The comptrollers of New York state and New York City announced late Wednesday that they had reached a settlement with casino operator Wynn Resorts, which agreed to pay $41 million in damages and enact a series of governance reforms.
Thomas DiNapoli, the state comptroller, and Scott Stringer, the city comptroller, fiduciaries of two large pension funds, represented institutional investors as the co-lead plaintiffs in the case against the company and current and former officers, including ex-CEO Stephen Wynn, alleging sexual misconduct by Mr. Wynn toward employees and alleging inaction by other executives and board members to prevent the misconduct.
"We filed our lawsuit in response to serious and repeated allegations of sexual misconduct by Steve Wynn and the prior board's alleged failure to stop it," Mr. DiNapoli said in the news release. He is the sole trustee of the $215.4 billion New York State Common Retirement Fund, Albany, which held $22.6 million in Wynn Resorts stock as of Oct. 31.
"This agreement institutes a number of landmark reforms to improve governance and accountability at Wynn Resorts," Mr. Stringer said in the news release. He is the custodian and trustee for the five pension funds in the $208 billion New York City Retirement Systems. The pension funds own about $22.3 million in Wynn Resorts stock.
The company acknowledged the settlement, which requires court approval, in its own news release, noting that $20 million of the settlement money would come from Mr. Wynn and $21 million from the company's insurance carriers.
"Neither the company nor its current or former directors and officers were found to have committed any wrongdoing in connection with the settlement," the company said in the news release.
The two New York pension funds sued Wynn Resorts in March 2018, through their counsel at Cohen Milstein Sellers & Toll PLLC. They filed a derivative lawsuit, described in the news release as a "legal action taken on behalf of a company when it is believed its officers or directors failed to comply with their fiduciary obligations to the company."
Several other institutional investors also sued the company. The New York pension funds were designated co-lead plaintiffs in May 2018 by Joe Hardy Jr., a Clark County (Nev.) District Court judge. Clark County is the location of Las Vegas-based Wynn Resorts.
The news release by Mr. DiNapoli and Mr. Stringer also cited non-monetary provisions of the proposed settlement, worth, they said, another $49 million. These provisions include:
- Electing an independent board chairman and amending the company bylaws to separate the role of board chair and CEO.
- Amending the bylaws to require all directors seeking election to the board should receive majority vote support except in the case of a proxy contest.
- Making a commitment to greater diversity by requiring the board to announce its goal of achieving a 50% diversity on board membership.
For company employees, the settlement calls for:
- Prohibiting employer-forced arbitration clauses and non-disclosures agreements.
- Improving the ability of company employees to report complaints, including the establishment of a third-party hotline.
- Improving the company's sexual harassment and diversity training for all employees.