ICYMI: MGM Cut $32 Million Deal With CEO Who Left To Fight Pandemic
LAS VEGAS – Nearly 72 hours after Gov. Steve Sisolak put former MGM Resorts International CEO Jim Murren in charge of Nevada’s economic response, the Lord of Layoffs still hasn’t said a word about his exit from MGM or done an interview with Nevada media.
Today, a report from Bloomberg detailed Murren’s $32 million pay off to leave his role as CEO just weeks before he began furloughing and laying off his employees.
Charles Elson, director of the University of Delaware’s center for corporate governance, criticized Murren’s cash grab.
“That’s called having your cake and eating it, too,” Elson said.
Murren could’ve declined the money but doesn’t appear to be doing so, according to a regulatory filing on Monday.
“He publicly expressed an altruistic intent, which is a good thing,” Elson said. “But to see that the board compensated him in that way, that’s troubling. If they’d given him something — fine. But the full value?”
Sisolak owes Nevadans an explanation for why he chose the Lord of Layoffs for this job and Murren owes an explanation for why he’s taking $32 million from his former employer while his frontline workers face uncertainty after Murren laid them off.
Read more from Bloomberg here.
MGM Cut $32 Million Deal With CEO Who Left To Fight Pandemic
Christopher Palmeri and Anders Melin
Link.
Few businesses have been hit as hard by the coronavirus pandemic as MGM Resorts International.
By last week, it had closed all its U.S. casinos, furloughed tens of thousands of workers and started layoffs. The stock was pummeled and outgoing Chief Executive Officer Jim Murren had visited Washington to ask for financial aid.
Then on Sunday, MGM’s directors said Murren would step down immediately, accelerating plans announced last month. They handed the executive, who is going to work for the Nevada governor, $32 million in exit payments — sidestepping his original job contract, which entitled him to nothing if he left the company voluntarily.
It’s not unusual for boards to strike bespoke severance deals with outgoing senior executives. But for MGM, the timing is unusual. The company’s prospects seem bleak and its workers face an uncertain future. Some lawmakers have proposed barring companies that receive federal aid from paying golden parachutes. It’s unclear whether that would have impacted Murren’s arrangement.
“That’s called having your cake and eating it, too,” Charles Elson, director of the University of Delaware’s center for corporate governance, said of the board’s decision to pay Murren. “I don’t think that will play very well with investors.”
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The agreement also said that Murren would receive a combined $32 million in salary, incentives and severance for his work over those 22 months. That included a $4 million guaranteed bonus for this year, $575,000 a month in 2021 for his consulting services and $12 million in severance.
If Murren left on his own during that period, his payments would cease and he wouldn’t be eligible for severance, according to the contract.
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Nevada Governor Steve Sisolak said that Murren had been tapped to lead the state’s newly formed task force to tackle the coronavirus outbreak. Murren “helped develop this idea,” Sisolak said at a news conference, lauding the casino executive’s experience and contacts in Washington and beyond.
But on Monday, MGM’s board said that Murren’s exit would be categorized as a “termination without good cause,” according to a regulatory filing, not as a voluntary exit. As a result, he is eligible to collect the full $32 million.
“He publicly expressed an altruistic intent, which is a good thing,” University of Delaware’s Elson said of Murren. “But to see that the board compensated him in that way, that’s troubling. If they’d given him something — fine. But the full value?”
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