CEO Salary Survey
by and Keith Kefgen Howard Krieger
November 1, 2008
The average salary for a gaming CEO was down from $750,000 in 2006 to $710,000 in 2007. The average CEO bonus dipped from $1.06M to $945,000. Where have all the rock stars gone?
What a difference a few
quarterly reports can have on an industry. Just last fall, most gaming
companies were riding 52 week highs. As we write this report, most of those
same companies have seen their stock price drop 50 percent or more. Wynn
Resorts has been one of the few bright spots with a drop of less than 15
percent from its 2007 highs.
Other changes in the industry also have affected the landscape of gaming. For example, the privatization of Harrah’s Entertainment and Station Casinos brought the private equity/hedge fund business front and center. Even single assets such as the Sahara and the Stratosphere got gobbled up by private equity firms.
Furthermore, the trend of global expansion continues to impress, as South America, Asia and Russia have all seen gaming as a way to attract world tourism. On the other hand, local markets such as Philadelphia, Kansas City and others struggle to cut through significant political and social red tape. And it finally looks like the list of new billion dollar casinos is over in Las Vegas as Echelon, Plaza, W Las Vegas and others have been put on the back burner.
Moreover, it looks as if gaming is not going to be the recession-proof industry it has traditionally been. How this affects investor sentiment and the performance of public gaming stocks will be very telling on CEO survival.
One thing is clear, “rock star” performance is over for awhile, and the CEOs who perform best will be focused on cost control and operational efficiency.
As in our past 14 studies of CEO performance, we analyzed the financial statements of public gaming companies to discover who gave shareholders the best performance relative to their pay. In reaching our conclusions, we looked at stock price, EBITDA and market capitalization over a three-year period and compared that to total compensation (salary + bonus + long-term incentives + all other compensation). The result is expressed as an HVS Value Index, with an index of 100 being average.
The top 10 performers this year included a spectrum of the industry. Five were from casino operators, while the other five ran gaming technology companies. Both large cap and small companies were well represented. The top performer this year was Andre Hilliou of Full House Resorts with an HVS Index of 187.6. By our calculations, Hilliou was under paid by 87.6 percent or nearly $700,000. Steve Wynn, Sheldon Adelson and Lorne Weil have been consistent members of the top performers club, with Wynn winning the top spot twice. With Wynn Resorts’ stock price not getting battered in the first two quarters of 2008 like most others, he might just win again next year.
The average salary for a
gaming CEO was down approximately 5 percent from $750,000 in 2006 to $710,000
in 2007. The average bonus for gaming CEOs also was down about 10 percent from
$1,060,000 to $945,000. These averages were certainly affected by Harrahs and
Stations going private and weak Q4 2007 results. The average long-term
incentive (stock options, restricted stock grants etc.), was almost identical to
last year at nearly $1.5 million. Likewise, total compensation was slightly
down over the comparison timeframe.
The largest salary belonged to Wynn at $3.2 million, with six other CEOs making a million dollars or more. The largest short-term incentive of $7.5 million was garnered by Wynn as well, with Terry Lanni of MGM Mirage coming in at $6.4 million. Lanni has also been a consistent top performer and won the top spot in 1999. The largest stock award was given to Lorne Weil with a value of nearly $8 million, while the largest overall pay package was Lanni’s at $12.7 million.
Adelson (second from left)
As we previously stated, gaming is having a rough 2008, and the true test for many gaming CEOs is still in front of them.
Recent events have taught investors that even venerable brands such as Bear Stearns and Lehman Brothers can disappear. We predict that CEOs who adjust to the new economic environment and have a global presence will fare best in the coming years.
CEOS RANKED BY TOTAL COMPENSATION
|Rank||CEO/ Company||Salary($k)||Short-Term Incentives($k)||Other($k)||Long-Term Incentives($k)||Total ($k)(1)||HVS Value Index (2)|
|1||Terrence J. Lanni/
|2||Stephen A. Wynn/
|3||Lorne A. Weil/
Global Cash Access
|6||William S. Boyd/
|7||Thomas J. Matthews/
|8||Robert L. Evans/
|11||Sheldon G. Adelson/
Las Vegas Sands
|13||Daniel R. Lee/
Trump Entertainment Resorts
|16||Mark L. Yoseloff/
|17||Russel H. McMeekin/
Monarch Casino & Resort
|21||Paul W. Lowden/
Elixir Gaming Technologies
|23||Andre M. Hilliou/
Full House Resorts
|24||Clifton E. Lind*/
Dover Downs Entertainment
Nevada Gold & Casinos
|27||James B. Druck/
|28||Gerard P. Charlier/
Gaming Partners International
|30||Jay M. Meilstrup/
|31||Randall D. Sampson/
(1) Minimum of $275,000 in total compensation to be included
(2) “HVS Value Index” is based on an average of 100.0, must be CEO for more than one year
*no longer CEO
is a veteran sales and business development professional having spent the majority of his career working in several aspects of financial services. Krieger is managing director at HVS Executive Search, and specializes in retained executive search, compensation consulting, and corporate governance counseling for the Lodging and Gaming industries. Previously Mr. Krieger held several positions with American Express primarily in sales and account management for the Establishment Services division. His experiences also include development of new sales channels for the Travelers Cheque/Pre-paid Services Division where he led the effort to expand the number and type of partners selling Amex’ Travelers and Gift Cheques. Most recently Mr. Krieger was working with a start-up company in the golf industry, which appealed to his passion for the game. Mr. Krieger holds a B.A. in Economics from Rutgers University.
and Keith Kefgen
is president of HVS Executive Search, a leading career placement and compensation consulting firm specializing in the lodging, gaming, retail and restaurant industries. He is a frequent lecturer on these and related issues and has written more than 90 articles on the topics of executive selection, pay-for-performance, corporate governance and executive leadership. He is the founder of the recruiting Web site hospitalitycareernet.com and 2020skills.com, an online assessment profiling service.
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