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Betting the house at Wynn Resorts __»

We’ve written about Wynn Resorts (WYNN) before, both in this space and elsewhere. When we do, it always seems to have something to do with cheap or free housing.

Now along comes Linda C. Chen, Wynn’s newly minted chief operating officer for Wynn Resorts (Macau) S.A. We imagine it’s a pretty glamorous job, what with the grand opening of the Encore Macau, the company’s new all-suites hotel and casino. (Read Robin Leach‘s take in the Las Vegas Sun.)

So perhaps it’s no surprise that Wynn is willing to guarantee Chen a salary of at least $1.5 million a year — for 10 years. Performance reviews, Chen’s employment agreement tells us, can increase her salary, but can’t reduce it. She also gets use of a car while posted in China’s special administrative gambling region. If she’s fired without cause, she gets up to four years’ salary (which would be a minimum of $6 million).

And then there’s the house:

“Wynn Macau has agreed to purchase Ms. Chen a home in Macau costing approximately $5.4 million (US) (the —Macau House).”

We haven’t done much house-hunting in Macau, nor do we know just which house Chen is getting, but that sounds like a pretty nice place, to judge by what’s online. Even nicer — and not mentioned in the 8-K summary that accompanied Chen’s contract when it was filed on Monday — “Wynn Macau shall provide improvements to the Macau House as approved by the President of [Worldwide Wynn],” the subsidiary of Wynn Resorts that employs Chen.

And then the truly nice part: If Chen plays her cards right, the house is hers free of charge, or awfully close to it.

If she’s fired without cause, for example, or leaves for any of a list of “good” reasons after a change in control, she gets the house for a buck. That’s $1 U.S. (Good reason, it’s worth noting, includes a reduction in her salary.)

Otherwise, she pretty much has the option to buy the house at an attractive discount to fair market value: Wynn gets the house appraised, and she gets to knock 10% off that price for each year she’s worked under her contract. Yes, if she makes it the end of the 10-year contract, that means she gets the house for nothing. Or, as the contract puts it:

“On February 25, 2020, Employee shall have the right to purchase the Macau House for the Purchase Price (defined below); provided that the Employee is still employed with Employer (it is expected that the Purchase Price on such date will be $0 (US)) —”

There is a flip side to this homey arrangement, however. If Chen is fired for cause — which includes committing a felony or “the willful destruction by Employee of the property of Employer — having a material value” — Wynn can essentially put the house to her, forcing her to buy it and deducting the cost from severance or other amounts it owes her.

Even then, she gets the 10%-a-year discount. With a deal like that — if we were the betting sort — we’d put money on Chen for the finish.

Image source: banspy via Flickr