On January 26, 2018, The Wall Street Journal published an explosive story about Steve Wynn, the chief executive and chairman of the board of Wynn Resorts, a leading operator of luxury hotels and casinos. The Journal reported that dozens of people had recounted a decades-long pattern of sexual misconduct involving Wynns unwanted advances on women who worked at his properties. The executive immediately challenged the Journal story, saying, The idea that I ever assaulted any woman is preposterous. The day the article came out, the share price of Wynn Resorts dropped by 10 percent, wiping out $2 billion in shareholder value. Steve Wynn had begun his career as a young man by taking over his fathers bingo parlors in Maryland. He moved on to Las Vegas, Nevada, where he renovated the Golden Nugget, and later developed (and sold) the Mirage, Bellagio, and Treasure Island properties. Over his long career, Wynn was widely credited with driving the transformation of Las Vegas from a seedy strip into a world-class destination for entertainment and gaming. In 2018, Wynn Resorts owned the Wynn Las Vegas and two hotel casinos in Macau and was in the process of building a new property in Massachusetts, expected to open in 2019. The firm had more than 24,000 employees and earned revenues in 2016 of $4.5 billion, about three-quarters of which came from its Macau operations. In 2016, Steve Wynns total compensation was $28.2 million, placing him tenth on the list of top-paid U.S. CEOs. The research organization As You Sow ranked Wynn sixth on its list of most overpaid CEOs, based on a comparison of his compensation with total return to shareholders over the prior five years. But the company defended Wynns compensation package, pointing out in its proxy statement that between the initial public offering in 2002 and 2017, shareholders had averaged a total return of 19 percent per year, well above the 9 percent return of the S&P 500 during that period. Wynn Resorts board of directors was comprised of ten people. Wynn served as chairman, a role he had held continuously since the company went public. The other nine directors, although nominally independent, had close personal ties with the chief executive. Their annual compensation ranged from $362,406 to $517,973. Wynn Resorts board was widely viewed as compliant with the CEOs wishes. The board had voted against Wynn only three times since 2002. The sole board member who was ever opposed for re-election was Elaine Wynn, Steves ex-wife, who lost the support of the other directors after the couples divorce. Glass Lewis, a proxy advisory firm, had given the companys corporate governance practices an F grade in both 2016 and 2017. In the latter year, 41 percent of shareholders, including big institutional investors had opposed the companys compensation policies in a say-on-pay vote. On the day the Journal article broke, the board issued a statement affirming the companys commitment to maintaining a respectful culture and announced it had formed a committee to investigate the allegations. But these actions failed to stem a tide of negative press. On February 6, Wynn resigned, saying he could no longer be effective. The board accepted his resignation with a collective heavy heart, calling Wynn a beloved leader and visionary. Less than four weeks after the publication of the allegations against Steve Wynn, New York states public pension fund filed a lawsuit against the Wynn Resorts board of directors, saying the board had done nothing to prevent the CEOs sexual abuse and harassment and had allowed him to resign without being held accountable. Other states, union pensions, and individual shareholders also filed suit, and gambling regulators in Massachusetts, Nevada, and Macau opened investigations. The story of Steve Wynn is a clich: a powerful man preying on the powerless, said the state of Oregon in its shareholder lawsuit. But the directors of Wynn Resorts were not powerless. They were the only people with the knowledge and abilityand duty to the companyto investigate and stop Steve Wynns conduct.

Required Consider/incorporate your responses into the analysis section of your brief.

1. Which right did shareholders exercise that may have contributed to a 10% drop in share value? 2. In what way did the Wynn Resorts board of directors contribute to the ongoing problem of sexual misconduct in the workplace? 3. How did the Wynn Resorts investors seek restitution for the many years of wrongful conduct that reportedly continued at the company?