Wynn Resorts Ltd. - Special Call

Wynn Resorts, Limited (WYNN)

February 21, 2012 9:00 am ET

Executives

Matt Maddox - Chief Financial Officer, Principal Accounting Officer and Treasurer

Stephen A. Wynn - Founder, Chairman, Chief Executive Officer, Chairman of Wynn Macau Limited and Chief Executive Officer of Wynn Macau Limited

Unknown Executive -

Kim Sinatra - Senior Vice President, General Counsel and Secretary

Analysts

Joseph Greff - JP Morgan Chase & Co, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Carlo Santarelli - Deutsche Bank AG, Research Division

Mark Strawn - Morgan Stanley, Research Division

Harry Curtis - Nomura Securities Co. Ltd., Research Division

Felicia R. Hendrix - Barclays Capital, Research Division

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Presentation

Operator

Welcome to the Wynn Resorts Conference Call. I will now turn the call over to Mr. Matt Maddox.

Matt Maddox

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Thank you. Good morning, everyone. Before we get started, I need to remind everybody that we will be making forward-looking statements on this call, and those statements may or not may not come true. Now I'm going to turn over to Steve to introduce the call.

Stephen A. Wynn

Good morning. I think this is an unusual phone call occasioned by the incidents that took place this weekend when we had a board meeting. It concerns the shareholder of the company, the director; Aruze USA; Universal, the parent company in Japan; and our Director Kazuo Okada. This matter was brought to the attention of the board and brought to the vote of the board because of the actions of the Compliance Committee chaired by Governor Robert Miller. I'm going to introduce Governor Miller, but I would like to remind the people on the call that beside the other distinguished members of the board of Wynn Resorts, Governor Miller himself is probably the most qualified Chairman of a Compliance Committee for a Nevada corporation. Of all the humans that we could have found in the world, this gentleman probably is the most qualified. He was just as [indiscernible] he was just a District Attorney. He with the Chairman of the National District Attorneys' Association. And then as Lieutenant Governor, fulfilled the last 2 years of the governor's term of former Senator Ryan and then received 2 full terms of 8-year, 4 years a piece, for a total of 10 years as the longest-sitting governor in Nevada history. I don't think any citizen in the history of our state has had more qualifications, more training and more judgment and perspective on issues of compliance or law enforcement than Governor Miller. It is, therefore, my pleasure to turn the meeting and the discussion over to Governor Miller.

Unknown Executive

Thank you, and good morning to everybody. I'm certain that all of you would like to just skip to the bottom line, but please allow me a few minutes to go through the deliberate and lengthy process that led up to the decision on Saturday, because I think the what and the whens are relative in consideration of the why. This began well over a year ago. In fact, in early to mid-July of the year 2010, the company did an internal investigation for the Compliance Committee relative to the concept of considering business in the Philippines, and that was pursuant to our belief that Mr. Okada, a shareholder and board member had approached Mr. Wynn to suggest the concept of doing business in the Philippines. The reason I came to the Compliance Committee is because the Compliance Committee, under Nevada regulations, has a responsibility of considering anything that might have bearing upon our privileged license. And since this company has a privileged license, the Compliance Committee is structured under the Nevada regulatory authority to self-report anything that might be of interest to them in their ongoing consideration as to the license that we hold, the people that we deal with or anything that might raise questions in their mind. That report raised some questions about whether or not this company should do business in the Philippines. Subsequent thereto, because there were ongoing conversations by Mr. Okada suggesting he was considering doing business in the Philippines, additional reports occurred. In February of the year 2011, in other words, approximately a year ago, one group that was hired to do some follow-up assessment of the risk of doing business in the Philippines uncovered some questions relative to Aruze, Universal and Mr. Okada. Those questions related to associations of Mr. Okada and his company in the Philippines. They related to questions revolving around the usage of some rights provided by those companies to the Philippine government, which were controlled by PAGCOR, the regulatory authority, at least a portion are [ph] more controlled by PAGCOR, and subsequently, some of that rights was diverted for the use of the then Chairman of PAGCOR's sons in their political elections. The license given to Mr. Okada and his company in May of 2010 was characterized by the Filipino press as the midnight deal, and it was granted by the individual whose sons benefited from the utilization of the rights. I'm not suggesting that there was a direct connection or knowledge by Mr. Okada or Aruze at this point in time, but certainly as you might expect with us being a committee assigned a task of investigating whether there's anything needed to be reported by the appropriate authorities, it raised some concerns and raised some eyebrows in our mind.

So on February 24, 2011, just short of a year ago, the Board of Directors on which all members were present, including Mr. Okada, discussed the Universal's commitment in the Philippines. We discussed some of these facts. We then advised that the company should not do business in the Philippines. This was, of course, disputed by Mr. Okada, but it was all the other board members suggesting it. We advised Mr. Wynn that it was extremely unlikely that this Board of Directors would have ever approved doing business in the Philippines and suggest that they have to [ph] cancel this meeting that have been scheduled with Philippine President Aquino at the request of Mr. Okada, which he did.

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