In this Closer Look, we use the example of VICI Properties — a publicly traded REIT that emerged from the bankruptcy of Caesar’s Entertainment — to examine how appropriate governance choices can change the course of a corporation and establish a foundation for long-term success. We discuss the company’s history, and the decisions the controllers of the company made to establish a board of directors, recruit a leadership team, and develop corporate, financial, and investor relations strategies, and compensation and governance programs. The result of these efforts was that less than five years from bankruptcy emergence, VICI Properties achieved an impressive track record of growth, market value creation, and credit quality improvement that garnered external recognition from investors and analysts for its achievements. We ask: What role did governance choices play in these outcomes? How critical is board quality among publicly traded companies in general and REITs in specific? In what way does executive leadership contribute to corporate success? How important are intangible leadership qualities, such as vision, communication, and consensus-building? How, if at all, does the composition of a company’s shareholder base contribute to performance? Do governance choices tangibly contribute to value creation, or do they simply make skeptical investors “more comfortable” with the board and management?
Copyright held by William J. Ferguson, David F. Larcker, and Brian Tayan. Further inquiries about reproduction and use should be directed to the Corporate Governance Research Initiative.
