52 slides from Mgm Resorts International's proxy contest presentation, May 8, 2015
Slide 1: Honesty, Integrity, and Candor
“HONESTY, INTEGRITY, AND CANDOR” May 2015 www.RestoreMGM.com www.LandandBuildings.com
Slide 2: Honesty, Integrity, and Candor
HONESTY, INTEGRITY, AND CANDOR On May 6, 2015, the Board of Directors (the “Board”) of MGM Resorts International (“MGM” or the “Company”) issued a letter to MGM shareholders responding to the presentation that we filed in support of our nomination of four director nominees – In its letter, the Boa
Slide 3: MGM has been and continues to actively evaluate all strategic initiatives
“MGM HAS BEEN – AND CONTINUES TO – ACTIVELY EVALUATE ALL STRATEGIC INITIATIVES FOR THE COMPANY” In its most recent letter, the Board asserts that they regularly explore a REIT structure and are currently doing so: – If MGM had been exploring a REIT strategy prior to our involvement, why did Jim Mu
Slide 4: The Company's price improvement following the release of our plan has been lost
THE COMPANY’S PRICE IMPROVEMENT FOLLOWING THE RELEASE OF OUR PLAN HAS BEEN LOST $24.00 April 9 MGM discloses $400 million February 17 CityCenter $23.00 Mr. Murren appears on CNBC, where special dividend he states that MGM is willing to consider a REIT structure $22.00 $21.00 April 20 MGM announces t
Slide 5: We have ensured that your company has performed very well
“WE HAVE ENSURED THAT YOUR COMPANY HAS PERFORMED VERY WELL…” In perhaps what we view as the Board’s most disingenuous argument, they are actually attempting to convince shareholders that the Company has performed well The Board uses a March 2009 date – when the Company was nearly bankrupt – to b
Slide 6: How we measure MGM's performance
HOW WE MEASURE MGM’S PERFORMANCE This table reflects our view of MGM's performance relative to that of its TSR peers over the last 1-, 3- and 5-year periods and since Mr. Murren became CEO, ending on March 16, 2015 (the day prior to the release of our proposal) Since Mr. Murren 1-Year 3-Year 5-Year
Slide 7: MGM's TSR compared to Sands
MGM’S TSR COMPARED TO SANDS 10% MGM 1-Year 100% 3-Year MGM Sands Sands 5% 80% 0% -5% 60% -10% 40% 36.3% -15% 20% -20% 6.4% -25% 25.2% 0% -30% 33.7% -20% -35% -40% -40% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 400% 5-Year 2500% Since Mr. Murren became CEO MGM M
Slide 8: MGM's TSR compared to Wynn
MGM’S TSR COMPARED TO WYNN 10% 1-Year 120% 3-Year MGM Wynn 100% 0% 80% -10% 60% 40% 36.3% -20% 20% 17.0% 25.2% -30% 0% -20% -40% MGM 43.3% -40% Wynn -50% -60% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 350% 5-Year 1000% Since Mr. Murren became CEO MGM MGM Wynn W
Slide 9: MGM's TSR compared to Penn
MGM’S TSR COMPARED TO PENN 40% 1-Year 100% 3-Year MGM MGM Penn Penn 30% 80% 28.4% 20% 66.5% 60% 10% 40% 36.3% 0% 20% -10% 0% -20% 25.2% -20% -30% -40% -40% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 250% 5-Year 350% Since Mr. Murren became CEO MGM MGM Penn 300%
Slide 10: MGM's TSR compared to Boyd
MGM’S TSR COMPARED TO BOYD 10% 1-Year 100% 3-Year MGM MGM 5% Boyd Boyd 4.3% 80% 75.5% 0% 60% -5% 40% -10% 36.3% -15% 20% -20% 0% -25% 25.2% -20% -30% -40% -35% -40% -60% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 140% 5-Year 350% Since Mr. Murren became CEO MGM
Slide 11: MGM's TSR compared to Pinnacle
