CASPER
THE FRIENDLY GHOST
ATLANTIC CITY, N.J. – It's not so lonely at the top when it comes to the pay cuts sweeping the casino industry.
While many gambling houses across the country have laid off hourly workers and cut or frozen pay for those who remain, top executives are feeling the pain, too. Many of the country's largest casino companies have cut pay for their executives and managers.
They range from mandatory unpaid days off — equal to a 5 percent pay cut — for managers at Resorts Atlantic City and the Atlantic City Hilton Casino Resort to a 15 percent cut for top earners in Steve Wynn's casino empire.
Harrah's Entertainment Inc., the world's largest casino company, cut the pay of managers at all of the more than 50 casinos it runs. Spokeswoman Alyce Parker blamed the recession and economic climate on the 5 percent pay cuts, which saved the company about $90 million.
When announcing his company's cuts in February, Wynn said the measure was designed to share the pain while sparing jobs. The company saved $75 million to $100 million by cutting managers' pay by 10 to 15 percent and reducing hours for hourly workers.
"Everybody makes a little less money, but everybody keeps their jobs," Wynn said.
The cuts come as casinos are struggling with the recession and a continuing proliferation of new competitors. So far this year, Atlantic City's revenues are $1.94 billion, down 15.3 percent from the same period last year. With one month left in its fiscal year, casinos in Nevada have taken in just less than $10 billion so far, down 13.7 percent from a year ago.
Michael Pollock, managing director with Spectrum Gaming Group, a casino consulting firm, said the executive pay cuts are more than just symbolic.
"It's certainly not a public relations move," he said. "It's a recognition that management costs are one of the line items that has to be addressed."
The real pain for casino executives has come in recent years from cuts to cash bonuses that had been worth millions. MGM Mirage did not award cash bonuses in 2008 because the company did not meet minimum targets set by its compensation committee. That meant that CEO Jim Murren missed out on a bonus worth $4.7 million in 2007 and nearly $4.9 million in 2006.
Wynn's base salary increased to $3.25 million in 2008, compared with $3.17 million in 2007. But that was more than offset by a $3.5 million cut to his cash bonus, which was $4 million for 2008 compared with $7.5 million in 2007.
Workers are quick to point out that a 5 or 10 percent pay cut to an executive making six figures does not hurt as much as pay cuts of a similar percentage to dealers making a fraction of that. Members of the United Auto Workers, who are in a bitter struggle to sign first-ever dealer contracts in Atlantic City, routinely blast Harrah's CEO Gary Loveman, who profited handsomely when the company was bought last year by two private equity firms.
They say the true value of his stock options was more than $89 million last year, on top of $2 million in salary and $1 million in other benefits. The company says Loveman's total compensation for last year was $39 million, including benefits from stock options not yet cashed in.
The cuts have helped save some casino jobs. A Wynn spokeswoman says the company has not had to cut jobs at its Wynn Las Vegas or Encore casinos.
But Harrah's four Atlantic City casinos have shed 342 jobs since the beginning of the year, according to the New Jersey Casino Control Commission. The Tropicana Casino and Resort, which froze the pay of employees making $50,000 or more, is down 71 jobs.
Resorts Atlantic City is down 81 jobs over that period, but its sister property, the Atlantic City Hilton, has added 64 jobs since the start of the year.
The Mohegan Tribal Gaming Authority instituted pay cuts of 4 to 10 percent at its casinos in Connecticut and Pennsylvania.
Trump Entertainment Resorts was one of the first casino companies to institute pay cuts, trimming the pay of 22 of its highest-paid executives at its three Atlantic City casinos by 5 percent last fall. But it didn't help keep the company out of bankruptcy.
While many gambling houses across the country have laid off hourly workers and cut or frozen pay for those who remain, top executives are feeling the pain, too. Many of the country's largest casino companies have cut pay for their executives and managers.
They range from mandatory unpaid days off — equal to a 5 percent pay cut — for managers at Resorts Atlantic City and the Atlantic City Hilton Casino Resort to a 15 percent cut for top earners in Steve Wynn's casino empire.
Harrah's Entertainment Inc., the world's largest casino company, cut the pay of managers at all of the more than 50 casinos it runs. Spokeswoman Alyce Parker blamed the recession and economic climate on the 5 percent pay cuts, which saved the company about $90 million.
When announcing his company's cuts in February, Wynn said the measure was designed to share the pain while sparing jobs. The company saved $75 million to $100 million by cutting managers' pay by 10 to 15 percent and reducing hours for hourly workers.
"Everybody makes a little less money, but everybody keeps their jobs," Wynn said.
The cuts come as casinos are struggling with the recession and a continuing proliferation of new competitors. So far this year, Atlantic City's revenues are $1.94 billion, down 15.3 percent from the same period last year. With one month left in its fiscal year, casinos in Nevada have taken in just less than $10 billion so far, down 13.7 percent from a year ago.
Michael Pollock, managing director with Spectrum Gaming Group, a casino consulting firm, said the executive pay cuts are more than just symbolic.
"It's certainly not a public relations move," he said. "It's a recognition that management costs are one of the line items that has to be addressed."
The real pain for casino executives has come in recent years from cuts to cash bonuses that had been worth millions. MGM Mirage did not award cash bonuses in 2008 because the company did not meet minimum targets set by its compensation committee. That meant that CEO Jim Murren missed out on a bonus worth $4.7 million in 2007 and nearly $4.9 million in 2006.
Wynn's base salary increased to $3.25 million in 2008, compared with $3.17 million in 2007. But that was more than offset by a $3.5 million cut to his cash bonus, which was $4 million for 2008 compared with $7.5 million in 2007.
Workers are quick to point out that a 5 or 10 percent pay cut to an executive making six figures does not hurt as much as pay cuts of a similar percentage to dealers making a fraction of that. Members of the United Auto Workers, who are in a bitter struggle to sign first-ever dealer contracts in Atlantic City, routinely blast Harrah's CEO Gary Loveman, who profited handsomely when the company was bought last year by two private equity firms.
They say the true value of his stock options was more than $89 million last year, on top of $2 million in salary and $1 million in other benefits. The company says Loveman's total compensation for last year was $39 million, including benefits from stock options not yet cashed in.
The cuts have helped save some casino jobs. A Wynn spokeswoman says the company has not had to cut jobs at its Wynn Las Vegas or Encore casinos.
But Harrah's four Atlantic City casinos have shed 342 jobs since the beginning of the year, according to the New Jersey Casino Control Commission. The Tropicana Casino and Resort, which froze the pay of employees making $50,000 or more, is down 71 jobs.
Resorts Atlantic City is down 81 jobs over that period, but its sister property, the Atlantic City Hilton, has added 64 jobs since the start of the year.
The Mohegan Tribal Gaming Authority instituted pay cuts of 4 to 10 percent at its casinos in Connecticut and Pennsylvania.
Trump Entertainment Resorts was one of the first casino companies to institute pay cuts, trimming the pay of 22 of its highest-paid executives at its three Atlantic City casinos by 5 percent last fall. But it didn't help keep the company out of bankruptcy.