LAS VEGAS--UNITE HERE continues to encourage Red Rock Resorts shareholders to withhold their votes on the company’s directors at the upcoming July 6, 2017 meeting of stockholders in accordance with ISS recommendations.
“Red Rock’s directors, especially its putative independent directors, have consistently failed in their fiduciary duty to the company’s public investors,” said Jason Kordosky, a research analyst with UNITE HERE. “Public investors need a responsive board and truly independent directors, especially now that they own a majority of the company but still have no say in corporate governance because of the dual-class share structure.“
Read UNITE HERE’s critique of Red Rock’s corporate governance and related-party transactions.
Red Rock’s independent directors comprise the committee that is responsible for the company’s corporate governance. Despite this responsibility, they have failed to prevent major governance risks, including retaining several antitakeover devices which can be detrimental to shareholder value.
Red Rock’s IPO governance was flagged last year by the Council of Institutional Investors as a "perfect example" for its policy statement calling on newly public companies to include sunset mechanisms for provisions that insulate management from public shareholders. Furthermore, Red Rock’s anti-shareholder corporate governance stands in contrast to the guidelines of major proxy advisors and the Investor Stewardship Group – which includes four of Red Rock’s significant outside investors: BlackRock, JP Morgan, T. Rowe Price, and Vanguard.
Directors Nave, Lewis, and Cashell also have a history of approving transactions that benefit insiders and related parties. An example of this is the $120 million price of a recent related-party land purchase, which was described as “on the high side” by one significant shareholder, according to Bloomberg.
Despite Red Rock’s dual-class share structure, which gives the Fertitta family control of the company, outside investors can send a clear and strong message that things need to change by withholding their votes from the company’s directors.
UNITE HERE is a labor union that 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 been pursuing 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.