MGM’S TSR COMPARED TO PINNACLE 50% 1-Year 250% 3-Year MGM MGM 40% Pinnacle 40.2% Pinnacle 218.6% 200% 30% 20% 150% 10% 100% 0% -10% 50% 36.3% -20% 25.2% 0% -30% -40% -50% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 350% 5-Year 700% Since Mr. Murren became CEO MGM
Slide 12: MGM's TSR compared to Hyatt
MGM’S TSR COMPARED TO HYATT 30% 1-Year 100% 3-Year MGM MGM Hyatt Hyatt 20% 80% 10% 10.6% 60% 42.1% 0% 40% -10% 20% 36.3% -20% 0% 25.2% -30% -20% -40% -40% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 140% MGM 5-Year Hyatt 120% 100% 80% 62.5% 60% 40% 59.8% 20% 0%
Slide 13: MGM's TSR compared to Starwood
MGM’S TSR COMPARED TO STARWOOD 15% 1-Year 100% 3-Year MGM MGM 10% Starwood Starwood 8.8% 80% 5% 60% 60.0% 0% -5% 40% -10% 36.3% 20% -15% -20% 0% -25% 25.2% -20% -30% -40% -35% Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Mar-14 Jun-14 Sep-14 Dec-14 140% MGM 5-Year 700% Since Mr. Murren becam
Slide 14: MGM's TSR compared to Marriott
MGM’S TSR COMPARED TO MARRIOTT 70% 1-Year 140% 3-Year MGM MGM Marriott 127.9% 60% Marriott 120% 56.7% 50% 100% 40% 80% 30% 60% 20% 40% 36.3% 10% 20% 0% 0% -10% -20% -20% 25.2% -40% -30% -40% -60% Mar-14 Jun-14 Sep-14 Dec-14 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 250% 5-Year 600% Since
Slide 15: MGM's TSR compared to Hilton
MGM’S TSR COMPARED TO HILTON 40% 1-Year MGM 30% Hilton 31.5% 20% 10% 0% -10% -20% 25.2% -30% -40% Mar-14 Jun-14 Sep-14 Dec-14 Source: Bloomberg; Note: As of March 16, 2015 unaffected closing price LANDandBUILDINGS 14
Slide 16: Wynn and Sands are the closest operational peers
WYNN AND SANDS ARE THE CLOSEST OPERATIONAL PEERS The Board takes issue with us comparing the Company’s operations to only Wynn and Sands – We believe any knowledgeable investor who closely follows the gaming space will recognize that Wynn and Sands are MGM’s closest operational peers • We note tha
Slide 17: EBITDA margin comps
EBITDA MARGIN COMPS We believe the Board inappropriately compares MGM’s EBITDA margin to regional gaming companies – Boyd Gaming Corporation (“Boyd”), Penn National Gaming Inc. (“Penn”), and Pinnacle Entertainment Inc. (“Pinnacle”) – and a company in Chapter 11 (Caesars) – We acknowledge that ther
Slide 18: MGM's Las Vegas properties have lagged in most years since Mr. Murren became CEO
MGM’S LAS VEGAS PROPERTIES HAVE LAGGED IN MOST YEARS SINCE MR. MURREN BECAME CEO Despite holding several of the top properties on the Las Vegas Strip, MGM has been unable to surpass the operating efficiency of Wynn and Sands during most years – Since 2008, MGM’s average EBITDA margin of their Las
Slide 19: Consolidated LTM EBITDA margin
CONSOLIDATED LTM EBITDA MARGIN 40 LTM EBITDA Margin Felicia Hendrix, Barclays Capital: “[A] question for you just on the cost side of things and I know it's harder to talk about 35 flow-through this quarter, but as we think about the 50% goal, I'm wondering if that still stands for the year. And whe
Slide 20: Disturbing recent trend in flow-through
DISTURBING RECENT TREND IN FLOW-THROUGH MGM Las Vegas Strip Quarterly Flow-Through 80% Note: “Flow-Trough” is defined as incremental EBITDA divided 60% 55% by incremental revenue 40% 37% 26% 20% 0% 0% -20% “50% [flow-through] is still a pretty good benchmark.” -40% - Jim Murren, Chairman & CEO of MG
Slide 21: MGM's EV/EBITDA 2014 multiple was about 10.5x, above the median industry multiple
