MGM Resorts International Chairman and CEO Jim Murren, who led the casino giant’s growth into new markets nationally and internationally while solidifying the company’s leadership on the Las Vegas Strip, said Wednesday he would step down from his positions as soon as a successor is named.
The unexpected news came at the outset of MGM’s fourth quarter earnings announcement.
In a statement, MGM Resorts said the board had formed a committee of independent directors to conduct the search process for a new CEO. A timetable was not given.
At the end of the company’s quarterly conference call, Murren, 58, who has been MGM’s CEO for 12 years, said “I’m not going anywhere soon” and that he expected to be on the next conference call in three months. His comments suggested the search process will take a while.
“Why am I doing it now? After 12 years, especially, after the last couple of years, we’ve really changed the dynamic of this company,” Murren said during the conference call’s question-and-answer session. “The company has never been in a better position. When I thought (it) through, how I could best serve MGM going forward, I thought it was pretty clear that a leader should help lead a company into the next decade or two.”
Murren said he would remain in all his corporate board positions until a new CEO was hired and he would help in the transition.
Murren’s employment agreement with MGM expires in 2021. He earns $2 million a year in base salary.
According to the company’s 2019 proxy statement filed with the Securities and Exchange Commission, Murren earned $12.8 million in salary, bonus and other compensation in 2018, $14.6 million in 2017 and $16.6 million in 2016.
Murren said he didn’t make the decision to step down lightly. He cited the company’s current financial structure, saying that “meaningful strides” have been made to strengthen MGM’s balance sheet through an “asset-light strategy.” In recent statements he has termed MGM’s financial structure a “fortress balance sheet.”
However, the announcement follows a year of turmoil for MGM Resorts. The company’s depressed stock price at the end of 2018 attracted activist investors who sought changes in the corporate structure. MGM’s board formed an ad-hoc committee that was assigned to appraise the company’s expansive real estate portfolio. MGM was also weighed down by more than $15 billion in long-term debt.
That led to the sale/leaseback of Bellagio in October for $4.25 billion and the outright sale of Circus Circus Las Vegas to Treasure Island owner Phil Ruffin for $835 million. In January, a joint venture between real estate investment trusts MGM Growth Properties and an affiliate of the Blackstone Group took ownership of MGM Grand Las Vegas and Mandalay Bay in a transaction valued at $4.6 billion. The properties were leased back to MGM Resorts.
In total, the transactions provided MGM Resorts net proceeds of $8.2 billion, which was used to retire $3.1 billion of the company’s long-term debt, which now stands at $11.3 billion as of Dec. 31.
In 2019, through the MGM 2020 company-wide cost reduction effort, more than 1,000 employees were laid off while several long-time executives took early retirement buyouts.
Murren became chairman and CEO of MGM Resorts in 2008 when the late Terri Lanni retired from those positions. At the time, the $9 billion CityCenter development on the Las Vegas Strip was a year from opening, its finances ravaged by the recession that was gripping the country.
However, Murren and his team – with advice from the late billionaire Kirk Kerkorian, MGM’s largest shareholder at the time, and Senate Majority Leader Harry Reid of Nevada, who asked banks and financial institutions to loan MGM the money needed to finish CityCenter – got the project completed and opened in December 2009.
Murren joined MGM in 1998 as Chief Financial Officer after a career as a Wall Street analyst. He became the company’s president in 1999 and its Chief Operating Officer in 2007.
“Jim has led the company through growth, transforming it into a global entertainment company with a worldwide footprint and creating value for MGM Resorts shareholders,” Roland Hernandez, the MGM board’s lead independent director, said in a statement.
Under Murren’s direction, MGM Resorts expanded through construction and acquisition. The company built the $1.2 billion MGM National Harbor in Maryland and the $960 million MGM Springfield in Massachusetts and acquired casinos in Ohio and New York.
Murren also led MGM Resorts’ expansion in Asia, which saw the opening of two properties in Macau and the company’s current effort to obtain a license in Osaka, Japan. He also led MGM’s efforts in sports betting through partnerships with professional sports leagues and the company’s investment into online sports wagering with Roar Digital.
Murren said expects MGM Resorts will evolve over time into a global, digital, sports and entertainment company. He also plans to continue to lead the company’s efforts Japan, including heading a large delegation to speak in Osaka in May on why MGM Resorts should earn the integrated resort license for the location.
“Leading MGM Resorts has been the most rewarding and fulfilling experience in my professional career,” Murren said in a statement. “We have a solid leadership team in place, and I am confident that they will work with my successor to continue the company’s trajectory of growth and expansion.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.