Caesars CEO defends his tenure

But in January 2012, after an ill-fated leveraged buyout saddled the company with insurmountable debt, Mr. Loveman made another appearance at Stanford’s “Paths to Power” class. He told students that to keep the company afloat he had been forced to lay off 12,000 people, including single moms and cancer patients.

Beyond that he said he had faced “every imaginable human catastrophe” on the job, “floods, hurricanes, building collapses, murders. I’ve had employees murder customers, I’ve had customers murder employees, and dead babies…” he said, trailing off as he referenced infants that had been abandoned on company property.

“This job has made me numb,” Mr. Loveman told the students, adding that it is now a challenge for him to be “emotionally normal.”

Sympathy is in short supply among the thousands of workers who have borne the brunt of the cuts at Caesars. Many accuse Mr. Loveman of being indifferent to their struggles.

Mr. Loveman, stepped down after 12 years as CEO on Tuesday but stay on as chairman, shrunk Caesars’ head count to 68,000 at the end 2014 from 87,000 in 2007, before the buyout, which he helped engineer. On top of that, the company is trying to push many full-time employees into part-time contracts, say staff, and has plans to pass on health-care cost increases to employees and to reduce the cost of workers’ compensation, according to a September presentation to creditors.

“I absolutely empathize with their frustration,” the 55-year-old executive said, speaking of the laid-off workers in a set of interviews with The Wall Street Journal. Mr. Loveman denied that the company was trying to push current staff into part-time contracts, said Caesars’ health-care plans are “second to none” and added that any reduction in the cost of workers’ compensation wouldn’t be “adversarial” toward employees.

Anthony Sanfilippo, a former Caesars executive who is now president of casino operatorPinnacle Entertainment Inc., said Mr. Loveman could be very compassionate to staff, particularly in the aftermath of Hurricanes Katrina and Rita, but that he didn’t show that side often enough. Mr. Sanfilippo, whom Mr. Loveman had said he mentored, questioned whether Mr. Loveman had really been ready to take responsibility for the culture of the company when he was appointed to the top job. “If Gary had led more with his heart than his intellect, people wouldn’t be asking what happened to the heart and soul of Caesars Entertainment,” said Mr. Sanfilippo.

“I was accessible almost to a fault,” said Mr. Loveman.

Mr. Loveman also has been criticized for his pay. The buyout—which ultimately caused Caesars’ largest unit to file for bankruptcy protection this past January —made his shares and options worth around $90 million. Mr. Loveman countered that while he took the majority of that money home, he also reinvested tens of millions back into the company.

The company returned to the stock market in 2012.

Last year his total compensation was valued at over $32 million—more than quadrupling from 2013—drawing criticism from proxy advisory firm Institutional Shareholder Services, which also called him out for excessive use of the company plane. Mr.

Loveman said the criticism was unfair as most of the figure represented restricted stock and options that are under water.

He highlighted that he had voluntarily cut his base salary from $2 million to $1.9 million in 2009 due to the financial crisis and never raised it again. As for the plane, he said that almost all of his flights were commutes from his home in the Boston area to the company’s properties around the country.

A former Harvard Business School professor, Mr. Loveman was plucked from academia in the 1990s to consult for Caesars and became its chief operating officer in 1998 before taking the top job in 2003.

With his disheveled hair and professorial style, Mr. Loveman looks nothing like a slick casino mogul. When he joined Caesars, he drove a 1987 Honda. He is praised for bringing big data and Ivy League intellect to the freewheeling casino industry.

Many also compliment his dry sense of humor and his public-speaking chops.

He built Caesars into the world’s largest casino company but the leveraged buyout and a decision around the same time to balk at the cost of a one-time offer for a casino license in the Chinese city of Macau, have left the formerly investment-grade company burdened by debt and lagging far behind its competitors in revenue and earnings growth.

Mr. Loveman’s task when he took over the company was to find a way to compete with the opulent resorts being built by people like Steve Wynn.

He decided to build intellectual property instead. He saw that grandmothers playing slots were more profitable than the high-rollers his rivals were courting, so he hired hordes of mathematicians and M.B.A.s to turbocharge Caesars’ loyalty program.

Total Rewards has since grown to 46 million members and is still considered Caesars’ crown jewel, valued at over $1 billion by creditors.

To lock the low-rollers into Caesars’ network, Mr. Loveman doubled the company’s empire to more than 50 casinos from 26 casinos in 2003.

Then came private-equity firms Apollo Global Management LLC and TPG Capital. With their $30.7 billion buyout plan, they wagered that the company—at the time calledHarrah’s Entertainment Inc.—was undervalued and that the resulting debt load could be handled.

“One of the things that it’s important to realize in this story is that everybody wanted in on this deal,” said Mr. Loveman. “People now look back on this and say, ‘How could anybody have done this?’ But the fact is everybody wanted to do this.”

But the financial crisis that struck just as the deal closed in January 2008 made the company’s $22 billion in post-buyout debt unmanageable.

To keep the company afloat, Mr. Loveman spearheaded Caesars’ strategy of “growing while we shrank,” said Apollo co-founder Marc Rowan in an interview. “He has worked a lot harder than he thought he was going to work.”

Mr. Loveman added casinos, invested in an online gambling business and built a 550-foot-tall Ferris wheel on the Las Vegas Strip, while cutting staff and deferring maintenance on many properties.

On the casino floor below the executive offices, which overlook a topless pool at Caesars Palace, staff say morale has sunk as managers saddle them with impossible workloads, ignore their complaints and decline to rein in abusive customers.

Mr. Loveman, who will be succeeded by Mark Frissora, former CEO of car-rental company Hertz Global Holdings Inc., said he is aware of staff complaints but that internal surveys show “employees are more engaged” and that “they trust people in management.”

On an earnings call in March, Mr. Loveman said he and his team had saved the company $900 million since the buyout and planned to save another $250 million to $300 million through what he described as more “ingenious” cuts.

Nevertheless, analysts including Dennis Farrell of Wells Fargo Securities LLC and Alex Bumazhny of Fitch Ratings say that Caesars has underperformed rivals during Mr. Loveman’s tenure. Since 2005, net revenue at Caesars has risen less than 20%, compared with around 740% and 650% respective growth rates at its Asia-focused rivals Las Vegas Sands Corp. and Wynn Resorts Ltd. At U.S.-focused rivals MGM Resorts Internationaland Penn National Gaming Inc., revenue has grown 65% and 90%, respectively, over the same period.

Mr. Loveman says revenue and earnings aren’t the best way to assess Caesars’ performance and that while the company has been over-invested in weak markets like Atlantic City, and not at all present in key Asia markets, it often outperforms rivals in the markets it’s in.

The company provided market-share data highlighting nine of its properties that last year punched above their weight in terms of gambling revenue.

To the Stanford students, Mr. Loveman offered this advice: “You want to be liked? Get a dog.”