UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☑þ
Filed by a Party other than the Registrant ☐¨
Check the appropriate box:
| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material under §240.14a-12 |
CENTURY CASINOS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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| Fee paid previously with preliminary materials. | |
¨ | Fee computed on table | |
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Dear Stockholder:
We cordially invite you to electronically attend the Annual Meeting of Stockholders of Century Casinos, Inc., which will be held on Wednesday,Monday, June 9, 202124, 2024 at 8:00 a.m. Mountain Daylight Time. We are pleased to announce that this year’s Annual Meeting will again be a virtual meeting via live webcast on the Internet. You will be able to attend the Annual Meeting, vote and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/cnty2021cnty2024.
At the Annual Meeting, you will be asked to vote on proposals to elect two Class III directors to our Board of Directors, ratify the appointment of our independent registered public accounting firm, approve an advisory (non-binding) resolution regarding the compensation of our named executive officers, approve the Amended and Restated 2016 Equity Incentive Plan and consider such other business as may properly come before the meeting.
Enclosed is a notice of the Annual Meeting, the proxy statement and proxy card along with a copy of our Annual Report on Form 10-K for the 20202023 fiscal year.
We encourage you to read the enclosed proxy statement and vote promptly. If you attend the Annual Meeting, you may vote in personlive via the Internet even if you previously voted by proxy. Thank you for your interest and support.
Sincerely, | |
/s/ Erwin Haitzmann | |
Erwin Haitzmann | |
Chairman of the Board of Directors |
April 30, 202129, 2024
DATE AND TIME
8:00 a.m. Mountain Daylight Time |
PLACE Virtual Meeting www.virtualshareholdermeeting.com/ |
RECORD DATE
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, 8:0 Time 4:00 p.m. Central European Summer Time PLACE Virtual Meeting www.virtualshareholdermeeting.com/cnty2018 RECORD DATE Tuesday, April 17, 2018
ANNUAL MEETING PROPOSALS
1 ELECTION of two Class III directors to our Board of Directors | 2 RATIFICATIONof the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, | 3 APPROVAL of an advisory (non-binding) resolution regarding the compensation of our named executive officers | 4 |
Any other business as may properly come before the meeting in accordance with our bylaws or any adjournment or postponement thereof will also be voted upon.
PROXY VOTING
Only those stockholders of record owning shares of our common stock at the close of business on April 21, 202125, 2024 are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement of the Annual Meeting. A complete list of these stockholders will be available for ten days prior to the meeting at the office of our Corporate Secretary at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903, and at the Annual Meeting.
To attend the Annual Meeting via the live webcast, go to www.virtualshareholdermeeting.com/cnty2021cnty2024 at least 15 minutes prior to the start time to register. Click on the link to the audio-only webcast, on that page and a scriptwhich will take you through the steps necessary to access the webcast. In order to ask questions and submit a ballot at the meeting, you must have a Broadridge-issued control number and enter it when prompted.
Our proxy statement is enclosed. Stockholders who cannot attend the meeting via the Internet should vote by using the enclosed proxy card. Please fill in, date, sign and return the enclosed proxy card in the enclosed envelope so that your shares may be voted at the meeting. If you attend the meeting via the Internet, you may revoke your proxy and vote in person.live at the meeting. Your vote is important.
By order of the Board of Directors, | |
/s/ Margaret Stapleton | |
Margaret Stapleton | |
Chief Financial Officer and Corporate Secretary |
Colorado Springs, Colorado
April 30, 202129, 2024
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20212024 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Century Casinos, Inc. (“we,” “us,” “our,” or the “Company”) for the Annual Meeting of Stockholders (“Annual Meeting”) to be held at the following date, time and place, and at any postponements or adjournments thereof:
June | Virtual Meeting |
8:00 a.m. Mountain Daylight Time | www.virtualshareholdermeeting.com/ |
Matters to be considered and acted upon are set forth in the accompanying Notice of Annual Meeting of Stockholders and this proxy statement and are more fully described herein. The enclosed materials were first mailed on or about April 30, 202129, 2024 to our stockholders of record as of April 21, 2021. 25, 2024.
YOUR VOTE ISIS IMPORTANT
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 9, 2021.24, 2024. This proxy statement and the Annual Report on Form 10-K are available at www.proxyvote.com. None of the information contained in our Annual Report on Form 10-K is proxy solicitation material.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record at the close of business on April 21, 202125, 2024 will be entitled to vote at the Annual Meeting. On that date, there were 29,575,96230,682,603 shares outstanding of our common stock, our only class of voting securities. Each share of common stock is entitled to one vote per share. Cumulative voting in the election of directors is not permitted.
All properly executed proxies received prior to the Annual Meeting will be voted at the Annual Meeting. If a stockholder directs how a proxy is to be voted with respect to the business coming before the Annual Meeting, the proxy will be voted in accordance with the stockholder’s directions. If a stockholder does not direct how a proxy is to be voted, it will be voted as the Board recommends, which is as follows:
PROPOSALS | PAGE | RECOMMENDATION |
Proposal No. 1: Election of Directors
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Proposal No. 2: Ratification of Independent Registered Public Accounting Firm
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Proposal No. 3: Advisory Vote to Approve Executive Compensation
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Proposal No. 4: Approval of the Amended and Restated 2016 Equity Incentive Plan Approval of the Amended and Restated 2016 Equity Incentive Plan | 14 | FOR |
A proxy may be revoked at any time before it is exercised by giving written notice to our Corporate Secretary at Century Casinos, Inc., 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903 or by delivery of a subsequently executed proxy. Stockholders may vote their shares in person if they attend the Annual Meeting, even if they have executed and returned a proxy. Stockholders will not be able to vote their shares by phone at the meeting.
