Playing the odds at Las Vegas Sands…

Casino giant Las Vegas Sands (LVS) continues to double down on its management team, though it appears to be taking increasingly creative approaches to keeping them happy and on the job.

Last month, Sonya footnoted the company’s new employment agreement with an Executive Vice President, Robert G. Goldstein. This morning, it was Chief Operating Officer Michael A. Leven’s turn. Las Vegas Sands put out a press release announcing his retention — with some glowing words from Chairman and CEO Sheldon G. Adelson, who called Leven “the nicest guy” and “probably the most competent and productive businessman I’ve worked with” in 66 years.

But the more interesting details to us (as usual) were in the 8-K itself. The short version is that he’s got a good shot at $5 million in the next year or two, and a chance at another $7 million to $16 million if he and the company play their cards right. But like all the best entertainment that Las Vegas has to offer, it’s more complicated than a simple waiting game.

Most of Leven’s employment agreement remains the same: $3 million salary, a bonus target of the same amount (though it can go higher; last year, he got $3.2 million, according to the company’s proxy). He still gets free jet rides for himself and his spouse, along with a country club membership (a combined $368,560 value in 2011).

The bulk of the changes come in the form of a chance at 300,000 shares of Las Vegas Sands stock, technically down from 350,000 in 2011. This is also where the odds start kicking in.

First, Leven has to stick around through the end of 2014, and through 2015 to max out the jackpot. Then, if LVS shares average at least $50 or more in December of 2013, he gets 100,000 shares — but they don’t vest for a year. If the company misses that mark, not to worry, Leven has another shot at this particular pot: If LVS shares average at least $50 apiece in December 2014, he still gets those 100,000 shares, this time without restriction: the equivalent of a minimum of $5 million.

But wait — there’s more! If LVS shares top not $50, but $60, on average in December 2014, Leven gets another 100,000 unrestricted shares (a $6 million value, or more). And if the December 2014 average share price tops $70, he gets a third tranche of 100,000 unrestricted shares ($7 million).

Add it all up, and he gets roughly $5 million if LVS shares average $50 in December 2013 or 2014; $12 million if they average $60 in December 2014; and a whopping $21 million if they average $70 a share in December 2014.

In general, we’re skeptical of pay structures that rely hitting stock targets in a narrow window (anyone want to take odds on some big December announcements?). But there’s no question that Leven has some powerful incentives to try to lift a stock price that has bounced around below $50 a share for most of the last five years (with the first few months of this year a notable exception).

For Leven’s sake, we hope the odds are a little better than your average slot machine, which consistently favors the house. As for shareholders — we hope this new system for beating stock-market odds works better than the last.

Image source: Slot machine with winning 777 via


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