Friday, May 12, 2006

Despite accolades from business and community leaders, MGM Mirage executives
conceded at their annual diversity program presentation Wednesday that they
have a long way to go in building a company and industry that fully reflects
American culture. The Rev. Jesse Jackson, speaking from the audience, said
MGM Mirage and the audience of 1,500 suppliers, contractors and employees
attending the annual meeting, looked like a little United Nations. "This is
who we are, and you deserve a lot of credit," he told MGM Mirage Chairman
Terry Lanni, who Jackson said should be "in the White House."

Lanni said on every metric, MGM Mirage's diversity improved in 2005 compared
with 2004, despite the challenges of integrating 30,000 Mandalay Resort
Group employees with 40,000 MGM Mirage workers. The companies merged last
year, creating the world's second-largest gaming company.

Minority workers at MGM Mirage, for example increased to 55.7 percent of its
work force in 2005, up from 54.4 percent a year earlier, and minority
managers increased as a proportion of the total to 32.6 percent from 31.2
percent a year earlier.

MGM Mirage executives also conceded that while financially rewarding, the
MGM Mirage's merger with Mandalay has proven to be a tremendous challenge
for the company's diversity program.

Data comparing results for the combined companies were not available.

Senior Vice President Punam Mathur said the merger was the biggest challenge
MGM Mirage faced in 2005 but also a great opportunity.

Mandalay Resort Group did not have a formal diversity initiative like MGM
Mirage and its employment of minorities in many ways lagged MGM Mirage's,
which helped drag the company's statistics down last year.

Mandalay property managers, for example, were only 24 percent minorities in
2005, compared with MGM Mirage, where they accounted for 32.6 percent of the
total. Minorities accounted for only 54.6 percent of the Mandalay workforce,
compared with 55.7 percent at MGM Mirage.

Still, Mathur said introducing MGM Mirage's diversity programs to workers
and managers at Mandalay properties was a critical first step in merging the
cultures of the two companies and motivating the Mandalay employees.

Lanni said diversity programs are critical to maximizing the motivation and
performance of employees.

That is why, as chairman of the American Gaming Association, he has
initiated a program to establish industrywide standards for diversity in
hiring, procurement and contracting.

Mathur said it is ironic, perhaps, that MGM Mirage found itself facing a new
diversity challenge in its latest acquisition because its diversity program
grew out of the merger that created it.

In 2000, regulators and community leaders expressed concern that MGM Grand
Inc.'s diversity programs were weaker than those at Mirage Resorts, which
was then headed by Steve Wynn, which it was buying.

Regulators considering the proposed merger insisted that MGM Grand at least
perpetuate the diversity programs and standards in place at Mirage Resorts.
Arte Nathan, the chief of human resources at Wynn Resorts Ltd. who was then
in the same position at Mirage Resorts, said the result has been a high
profile program at MGM Mirage that has had the bonus of good results.

Nathan said Wynn Resorts has similar programs that focus on hiring,
purchasing, construction and maintenance.

He said 60 percent of the Wynn Resorts work force is made up of minorities
and the company is very mindful of its commitment to diversity.

Boyd Gaming Corp., which acquired Coast Casinos two years ago, faced no
challenges similar to those facing MGM Mirage in its merger, according to
Marianne Johnson, chairman of its diversity committee.

Minorities made up 49.3 percent of its work force and 54 percent of its
managers in 2004. Data for 2005 are not yet available.

But the profiles of the two companies and their commitments to diversity
were very similar at the time of the merger.

Since then, Boyd Gaming has been formalizing and expanding its diversity
program at the initiative of Chairman Bill Boyd.

"His mandate has always been for diversity. We just found the time had come
to put it on paper," Johnson said.

The picture was not quite so clear at Harrah's Entertainment, the world's
largest gaming company, which is still completing its integration with
Caesars Entertainment.

Harrah's acquired Caesars last year in a $9.4 billion deal.

Fred Keeton, Harrah's chief diversity officer, said his company is still in
the throes of forming a postmerger diversity program.

He said Harrah's faces enormous challenges in developing a diversity program
sensitive to the many communities in which it operates all across the
country. Plus, it has moved from having just two properties in Las Vegas to
having seven, including the Imperial Palace, which it acquired last year.

And the impetus for its diversity program, he said, is threefold: compliance
with r

egulations, good business and character. "It's an issue that is critical to
business," Keeton said.

Given the complexity of the merger and melding databases between the
companies, data on the makeup of Harrah's work force was not available.

Lanni and other gaming executives, however, acknowledged that the gaming
companies still have miles to go in accomplishing their objectives.

"It's a long, winding road," Lanni said. "We don't reflect yet the
communities in which we live, but we will (persist until we do)."