Many investors are asking whether governance in corporate America is working.

In some cases, the blunt answer is “no.” Just consider the firing of CBS president and CEO Les Moonves. How did it take a decade for issues of harassment come to light?

In fact, the #MeToo Movement accused more than 425 executives of misconduct in 2018. The gaming industry was not immune, with Steve Wynn being caught up in a messy boardroom scandal.

Even with all the controversy, we believe corporate governance is improving and boards are ready to act more swiftly on controversial l issues. For example, Wynn Resorts responded to Wynn’s missteps by adding three additional female directors and officially separating the roles of CEO and chairman.


So, considering the anti-corporate mood of late, how did gaming industry boardrooms perform in 2018? Casino Journal and AETHOS Consulting Group have been analyzing board practices in the casino business for over a decade. The study examines and distributes points in five categories:

  • Board size and makeup;
  • Committee structure;
  • Related party transactions;
  • Evaluation and shareholder communication; and
  • Board and executive pay-for-performance.

The results of the most recent survey are a mixed bag of performance. Gaming & Leisure Properties earned the top spot this year, ending MGM Resorts’ four-year run.  Interestingly, Gaming & Leisure Properties scored well in many areas, but could easily earn more points by adding diversity to the board and separating the CEO and chairman roles. MGM Resorts dropped into a tie for third with Carnival Cruises and Scientific Games Corporation, with Everi Holdings moving from third to second overall. Great Canadian Gaming and Rank Group tied for the fourth spot on the list, while Boyd Gaming and Eldorado Resorts tied to round off the top five performers.

As previously mentioned, gaming industry boards were judged on five criteria to come up with this year’s ranking. Here’s a closer look at how the judging process worked within each of these categories, along with some trends we spotted along the way:


In determining the effectiveness of the size and makeup of a company’s board, we looked at six attributes: total number of board members, length of term, the chairman’s background, the presence of a lead director, ratio of insiders and outsiders on the board and the board’s diversity policy.

  • Total number of board members: A board should be comprised of an odd number of members between five and 11; a range that most experts consider to be optimal. Surprisingly, over half (17) of the boards had an even number of board members.
  • Length of term: Boards are moving in a positive direction in this area with 19 boards featuring one-year terms.  Having board directors stand for reelection every year is preferred by investors who don’t want directors being treated like Supreme Court justices.    
  • Chairman characteristics: We are firm believers that the chairman and CEO responsibilities are different, and the roles should be separated.  In today’s environment, the chairman should be independent of the company (see Wynn Resorts above). There is only one reason why a CEO wants to be chairman—to consolidate power. Thirteen gaming companies had an independent chairman, up from seven last year.
  • Lead director: When a board allows an insider to be chairman, they should at least appoint a lead independent director. Eleven of the 18 companies with an inside chairman appointed a lead independent director. The seven other companies need to address this in the short term. 
  • Ratio of insiders and outsiders: Boards should have a super-majority of independent board members. Fourteen gaming boards had a super-majority, while the remaining 17 companies had less than an optimal ratio. 
  • Diversity: Companies received points by having a formal policy around gender and racial diversity. Beyond being a social responsibility in today’s environment, it is just good business practice as well— a diversity of background and opinion can only help corporate governance.  This year, Wynn joined Boyd Gaming, MGM Resorts and Carnival Cruises as the only companies with a full score in this area. 


The SEC requires public companies to have the following four committees: audit, compensation, governance and nominating. We look for companies to not only meet this requirement but also have an official charter, no executive committee and for each committee to be made up of solely independent directors. Only nine of the 31 companies scored perfectly in this metric.


We continue to see related-party transactions taking place with these companies, with 18 companies having some form of them. While on a percentage basis this represents a slight decrease from last year’s study, it is still too high. If you want to sit on a board, you should not be doing business with the company; whether that be leasing office space or hiring affiliated consulting practices.


Issues concerning the effectiveness of internal board operations, director evaluation and accessibility to shareholders were measured in this section. Much like our next section, we like to see companies study the competition to make sure shareholders are happy, feel engaged and are confident in board strategy.  Six companies scored perfectly in this category, up from five the year before.


The final area of our survey focused on how the CEO and the board get paid. There has been significant improvement in both transparency and the structuring of CEO and executive compensation. We not only like to see performance metrics and targets clearly outlined, but these programs benchmarked against companies both inside and outside the gaming industry.

Shareholders should also expect board members to be compensated in company stock, as well as cash, to link them more closely with stock performance. Carnival Cruises deserves special consideration for instituting a program to encourage all directors to partake in a cruise at a reduced fare. In our view, this type of program should be utilized more often to get a better feel for on-the-ground operations.