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Jan 30, 2020

How Caesars improved governance through ‘trial by fire’

Why Caesars Entertainment Corporation took home the 2019 Corporate Governance Award for governance team of the year (large cap)

Caesars Entertainment Corporation this year wins the award for governance team of the year (large cap) after making strides on governance while undergoing what one of our judges called ‘trial by fire.’ Michelle Bushore, leader of the governance team, joined Caesars in October 2018. She was promoted in June 2019 from deputy general counsel to executive vice president, general counsel, chief legal & risk officer and corporate secretary, succeeding Timothy Donovan, who had been Caesars’ general counsel for 10 years.

The team spent the first part of 2018 dealing with Caesars’ emergence from bankruptcy in October 2017. Next came a sharp drop in the company’s share price following the second-quarter earnings call on August 1, 2018. This triggered a round of shareholder activism as investors voiced concerns to the board and management.

In February 2019 activist investor Carl Icahn started to build a stake in Caesars. Negotiations with him led the company the following month to add three new directors to its board, while three directors stepped down. A new CEO, Anthony Rodio, joined the company and the board in May 2019. Then in June Caesars agreed to merge with Eldorado Resorts in a deal valued at $17.3 billion.

For the governance team, this period demanded careful and extensive investor engagement. The team began this process after the company had emerged from bankruptcy and it took the initiative to deal with investors wanting change at the company even before Caesars was aware of Icahn’s interest. ‘By the time we knew he was building a stake, we were ready,’ says Renee Becker, vice president, chief counsel for corporate and securities and assistant secretary.

During this time, it was important for the governance team to ensure the board was on the same page in terms of investor engagement. Members of the team looked at communications policies at other companies and consulted with directors about their experiences on other boards to establish best practices, Becker explains.

As a result, the team created a policy directing that all communications regarding the company between directors and shareholders, the media and other outside parties are funneled through the board chair, with the expectation that the chair will consult with the CEO and general counsel ahead of making such communications. The team also began to develop a more formal shareholder outreach program, something that had not previously been necessary given that 60 percent of Caesars’ shares were held by two private equity firms.

The governance team last year also saw that a lack of female representation on the Caesars board needed to be addressed, and by the end of 2018 it had onboarded two female directors. In total, the team dealt with the onboarding of six new directors in less than six months. It helped create a formal training program for new directors that educated them about their role as board members and familiarized them with the company’s senior leaders and operations.

In addition, ahead of what was expected to be a tough 2019 proxy season, the governance team further improved shareholder engagement, establishing a formal outreach program for the 2019 AGM.

In recognition that Caesars was no longer a controlled company, the team opted for a total overhaul of the proxy statement along the lines of modern disclosure – adding a summary section, color, director photos and tables and charts. Among other things, the company’s compensation program was enhanced in response to investor requests that it include more performance-based measures and new metrics. In the end, all proposals at the 2019 AGM passed comfortably.

This article originally appeared in the latest Corporate Secretary special report.


Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...