“MGM’S EV/EBITDA 2014 MULTIPLE WAS ABOUT 10.5x, WHICH IS ABOVE THE MEDIAN INDUSTRY MULTIPLE OF 9.5x” The Board attempts to assert that MGM’s valuation is in line with its peers, and again includes regional gaming companies (Boyd, Penn, and Pinnacle) and a company in Chapter 11 (Caesars) We do no
Slide 22: MGM persistently depressed valuation
MGM PERSISTENTLY DEPRESSED VALUATION Annual EV/EBITDA 28.0x 26.0x Since 2008, MGM’s average EV/EBITDA was 12.4x, compared to 16.4x and 15.0x 24.0x for Sands and Wynn, respectively 22.0x 20.0x 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 2008 2009 2010 2011 2012 2013 2014 2015E Source: Deutsche Bank, Apri
Slide 23: History of strong ROIC investments
“HISTORY OF STRONG ROIC INVESTMENTS” The Board asserts in its letter to shareholders that the Company has a “history of strong ROIC investments” – We agree that MGM China has had a solid return, however, the 19% ROIC in Detroit should be considered within the standard range of what is acceptable;
Slide 24: MGM has made significant progress in improving its balance sheet
“MGM HAS MADE SIGNIFICANT PROGRESS IN IMPROVING ITS BALANCE SHEET” MGM’s “progress” has slowed Does MGM really have “Continued dramatically and the Company free cash flow growth?” is still considerably over- leveraged, in our view $ in millions, except per share 2009 2010 2011 2012 2013 2014 Fre
Slide 25: L&B lacks credibility
“L&B LACKS CREDIBILITY” MGM’s share price improved 10.6% the day our proposal was released and over the following three-day period MGM’s stock rose by 15% and nearly 25% of the Company’s shares outstanding traded hands – or more than one-third of the unaffiliated shares of the Company We retaine
Slide 26: The dead hand put is dead
THE DEAD HAND PUT IS DEAD Even if the provision was requested by Yes, we do believe that the dead Would the Board have the Company’s lenders, why would the hand put is indeed an egregious made this amendment if Board approve the request? entrenchment technique not for a shareholder To be cle
Slide 27: False insinuations made against Roland Hernandez and comments by Richard Kincaid
“FALSE INSINUATIONS MADE AGAINST ROLAND HERNANDEZ AND COMMENTS MADE BY L&B NOMINEE RICHARD KINCAID CALL INTO QUESTION L&B’S INTEGRITY” In its recent letter, we believe the Board attempts to disassociate itself from the set of events that led to Richard Kincaid resigning from the board of Vail Reso
Slide 28: Excellent executive-shareholder alignment
“EXCELLENT EXECUTIVE-SHAREHOLDER ALIGNMENT” $14,000,000 $13,752,443 140% $12,000,000 $10,991,426 120% $9,775,903 $9,933,557 $9,641,477 $10,183,159 CEO Compensation Total Shareholder Return $10,000,000 100% $8,000,000 80% $6,000,000 60% $4,000,000 40% $2,000,000 20% $0 0% -$2,000,000 -20% -$4,000,000
Slide 29: Jim Murren's recent MGM stock sales
JIM MURREN’S RECENT MGM STOCK SALES $30.00 March 3, 2014 Sold 10,675 shares October 7, 2014 $28.00 for $295,343 Sold 4,459 shares September 10, 2013 for $97,206 $26.00 Sold 150,000 shares for $2,859,090 $24.00 $22.00 May 13, 2013 May 1, 2014 Price Per Share Sold 250,000 shares Sold 187,500 shares $2
Slide 30: Share repurchases and Robert Baldwin stock sales 2006-2007
Between 2006 and 2007: – MGM repurchased 16.4 million shares for over $1 billion, and – Robert Baldwin sold more than 750,000 shares for more than $64 million HONESTY, INTEGRITY, AND CANDOR Source: Company filings 29
Slide 31: Robert Baldwin's sales of MGM stock
