Mgm Resorts International · NYSE:MGM
Mgm Resorts International — Proxy Contest (April 2015)
54 slides from Mgm Resorts International's proxy contest presentation, Apr 27, 2015
Slide 1: Schedule 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: Investor Presentation April 2015
INVESTOR APRIL 2015 PRESENTATION
Slide 3: Overview
OVERVIEW MGM independence, Company flawed Land Protect &has and your Buildings’ that adelivered makes history Investment drive experience numerous proposed of value above value-generating inand for MGM industry Board incorrect shareholders necessary – changes vote average financial, strategic for sk
Slide 4: I. About MGM
I. ABOUT MGM
Slide 5: Who is MGM Resorts?
WHO Fortune 18 Licensed $10 68,100 The business 4Leading destination billion entertainment ISemployees 500 MICE lines MGM inin 8company jurisdictions global resorts operator RESORTS? worldwide leader revenue with inwith worldwide Las iconic diverse Vegas brands revenue knownmix worldwide across mult
Slide 6: Las Vegas properties
LAS VEGAS MGM 5Monte Grand Carlo NY-NY Bellagio PROPERTIES Luxor CityCenter CircusMandalay Circus Excalibur Bay The Mirage
Slide 7: Rest of world properties
REST OF 6MGM Springfield Detroit WORLDBeauMGM Rivage National MGM Harbor Macau MGM Cotai
Slide 8: Properties snapshot
MGMArea Resorts Hotel Total Food Employees MICE 7Entertainment & Rooms Space PROPERTIES 18 Beverage (Acres, 68,100 (sq. 46,140 Space ft.) Outlets LV(sq. 3,000,000 SNAPSHOT Strip) ft.) Approximately ~650 2,200,000 375
Slide 9: II. Historical Performance
II. HISTORICAL PERFORMANCE
Slide 10: Track record of delivering superior total shareholder returns
TRACK PERFORMANCE Since Dow 1As DJ Gaming MGM Source: Note: returns 9(1) Year (2) of U.S. Gaming TSR Jones year Total bottoming outperformed Resorts 3have Factset Gaming Peers Year RECORD performance end US Shareholder Peers been 5Median International 2014 Gaming Year during Index adjusted include:
Slide 11: Strong operating performance
STRONG Strong Historical $9,810 $10,082 $9,161 2012 21.8% $1,998 24.0% 24.5% Net Source: 10 Revenue 2013 operating $2,469 $2,351 Company Net OPERATING 2014 ($Revenue millions) 2012 performance filings 2013 &PERFORMANCE Adjusted Adjusted 2014 in netProperty Property revenuesEBITDA EBITDA and Adjusted
Slide 12: Record year in U.S. wholly owned operations
TRACK PERFORMANCE Last owned 1U.S. $6,342 $1,518 $6,053 $5,893 $5,634 $1,165 23.8% 20.7% Adjusted 2010 Net Source: 11Year Revenue year, (Wholly 2011 31domestic Adjusted Net $1,443 $5,933 22.0% Company Year RECORD Property MGM’s 2012 Revenue 4.8% ($ Owned) 5322.3% $1,298 Year millions) 2013 resorts P
Slide 13: MGM China consistently delivers superior value
VALUE the over MGM $3,317 Adjusted $814 $2,606 $2,808 25.9% 1$630 $1,571 $358 22.8% 2010 Net Source: 12 Year last Revenue $1 24.2% 2011 CHINA China Adjusted 3MGM $3,283 $679 24.5% five billion, Company Year EBITDA 2012 years 24.2% achieved has Historical ($ China 5$850 CONSISTENTLY Year representing
Slide 14: III. Well Positioned for the Future
III. WELL POSITIONED FOR THE FUTURE
Slide 15: Strong geographic diversification
STRONG GEOGRAPHIC with Strong Net Las 12% 34% 54% Geographic Regional U.S. Source: (1) 14 For Vegas Revenue globally Macau geographic the Company PORTFOLIO 12-month diversification Contribution recognized REVENUE filings diversity period OF brands by strategy with ASSETS December MIX Region(1) a con
Slide 16: Las Vegas: investing in the future
LASVegas Las evidenced since 39 Record Occupancy remains ADR 2010 Room growth Investing $108 Mandalay $105 feet AEG/MGM 86.9% opening Park and Source: 15 New of& VEGAS 2011 $111 2008, +5% Inventory convention entertainment visits Las flat Spring York-New in Bay Trends by 2012 y-o-y highest driven Ve
Slide 17: CityCenter
THE Aria CityCenter: Vdara Mandarin 6Veer Crystals 50/50 LEED Resort Towers CITYCENTER joint Hotel Gold Oriental, venture & &Certifications Casino Spa with Las VISION Vegas Dubai World
Slide 18: MGM China
