Wynn Resorts Ltd. and Elaine Wynn, who has been battling the casino company to keep her board seat, were both handed a setback after a proxy advisory report criticized corporate governance.
Institutional Shareholder Services advised shareholders on Sunday to withhold support for Wynn Resorts' two nominees and also reject Ms. Wynn's bid to seek re-election to the board.
“There appears to be no daylight between Elaine Wynn and the rest of the board on tolerating weak governance practices, poor pay practices or an overall corporate governance profile that ranks among the worst, not the best, of U.S. companies,” ISS said.
Shareholders in Wynn Resorts include a host of pension funds, among them the $181.7 billion New York State Common Retirement Fund, $104 billion State of Wisconsin Investment Board, C$238.8 billion ($191.5 billion) Canada Pension Plan Investment Board and $300.5 billion California Public Employees' Retirement System.
The board of Las Vegas-based Wynn Resorts decided in February against renominating Ms. Wynn, who is in a legal fight with her ex-husband, Chairman and CEO Steve Wynn. She drew scrutiny after a $9.5 million stock sale in January came during an insider-sale prohibition before the company's earnings report.
Ms. Wynn, a co-founder of the company and its third-largest shareholder, has been a director since October 2002. She nominated herself as dissident shareholder.
Citing the “manifest failures of governance,” the ISS report recommended that shareholders reject all of the candidates. Annual incentive pay for Mr. Wynn has increased despite negative shareholder returns, the report said. Limited disclosures about new performance measures don't give investors enough information, it said.
“Given that this proxy contest is the one moment when every board is perhaps most keenly attentive to the voice of its shareholders, Wynn shareholders may wish, instead, to demand a more compelling alternative than the status quo,” the report said.
Wynn Resorts, in a statement Sunday, reiterated its support for its two nominees, John J. Hagenbuch and J. Edward Virtue, and its opposition to Ms. Wynn's re-election.
Ms. Wynn opposed the ISS recommendations and said in a statement that she could bring “meaningful value creation” if shareholders re-elected her.
