Who will succeed James Murren at the helm of MGM Resorts International? Not surprisingly, it’s become a question of enormous interest to the investment community.
“While we have no doubts in the board (of directors’) ability to locate and recruit a strong successor, we could see the stock potentially in a holding pattern in the meantime,” said SunTrust Bank gaming analyst Barry Jonas.
The company said a special committee of directors was being formed to conduct the search, but its membership was still a mystery last week.
“When we are able to release that information, we will,” spokeswoman Debra DeShong said in a recent e-mail to the Nevada Independent.
The board includes longtime members Alexis Herman, U.S. secretary of labor under President Bill Clinton, and Rose McKinney-James, who has held several government positions in Las Vegas and with the state of Nevada.
Then there’s activist investor Keith Meister, founder of Corvex Management, who owns around 3 percent of the company and joined the board last January. A long-time associate of corporate raider Carl Icahn, Meister is one of three directors manning a special committee charged with appraising the company’s real estate holdings and is reputed to have been a driving force behind the billions of dollars’ worth of deals on the Las Vegas Strip over the last several months that divested MGM of its ownership of Bellagio, Circus Circus and the MGM Grand.
Murren announced his resignation on February 12 and, according to the Independent, spent much of the next day in meetings with employees in Las Vegas explaining his decision to step down as chairman and CEO a year ahead of the expiration of his contract.
The 58-year-old’s tenure with MGM dates back to 1998, when he signed on as chief financial officer of Kirk Kerkorian’s MGM Grand Inc. after a successful career as an analyst with Deutsche Bank. He became chairman and CEO in 2008, on the eve of the global financial crisis, and managed to bring the Strip’s massive CityCenter resort complex to completion in the teeth of the Great Recession.
Murren is credited with spearheading MGM’s growth through construction and acquisition, leading the company into the burgeoning Macau market and helping position the company as a frontrunner for a megaresort license in Japan. In the U.S., he led expansion through a combination of large-scale greenfield developments—the $1.2 billion MGM National Harbor in Maryland and the $960 million MGM Springfield in Massachusetts—and strategic acquisitions in the Cleveland and greater New York City-area markets.
He also is recognized as one of the leaders in establishing Las Vegas as a major sports city through MGM’s co-development of the T-Mobile Arena, home of the NHL’s Las Vegas Golden Knights and the Las Vegas Aces of the WNBA.
But more recent years have been ones of turmoil for the company, starting with the October 2017 shooting deaths of 59 attendees of an outdoor concert on MGM land on the Strip, and the wounding of hundreds more by a gunman firing from a hotel suite atop the company’s Mandalay Bay.
The company’s response to the barrage of victim litigation did not cast it in the best light public relations-wise, although a settlement has since been reached that will resolve the claims with a payout of up to $800 million.
Early last year, under pressure from activist investors, MGM announced a corporate-wide cost-reduction program that’s resulted in the exits of several top executives and layoffs involving more than 1,000 employees.
This year opened with a major challenge as well, in the form of the viral outbreak in China that forced Macau’s casinos to close for two weeks, including two properties that are majority-owned by MGM. The contagion has brought visitation to the gambling hub to a virtual standstill.
Several analysts are saying they’d like to see Murren’s successor come with a strong gaming background. Some say ideally the search should include separate candidates for chairman and CEO. Among the Strip’s largest gaming companies, only MGM and Las Vegas Sands have combined those roles.
“It concentrates a lot of power with a single person,” Andrew Challenger said, vice president of national executive recruiters Challenger, Gray & Christmas, told the Independent.
However it plays out, a decision on the choice, or choices, might take months.
Challenger said the CEO turnover rate nationally was up 37 percent in January and of the 198 replacements tracked that month, 107 came from outside the company.
“This is a tough environment, and a lot of companies don’t have the talent on the inside waiting in the wings.”
