period of at least three consecutive business days but not more than 60 days during which the majority of employees at a particular company are not allowed to make alterations to their retirement or investment plans, including stock sales.

The Las Vegas-based company also accused her of improper behavior regarding a land deal, according to the slide presentation filed with the SEC. Wynn Resorts alleges she participated for years in board meeting in which the company’s plans to acquire property in Las Vegas were discussed while failing to disclose her nephew, Andrew Pascal, was involved in a competing bid which ultimately acquire the land.

Wynn called the charge that she was aware of Pascal’s plans to bid for the land during board discussions a complete “fabrication.” “Because I had no such knowledge, I had no reason to recuse myself from any board discussion regarding this land,” she said.

She also wrote in the shareholder letter the Wynn Resorts board has been “fully aware of the long-standing process in place allowing me to transfer shares to my philanthropic foundation.”  Wynn said a company attorney “knew about the foundation’s sale of share during the blackout period and in fact sent an instruction letter … to help consummate such a sale.”

She also denied the company’s claim that a lawsuit seeking to dissolve a shareholder agreement put her at odds with the board. Wynn filed the lawsuit in June 2012 in the U.S. District court of Nevada against her ex-husband, Steve Wynn, seeking to dissolve a shareholder agreement that puts voting and selling restrictions on her shares.

Santarelli Reaffirms Favorable View Of WYNN

Carlo Santarelli, an analyst with Deutsche Bank, on Friday reaffirmed his “favorable view” of Wynn Resorts despite continued pressure given Macau gaming revenue trends, “and a proxy battle that has played out in the mainstream media.”

Santarelli rates Wynn Resorts as a “buy” and has a target price of $170. The gaming company’s shares will open for trading on the Nasdaq Monday at $126.50.

“While conflicts clearly exist, and (Steve) Wynn’s track record of strong shareholder returns speak well in favor of the company and its position against (Elaine) Wynn, we believe it is difficult to weigh in on an end result,” Santarelli said in a client note.

Santarelli said the best result for shareholders would be an orderly board room going forward. “We would also note, whether (Elaine) Wynn is or isn’t elected to the board has no bearing on her ability to monetize her shares.”

Wynn Resorts will hold its annual shareholders meeting on April 24 at Encore.

Steve Friess has been covering the Wynn Resorts controversey for the New York Times. Here is a link to the Wall Street Journal's Kate O'Keeffe's reporting on Wynn Resorts.

Kate O'Keeffe, reporter in Hong Kong, Wall Street Journal;  Steve Freiss, freelance reporter, New York Times, USA Today, and Las Vegas Weekly

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