Proxies are being solicited by mail, and, in addition, our directors, officers and regular employees (who will not receive any additional compensation) may solicit proxies personally, by telephone, by email, or by special correspondence. We will reimburse brokerage firms and others for their expenses in forwarding proxy materials to the beneficial owners of our common stock. All expenses involved in preparing, assembling and mailing this proxy statement and the enclosed material and in connection with the solicitation of proxies in regard to the proposals brought forward by us and included in this proxy statement will be paid by us.
The holders of a majority of our issued and outstanding shares of common stock, represented either in person or by proxy and entitled to vote at the meeting, will constitute a quorum for the transaction of business at the Annual Meeting. A vote of the holders of a majority of the common stock present, either in person or by proxy, and entitled to vote, is required to elect the director nominees, to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2021 and2024, to approve the advisory (non-binding) resolution regarding the compensation of our named executive officers (“NEOs”). and to approve the Amended and Restated 2016 Equity Incentive Plan.
A stockholder entitled to vote may abstain from voting for nominees for director in the election of directors and may abstain from voting on any of the other proposals. Abstentions are counted for purposes of determining a quorum to conduct business. Abstentions will have the effect of a vote “against” a proposal, because an abstention represents a share entitled to vote and is included in the denominator in determining the percentage approved. The inspectors of election will treat broker non-votes, which are shares held by brokers or nominees for which the broker or nominee has no discretionary power to vote on a particular matter and for which they have received no instructions from the beneficial owners or persons entitled to vote, as shares that are present for purposes of determining the presence of a quorum. However, for purposes of determining the outcome of any matters as to which the broker has indicated on the proxy that it does not have discretionary authority to vote, including the election of directors, those shares will be treated as not entitled to vote with respect to that matter (even though those shares may be entitled to vote on other matters).
If you are a stockholder who wishes to present a proposal for inclusion in the proxy statement and form of proxy for consideration at our 20222025 Annual Meeting of Stockholders, you must submit your proposals to the attention of our Corporate Secretary at our executive office at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903, so that the proposal is received by us no later than December 31, 2021.30, 2024. In order for a stockholder proposal to be properly considered at the 20222025 Annual Meeting, our Corporate Secretary must have received notice of the proposal no sooner than December 11, 202126, 2024 and no later than February 9, 2022,24, 2025, in accordance with our amended and restated bylaws. Proposals received by us before December 11, 202126, 2024 or after February 9, 202224, 2025 will be deemed untimely and will not be considered at the 20222025 Annual Meeting. In addition to satisfying the foregoing requirements under our amended and restated bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than management’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) no later than April 25, 2025.
STOCKHOLDER COMMUNICATIONS AND DIRECTOR NOMINATIONS
Stockholders or other interested parties may communicate with our Board, any individual director, or members of any Board committee. Stockholders should send any communications to investor@cnty.com, and identify the intended recipient or recipients. All communications addressed to the Board or any identified director or directors will be forwarded to the identified person or persons.
In order to nominate candidates for election to our Board, nominations must be timely received from a stockholder at our executive office at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903, as described above under “Stockholder Proposals”, and must set forth the name, age, business address and residence address of each nominee, the nominees’nominee’s principal occupation or employment, the number of shares of our common stock owned by each nominee, and any other information regarding each nominee required to be disclosed by our amended and restated bylaws or by applicable laws. The nomination must also state the name and address of the stockholder making such nominationsnomination and the number of shares of common stock owned by such person.
HOUSEHOLDING
To reduce the expense of delivering duplicate proxy solicitation materials, we and some brokers may take advantage of the “householding” rules of the Securities and Exchange Commission (“SEC”). These householding rules permit the delivery of only one set of proxy solicitation materials to stockholders who share the same address, unless otherwise requested. Any stockholder of record who shares an address with another stockholder of record and who has received only one set of proxy solicitation materials may receive a separate copy of those materials, without charge, or request future delivery of separate materials upon writing our Corporate Secretary at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903 or calling (719) 527-8300. Likewise, any stockholder of record who shares an address with another stockholder of record and who has received multiple sets of proxy solicitation materials may request future delivery of a single copy of those materials upon writing our Corporate Secretary at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903 or calling (719) 527-8300.
If you consent to householding, your election will remain in effect until you revoke it. Should you later revoke your consent, you will be sent separate copies of those documents that are mailed at least thirty days or more after receipt of your revocation.
The following table presents the current members of the Board, the committees on which they serve, and whether they are independent under Nasdaq Stock Market (“Nasdaq”) listing standards and SEC rules.
NAME | AUDIT COMMITTEE | COMPENSATION COMMITTEE | GOVERNANCE AND NOMINATING COMMITTEE | INDEPENDENT |
Erwin Haitzmann | ||||
Peter Hoetzinger | ||||
Eduard Berger |
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Gottfried Schellmann |
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Dinah Corbaci |
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The Board held three meetingsone meeting and approved resolutions through unanimous written consent on eight occasions during 2020.2023. During 2020,2023, each director attended at least 75% of the meetings of the Board meeting and all committee meetings held during the period foryear of which he or she has been a director and of each committee held during the period that he or she has served as a member. A majority of our directors are independent directors, as required by the Nasdaq listing standards. Our Board determines whether a director is independent through a broad consideration of facts and circumstances, including an assessment of the materiality of any relationship between us and a director not merely from the director’s standpoint, but also from that of persons or organizations with which the director has an affiliation. In making this determination, the Board adheres to the independence criteria defined by the Nasdaq listing standards and applicable SEC rules.
