Melco Resorts Awards Founder and CEO Stock Bonus Despite Company’s Downfall

Posted on: April 8, 2024, 09:15h. 

Last updated on: April 8, 2024, 09:33h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Melco Resorts & Entertainment is carrying on its tradition of awarding its founder, chairman, and chief executive officer with a spring stock bonus despite the company’s post-pandemic struggles.

Melco Resorts Lawrence Ho Macau China
Melco Resorts billionaire Lawrence Ho has been awarded millions of dollars in company shares despite the company’s post-pandemic struggles. Melco’s board says the nonperformance-based bonus is to incentivize the leader to improve Melco’s financial position in the years ahead. (Image: Getty)

Hong Kong-based Melco owns and operates integrated resort casinos in China’s Macau, the Philippines, and Cyprus. The company last week confirmed it has once again awarded its founder Lawrence Ho with another healthy stock award, as the firm has done most Aprils in recent years.

Ho was given an allotment of 952,380 restricted shares, which are the equivalent of more than 2.857 million ordinary Melco Resorts shares traded on the Nasdaq. The award amounted to nearly $7.2 million.

The Melco board also approved issuing company President Evan Winkler nearly 150K restricted shares, Executive Director Clarence Chung Yuk Man 74,406 shares, and independent nonexecutive Director John Crawford 19,900 shares.

The share allotments cannot be cashed out until they vest in three equal batches. The first batch vests on April 3, 2025, and the remaining two batches vest on April 3, 2026, and April 3, 2027.

Not Performance Based

The bulk of Melco Resorts’ revenue comes by way of Macau and the company’s City of Dreams, Studio City, and Morpheus properties. Melco’s market share in Macau has declined post-COVID-19.

Ho conceded last month that the organization slashed its overhead costs “too deep” in the aftermath of the coronavirus and that led to customers and the city’s highly coveted VIPs taking their business elsewhere. The Melco securities filing regarding the stock awards said the allotments were not performance-based.

There are no performance targets nor claw back mechanism attached to the Restricted Shares granted,” the SEC filing read.

The Melco board said the restricted shares program not being based on performance is “market competitive” and recognizes “past contributions” to the company by the recipients. The statement added that the bonuses “incentivize” grantees to promote the success and enhance the value of Melco Resorts and helps “motivate, attract, and retain” their services.

Melco gave Ho a $5.1 million stock bonus in April 2018, $10 million in April 2021, and $15.2 million in April 2022.

Stock Slide

Some investors might not be overly thrilled to learn of Melco Resorts’ annual awards after what’s been a more than difficult year. With Melco losing market share in Macau and gaming revenue remaining suppressed in the Chinese enclave from pre-pandemic levels, many shareholders have divested their stake in the organization.

A year ago, Melco’s Nasdaq shares were trading at $12.85. On Monday, they opened trading at just $7 — 45% below April 2023.

Melco has been an extremely volatile stock since it reached its trading high of $43 in January 2014. Shares went as low as $5 in the summer of 2022 before rebounding as China and Macau reopened to the world after People’s Republic President Xi Jinping ended his “zero-COVID” policy that kept the country isolated during the global health crisis.

Melco shares climbed to around $13 last summer during Macau’s initial gaming recovery but after the company lost VIP market share and struggled to compete for the premium mass segment, its quarterly filings sent investors running.

Melco’s pandemic downfall cost Ho many millions and momentarily cost him his billionaire status. He’s since regained that title, with Forbes currently estimating his net worth at around $1.2 billion.