Land and Buildings Investment Management issued an investor presentation providing a detailed analysis supporting what it views as the urgent need for change at MGM Resorts International.
Land and Buildings, a 0.38 percent shareholder of MGM, says the casino operator has failed to perform in line with its peers and urged shareholders to elect a group of four individuals – Mathew Hart, Richard Kincaid, Jonathan Litt and Marc Weisman – to replace four current members of the board.
“When we initially brought our ideas to MGM, we genuinely hoped to avoid a public campaign and work constructively with the Board. Unfortunately this was not a path they were willing to take, and now that we find ourselves in a contested situation, we’re actually pleased to have this opportunity to put a spotlight on the Company,” said Jonathan Litt, founder of Land and Buildings.
Land and Buildings detailed reasons why the company is underperforming, which included a substantial stock underperformance, lack of accountability and an overleveraged balance sheet.
“MGM’s total shareholder return has lagged its peers by 433% since Jim Murren became CEO on December 1, 2008, and has lagged over the trailing 1-, 3- and 5-year periods,” L and B says.
The company went on to say: “MGM has a history of very poor capital allocation decisions in our view, has been a consistent underperformer and persistently trades at a depressed valuation – and yet we see no evidence that the Board has held management accountable.”
L and B says MGM’s performance in comparison to its peers has been “unacceptable” and that the company needs a “wakeup call.”
“The long-term performance of the Company relative to its peers has been unacceptable, in our view, and as we have done our due diligence we have uncovered what we believe are serious concerns about MGM’s current boardroom culture. In our view, MGM is in need of a wakeup call, which we believe can benefit all shareholders.”
Litt has urged MGM Resorts to split into a separate real-estate investment trust and hotel-management company to create sustained shareholder value.