Our policy regarding attendance by members of the Board at our Annual Meeting of Stockholders is to encourage directors to attend, either in person or by teleconference, subject to their availability during that time. All members of the Board attended the 20202023 Annual Meeting.
BOARD DIVERSITY MATRIX
BOARD DIVERSITY MATRIX (As of April 25, 2024) | ||||
Total number of Directors | 5 | |||
FEMALE | MALE | NON-BINARY | DID NOT DISCLOSE | |
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Directors | 1 | 3 | 0 | 1 |
DEMOGRAPHIC BACKGROUND: | ||||
White | 1 | 3 | 0 | 1 |
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Eduard Berger | Audit Committee Financial Expert: Gottfried Schellmann | |
Dinah Corbaci | Nasdaq/SEC Qualified: All | |
RESPONSIBILITIES | ||
Selects and appoints our independent registered public accounting firm. Reviews the independence and performance of the independent registered public accounting firm. Reviews our system of internal controls. Oversees risk Reviews actions taken to comply with applicable gaming rules and regulations. Reviews compliance with our Code of Business Conduct and Ethics. | Approves the services and fees of the independent registered public accounting firm. Reviews our annual and quarterly financial statements and the independent registered public accounting firm’s opinion rendered with respect to such financial statements. Reviews disclosures in our Form 10-K, Form 10-Q and proxy statement filings with the SEC. Reviews related party transactions. |
The Audit Committee of the Board is governed by an Amended and Restated Charter and Powers of the Audit Committee, a current copy of which can be found at www.cnty.com/investor/governance/facts-overview/. During 2020,2023, the Audit Committee held four meetings.
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COMPENSATION COMMITTEE | |
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Develop guidelines and review the compensation and performance of our executive officers, and review and approve corporate goals relevant to the compensation of our executive officers in light of our goals and objectives. Determine the compensation of the executive officers, including base pay, incentive pay (bonus) and equity awards. Review and discuss with management our annual Compensation Discussion and Analysis. Make recommendations to the Board regarding inclusion of the Compensation Discussion and Analysis in our annual proxy statement. Make recommendations with respect to incentive-compensation plans and equity-based plans. | Develop plans for management succession. Review major organizational and staffing matters. Review director compensation levels and practices, and recommend, from time to time, changes in such compensation levels and practices to the Board. Annually review and reassess the adequacy of the Compensation Committee’s charter and recommend any proposed changes to the Board for approval. Annually review the Compensation Committee’s own performance. Perform any other activities consistent with the Compensation Committee’s charter, our bylaws and applicable laws, rules and regulations that the Compensation Committee or the Board deem appropriate. |
The Compensation Committee of the Board operates pursuant to a written charter that was adopted by the Board, a current copy of which can be found at www.cnty.com/investor/governance/facts-overview/.
The Compensation Committee collaborates with our management team in reviewing the material terms of our existing compensation policies and programs for all employees and believes that such policies and programs do not encourage excessive risk-taking that is reasonably likely to result in a material adverse impact on us.
In fulfilling its responsibilities, the Compensation Committee may delegate any of its responsibilities to one or more subcommittees or to one of its members as the Compensation Committee may deem appropriate in its sole discretion, to the extent permitted by Nasdaq and SEC rules and any other applicable rules and regulations. In addition, the Compensation Committee may, from time to time, engage external compensation consultants to assist in reviewing compensation policies and programs, setting executive compensation. In 2016, the Compensation Committee engaged an independent advisor to assist the Compensation Committee in redesigning our annual and long-term incentive compensation plans. During 2020,2023, the Compensation Committee held two meetings. one meeting.
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Gottfried Schellmann (Chairman) | Independent: All |
Eduard Berger | |
Dinah Corbaci | |
RESPONSIBILITIES | |
Develop and recommend to the Board a set of corporate governance principles. Advise the Board on corporate governance matters. Develop and recommend to the Board criteria for the selection of candidates to serve on the Board. Establish procedures for the identification and evaluation of any candidate for the Board, including any incumbent director. Establish procedures for stockholders to submit potential candidates for election to the Board. Select and approve all nominees for Board membership. Make recommendations as necessary regarding changes in the size and composition of the Board and each Board committee. | Make recommendations as necessary regarding the establishment of new Board committees and selection of directors to serve on each committee. Develop and administer an annual Board and committee evaluation process. Annually review the Governance and Nominating Committee’s own performance. Perform any other activities consistent with the Governance and Nominating Committee charter, our bylaws and applicable laws, rules and regulations that the Governance and Nominating Committee or the Board deem appropriate. |
The Governance and Nominating Committee operates pursuant to a written charter that was adopted by the Board, a current copy of which can be found at www.cnty.com/investor/governance/facts-overview/.
The Governance and Nominating Committee will consider director nominees recommended by stockholders under the same procedure used for considering director nominees recommended by management or other directors. See the “Stockholder Communications and Director Nominations” section of this proxy statement for procedures to be followed by stockholders to submit recommendations.nominations.
In fulfilling its responsibilities, the Governance and Nominating Committee may engage external consultants. No external consultants were used during 2020.2023. We believe that our current Board members collectively possess diverse knowledge and experience in the disciplines that impact our business. Prior to nominating a new director candidate, our Governance and Nominating Committee considers the collective experience of the existing Board members. Based on this evaluation, the Governance and Nominating Committee nominates individuals who it believes can either strengthen the Board'sBoard’s sophistication and experience or further diversify the collective experience represented. Although the Board does not currently have a policy directly addressing director diversity, the Governance and Nominating Committee, guided by the Governance and Nominating Committee'sCommittee’s charter, generally assessesintends to assess the diversity of the Board and the effectiveness of its diversity considerations prior to nominating any additional candidates for director. During 2020,2023, the Governance and Nominating Committee heldapproved one meeting.resolution by unanimous written consent.
