Following the April 2011 board meeting, pursuant to his rights as a director of the Company and in furtherance of his fiduciary duties to stockholders of the Company, Mr. Okada, sought to further investigate the Wynn Macau donation and requested additional information from Wynn Resorts concerning the donation and related matters. When the Company refused to provide the information, Mr. Okada took legal action and was vindicated by a court order requiring Wynn Resorts to comply with Mr. Okada's reasonable requests.
As Mr. Okada feared, the questionable Wynn Macau donation has already spawned at least four stockholder lawsuits against the Company and investigations by both the United States Securities and Exchange Commission (for possible violations of law including the Foreign Corrupt Practices Act) and the Nevada Gaming Board. Not only is this enormous financial commitment a drain on the Company's coffers, but now Wynn Resorts stockholders will be saddled with the added costs associated with responding to the regulatory investigations and lawsuits. If the results of these investigations and lawsuits include the development of facts regarding legally questionable practices by the Company, stockholders will be at still further risk.
Wynn Resorts Attempts to Silence Kazuo Okada
After Mr. Okada alone voted against the Wynn Macau donation and sought to investigate the donation, Mr. Wynn caused the Board to declare Mr. Okada, Aruze USA and Universal as being "unsuitable" at a special Board meeting hurriedly put together, called on only three days' notice and held in the middle of the night in Asia. There, at Mr. Wynn's urging, the Board voted to forcibly take Aruze USA's stock in exchange for a ten-year note at a 30% discount to the then-current stock market price. In one fell swoop, Mr. Wynn and his Board thus acted to quell dissent and consolidate power at Wynn Resorts by disenfranchising the Company's largest stockholder. Although Wynn Resorts purports to justify the redemption by claiming that, on the basis of a purportedly independent report, Aruze USA's continued ownership of stock would put Wynn Resorts in imminent danger of losing its gaming licenses, we believe that the purportedly independent report was a mere pretext for the Board's actions to oust a dissenting Board member and entrench and enrich Mr. Wynn, the Board, and the management of Wynn Resorts. In fact, one Board member who voted in favor of the redemption, Elaine P. Wynn, has admitted in court filings that Wynn Resorts was not in imminent danger of losing any gaming licenses, and therefore such claimed danger was not a basis for the redemption. Aruze USA has challenged the Board's actions in court and believes the Company's purported redemption is contrary to law and will be determined void ab initio pursuant to the pending litigation.Serious Questions of Corporate Governance The Wynn Macau donation is far from the only example of Wynn Resorts' poor corporate governance. Experts in corporate governance best practice have repeatedly raised serious concerns about the governance of Wynn Resorts, many of which stem from the undue influence exercised by Mr. Wynn.
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