LAS VEGAS-Outside shareholders of Red Rock Resorts, Inc. (NASDAQ: RRR) demonstrated their dissatisfaction with directors at the company’s July 6th meeting of stockholders, with the most opposition shown toward the independent directors.
“Red Rock shareholders are realizing that the company’s directors do not serve their interests,” said Jason Kordosky, a research analyst with UNITE HERE. “Director opposition typically grows over time and we anticipate more dissent until the company installs a truly independent board.”
Assuming all insiders voted shares in favor of management’s recommendation, the outside Class A shareholder vote “for” the directors was 71% for Frank Fertitta, 70% for Lorenzo Fertitta, 60% for James Nave, 60% for Robert Lewis, and 59% for Robert Cashell, Jr. That means between 29% and 41% of outside shares were not voted “for” the company’s directors.
Ernst & Young reports that only 3.8% of Russell 3000 directors received less than 80% support from all shareholders (combined inside and outside) in 2017 (YTD, 5/31/2017). Therefore, a significant number of Red Rock’s outside shareholders expressed discontent with the entire board.
Red Rock’s closing share price on July 5th was down 3.1% year-to-date compared with NASDAQ Composite Index’s gain of 13.3%. As of May 8th, Class A shareholders held 58.4% of the equity but only controlled 12.9% of the vote.
Leading up to the annual meeting, UNITE HERE sent communications to Red Rock’s investors that criticized the independent directors for anti-shareholder governance measures and related-party transactions and encouraged investors to withhold votes from its independent directors. ISS recommended withholding on all of the company’s directors.
UNITE HERE represents 270,000 working people across North America, including 100,000 casino workers. Our members are beneficiaries of pension funds with over $60 billion in assets. Since 2012, we have pursued a program of improving corporate governance practices at listed companies. UNITE HERE locals represent employees at three of the casinos managed or owned and operated by Red Rock’s subsidiary, Station Casinos.