The general criteria that the Governance and Nominating Committee uses to select nominees are:
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Such individual’s reputation for integrity, honesty and adherence to high ethical standards;
Demonstrated business acumen, particularly in the casino industry;
Experience and ability to exercise sound judgments in matters that relate to our current and long-term objectives;
Willingness and ability to contribute positively to our decision-making process;
Commitment to understanding us and our industry and to regularly attend and participate in meetings of the Board and its committees;
Interest and ability to understand the sometimes conflicting interests of our various constituencies, which include stockholders, employees, customers, governmental units, creditors, and the general public;
Ability to act in the interest of all stakeholders;
Shall not have, or appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all of our stockholders and to fulfill the responsibilities of a director; and
Understanding of the complexity of diverse international business structures.
The Governance and Nominating Committee reviewed the qualifications of Dr. Erwin Haitzmann and Mr. Gottfried Schellmann, whose terms expire at the 20212024 Annual Meeting, and has recommended to the Board that Dr. Erwin Haitzmann and Mr. Gottfried Schellmann be re-electedre-nominated to the Board for three-year terms expiring at the 20242027 Annual Meeting.
Under the Company’s director resignation policy, promptly following the receipt of the final report from the Inspector of Elections relating to an election of directors of the Company (other than elections in which the number of nominees exceeds the number of directors to be elected), any nominee who does not receive the affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote, will tender his or her resignation for consideration by the Board. Subject to certain conditions, the Governance and Nominating Committee will meet to consider the tendered resignation and make a recommendation to the Board concerning the action, if any, to be taken with respect to the director’s resignation. The Board will consider and act upon the Governance and Nominating Committee’s recommendation within 90 days of certification of the vote at the Meeting. In considering the director’s resignation, the Governance and Nominating Committee and the Board will consider all factors they deem relevant, including, without limitation, the underlying reason for the vote result, if known, the director’s contributions to the Company during his or her tenure, and the director’s qualifications. The Board may accept the resignation, refuse the resignation, or refuse the resignation subject to such conditions designed to cure the underlying cause as the Board may impose. Within four business days of the decision regarding the tendered resignation, the Company will file with the SEC a report on Form 8-K disclosing the decision with respect to the resignation, describing the deliberative process and, if applicable, the specific reasons for rejecting the tendered resignation.
The Board does not have a policy regarding the separation of the roles of Co-Chief Executive Officer and Chairman of the Board, as the Board believes it is in our best interests to make that determination based on our particular position and direction and the membership of the Board. The Board has determined that having our Co-Chief Executive Officer Dr. Haitzmann serve as Chairman is in the best interest of our stockholders at this time. This structure makes the best use of the Co-Chief Executive Officer’s extensive knowledge of us and our industry, as well as fostering greater communication between our management and the Board. The combined role of Chairman and Co-Chief Executive Officer is balanced by our governance structure, policies and controls. Three of the five members of our Board of Directors satisfy the requirements of independence promulgated by the SEC and Nasdaq, and the Audit, Compensation, and Governance and Nominating Committees are composed entirely of independent members of the Board. This structure encourages independent and effective oversight of our operations and prudent management of risk.
The Board has not appointed a “lead independent director” due to the small size of the Board and because three of the five directors are independent. The Board therefore does not believe that a lead independent director would add significant value at this time.
Our Board of Directors administers its risk oversight function directly and through its committees. The Board has oversight responsibility for all risks and has various programs to oversee financial and business risks including (i) reviewing and discussing with management the quarterly and annual SEC filings, (ii) reviewing and discussing with management our business strategies and the related business plan, (iii) monitoring quarterly results, and (iv) reviewing and discussing with management results of our enterprise risk management program.
Companies face a variety of risks, including credit risk, liquidity risk, and operational risk. The Board believes an effective risk management system will (i) timely identify the material risks that we face, (ii) communicate necessary information with respect to material risks to senior executives and, as appropriate, to the Board or relevant Board committee, (iii) implement appropriate and responsive risk management strategies consistent with our risk profile, and (iv) integrate risk management into our decision-making.
The Board has designated the Audit Committee to take the lead in overseeing risk management.management, including information technology and cybersecurity risks. The Audit Committee makes periodic reports to the Board regarding briefings provided by management and advisors as well as the Audit Committee’s own analysis and conclusions regarding the adequacy of our risk management processes.
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The Compensation Committee administers compensation risk oversight through its oversight of compensation practices and the Compensation Committee’s assessment of the potential impact of those practices on risk-taking. The Compensation Committee believes that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.
In addition to thea formal compliance program, the Board encourages management to promote a corporate culture that incorporates risk management into our corporate strategy and day-to-day business operations. The Board also continually works with the input of our executive officers to assess and analyze the most likely areas of future risk for us.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2020,2023, the members of the Compensation Committee were Mr. Gottfried Schellmann and Dr. Dinah Corbaci. Neither of these individuals areis a current or former officersofficer of the Company or any of our subsidiaries. During 2020,2023, none of our executive officers served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers served as a director or member of our Compensation Committee.
