Facebook
Fark
Digg
Reddit
StumbleWorking harder for less? Not if they have a choice
Without big bonuses, some executives are out the door
Monday, April 6, 2009 | 2 a.m.
Sun Archives
- Third executive leaving Las Vegas Sands (3-24-2009)
- Sands not so adored in Macau these days (3-23-2009)
- Sands president begins early, earning base of $2 million (3-17-2009)
- Las Vegas Sands replaces president (3-9-2009)
- Las Vegas Sands faces third shareholder lawsuit (2-18-2009)
- Las Vegas Sands swings to loss in fourth quarter (2-11-2009)
- Las Vegas Sands directors hit with shareholder lawsuit (1-28-2009)
- Las Vegas Sands: A big rise, a big fall (1-18-2009)
When times were good, casino executives were richly rewarded with performance-based compensation packages worth, on paper, up to tens of millions of dollars a year.
Now that the tide has turned, these executives are taking a double hit: Not only are they forced to work harder to keep their jobs, they are doing it for less money.
Bank lending isn’t the only thing that has dried up in this recession. So has bonus pay, in the form of stock options or grants of stock.
Bad performance, no performance bonus.
It’s hard to pity bosses with base salaries in the high $100,000s to well over $1 million. But for those who have grown accustomed to earning several times their base salary in bonuses, not getting that money is a bitter pill to swallow.
Leading up to the recession, the gaming industry was one of the hottest sectors on Wall Street. Stock prices rose exponentially. Some soared over $100 per share on expectations of mind-blowing profits in Macau, a gateway to mainland China.
Bosses racked up big paper profits at a time when their jobs were easier.
Visitors were flocking to Las Vegas in record numbers and casinos across the spectrum could count on getting a piece of that business.
Shareholders — happy that companies leveraged cash to build more elaborate casinos with bigger profit expectations — didn’t complain when executive compensation soared to new and dizzying heights.
Now, unhappy investors are questioning those decisions.
Gaming is a niche business run by a select group of casino operators that have earned their stripes.
As heavily regulated, labor-intensive enterprises that never close, they require more work from auditors and accountants than the typical 9-to-5 operation. Add to that the fact that many executives are now working longer hours to keep companies afloat and you have a good reason why some executives might think now is a good time to split.
Gaming executives who leave their posts rarely retire. They bide their time — usually waiting at least a year for non-compete agreements to expire — before finding a better opportunity down the road.
The money motive adds another dimension to the recent exodus at Las Vegas Sands.
Last month, President and Chief Operating Officer Bill Weidner was forced to resign after a dispute with CEO Sheldon Adelson over the company’s direction. Brad Stone, president of global operations and construction, followed his longtime colleague out the door.
An experienced construction manager, Stone leaves with a strong reputation in an industry that will be clamoring for his skills when the economy improves.
A rich compensation package is enough reason to endure a difficult boss, economy or workweek. Without it, the motivation to toil at a demanding job isn’t as strong.
Stone cashed out 100,000 shares of Las Vegas Sands stock at $120 per share in September 2007. Sands share price would peak at $150 the following month. Shares now trade under $5.
Many believe that Stone and Weidner, who has cashed out relatively few shares recently, will be able to emerge in new gaming companies that could arise as a result of bankruptcy restructurings.
More work for diminishing returns might also explain the departure of T.J. Matthews, who stepped down as CEO of International Game Technology this month. His sudden exit wasn’t a total surprise to insiders who say Matthews had hinted that he would not renew his employment contract.
The recession is forcing many gaming giants to consider bankruptcy protection. It’s also allowing executives to blame poor company performance on forces beyond their control, while giving them an opportunity to cut their losses and move on to greener pastures.
Discussion: comments so far…
Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.
Only trusted comments are displayed on this page. Untrusted comments have expired from this story.
No trusted comments have been posted.
Post a comment
Most Popular
- Viewed
- Discussed
- E-mailed
Everything Under the Sun
Blogs
The Kats Report
Joe Pesci remembers his own honeymoon in Vegas -- meeting the Rat Pack (1 Comment)
Las Vegas Philharmonic says search for new music director to begin 'immediately' (1 Comment)
With Shenandoah project stalled, Wayne Newton hits back legally (7 Comments)
Where does a Playmate play when she turns 21? Vegas! (3 Comments)
Ice Ice Billy
The road to six-toed cats and Mayor Bubba
The Kats Report
David Itkin tells L.V. Philharmonic officials he's on his way out (14 Comments)
Diamond Dave sells it well as Van Halen pours out the power at MGM Grand (2 Comments)
- Locally owned and independent since 1950; Winner of the Pulitzer Prize for Public Service, best news website in the nation & DuPont Award for broadcast journalism
Ya, poor execs.
They are the ones who brought the industry to bankruptcy. Everyone in the casino is now doing more for less. The difference is the people at the bottom do not have a "buy out" or some golden parachute as they get kicked out the door.
Add the biggest fraud of them all. Terri Lani to your list of execs who narcissistically thought they reinvented Vegas and deserved huge compensation packages, then when it began to unravel he ran off and left the mess to be paid for by MGM workers all taking pay cuts and all having to pay more for health insurance.
All salaried workers at MGM have been forced to take a pay cut and pay more for health insurance.
And this scum lives it up in So Cal with his millions in stock options he cashed in. I read a few days ago about another MGM exec bailing out on the company and going to Nevada Power. Too bad the selfish scum at the top doesn't have to give back all the millions they earned running this company into the ground. No, it is better to nickle and dime the employees than to hold the lying scum management accountable for the falling profits.
