The executives and board members for Wynn Resorts have decided to receive company shares to replace all or part of their salaries for the remainder of 2020, the company announced.
The new compensation plan was made to help offset employee compensation as well as other expenses while Wynn’s properties in the United States remain closed due to the COVID-19 pandemic.
Furthermore, the company’s CEO, Matt Maddox, will forfeit his entire salary for the remainder of the year, receiving company shares instead. According to regulatory filings, Maddox earned $1.9 million in 2018.
Other executives, as well as board members, agreed to relinquish between 33% and their entire salary for the remainder of 2020 in exchange for stock in Wynn Resorts.
Wynn Resorts stock is down by at least 46% in 2020. Fortunately, analyst Joe Greff of J.P. Morgan thinks that shares in Wynn Resorts were undervalued and that Wynn could weather the COVID-19 pandemic for at least 17 months due to its strong liquidity position.
While this move will benefit the average Wynn employee, receiving stock ultimately could personally benefit the executives. Most of them already have enough money in the bank to forgo a salary during this crisis. Stock options could ultimately earn them much more than their salaries, as long as they can hold off on selling their stock until the stock returns to pre-crash levels. At that point, they’ll make a huge profit.
On March 15, Wynn Resorts announced it would close its properties for two weeks to stop the spread of the coronavirus; that decision was made before Nevada Governor Steve Sisolak ordered all casinos in the state to close for at least 30 days.
Wynn Resorts stated it will continue to pay all employees for 30 days, including their average tips, while its hotel-casinos in both Massachusetts and Las Vegas remain closed.
Wynn wants to retain its employees
Wynn CEO Matt Maddox learned a lesson during the financial crisis of 2008; in the long run, it pays to retain employees, even if it’s costly in the short run.
“I can’t imagine having to rehire and retrain 13,000 employees. I’d rather keep the experience and knowledge we have in the service standards,” he said.
Maddox also pointed to the loyalty continuing to pay employees engenders. “Wynn is known as the best place in Las Vegas for service and experience, ” he said. “I want our employees to be happy to work for us, because if they’re happy, visitors will be happy and our shareholders will be happy too.”
A global impact
Wynn’s business revenue has taken a global hit; the company gets 80% of its revenue from China, the place where the pandemic started. In February, Wynn’s resorts in Cotai and Macao were ordered to close for two weeks, as the Chinese government attempted to stop the spread of the virus.
Maddox revealed during an earnings call that Wynn Resorts spent as much as $2.6 million daily during the Macao shutdown, and most of that was on salaries.
Wynn’s Chinese casinos have since reopened, but tighter restrictions on the number of seats and games permitted at the tables, the usual visitors have not returned. Gambling revenue for Wynn’s Chinese properties fell by 88% in February from the year before. Furthermore, analysts expected a 70% drop for March.
Unfortunately, after one month without any new COVID-19 cases surfacing in the casino districts, two cases have recently been reported; these cases involved tourists traveling from other countries. Regulators in those regions had already banned tourists from outside of Hong Kong, mainland China, and Taiwan, but new limitations have been extended to residents returning from those areas.
When will the closures end?
As it stands, Governor Sisolak’s 30-day statewide shutdown should end by April 18. However, that could easily be extended. At this time, it’s impossible to say when Las Vegas, and the state of Nevada, will be fully up and running.
