⁍ An entrenched, inexperienced and overly friendly board can enable value destruction, or worse.
⁍ Crown Resorts’ predicament is not unique to the industry or beyond.
⁍ In Macau, rival Galaxy Entertainment has multiple members of the founding family as directors and several who have been there for over a decade.
– A scandal-plagued Australian casino company is looking for a new CEO after its founder stepped down Thursday. James Packer, who owns a 37% stake in Crown Resorts, announced that he will step down from the board of the company, which is developing a luxury hotel in Sydney, the BBC reports. The move came after shareholders, including pension funds, protested the board’s “cozy” relationship with Packer, who is also the company’s largest shareholder. At the company’s annual general meeting, shareholders voted against three directors seeking re-election, with 58% of the vote against them, Reuters reports. Director John Horvath, who was re-elected, said he would step down after receiving just 58% support. Horvath was appointed as deputy chairman just months earlier. It was all part of the gambler’s conceit—the theory that a bettor can stop his own bad behavior while still engaging in it—at Crown. Five years after the controversial marketing operations that led to jail-time for employees in China, Crown kept chasing the country’s wealthy clientele, a practice also being investigated. Several also held their seats for a decade or longer, giving cause to question their independence under Australian Stock Exchange guidelines. Crown’s predicament is not unique, to the industry or beyond. In Macau, rival Galaxy Entertainment has multiple members of the founding family as directors and several who have been there for over a decade. An entrenched board can enable value destruction, or worse. It’s a crapshoot best avoided.
Source: https://www.reuters.com/article/us-australia-crown-resorts-breakingviews/breakingviews-crown-resorts-disabused-of-gamblers-conceit-idUSKBN2770AV