Sex Harassment Meets Shareholder LawsuitsHR Dive February 22, 2018
David W. Garland, Member of the Firm and Chair of the firm’s National Employment, Labor & Workforce Management Steering Committee, authored an article in HR Dive, titled, “Sex Harassment Meets Shareholder Lawsuits.”
Following is an excerpt:
In last month’s column, we wrote that boards of directors need to pay more attention than ever before to HR issues because if not handled well, they can lead “to reputational damage, to the loss of key leaders and talent, and to possible loss of shareholder value.” If anyone doubted the wisdom of that advice, they should look no further than the events that recently unfolded at Wynn Resorts.
On Friday, Jan. 26, The Wall Street Journal reported that a number of women had accused Steve Wynn, the company’s founder, chairman and CEO, of sex harassment. The company issued a statement saying that it was committed to operating with the “highest ethical standards and maintaining a safe and respectful culture.” Wynn denied the allegations in his own public statement but on the same day the story broke, the company’s stock dropped by 10% — a loss of $2 billion in shareholder value in an afternoon. (In a recent securities filing, the company had said that if it lost the services of Wynn, then “the business may be significantly impaired”).
In the days that followed, the company’s board formed a special committee to investigate the allegations against Wynn. Regulators also took notice of the allegations and announced that they would monitor them. More women came forward telling their own stories, and a $7.5 million settlement paid to a former employee who claimed to have been harassed by Wynn came to light. By Monday, Jan. 29, the company’s stock was down another $1 billion. As the Journal put it that day, “the price of sexual-misconduct accusations has never been higher.”