MGM 2014 As the component Las Macau initiatives domestic growth Moreover, commitment Slots competitive Non development 37% Baccarat 31% Source: Note: (1) 17 aMacau world’s Vegas Baccarat leading table Gross Slots $CHINA operations in in DICJ has properties, Las which billions Strip market our of lar
Slide 19: Cotai positions MGM for future growth
poised In Cotai The $814 $630 2010 $358 Adjusted MGM Note: (1) 18 2014, CAGR addition $850 $679 2011 development $has CHINA China for inMGM EBITDA millions future received reflects 2012 of hasChina 1,500 2013 growth been five on Margin positions more rooms 2014 arepresented aperiods pro significant
Slide 20: The long-term Macau story
THE Mainland Macau China’s Infrastructure Hong China Light Potential Extended Development Source: (1) 19 Morgan LONG rail Kong-Zhuhai-Macau high-speed Mass DSEC urban travel system border China Stanley TERM market of projects population’s policy Hengqin penetration gate within railMACAU represents h
Slide 21: Pursuing opportunities in new geographies
PURSUING MGM Actively 20 National Springfield Cotai pursuing (opening OPPORTUNITIES Harbor Japan (opening Fall (opening and 2016) second South IN second Korea half NEW 2017) half markets GEOGRAPHIES 2016)
Slide 22: Wall Street supports MGM developments
WALL “…it facilities “In MGM’s “Simply MGM –International 21Stifel Credit Union our was Cotai, STREET view, (March Strip Suisse Gaming put, inclear the has if investors National assets. United MGM to (January 5,SUPPORTS opportunities Research us 2015) that Considering China States. Harbor will 23, w
Slide 23: L&B critique of capital allocation
L&B “We and case, “[MGM] take environment –same 22Land potential advantage expect with capital-allocation HAS &has Buildings $13 BEEN significant to projects…Value a additional history of reduce the INCONSISTENT (March (April current of debt…the development mistakes” potential poor 20, 17, favorable
Slide 24: IV. Balance Sheet Management and Capital Allocation Strategy
IV. THOUGHTFUL BALANCE SHEET MANAGEMENT AND CAPITAL ALLOCATION STRATEGY
Slide 25: Improved balance sheet
IMPROVED Significantly Corporate growth Regular $1.45 Continued Source: 24 billion initiatives Company dividend credit free convert de-levered BALANCE cash ratings policy Executing filings flow matured were balance atgrowth SHEET MGM further upgraded April sheet China 15, opportunities since three 2
Slide 26: Examples of proactive balance sheet management
EXAMPLES 5/14/09: 2023 9/17/09: $25.00 5/27/11: $20.00 3/9/10: $5.00 Sr. 4.250% Dec-08 $0.00 25 Sec.Notes Stock $15.00 4/15/10: Dec-09 Massachusetts $1.7bn 12/16/13: 10/25/10: Offering OF Convertible $10.00 Dec-10 MGM 6/13/14: PROACTIVE 11/25/14: Coupon: Sr. Dec-11 MGM Note Unsec. 5/15/09: 11.125% D
Slide 27: Leverage profile 2009 vs. 2014
LEVERAGE 12/31/2009 Corporate: (1) (2) 12/31/2014 26 Net Restricted Cost Credit Leverage Pro Leverage ofRatings forma Debt(3): Group: Caa2 (1) metrics PROFILE—2009 (2) for Corporate: 11.9% 6.0% /conversion CCC+ 10.1x 9.2x based Maturity: (Pro Maturity: Senior B2 on Forma: of / Company B+ VS. $1.45 S
Slide 28: History of value-generating strategic initiatives
HISTORY existing New Board Hakkasan Rock Las The 27 Vegas capital rooms restaurants entertainment streetscape inalso Rio properties, at Arena OF supported investments at festival MGM Bellagio, VALUE atwith Bellagio, New at including: Grand grounds trend Mandalay AEG, GENERATING the MGM York-New sett
Slide 29: MGM hospitality
MGM Diaoyutai Best Opened Topped In BEIJING SHANGHAI 28 2014, year HOSPITALITY off the created ever SHENZHEN MGM, the Diaoyutai HANGZHOU at Bellagio MGM MGM the Company’s Boutique Hakkasan CHENGDU Grand Shanghai SANYA Sanya Chengdu hospitality with and signed the Hakkasan affiliate an agreement in G
Slide 30: Portfolio management
PORTFOLIO Golden 29 NuggetMANAGEMENT Primm Laughlin CityCenter (50%) Treasure Island
Slide 31: V. Land & Buildings' Proposal Has Serious Flaws
V. LAND & BUILDINGS’ PROPOSAL HAS SERIOUS FLAWS
