Apr 20, 2017
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The total compensation package of James Murren (pictured), chairman and chief executive of casino group MGM Resorts International, rose 25.1 percent year-on-year in 2016.
That is according to a proxy filing on Wednesday to the U.S. Securities and Exchange Commission.
Such compensation amounted to US$16.6 million last year, compared to US$13.3 million in 2015.
MGM Resorts has a 56 percent stake in Macau casino operator MGM China Holdings Ltd. Mr Murren has expressed an interest in the MGM Resorts group spending as much as US$10 billion in pursuit of a casino licence in Japan.
According to the group’s latest proxy filing, Mr Murren’s 2016 base salary was kept at the 2015 level, i.e., US$2 million. But his 2016 stock awards – consisting of restricted stock and performance-linked shares – rose 19.0 percent year-on-year, to an assessed value of US$7.4 million.
As part of the negotiation of a new employment agreement for Mr Murren, the company granted him for 2016 restricted stock units valued at US$2 million as a “sign-on bonus” said the regulatory document.
The vesting of those units is subject to Mr Murren’s continued employment with the company through to December 31, 2021.
In 2016 the CEO was also awarded nearly US$5.7 million as a bonus under the group’s non-equity incentive plan, up 26.9 percent on 2015’s award.
Mr Murren’s 2016 package comprised a further US$1.5 million in “other compensation”, up 167.5 percent on 2015’s figure. That 2016 award included a US$250,000-allowance for use of a company aircraft, and US$392,000 for “personal security”.
The firm said the cost of the latter was “within a competitive range based on cost of such services for the chief executive officers of the three other major Las Vegas based gaming/resort companies (Las Vegas Sands [Corp], Wynn Resorts [Ltd], and Caesars Entertainment [Corp]).”
The MGM Resorts filing stated Mr Murren’s approximately US$5.7-million bonus for 2016 was – in line with bonuses for other senior executives of the group – valued at 141.3 percent above his bonus target figure for the year. This was on the basis that the group had in 2016 achieved 108.3 percent of the revised target for adjusted earnings before interest, taxation, depreciation and amortisation that had been set by the compensation committee.
In February, MGM Resorts reported group profit of US$1.1 billion for 2016, compared to a loss of US$448 million in the prior year.
REIT IPO gain
In April 2016 – under Mr Murren’s leadership – the group announced that it had completed the deal to establish a subsidiary, MGM Growth Properties LLC, as a publicly-traded real estate investment trust (REIT). According to Wednesday’s proxy filing, the initial public offering for MGM Resorts’ REIT was “the third-largest of its kind in history and priced at the top of its range, resulting in US$1.1 billion of net proceeds”.
“The company believes the success of the MGM Growth Properties IPO is a testament to the knowledge, skills and industry experience possessed by the company’s key leadership team, which includes the company’s named executive officers,” added the proxy filing.
Mr Murren – a former director of research and managing director within the Deutsche Bank AG group – is also chairman of MGM Growth Properties.
The firm also noted in the filing: “We recognise the importance of aligning our management’s interests with those of our shareholders.”
It said that under guidelines established in April 2012, the group’s CEO was expected to accumulate stock with a fair market value equal to five times his or her base salary. Other named executive officers were expected to accumulate stock with fair market value equal to two times their respective base salary.
The group stated that in March this year it held discussions on executive compensation with six institutional holders of MGM Resorts stock – representing approximately 26 percent of its shareholder base.
“Based on the positive results of the 2016 say-on-pay vote, and considering feedback from these discussions, we believe that our shareholders are generally satisfied with our current executive compensation programme and policies,” stated the proxy filing.
The second-highest compensation package in the group during 2016 went to Robert Baldwin, its chief customer development officer. His package amounted to just over US$7.02 million, up 7.0 percent from the approximately US$6.56-million awarded a year earlier.
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"The positive underlying contribution from each of our operating segments provides a strong start to the year"Marco SalaChief executive of lottery and gaming supplier IGT