As one would imagine, 2020 has not been kind to Wynn Resorts (WYNN). As COVID-19 restricted recreational travel activity the hotel and casino operator saw its revenues dry up and its stock dropped precipitously (almost -70%) before recovering slightly and flatlining around -38% YTD.
In response, played as a retention strategy, Wynn has approved a one time restricted stock grant for 240 key employees of 176,247 shares; shares will vest a year from offering date. At current market value, the grant is equivalent to ~$64K per person or ~$14.5M. Wynn hopes this grant will help to “retain” and “motivate” employees in light of the uncertainty surrounding the companies immediate future.
“In recognition of the challenges we are facing and how much the Company needs you to stay focused and motivate your team, I’ve asked our Board of Directors to approve a stock grant that will vest and become your stock this time next year.”CEO Matt Maddox in a letter to employees
To avoid equity dilution from the “new” shares, Wynn CEO Matthew Maddox requested the company cancel a 140,000 share grant that would be made available to him if certain performance targets were met. Safe to to say, it would’ve been highly unlikely for the casino operator to hit performance targets that were made pre-COVID, and thus the shares would not likely have been granted.
Previously, Maddox announced he was foregoing the remainder of his 2020 cash Salary (in 2019 he was paid $2.0M in cash). That being said, Maddox will receive 24,501 shares under the new grant, or ~$2M in market value.
The plan seems to do two things 1) ensure that executives still get a nice pay day and 2) motivate and reward some other key employees.
While many will see the grants as a smart play to improve retention at the higher levels, some will question it relative to what could or could not be done for front-line workers that have been laid off. However, Wynn boldly paid 15,000 employees through May 31 — an extended 75 days during COVID-19 shutdown — which cost them upwards of $250M.
Wynn will be hoping this stock grant and a focus on doing right by its employees will help the company reverse its fortune for the future.