Jim Murren left his role as CEO of MGM Resorts last month with a $32 million platinum parachute. It’s sparked criticism from industry observers including Charles Elson, director of the University of Delaware’s Center for Corporate Governance, who said the MGM board decision to approve the payout leaves the wrong impression, at the very least.
“That’s called having your cake and eating it, too,” Elson told Bloomberg News. “I don’t think that will play very well with investors.”
Back in February, MGM announced that Murren, CEO since 2008, would continue to serve until a successor was found, remain throughout the transition, and then act as a consultant throughout 2021. His pay for that additional service amounted to $32 million—including a $4 million guaranteed bonus for 2020, $575,000 a month in 2021, and $12 million in severance.
According to the contract cited by Bloomberg, if Murren left of his own accord during that period, the payments would end and he would be ineligible for severance. When the company fast-tracked the succession and named Bill Hornbuckle as CEO, it called Murren’s exit a “termination without good cause.”
That language, apparently, made him eligible to collect the full $32 million.
Meanwhile, Murren has agreed to head up a Nevada task force on the coronavirus, without compensation. “He publicly expressed an altruistic intent, which is a good thing,” Elson said. “But to see that the board compensated him in that way, that’s troubling. If they’d given him something—fine. But the full value?”
According to the Las Vegas Review-Journal, former Caesars Entertainment CEO Mark Frissora pocketed $30 million when he left the company last year, so the size of Murren’s exit package may not be extraordinary. It’s the timing that’s unfortunate, as MGM lays off tens of thousands of workers in the wake of the coronavirus scare.
Certainly, Murren’s accomplishments can’t be dismissed. He was a leading proponent of sports betting, and during his tenure, MGM signed deals with the NBA, MLS, NHL and NFL. GamblingNews.com reported that he “was essential to the resolution of multiple challenges MGM faced, not least of all the October 1, 2017 shooting when a gunman killed 58 people and wounded hundreds.”
But the Washington, D.C. Daily Caller chided MGM for “redefining Murren’s exit so that he wouldn’t miss out on a penny of his perks” and said the choice “may not sit well with MGM’s rank-and-file staff, for whom MGM could only muster two weeks’ pay and $1 million to be divided among roughly 74,500 employees.”
“It’s not like Murren will end up in the poorhouse if he didn’t fill his wheelbarrow to the brim on his way out the door,” the publication observed.
