Melco Crown Resorts pays founder and CEO stock bonus despite company collapse
Melco Crown Entertainment is continuing its tradition of spring stock dividends for its founder, chairman and CEO, despite struggling in the wake of the pandemic.
Hong Kong-based Melco owns and operates integrated resort casinos in Macau, China, the Philippines and Cyprus. The company confirmed last week that it was again awarding its founder Lawrence Ho the Healthy Stock Award, as it has done most Aprils in recent years.
Mr. Ho received an allotment of 952,380 restricted shares, equivalent to more than 2.857 million shares of Melco Resorts common stock traded on Nasdaq. The price is close to $7.2 million.
Melco's board also approved the issuance of nearly 150,000 restricted shares to company president Evan Winkler, 74,406 restricted shares to executive director Clarence Chung Yuk Man, and 19,900 shares to independent non-executive director John Crawford.
Stock awards must be divided into thirds before they can be paid out. The first batch will be handed over on April 3, 2025, and the remaining two batches will be handed over on April 3, 2026 and April 3, 2027.
Not based on performance
Melco Resorts generates the majority of its revenue from Macau and the company's City of Dreams, Studio City and Morpheus hotels. Melco Resorts' market share in Macau has declined due to the COVID-19 epidemic.
Ho admitted last month that the company had "excessively" cut overhead costs in the wake of the coronavirus outbreak, causing clients and the city's coveted VIPs to take their business elsewhere. Melco's securities filings regarding the stock awards note that the awards are not based on performance.
There are no performance targets or clawback mechanisms associated with the restricted stock grants,” the SEC filing states.
Melco Crown's board of directors said the restricted stock plan is not performance-based, is "market competitive" and recognizes recipients' "past contributions to the company." The statement added that bonuses provide employees with "incentives" to promote the success and add value of Melco Resorts and help "motivate, attract and retain" their services.
Melco Crown granted Mr. Ho a stock bonus of US$5.1 million in April 2018, a US$10 million grant in April 2021, and a US$15.2 million stock bonus in April 2022.
Stock Slide
After a tough year, some investors may not be happy to hear about Melco Resorts' annual awards. Many shareholders have divested their stakes in the organization as Melco Crown loses market share in Macau and gaming revenue in the Chinese enclave remains below pre-pandemic levels.
A year ago, Melco shares were trading at $12.85 on Nasdaq. On Monday, they opened just $7, or 45%, below April 2023 levels.
Melco's stock has been volatile since hitting a trading high of $43 in January 2014. In the summer of 2022, after Chinese President Xi Jinping ended the "zero-COVID" policy that had isolated the country during the global health crisis, the stock price briefly fell to $5 before recovering as China and Macau reopened to the world.
Last summer, Melco Crown's shares climbed to around $13 as Macau's gaming market began to recover. However, its quarterly financial report sent investors fleeing after the company lost VIP market share and struggled to compete in the high-end mass market.
Melco Resorts collapsed due to the epidemic, causing Mr. Ho to lose millions of dollars and temporarily lose his billionaire status. He has since reclaimed the title, and Forbes currently estimates his net worth at about $1.2 billion.
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Source: www.casino.org
