Working harder for less? Not if they have a choice

By Liz Benston

Monday, April 6, 2009 | 2 a.m.

When times were good, casino executives were richly rewarded with performance-based compensation packages worth, on paper, up to tens of millions of dollars a year.

Now that the tide has turned, these executives are taking a double hit: Not only are they forced to work harder to keep their jobs, they are doing it for less money.

Bank lending isn’t the only thing that has dried up in this recession. So has bonus pay, in the form of stock options or grants of stock.

Bad performance, no performance bonus.

It’s hard to pity bosses with base salaries in the high $100,000s to well over $1 million. But for those who have grown accustomed to earning several times their base salary in bonuses, not getting that money is a bitter pill to swallow.

Leading up to the recession, the gaming industry was one of the hottest sectors on Wall Street. Stock prices rose exponentially. Some soared over $100 per share on expectations of mind-blowing profits in Macau, a gateway to mainland China.

Bosses racked up big paper profits at a time when their jobs were easier.

Visitors were flocking to Las Vegas in record numbers and casinos across the spectrum could count on getting a piece of that business.

Shareholders — happy that companies leveraged cash to build more elaborate casinos with bigger profit expectations — didn’t complain when executive compensation soared to new and dizzying heights.

Now, unhappy investors are questioning those decisions.

Gaming is a niche business run by a select group of casino operators that have earned their stripes.

As heavily regulated, labor-intensive enterprises that never close, they require more work from auditors and accountants than the typical 9-to-5 operation. Add to that the fact that many executives are now working longer hours to keep companies afloat and you have a good reason why some executives might think now is a good time to split.

Gaming executives who leave their posts rarely retire. They bide their time — usually waiting at least a year for non-compete agreements to expire — before finding a better opportunity down the road.

The money motive adds another dimension to the recent exodus at Las Vegas Sands.

Last month, President and Chief Operating Officer Bill Weidner was forced to resign after a dispute with CEO Sheldon Adelson over the company’s direction. Brad Stone, president of global operations and construction, followed his longtime colleague out the door.

An experienced construction manager, Stone leaves with a strong reputation in an industry that will be clamoring for his skills when the economy improves.

A rich compensation package is enough reason to endure a difficult boss, economy or workweek. Without it, the motivation to toil at a demanding job isn’t as strong.

Stone cashed out 100,000 shares of Las Vegas Sands stock at $120 per share in September 2007. Sands share price would peak at $150 the following month. Shares now trade under $5.

Many believe that Stone and Weidner, who has cashed out relatively few shares recently, will be able to emerge in new gaming companies that could arise as a result of bankruptcy restructurings.

More work for diminishing returns might also explain the departure of T.J. Matthews, who stepped down as CEO of International Game Technology this month. His sudden exit wasn’t a total surprise to insiders who say Matthews had hinted that he would not renew his employment contract.

The recession is forcing many gaming giants to consider bankruptcy protection. It’s also allowing executives to blame poor company performance on forces beyond their control, while giving them an opportunity to cut their losses and move on to greener pastures.