October 21, 2012
BY Kieth Kefgen, Lacey Hagen
& Mandeep Singh, HVS Executive Search
After a slower than expected recession recovery, the gaming industry is beginning to see signs of optimism, leading towards an economic rebound.
Casino revenues have been increasing along with a stronger domestic and international presence. Commercial gaming is now in 22 U.S. jurisdictions and companies have also begun serious developments in emerging international markets. These increases have produced a noticeable impact on executive compensation for certain gaming leaders; however, others are sitting at the table with a short stack.
Our annual review of gaming CEOs compared 2011 compensation in relations to stock performance, EBITDA growth, and market capitalization over a three year period. The results are expressed in our HVS Value Index which reveals whether each CEO was over or underpaid based on performance.
After two years of holding the top spot of Top HVS Value Index, Full House CEO Andre Hilliou comes in second to Las Vegas Sands (LVS) CEO Sheldon Adelson, who moved up from the number 12 ranking last year. According to our analysis, Adelson was underpaid by 93.6 percent, or approximately $13 million. The LVS stock price rose 228 percent over the survey period, while 13 other gaming stocks improved from 2010 to 2011. Entertainment Gaming Asia had the largest stock appreciation with a 272 percent increase.
SALARY AND BONUS
Five CEOs did not receive a bonus in 2011, while eight got nothing in 2010 and eleven in 2009. The largest bonus payouts were made to the same players as last year: Stephen Wynn, Wynn Resorts ($10.1 million), Sheldon Adelson, Las Vegas Sands ($6.3 million), and James Murren, MGM Resorts ($5.4 million).
Seven CEOs received nothing in the form of long-term incentives, which we though odd in light of pay-for-performance pressures from shareholders and boards. The average amount of “other” compensation was $388,726 in 2011, which was a71 percent increase from the 2010 average of $227,000.
The average CEO total compensation for 2011 was $4.5 million with Gary Loveman of Caesars Entertainment leading the way with his $20.4 million package. Lorne Weil of Scientific Games Corporation followed closely with a package of $19.9 million.
With his new developments in Madrid, Sheldon Adelson may significantly increase the gap between himself and Micky Arison of Carnival as the richest CEO in the industry. It appears that growth focused organizations are still getting greater multiples from Wall Street and investors. The key is walking the fine line between accretive growth and a capital stack that will implode at the sign of global economic weakness.
Keith Kefgen is CEO of HVS Executive Search. Keith has more than 20 years of experience in the field of hospitality executive search. He is a frequent lecturer on industry related issues and has written more than 100 articles on the topics of executive selection, pay-for-performance, corporate governance and executive leadership. He can be reached at www.hvs-executivesearch.com.
Lacey Hagen is vice president of HVS Executive Search in New York. Lacey is responsible for mid-management recruitment as well as global marketing and business development initiatives in North America.
Mandeep Singh is vice president of HVS Executive Search in the Las Vegas office. Previous experience includes Robert Half International as a sales consultant for professional staffing and consulting services. He was also an Associate at Ernst& Young.
Did you enjoy this article? Click here to subscribe to the magazine.