Union calls for SEC to investigate Red Rock board diversity
In a letter, Zachary Poppel, research analyst at the Culinary Union, asked the SEC to investigate whether Red Rock’s Nominating and Corporate Governance Committee is meeting SEC diversity requirements.
Poppel remarked that Red Rock’s “five-person board has been the same white men since its 2015 initial public offering”, adding that Red Rock is the only publicly traded Nevada-based casino company of nine with no women on its board of directors.
The most diverse is Wynn Resorts, with a 40% female board.
The letter also questions Red Rock’s claim that the gaming licensing process is to blame. In the Corporate Governance and Diversity section of the company’s 2020 and 2021 proxy filings, Red Rock stated that attaining a gaming licence is “onerous, invasive, time consuming and expensive”, and because of this “it is difficult to identify well-qualified candidates willing to subject themselves, as well as their families, to the rigorous and intrusive process necessary to obtain a gaming license”.
The letter points out that the Nevada Gaming Control board does not require every director on a board to be licensed. The only directors who require licences are those who are directly involved in administrating gaming activities. Therefore, Poppel specifies, Red Rock is able to promote directors to its board without undergoing “the rigors of the licensing process”.
“A gaming license is not an obstacle to board diversity because every publicly traded Nevada gaming company has women on their board except Red Rock Resorts,” said Geoconda Argüello-Kline, secretary-treasurer for the Culinary Union, in a statement.
“26% of board directors at these other Nevada gaming companies are women, so why is Red Rock Resorts claiming Nevada gaming regulations make it difficult to identify well-qualified candidates who would change its board’s composition?”
Further, Poppel claims that the pool for potential female directors in Nevada casinos seems to be no smaller than national averages, with 20 out of 76 directors in Nevada publicly traded casino companies being women.
In addition, the SEC recently approved Nasdaq’s plans to require every company it lists “to have, or explain why it does not have, at least two members of its board of directors who are diverse” by August 2023. However the Nasdaq said that it would not evaluate whether these explanations are valid.
This led the Culinary Union to go directly to the SEC for clarification on Red Rock’s lack of board diversity.
Earlier today Red Rock reported net revenue of $1.62bn in its 2021 financial year, up 37.3% compared to 2020.
Red Rock and the Culinary Union had clashed in 2021, when a court said the operator “undermined the fairness” of union elections through “outrageous” benefit changes.