Source Close to IGT Proxy Fight Gives Skinny on Tuesday’s Critical Vote

Written by:
Jenny Woo
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Source Close to IGT Proxy Fight Gives Skinny on Tuesday’s Critical Vote Senior International Correspondent Jenny Woo had an opportunity Friday to speak to someone intimately close to the IGT power struggle that will culminate on Tuesday into a final vote that determines a potential new makeup of the world’s leading slot manufacturer’s board.

Investor and Hedge Funds Manager Jason Ader would like three of his hand-picked executives on the board including former Chairperson Charles N. Mathewson, who served in that role from 1985 through 2003.

I spoke to a source familiar with that matter on Friday.  He wished to remain anonymous for the time being, though it is quite obvious whose side he is on in this fight that has captivated the readers of over these past several weeks. 

“The Ader Group owns six times more shares than all of (the current) management and the board combined and that the shareholders in general would benefit from having ownership of the company represented on the board,” our source asserted. 

That being said, our source believes IGT CEO Patti Hart will likely remain in her role for the time being provided she does not voluntarily decide to step down.

“I’m of the belief she has the support of the board and she has the support of the shareholders at the current time,” our source contends.  “I think ultimately the stock performance will be the determining factor for this management or to any management’s duration.

“I suspect that given the stock price performance since the Ader Group got involved in September 2012, they’ve begun to put pressure on the company as an active shareholder. They’ll continue to do that irrespective of the results next week. They will continue to pressure management to perform and as long as the stock price is performing, I suspect that she (Patti Hart) will have the support of the board and shareholders.”

While rumors have surfaced in recent weeks that Hart is prepared to step down, thus far there have been few signs to indicate this will be the case.  However, her own words in the past suggest she might not stick around should Ader get his way in this contentious power struggle.

Hart, who has held the title of CEO at International Game Technology since 2009 while serving on the board of the company beginning in 2006, was also a member of the board of directors at Yahoo!  She later came under fire at that Internet behemoth for “padding her own resume” through the alleged misrepresentation of her educational background.

“I had no interest in serving in a boardroom with an activist this nasty to me,” Hart would later say following her abrupt resignation. 

She was also instrumental in getting then-CEO Scott Thompson hired as Yahoo! CEO.  He, too, came under fire for a perceived “padding of his resume”.

Hart defended her decision regarding the hiring of Thompson: “Dan Loeb, a Yahoo investor, had accused [CEO] Scott Thompson of lying about his degree and challenged my academic credentials, too.

“I am one of the most vetted CEOs in the country. When I got a degree in business administration in 1978, my areas of focus were marketing and economics. Back then you only had broad-based degrees with areas of emphasis. At some point along the way, as press releases were being written, people highlighted the focus by saying I had a degree in marketing and economics. Scott had been portrayed as having a computer science and accounting degree. [It was in accounting.] It was a little ridiculous. Would we have hired Thompson if it did not say he had a degree in computer science? Yes.”

The Ader Group has since brought to light these same irregularities in Hart’s own resume.  They’ve delved even further, as have numerous media outlets, pointing out possible conflicts of interest during Hart’s tenure at IGT, not to mention the purchase of a private company plane that records show has been used almost exclusively for Hart’s own personal benefit

To date, the besieged IGT CEO hasn’t had much to say, though a highly publicized attack on Mathewson last month did a little more than raise a few eyebrows, especially in Las Vegas, where Mathewson still has some powerful admirers, including casino mogul Steve Wynn. 

Wynn’s reaction to the scathing letter submitted by Hart and her cronies, our source contends, was unprecedented.

“I’ve never seen a situation like this where a customer, in this case Steve Wynn, came out in support of an activist group seeking board seats. So I believe the attacks on Mr. Matthewson to be unwarranted and unfortunate. “You would have to ask the company as to what the motivation behind the attacks were but, nonetheless, I think Chuck Matthewson has created substantial value for IGT shareholders when he was leading the company. I certainly think he’s got a good context as to the history of this business, the relationships with the customers, and that was really one of the reasons why I believe he was nominated for the slate.”

Tuesday March 5, 2013 is the big day and will be on top of this story to reveal the outcome once known. 

- Jenny Woo, Senior International Correspondent

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