Caesars Entertainment’s search for a new chief executive may stretch past current CEO Mark Frissora’s planned departure, a gaming analyst told investors Monday.
Deutsche Bank gaming analyst Carlo Santarelli said in a research note that it was unlikely the company would name an interim CEO, leading to speculation that Frissora would remain in place past the planned Feb. 8 parting.
Frissora announced his departure Nov. 1. He joined Caesars in 2015 and led the company though its lengthy bankruptcy reorganization that was completed last year.
Caesars hired an executive search firm to seek candidates and a sub-committee of the company’s board is overseeing the process.
Santarelli said the firm, Illinois-based Heidrick & Struggles, has been interviewing candidates from both within the gaming industry and C-level executives from “consumer brand focused companies outside of gaming.”
Santarelli said, “At present, we believe the process has focused on current public company CEO’s, or those with CEO experience.” He added that hiring process “could extend well into 2019” and that it was “unlikely” Caesars would name an interim CEO, leading to speculation that Frissora would remain in the position past his planned departure.
A Caesars insider told CDC Gaming that the CEO search “will go as long as it takes to find the best candidate and (Frissora) will remain as CEO until that happens. (There is) no deadline.”
Frissora, 62, had been CEO of rental car giant Hertz prior to joining Caesars. He took over as CEO from Gary Loveman, who remained chairman of the company until last year.
Frissora had reportedly fallen out of favor with certain large shareholders, mainly hedge funds that gained ownership when the bankruptcy was finalized. The New York Post reported in September that one hedge fund wanted to force a sale of the company.
On the second quarter earnings call in August, Frissora complained much of Caesars stock was owned “by people not in it for the long-haul.” A few weeks later, Frissora purchased nearly $1 million of the company’s stock as a vote of confidence.
“I have been privileged to lead this iconic company and am proud of all that our team has accomplished,” Frissora said in a November statement. “Together, we navigated a complex restructuring process.”
In a Securities and Exchange Commission filing last month, Caesars said Frissora would be retained as a consultant for six months after Feb. 9 and will be paid $83,333 per month. Frissora will also receive a severance of $8 million, payable over 24 months, as well as a bonus and other benefits, including stock options. Caesars said it expects to record charges of $30 million in the fourth quarter related to Frissora’s departure.
In his research note, Santarelli said he discussed numerous topics with Caesars management. He said Caesars continues to feel comfortable with its occupancy on the books in the fourth quarter of 2018 and first quarter of 2019, given casino room night bookings and a solid convention and entertainment schedule.
Santarelli said company management believes tax rebates in 2019 and lower fuel costs could boost visitation to Caesars’ regional casinos and entice Californians to drive to Las Vegas.
Caesars executives said they continue to “monitor the mergers and acquisitions landscape,” but “equity valuations” have slowed the company’s aggressiveness. Caesars also plans to prioritize debt reduction relative to share repurchases.
Shares of Caesars closed at $7.12 Monday on the Nasdaq, down 33 cents or 4.43 percent.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
