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Reputation Expert: Wynn Must Distance Itself From CEO To Protect Gaming Licenses, Brand

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Reputation Expert: Wynn Must Distance Itself From CEO To Protect Gaming Licenses, Brand
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Wynn Resorts, Limited (NASDAQ: WYNN) founder and CEO Steve Wynn has found himself embroiled in a reputational crisis event: accusations of sexual misconduct.

The gaming company’s board faces a decision of whether to keep an industry legend at the helm. The founder is pushing back and asking his employees to rally behind him during company meetings.

Wynn is the quintessential example of a "Cult of Personality" executive whose company is closely tied to his persona. Organizations so closely tied to a single person can ultimately faces an existential threat in a world where personal reputations can shatter in an instant.

In a study that compares 7,500 companies conducted by reputational management firm Steel City Re, Wynn’s reputation ranking fell more than 27 percent since allegations were made public Jan. 26.

Real Change

A 1-percent move is evidence of a material change in a company's reputational standing, said Steel City Re CEO Nir Kossovsky. 

A measure of the value of Wynn’s reputation on an absolute value basis fell 6 percent, he said. 

“Those numbers are evidencing a real change in reputational value, however, we would not declare this a permanent change unless it persists in a state of impairment for 20 weeks,” Kossovsky told Benzinga.

Since the crisis began, Wynn shares have dropped over 16 percent.

What Kossovsky has found is that it's easier for corporate reputations to bounce back than those of an individual, he said. 

Target Corporation (NYSE: TGT) was able to quickly bounce back after a cybersecurity attack threatened the company’s reputation and its CEO resigned. 

It's a different situation when a company is so closely linked to one person, Kossovsky said. 

"It is a lot different when the company is eponymous. Weinstein and Co., Trump, Uber. When companies facing a reputational crisis are so closely tied to an individual, usually the founder, it’s really hard to bounce back." 

'They Will Have To Take Steve Wynn Out Of The Picture'

The Wynn brand is too broad to change its name quickly, but the company will ultimately have to distance itself from its founder if it wants to protect its licenses in Nevada and Massachusetts, where the character of individuals is part of gaming commission criteria, Kossovsky said. 

“The brand is too strong to change its name. I think the company will do far better by separating itself from Steve Wynn," Kossovsky said. "The company must draw a bright line between Steve Wynn and the organization, indicating that he is a rogue, that rogue behavior is not OK and [they] have isolated the problem."

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Photo courtesy of Wynn Resorts.

Posted-In: Nir Kossovsky Steel City Re Steve WynnNews Top Stories Exclusives Interview Best of Benzinga

 

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