ROBERT BALDWIN’S SALES OF MGM STOCK $100 December 2007 In 2006, the Company repurchased 6.5 Sold 382,813 million shares for a total of $247 million, at $90 shares for $34,573,154 – an an average cost of $37.98 per share February 2005 $80 average price per Sold 1,440,000 share of $90.31 In 2007, the
Slide 32: Strong corporate governance practices
“STRONG CORPORATE GOVERNANCE PRACTICES” We believe that good corporate governance goes well beyond any single provision and the claim of good governance in the face of poor performance leads to numerous questions we have for the Board: Why did the Board not even interview any of our nominees prior
Slide 33: Honesty, Integrity, and Candor
“HONESTY, INTEGRITY, AND CANDOR” Playing games, in our view, with the annual meeting and record date to minimize the full impact of shareholder democracy Cherry-picking peer groups and performance measurement dates to misrepresent company performance Insiders selling massive quantities of stock whil
Slide 34: Our director nominees
*) MGM RESORTS INTERNATIONAL™ OUR DIRECTOR NOMINEES 33 LANDandBUILDINGS
Slide 35: Land and Buildings' director nominees
LAND AND BUILDINGS’ DIRECTOR NOMINEES Our four independent, highly experienced director nominees will provide a fresh perspective to the Board and, given their deep real estate and finance experience, will help properly evaluate the strategic options for MGM’s real estate and capital structure Mat
Slide 36: Matthew Hart
MATTHEW HART Former lodging executive as President, CFO and COO at Hilton Hotels Corporation (“Hilton”) – President and Chief Operating Officer of Hilton, a global hospitality company, from 2004 until his retirement in 2007, where he was responsible for all operational aspects of Hilton – Also ser
Slide 37: Matthew Hart case study: Hilton
MATTHEW HART CASE STUDY: HILTON Mr. Hart’s career at Hilton started in $50 May 1996 when he was appointed CFO In May 2004, Mr. Hart’s role at Hilton $45 Hilton’s share price improved 178.5% from the expanded as he assumed the President time Mr. Hart was named President and COO and COO roles to B
Slide 38: Matthew Hart case study: Marriott
MATTHEW HART CASE STUDY: MARRIOTT Mr. Hart’s career at Marriott started in $7 1981 He grew within the Marriott $6 organization and played a significant role October 1993 in formulating the plan to separate Host Marriott spins Marriott into two companies: a hotel $5 off Marriott management compan
Slide 39: Richard Kincaid
RICHARD KINCAID Former CEO of Equity Office Properties Trust (“Equity Office”) – At the time, it was the largest publicly held office building owner and manager in the U.S., until its acquisition by Blackstone – Prior to becoming CEO, Mr. Kincaid served as the company's Chief Financial Officer, Ex
Slide 40: Richard Kincaid case study: Equity Office
RICHARD KINCAID CASE STUDY: EQUITY OFFICE Mr. Kincaid had served in numerous $60 executive roles at Equity Office before being named CEO in April 2003 $55 – At the time, the company was the Equity Office’s total largest publicly held office building $50 shareholder return was Adjusted Price Per Sh
Slide 41: Jonathan Litt
JONATHAN LITT Founder and Chief Investment Officer of Land and Buildings – Mr. Litt founded Land and Buildings in the summer of 2008 to take advantage of the opportunities uncovered by the global property bubble Former Managing Director and Senior Global Real Estate Analyst at Citigroup – Former