Slide 32: Land & Buildings' proposal has serious flaws
LAND assumptions Unsubstantiated Inconsistent Significant Unaddressed A MGM’s Land 31narrow, &&Buildings’ Board BUILDINGS’ short-term leveraging and include, and has cash overlapping oversimplified aover-simplistic proposal great focus but flow andPROPOSAL are deal untenable assumptions which makes
Slide 33: Overstated rent creates an untenable structure
OVERSTATED Unsubstantiated properties If and cover 2016E L&B Implied Note: (1) expenditures 32 the Wall $1,592 purports Rental structure rent Consensus Wall Property Street themselves payments MGM Street Payment to specified consensus relies have RENT cash numbers Level Wholly Consensus after 1.5x o
Slide 34: Inconsistent lease structures
INCONSISTENT Land The as Confusingly, At MGM (1) 33 athe The net &same has lodging lease, lease Buildings’ and time, Land structure Land will REIT Land REIT & proposal continue &Buildings model Buildings would & STRUCTURES Buildings uses to isbeactively legally characterizes consistent also terms as
Slide 35: Significant leveraging and untenable distribution by China
SIGNIFICANT Capital Potential Over-leveraging Maximum (1) presentation L&B 34 Peer 0.0x 1.0x 2.0x 4.0x 6.0x 6.8x 8.0xBased Median Proposed raise negative on leverage (assumes of (1) Wall 2016E this LEVERAGING MGM perception Street covenant magnitude $2.1bn year-end China, China research; is from of
Slide 36: Oversimplified assessment with unaddressed key issues
OVERSIMPLIFIED Numerous Unsubstantiated Lack Tax Required MGM Gains Failure 35 leakage offrom China to accounting debt purge adequately address material sales on levered repayments levered of cash ofdevelopment accumulated friction for non-core ASSESSMENT dividend address flow tax distribution from
Slide 37: Narrow focus conflicts with our global strategy
NARROW The operations Land Ignores Does Suggestion Harms Lack 36 Land of & not our basic clarity Buildings’ properly &and hard-earned FOCUS toBuildings global substantially future on development appreciate proposal WHICH trends growth proposal credibility and lever hinges CONFLICTS the prospects is
Slide 38: Wall Street skeptical of Land & Buildings' proposal
WALL “MGM MGM Difference “While assumption otherwise “Our very –China development.” 37UBS Deutsche Union cyclical, concern with to (March STREET we Doesn’t Gaming sell be between believe incremental Bank here accomplished assets correlated with 17, Need for SKEPTICAL Research (March 2015) shares aan
Slide 39: Fundamental misunderstanding of compensation structure
FUNDAMENTAL –“Company’s Over 38Land 70% andofBuildings’ short-term compensation MISUNDERSTANDING Letter incentive derived to Shareholders, bonus fromisachievement based OF April off COMPENSATION 20, of of annual 2015 goalsEBITDA or the STRUCTURE Company’s targets rather stockthan price total Managem
Slide 40: VI. Strong Board and Corporate Governance
VI. STRONG BOARD AND CORPORATE GOVERNANCE
Slide 41: MGM's strong, focused board
MGM’S Strong, focused Company, to Gaming/ C-Suite/ Director Leadership Lodging Robert Mary William Alexis Roland Anthony Rose James Gregory Daniel Board Source: 40 guiding McKinney-James Chris change Murren Herman Taylor Baldwin Hernandez independent Company on Grounds Resort/ Spierkel Real Director
Slide 42: Replacing four directors would undermine board diversity
REPLACING labor/government Board MGM’s Directors Land question Source: (1) 41 Bloomberg &ofCompany Buildings’ Board clients, the this he credibility isdiversity FOUR targeting has TV, customers relations, filings the nominees “Before DIRECTORS right of ofwho skills their and the gaming/hospitality,
Slide 43: MGM's board is the right team: Robert Baldwin, William Bible
MGM’S Robert Vast Over Chief Formerly William Director Key Served Commission Various Member, 42 Nevada experience three Design Baldwin as positions A. since BOARD National CEO the decades Bible gaming part-time and Director 2000 2010 of in (64) (70) as Construction Bellagio, IS Gambling the ofapolic
