Caesars Entertainment (NASDAQ:CZR) is implementing a majority vote standard for uncontested director elections following a push by hospitality labor union Unite Here.
A member of the Council of Institutional Investors, the union represents hospitality workers in the US and Canada and those employees are beneficiaries of various plans with more than $60 billion assets under management. Caesars will implement the majority voting standard at its July board meeting.
The agreement came after Unite Here provided notice to Caesars of its intention to independently solicit proxies for a majority vote shareholder proposal at the Company’s upcoming annual meeting,” according to a statement issued by the labor group.
The union previously pushed for a similar change at Eldorado Resorts in 2019, winning the support of 70% of investors. Eldorado acquired Caesars for $17.3 billion in 2020, creating the largest domestic gaming company by number of venues. The buyer’s management team runs “new Caesars.”
Caesars Listening This Time
In 2019, Unite Here made five non-binding proposals, including a recommendation to adopt a majority vote standard.
While that proposal was overwhelmingly approved by Eldorado investors, the gaming company didn’t implement the change. Following two years of inaction by the casino operator, the union threatened to again bring forth the proposal.
“In response, Caesars committed to implementing a majority voting standard, and Unite Here agreed it would not independently solicit proxies at the upcoming annual meeting,” the union said in the statement.
Unite Here’s Nevada chapters include the Culinary Workers Union Local 226 Las Vegas, Local 165 Las Vegas and Local 226 Reno. Caesars is the second-largest operator on the Las Vegas Strip and it controls six gaming venues in the Reno/Lake Tahoe market.
Board Governance Matters
With more investors of all stripes prioritizing environmental, social and governance (ESG) principles, companies are under pressure to maintain diverse, fairly elected, independent boards or risk the wrath of ESG-focused shareholders.
“We believe that board responsiveness is critical to upholding shareholder rights and maximizing long-term shareholder value,” says Unite Here senior research analyst L. Tchernyshyov.
Led by Executive Chairman Gary Carano, Caesars’ board consists of 10 members, including three women. Just one member is a person of color and 60% of the board is age 65 or older, according to company data.
Academics and consultants view boards as fertile ground for bolstering corporate governance efforts while investors argue board elections are prime opportunities for companies to give provide voices to a variety of investors. That could prove accurate at Caesars.
“This reform will create a more meaningful voice for shareholders in selecting directors. As a relatively new S&P 500 company and as a leader in the gaming industry, Caesars Entertainment should be responsive to its shareholders and a role model for best corporate governance practices,” adds Tchernyshyov.
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