DirectorsDuring 2023, compensation for directors who are neither our employees nor employees of any of our subsidiaries earn(“Outside Directors”) was as follows:
Annual cash retainer for Outside Directors is $40,000;
The Audit Committee chair will receive an additional annual cash retainer of $20,000;
Outside Directors received an annual equity grant of restricted stock units (“RSUs”) with a grant date fair value of $10,000 as further described below; and
Outside Directors were paid $2,000 for each meeting attended and for each gaming application completed. Directors
RSUs are reimbursed for expenses reasonably incurredtypically granted in connection with their serviceMarch of each year after the release of our Annual Report on Form 10-K (the “Director RSU Grant Date”) based on the Board.
For 2020, Mr. Schellmann received an additional $30,000 for his work as Chairmanclosing price of the Audit Committee. For 2020, Dr. Corbaci received an additional $15,000 for her work as a memberCompany’s common stock on that date. The RSUs vest 100% on the first anniversary of the Audit, CompensationDirector RSU Grant Date. The grant of Director RSUs for 2024 was postponed until stockholders approve the Amended and Governance and Nominating Committees and Mr. Berger received anRestated 2016 Equity Incentive Plan.
Directors who are also our employees receive no additional $15,000compensation for his work as a memberserving on our board of the Audit and Governance and Nominating Committees. directors.
2020
The following table sets forth the compensation of our non-employee directorsOutside Directors for 2020:2023:
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Gottfried Schellmann | $ | 60,000 | $ | 10,000 | $ | 17,000 | $ | 87,000 | |||
Dinah Corbaci | 40,000 | 10,000 | 17,000 | 67,000 | |||||||
Eduard Berger | 40,000 | 10,000 | 17,000 | 67,000 |
(1)Represents the grant date fair value of 1,357 RSUs granted to each Outside Director on March 15, 2023, calculated in accordance with U.S. GAAP.
(2)The amounts reflected in “All Other Compensation” reflects cash compensation for a completed gaming application and a $15,000 bonus to each Outside Director in recognition of the additional time and efforts related to our acquisitions of the Nugget Casino Resort (“Nugget Casino”) and Rocky Gap Casino, Resort & Golf (“Rocky Gap”) and the sale and leaseback of the real estate related to our Canada properties that were completed in 2023.
As of December 31, 2020,2023, Mr. Schellmann held options to purchase 25,000 shares of our common stock, all of which 6,250 were exercisable; Dr. Corbaci held options to purchase 56,70046,700 shares of our common stock, all of which 37,950 were exercisable; and Mr. Berger held options to purchase 25,000 shares of our common stock, all of which 6,250 were exercisable. We did not grant stock options to our non-employee independent directorsOutside Directors during 2020. 2023.
PROPOSAL NO. 1 ELECTION OF DIRECTORS
Our Board is divided into three classes of directors as nearly equal in number as possible. Each director who is elected at an Annual Meeting will be elected for a three-year term expiring at the third Annual Meeting of Stockholders after such director’s election. Accordingly, directors of one class only are elected at each year’s Annual Meeting of Stockholders. All nominees, if elected, will serve until the expiration of their respective three-year terms or until their successors are duly elected and qualified. Our Board consists of five directors in three classes as follows: (i) two Class I directors, Dr. Dinah Corbaci and Mr. Eduard Berger, whose terms will expire at the 20222025 Annual Meeting; (ii) one Class II director, Mr. Peter Hoetzinger, whose term will expire at the 20232026 Annual Meeting; and (iii) two Class III directors, Dr. Erwin Haitzmann and Mr. Gottfried Schellmann, whose terms will expire at the 20212024 Annual Meeting.
Based on the recommendations of our Governance and Nominating Committee, the Board has nominated Dr. Erwin Haitzmann and Mr. Gottfried Schellmann for election as Class III directors to serve for a three-year termterms expiring at the 20242027 Annual Meeting of Stockholders.
Dr. Haitzmann is presently a member of the Board of Directors, having served continuously as a director since March 1994. Mr. Schellmann is presently a member of the Board of Directors, having served continuously as a director since January 1997. Dr. Haitzmann and Mr. Schellmann have indicated a willingness to serve; however, in the event a nominee becomes unable to serve as a director, all proxies will be voted in accordance with the best judgment of the persons acting under such proxies.
Further information regarding Dr. Haitzmann and Mr. Schellmann, the nominees for Class III directors, are set forth below under “Information Regarding Directors.”
Vote Required
The affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote is required to elect a director. Abstentions effectively count as a vote against a nominee. Broker non-votes will have no effect on the outcome of the proposal. Proxies cannot be voted for a greater number of directors than the number nominated.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE ABOVE NOMINEES AS A CLASS III |
The Audit Committee of the Board has appointed Grant Thornton LLP as the independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2021.2024. In August 2020, we engaged Grant Thornton LLP as our independent registered public accounting firm. The services provided to us by Grant Thornton LLP during 20202023 and 2022 are described under “Principal Accounting Fees and Services” below. Although ratification is not required by law, the Board has determined that it is desirable to seek stockholder ratification of this appointment in light of the critical role played by the independent registered public accounting firm in auditing our financial statements. Notwithstanding the selection or ratification of Grant Thornton LLP, the Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of us and our stockholders. If the appointment is not ratified by our stockholders, the Audit Committee may reconsider whether it should appoint another independent registered public accounting firm. A representative of Grant Thornton LLP is expected to be present at the Annual Meeting, either in person or via telephone,the webcast, to respond to appropriate questions and will have an opportunity to make a statement if the representative desires to do so.