Slide 44: MGM's board is the right team: Mary Chris Gay, William Grounds
MGM’S Mary Extensive Served 1989 Since William Director Deep Director, Member Manager Board 43 until real Chris then, Member asW. since of BOARD President atestate Senior financial her served CityCenter Unlisted Grounds Gayplanned 2014 2013 of investment (47) Vice IS Lend as and and Funds THE (59) c
Slide 45: MGM's board is the right team: Alexis Herman, Roland Hernandez
MGM’S Alexis Expertise CEO Serves Recently Roland Deep Director Chairman Former Also public 44 aof financial company Director Herman as Hernandez U.S. Chairman consulting since of BOARD selected Chair in ofVail leadership, Secretary hotel 2002 expertise (67) of Resorts directorship as and IS US and
Slide 46: MGM's board is the right team: Anthony Mandekic, Rose McKinney-James
MGM’S Anthony Extensive Chief Previously Rose Director Important Leadership Served Public Serves 45 McKinney-James Executive Service on assince of BOARD Mandekic Director the expertise financial established Delta in Board the 2006 2005 Commission, Officer Petroleum gaming/resort/lodging IS of and (7
Slide 47: MGM's board is the right team: James Murren, Gregory Spierkel
MGM’S James Important Chairman Prior Leadership Gregory Director Technology Joined Ingram Then Since Serves 46 to served then, J.Ingram asMicro joining for since M. Murren BOARD aleadership, and experience—Chairman Non-Voting consultant expertise Spierkel Deutsche asEurope 1998 2013 Chief Micro Chie
Slide 48: MGM's board is the right team: Daniel Taylor
MGM’S Daniel Director Former Employed Non-Executive President Vice Tax 47 Manager President J.President since BOARD Taylor ofasMetro-Goldwyn-Mayer an specializing 2007 –Chairman (58) executive Taxes of ISMetro-Goldwyn-Mayer THE at MGM/UA of in RIGHT ofthe Tracinda Board entertainment TEAM Communicat
Slide 49: Board highly focused on good corporate governance
BOARD Received new seats, 95% Regularly 48 directors annually) Infinity HIGHLY favorable evaluates in World theFOCUSED ISS corporate past ~5%governance five hasyears one governance ONseat) Adopted GOOD andAnnually executive toCORPORATE aensure majority elected compensation alignment voting directors
Slide 50: MGM has the right board to continue generating value
MGM Last Future 49 five HAS is years bright THEthe with RIGHT Board development has BOARD driven opportunities TO significant CONTINUE growth and investment GENERATING in existing SUBSTANTIAL resorts Further VALUE roomFOR for balance ITS SHAREHOLDERS sheet improvement Existing Board has performed an
Slide 51: Strategic goals
MGMgrowth Successfully flow 50 STRATEGIC via openincreased development GOALS revenues projects: and cost MGMsavings Cotai, initiatives MGM National Continue Harbor, to leadMGM in corporate Springfield socialLeverage responsibility target of <5x within three years Increase financial flexibility to pu
Slide 52: Growth pipeline
GROWTH Mandalay 2015 Arena 2016 51 THE MGM 2017 MGM’sARENA & Cotai: is plans National second regional adding Park: Bay PIPELINE toFall Spring Convention open MGM project 350,000 casino 2016 an2016 Springfield: in arena MGM’s square the Center in Macau Las feet regional Expansion: Harbor: Vegas of ma
Slide 53: MGM investment thesis
MGM INVESTMENT Leading presence 52 gaming, & opportunity entertainment THESIS for valueand creation hospitality Continuously companyenhancing in Las Vegas balance and Macau sheet to with position a globally MGMrecognized for future brand growthExperienced Continued focus management on enhancing team
Slide 54: Cautionary statements
Cautionary Reform statements in markets international Form publicly updates Important proxies stockholder SUPPLEMENTS may website Participants to Annual 2015 Use Company’s disregarding 53 theof be obtain Annual considered 10-K, future. Non-GAAP Meeting, for Act at with in asAdditional http://mgmreso
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