Slide 42: Jonathan Litt case study: Associated Estates
JONATHAN LITT CASE STUDY: ASSOCIATED ESTATES Mr. Litt followed Associated Estates Realty $30 Corporation (“Associated Estates”), an apartment Associated Estates returned $28 REIT, since before its IPO in 1993 and identified 70% since Land and Buildings’ Adjusted Price Per Share significant underva
Slide 43: Marc Weisman
MARC WEISMAN Chief Operating Officer of J.D. Carlisle LLC, a New York-based real estate development company Since 1993, Mr. Weisman has managed various investments, principally in public company equity and debt as well as private real estate transactions, for the Weisman family office Previous
Slide 44: Marc Weisman case studies: examples of directorship performance
MARC WEISMAN CASE STUDIES: EXAMPLES OF DIRECTORSHIP PERFORMANCE 60% 55% 53.5% 50% 50% 45% 40.9% 40% 40% 35% 30% 30% 25% 20% 20% 15% 10% 10% 5% 0% 0% May-05 Aug-05 Nov-05 Feb-06 May-05 Aug-05 Nov-05 Feb-06 May-06 50% 48.2% 45% 40% 35% Mr. Weisman has a track record of significant 30% 25% creation
Slide 45: Directors we are opposing
*) MGM RESORTS INTERNATIONAL™ DIRECTORS WE ARE OPPOSING 44 LANDandBUILDINGS
Slide 46: Current MGM Board
CURRENT MGM BOARD MGM Board Tenure Mary Chris Gay William W. Grounds Gregory M. E. Spierkel William A. Bible Daniel J. Taylor Anthony L. Mandekic Rose E. McKinney-James Alexis M. Herman Roland A. Hernandez Robert H. Baldwin James J. Murren 0 2 4 6 8 10 12 14 16 18 Number of years We are seeking to r
Slide 47: Roland Hernandez
ROLAND HERNANDEZ Mr. Hernandez has been on the Board for 13 years, making it inappropriate for him, in our view, to be the Lead “Independent” Director, because his long tenure could make it challenging for him to hold the CEO and Chairman accountable Mr. Hernandez was on the Lehman Brothers Hold
Slide 48: ISS notes on Roland Hernandez and Lehman Brothers
“[ISS] notes that a director on MGM Mirage's board, Roland A. Hernandez, formerly served as a director of Lehman Brothers Holdings, Inc. until that firm’s bankruptcy in September 2008. Given the circumstances surrounding the collapse of Lehman Brothers, particularly the failures of risk oversight, s
Slide 49: Robert Baldwin
ROBERT BALDWIN Mr. Baldwin has been on the Board for 15 years and has been the Chief Design and Construction Officer of the Company since August 2007 – By opposing Mr. Baldwin for the Board, we are not seeking to replace him as Chief Design and Construction Officer, rather, we believe that fresh pe
Slide 50: Directors we are opposing
DIRECTORS WE ARE OPPOSING Yea Number of MGM TSR Shares During Board Gaming Hospitality Real Estate Purchased on Years on the Tenure vs. TSR Operating Operating Operating MGM Open Market MGM Board Peer Median Experience? Experience? Experience? Ownership % During Tenure Robert Baldwin 15 600%
Slide 51: Contact info
CONTACT INFO Shareholders 501 Madison Avenue, 20th Floor New York, N.Y. 10022 (212) 750-5833 Stockholders Call Toll-Free at: (877) 825-8631 Banks and Brokers Call Collect at: (212) 750-5833 Media Elliot Sloane / Dan Zacchei Sloane & Company 212-486-9500 ESloane@sloanepr.com or DZacchei@sloanepr.com
Slide 52: Disclosures
DISCLOSURES This presentation with respect to MGM Resorts International (“MGM” or the "Company") is for general informational purposes only. It does not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person who may receive this p