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As previously disclosed, on August 10, 2020, we dismissed Deloitte & Touche LLP as our principal independent registered public accounting firm. During the fiscal years ended December 31, 2019 and 2018 and subsequent interim periods through August 10, 2020, we had no disagreements with Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved would have caused Deloitte & Touche LLP to report the disagreement. There has been no adverse opinion, disclaimer of opinion, or qualified or modified opinion in Deloitte & Touche LLP’s reports for the preceding two years. For the preceding two years and through August 10, 2020, no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act (“Regulation S-K”) were identified.
On August 10, 2020, we engaged Grant Thornton LLP as our independent registered public accounting firm. During the two most recent fiscal years and interim period preceding the engagement, we have not consulted Grant Thornton LLP with respect to the accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or any other matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees billed to us by Grant Thornton LLP, our independent auditor since August 10, 2020:
2023 | 2022 | |||||
Audit Fees (1) | $ | 2,411,000 | $ | 1,596,324 | ||
Audit-Related Fees (2) | — | 206,250 | ||||
Tax Fees | — | — | ||||
Total | $ | 2,411,000 | $ | 1,802,574 |
(1)Audit fees consist of fees incurred for professional services rendered for the audit of our consolidated financial statements included in our annual reports on Form 10-K, reviews of the interim consolidated financial statements included in quarterly reports on Form 10-Q, consents for filings with the SEC, local statutory audits, and Deloitte & Touche LLP:associated expenses.
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| 2020 |
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| 2019 | |
Audit Fees to Grant Thornton LLP (A) |
| $ | 1,299,155 |
| $ | — |
Audit Fees to Deloitte & Touche LLP (A) |
|
| 1,115,567 |
|
| 1,550,309 |
Audit-Related Fees (B) |
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| — |
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| 20,000 |
Tax Fees |
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| — |
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| — |
All Other Fees (C) |
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| 10,700 |
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| — |
Total |
| $ | 2,425,422 |
| $ | 1,570,309 |
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(2)Audit-related fees for the years ended December 31, 2022 consist of fees incurred for certain professional services rendered in connection with acquisitions.
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The Audit Committee approved in advance all audit services provided in 20202023 and 20192022 including audit engagement fees and terms provided to us by our independent auditors (subject to the de minimis exception for non-audit services contained in Section 10A(i)(1)(B) of the Securities Exchange Act, of 1934, as amended (the “Exchange Act”)), all as required by applicable law or listing standards.
The independent auditors and our management are required to periodically report to the Audit Committee the extent of services provided by the independent auditors and the fees associated with these services.
Vote Required
Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 20212024 requires the affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote. Abstentions effectively count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, |
Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, the following report of the Audit Committee shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such acts.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee has reviewed and discussed with our management our audited consolidated financial statements of the Company for the year ended December 31, 2020.2023. The Audit Committee discussed with Grant Thornton LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by the applicable requirements of the PCAOB regarding the independent accountant'saccountant’s communications with the Audit Committee regarding independence, and has discussed with Grant Thornton LLP its independence.
Based upon the review and discussions noted above, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,2023, which was filed with the SEC on March 12, 2021.14, 2024.
Audit Committee:
Gottfried Schellmann, Chairman
Dinah Corbaci
Eduard Berger
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires that we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. See “Compensation Discussion and Analysis” and “Executive Compensation” below.
In order to better align the long-term interests of our executives with our stockholders and to attract and retain highly qualified executives, our compensation programs have been designed to provide competitive levels of compensation that integrate pay with our performance, with an emphasis on recognizing individual initiative and achievements and recognizing the complexity of our international operations. We base our compensation primarily on experience, expertise and performance, with a portion of potential compensation dependent upon our successful long-term performance and position in the international gaming industry.
In 2016, our Compensation Committee adopted a comprehensive Compensation Policy, which is described below under “Compensation Discussion and Analysis—Compensation Policy.” The Compensation Policy includes an annual incentive plan and long-term incentive plan. In the first quarter of 2017, the Compensation Committee began granting cash awards to senior management based on the Company’s achievement of certain performance measures under the annual incentive plan and began making annual performance stock unit (“PSU”) grants to senior management under the long-term incentive plan.2016 Equity Incentive Plan. Under our long-term incentive plan,program, a significant portion of the compensation paid to our executive officers is at-risk, performance-based compensation based on pre-determined, measurable performance objectives approved by the Compensation Committee. The Compensation Committee review the Compensation Policy annually and decided no changes were needed for 2023. See “Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentive Compensation” below.
As a result of these efforts, the compensation of our named executive officers received support from over 90% of the shares voted on this proposal at our last three Annual Meetings. We have responded to our stockholders’ input over the last several years and we will continue to consider the feedback from our stockholders when determining the compensation of our named executive officers in the future.
This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee of the Board of Directors. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. To the extent there is a vote against our named executive officer compensation as disclosed in this proxy statement, the Compensation Committee will evaluate whether any actions are necessary to address our stockholders’ concerns.
The affirmative vote of a majority of the shares present or represented and entitled to vote either in person or by proxy is required to approve this Proposal No. 3. Abstentions effectively count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.
Accordingly, we ask our stockholders to vote on the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 20212024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.”
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT. |
Introduction
We are asking our stockholders to approve the Amended and Restated Century Casinos, Inc. 2016 Equity Incentive Plan (the “2016 Plan”) to increase the number of shares of our common stock reserved for issuance under the 2016 Plan by an additional 2,430,400 shares, extend the term of the 2016 Plan, and make certain other decision changes to the 2016 Plan. The Board believes that long-term equity incentives play a critical role in our executive compensation program, motivating executives to make decisions that focus on long-term stockholder value creation, aligning executives’ interests with the interests of stockholders and serving as an effective retention device. Our ability to continue to provide a competitive level of long-term equity incentives is considered to be of utmost importance to our success.