Tough for me to feel bad for these guys. They've had it way too good for far too long. When you look at how the game is played (being a CEO of a major corporation), these people had it really, really good compared to alot of other people. It didn't take much talent to be a figure head in an industry that was going up, up, up for a long period of time. The real talent value comes in what these guys do when times are tough. Like right now. Most of these guys are showing their real worth right now, and I say let these people go. They're obviously out of touch and in way over their heads. A half-trained chimp could do what some of these people have done lately.
One more point...
"A rich compensation package is enough reason to endure a difficult boss, economy or workweek. Without it, the motivation to toil at a demanding job isn't as strong."
I suppose it's all relative, but do you really think that the bottom 90% of the workforce that makes under 100k a year really think that these people are having to "toil"? Please. Short-order cooks toil. Policemen and firemen toil. Landscapers and house cleaners toil. These guys? I doubt they know what hard work feels like.
Let them all go. I can't possibly see how they'll be missed. Promote people from within the industry who have been in the business for a long time. And for God's sake, reintroduce some common sense into the equation. If someone gets a bonus it should be tied to performance and be awarded after the fact. Quit allowing these big companies to award "cronie" bonuses. Things won't truly improve until someone comes in and runs things sensibly for a sensible paycheck.
Dont forget about GARY LOVEMAN who got a $39 million bonus but took a pay cut of $100,000. This is the worse it has been run ever. Bill Harrah must be rolling over in his grave.
Thousands of people have lost there jobs and this scumbag is still getting his money> I hope he chokes on it.
Not that I feel bad for these guys, but the "bonus" for Loveman wasn't a bonus it was considered compensation for the private equity buyout of his stock options and a paid bonus for 2007 in April of 2008 before the economy went in the pooper.
It's just sad that in good times the employees who do most the work don't get compensated, and when things are bad outside of what they did (bad decisions by upper management) they are the ones who feel the brunt of the blow.
On the flip side though, everyone who spent 100%+ of their income for years instead of being reasonable are the real culprits.
Don't let the door hit you in the ascot. The nerve of calculating the bonus based on the performance - that's just not American!
Not too many other corporations are hiring management either, many are cutting their pay. I'm sure somebody on the street, will take that boss job for less -- found a cool site; Balkingpoints ; incredible satellite view of earth
Im not talking about the buyout of 2007 Im talking about the bonus he got for 2008 after they took away the 401K and the 5% pay cut.
Let them walk! 10,000 other people can do their jobs as well or better than they can, and without the need for a bonus.
See how well the native American casino's pay them come limping home.
Yep, all these giants,were spending every last cent on building bigger and better.And now that things are down,there in survival mode.What ever happened to a stable profit? the prices of staying in vegas are ridiculas,let alone food, lodging, and even a night out with their families.We've outpriced the market folks,and these execs were chasing their huge bonuses on the backs of the workers who create these experiences. Insurance increases,layoffs are the easiest short term answer to maintaining the doors being open.Take a look at the wages these workers are making,or were making, and you can't blame them for being so upset over the fact these overpriced execs and ceo's raked in millions.And guess whos left taking the brunt of it? yep....its the folks who live paycheck to paycheck, as always. I don't feel sorry for any of em. As a matter of fact, I surely hope these execs feel the pain that workers are feeling right now. Maybe they'll understand what it feels like to have to lose some of their living standards, they were used to when things were good.Welcome Aboard with us! We have been there for a few yrs.And guess what? we are now looking at a 18% increase for power. God bless all the lower income folks who are working hard to keep what they have, while the higher incomes probably don't sweat the idea of these increases. Its no wonder America's in the shape were in. President Obama's taxbreak of the average of 12.00 a paycheck, just got sucked up on insurance increases. Its a shame because the middle class laborers are the ones who used to make the economy thrive.Does it make you wonder why were in the shape we are in? Middle class will never recover. While we sit and watch the rich get richer.I have no sympathy for personal greed who sacrafice the laborers for their bonuses.
The 5% pay cut and matching of 401 loss happened in November of 2008. Loveman got over $30,000,000 in the buyout, several million as a signing bonus to stay on when the company went private and his salary for the year. The rest was the value of security, usage of company property such as limos and the company jets.
Don't get me wrong; I am not an apologist for any of this as one of the people who are in the 5% and 401K group whos performance had nothing to do with what is going on...
get with the news he got another $39 million last month that had nothing to do with the buyout.
Bummer....now they have to live life just like the rest of us.
Acman, you are indeed incorrect. The $36,389,259 "bonus" you are referring to was a reflection of the increased value of options held by Loveman as a result of the merger. Keep in mind, the offer to go private was $90/share. His options were probably awarded when the stock was more in the $50 range. When the deal closed, all of those options are vested. If you still want to argue, go look at their 10-K. The information is on page 113.
GREED GREED GREED!!! THATS WHAT TOOK VEGAS DOWN!!! THE MOB LAYED OUT HOW TO TAKE PEOPLES MONEY,AND THESE SO CALLED MASTERS DID IT THERE WAY? YA THERE WAY WAS TO GET AS RICH AS THEY COULD AND RUN WHEN THE CARDS FELL! BOTTOM LINE IS THIS, BRING BACK THE MOB! THEY KNEW HOW TO TAKE CARE OF THERE GUESTS,AND WHEN THERE WAS TROUBLE,THEY TOOK CARE OF THAT TOO!JUST MAY PUT METRO ON NOTICE AS WELL TO THE FACT THAT IT ISNT THERE TOWN ANYMORE EITHER!!!
Now that the tide has turned, these executives are taking a double hit: Not only are they forced to work harder to keep their jobs, they are doing it for less money.
You mean the executives are having to do what they have been forcing upon the workers every day? Give me a break. I hope they get robbed like they rob their employees and customers and left with nothing but a paycheck to paycheck life. Then they will know the pain their employees, who they supposedly value as their most important asset, feel on a daily basis.