Sacked executive sues Sands for US$10m
Steve Jacobs, the ex-president and chief executive of Macau casino developer Sands China, is suing his former employers for breach of contract over a contested severance package and stock options potentially worth more than US$10 million.
Jacobs filed the civil action in Las Vegas this week seeking unspecified damages from Las Vegas Sands Corp, Sands China's New York-listed parent company, whose chairman and majority shareholder Sheldon Adelson is described in the suit as 'notoriously bellicose', 'mercurial' and demonstrating 'rude and obstreperous behaviour'.
The suit alleges Jacobs was terminated 'not for cause' after resisting Adelson's 'repeated and outrageous demands' that he 'use improper 'leverage' against senior government officials of Macau' in order to win favourable treatment towards the company's development plans, according to a copy of the 16-page complaint filed Wednesday with the Clark County district court and obtained by this newspaper.
'While Las Vegas Sands normally does not comment on legal matters, we categorically deny these baseless and inflammatory allegations,' Las Vegas Sands vice president of communications Ron Reese said yesterday in an e-mail.
Jacobs was appointed head of Macau operations in May of last year and cut US$365 million in annual costs that eliminated the equivalent of more than 3,000 full-time jobs across the Venetian, Sands and Four Seasons casino hotels. He also helped oversee Sands China's HK$19.4 billion Hong Kong stock market listing last November.
But relations between Jacobs and Adelson soured dramatically over the past year, according to the lawsuit. Jacobs' complaint alleges Adelson made a number of 'outrageous' and 'illegal' demands of him, including that he launch secret investigations against various high-ranking Macau officials so that any negative information about them could be used as bargaining chips to head off unfavourable policy decisions.
Adelson also allegedly demanded the company continue using the services of Macau attorney Leonel Alves despite Jacobs' concerns that this might risk violating provisions of the US Foreign Corrupt Practices Act, which governs relations between US firms and foreign government officials (Alves is also a member of the local government's executive council).
The suit further alleges that Adelson pressured Jacobs to refrain from telling the Sands China board of directors about his concerns over these and other issues.
Disagreements between Jacobs and Adelson 'came to a head' in late June of this year when they and other executives were in Singapore for the grand opening of the Marina Bay Sands, according to the suit.
On June 25, two days after the formal Singapore opening, Jacobs cashed out all of his vested stock options in Las Vegas Sands for a gross profit of US$4 million, according to an analysis of US Securities and Exchange Commission filings. He was sacked a month later.
Jacobs's suit contends he was fired 'without cause', and is therefore entitled to a severance payment of one year's base salary, or US$1.3 million. On this basis, his suit also claims he is entitled to all his outstanding stock options, which he attempted to exercise on September 24. That would have yielded a gross profit of US$7.41 million, according to an analysis of US and Hong Kong stock exchange filings.
Based on yesterday's share prices, those options would represent a potential gross profit of US$9.6 million.