The 2016 Plan originally became effective on June 9, 2016. On April 21, 2024, the Board approved, subject to stockholder approval, an amendment and restatement of the 2016 Plan (the “Restated Plan”) to approve the reservation of an additional 2,430,400 shares for future issuance under the Restated Plan, and make certain other changes described below.
Stockholder Approval and Board of Directors Recommendation
Stockholder approval of the Restated Plan is being sought in order to (i) satisfy the stockholder approval requirements of the Nasdaq listing standards for certain of the amendments included in the Restated Plan, including the increase in the number of shares available for issuance under the Restated Plan by 2,430,400 shares, and the extension of the term of the Restated Plan to the date that is 10 years after stockholder approval of the Restated Plan, and (ii) obtain stockholder approval of provisions relating to incentive stock options under Internal Revenue Code (“Code”) Section 422.
Our Board recommends that our stockholders vote FOR approval of the Restated Plan because our Board believes that we must offer a competitive equity incentive program if we are to continue to successfully attract and retain the best possible candidates for positions of responsibility. We expect that the Restated Plan will continue to be an important factor in attracting, retaining and rewarding the high caliber employees and non-employee directors essential to the Company’s success, and in motivating these individuals to strive to enhance the Company’s growth and profitability. The Restated Plan is intended to ensure that the Company will have available an equity incentive program with a reasonable number of shares to meet these goals. Unless a contrary choice is specified, proxies solicited by the Board will be voted FOR approval of the Restated Plan.
Key Compensation Practices
The Restated Plan includes changes and updates, including the following:
Increase in the shares available for issuance of awards by 2,430,400 shares;
Extend the term of the 2016 Plan to the date that is 10 years from the date of stockholder approval of the Restated Plan;
Add clawback provision that provides for forfeiture of all types of equity and equity-based awards granted to our NEOs under the Restated Plan, whether subject to time- or performance-based vesting conditions, in the event that the Company is required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under securities laws;
Remove and delete certain references to Code Section 162(m) and corresponding performance-based compensation award limits;
Subject all compensation paid to individual non-employee directors to an annual limit of $800,000;
Add that any dividends or dividend equivalents payable with respect to restricted stock or other full-value stock-based awards will be subject to the same restrictions and risk of forfeiture as the underlying awards; and
Remove one-year minimum vesting and performance period requirements.
The Restated Plan continues to include a number of features that we believe are consistent with the interests of our stockholders and sound corporate governance practices, including the following:
No repricing of underwater options or stock appreciation rights without stockholder approval. The Restated Plan prohibits, without stockholder approval, actions to reprice, replace or repurchase options or stock appreciation rights (“SARs”) when the exercise price per share of an option or SAR exceeds the fair market value of the underlying shares.
No discounted option or SAR grants. The Restated Plan requires that the exercise price of options or SARs be at least equal to the fair market value of our common stock on the date of grant (except in the limited case of “substitute awards” as described below).
No evergreen. The Restated Plan does not have an evergreen or similar provision providing for an automatic replenishment of shares available for grant.
No liberal share recycling provisions. We may not add back to the Restated Plan’s share reserve shares that are delivered or withheld to pay the exercise price of an option award or to satisfy a tax withholding obligation in connection with any awards, shares that we repurchase using option exercise proceeds and shares subject to an SAR award that are not issued in connection with the stock settlement of that award upon its exercise.
No liberal definition of “change in control.” No change in control under the Restated Plan would be triggered by stockholder approval of a business combination transaction, the announcement or commencement of a tender offer or any Board assessment that a change in control is imminent.
Limit on non-employee director awards. The Restated Plan subjects all compensation paid to individual non-employee directors under the Restated Plan or otherwise to an annual limit of $800,000.
Restrictions on dividends and dividend equivalents. While we do not currently pay dividends on our common stock, the Restated Plan prohibits the payment of dividends or dividend equivalents on stock options and SARs, and provides that any dividends or dividend equivalents payable with respect to restricted stock or stock units subject to the unvested portion of such an award will be subject to the same restrictions and risk of forfeiture as the restricted stock or stock units to which such dividends or dividend equivalents relate.
Hedging and Pledging. Any shares acquired pursuant to the Restated Plan are subject to our policy that provides for prohibitions on hedging transactions and pledging of our stock by our directors, officers and employees.
Clawback of Incentive Awards. The Restated Plan provides that all awards are subject to any clawback or recoupment policies and procedures in effect from time to time, including those set forth in the Restated Plan. For more information about our current executive compensation recoupment policies, see “Compensation Discussion and Analysis— Other Compensation Policies.
Clawback of Time-Vested Awards. The Restated Plan requires reimbursement or forfeiture of any type of awards made under the Plan (including awards vesting on a time-basis) received by our NEOs in the event that we are required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the securities laws.
Basis for the Requested Share Reserve Increase
Approval of the Restated Plan will help ensure that we continue to have sufficient shares available for (1) our annual grants to employees and directors and (2) grants to potential new hires.
In determining the amount of the share reserve for the Restated Plan, our Compensation Committee considered, in addition to the factors cited above, a number of factors, including the following:
Historical equity award burn rate. Our three-year average value-adjusted “burn rate” was 1.55% for fiscal years 2021 through 2023. We calculated value-adjusted burn rate by dividing (i) the sum of (A) the number of options multiplied by the option's dollar value using a Black-Scholes model and (B) the number of full value awards multiplied by the stock price, by (ii) the weighted-average number of shares multiplied by the stock price. This compares to benchmark guidance of 2.37% for our industry classification among Russell 3000 companies, therefore, we believe our historical value-adjusted burn rate is reasonable for a company of our size in our industry.
Year | Shares Granted | Basic Weighted Average Number of Common Shares Outstanding | Value-Adjusted Burn Rate |
2023 | 1,474,482 | 30,247,000 | 3.88% |
2022 | 341,265 | 29,809,000 | 0.76% |
2021 | — | 29,593,000 | 0.00% |
3-Year Average | 605,249 | 29,892,000 | 1.55% |
Overhang. As of March 1, 2024, we have outstanding equity awards under the Restated Plan covering approximately 2,166,907 shares. These outstanding equity awards (commonly referred to as the “overhang”), together with the
approximately 420,385 shares currently available under the 2016 Plan (as of March 1, 2024), represent approximately 8% of the fully diluted number of shares of our common stock. The dilutive impact of the additional 2,430,400 shares that would be available for issuance under the Restated Plan would increase the overhang by approximately 48% percentage points to approximately 15% based on our fully diluted number of shares of our common stock as of March 1, 2024.
Expected share usage and burn rate. We expect to continue making equity awards consistent with our past practices, and to maintain an average annual burn rate over the next three years of approximately 3.0%. On that basis, the Compensation Committee anticipates that the 2,430,400 additional shares available for future awards under the Restated Plan would be sufficient for equity awards for approximately two years at the current stock price.
Expectations regarding future share usage under the Restated Plan are naturally based on a number of assumptions regarding factors such as our future stock price performance, future growth in the population of eligible participants, the rate of future compensation increases, the rate at which shares are returned to the Restated Plan reserve through forfeitures, cancellations and the like, and the level at which performance-based awards pay out. While the Compensation Committee believes that the assumptions utilized are reasonable, future share usage will differ from current expectations to the extent that actual events differ from the assumptions utilized.
Description of the Restated Plan
The major features of the Restated Plan are summarized below. The summary is qualified in its entirety by reference to the full text of the Restated Plan, which is attached as Appendix B to this Proxy Statement.
Purpose of the Plan. The Restated Plan is intended to enable us to attract and retain the best available personnel for positions of responsibility, and to provide them with incentive awards intended to align their interests with those of our stockholders and thereby promote our long-term business success.
Eligible Participants. Employees, consultants and advisors of the Company or any subsidiary, as well as non-employee directors of the Company, are eligible to receive awards under the Restated Plan. As of March 31, 2024, there were approximately 4,181 employees of the Company and its subsidiaries, three non-employee directors of the Company and an indeterminate number of consultants and advisors who could be eligible to receive awards under the Restated Plan.
Administration. The Restated Plan is administered by the Compensation Committee, except for awards to non-employee directors which are administered by the Board. To the extent consistent with applicable law, the Compensation Committee may delegate its duties, power and authority under the Restated Plan to any of its members or, with respect to awards to participants who are not themselves our directors or executive officers, to one or more of our other directors or executive officers or to a committee of the board comprised of one or more directors. The Compensation Committee may also delegate non-discretionary administrative duties to other persons, agents or advisors.
The Compensation Committee has the authority to determine the persons to whom awards will be granted, the timing, type and number of shares covered by each award, and the terms and conditions of the awards. The Compensation Committee may also require or permit the deferral of the settlement of an award, establish and modify rules to administer the Restated Plan, interpret the Restated Plan and any related award agreement, cancel or suspend an award, accelerate the vesting of an award, and otherwise modify or amend the terms of outstanding awards to the extent permitted under the Restated Plan. Unless an amendment to the terms of an award is necessary to comply with applicable laws or stock exchange rules, a participant whose rights would be materially impaired by such an amendment must consent to it.
Except in connection with equity restructurings and other changes in the Company’s capitalization in which share adjustments are specifically authorized, the Restated Plan prohibits the Compensation Committee from repricing any outstanding “underwater” option or SAR awards without the prior approval of our stockholders. For these purposes, a “repricing” includes amending the terms of an option or SAR award to lower the exercise price, canceling an option or SAR award in exchange for replacement option or SAR awards having a lower exercise price or canceling an underwater option or SAR award in exchange for cash, other property or a “full value award” (an equity-based award other than an option or SAR award).
Subject to certain limits in the Restated Plan, the Compensation Committee may also establish subplans or modify the terms of awards under the Restated Plan with respect to participants who reside outside of the United States or are employed by a non-U.S. subsidiary in order to comply with local legal requirements.
Available Shares and Limitations on Awards. Currently, a maximum of 3,500,000 shares of our common stock are available for awards and issuance under the 2016 Plan. The proposed amendment would increase the number of shares available for issuance under the Restated Plan by an additional 2,430,400 shares, to 5,930,400. The shares of common stock that may be issued under the Restated Plan are authorized but unissued or treasury shares. The share limitations are subject to adjustment for changes in our corporate capitalization or shares, as described below.
The total compensation paid to each non-employee director in a calendar year, including the aggregate grant date fair value of all awards granted under the Restated Plan, together with the amount of any cash fees or retainers paid to such non-employee director, with respect to such individual’s service as a non-employee director, may not exceed $800,000.
The Restated Plan share reserve will be reduced by one share for every one share subject to an option or SAR award, and by 1.75 shares for every share subject to a full value award. Any shares of common stock subject to an award under the Restated Plan that expires, is forfeited or cancelled, or is settled or paid in cash will, to the extent of such expiration, forfeiture, cancellation or cash settlement, automatically replenish the Restated Plan share reserve and become available for future awards based on the same share ratio by which the share reserve was decreased when the award was originally granted. However, any shares tendered or withheld to pay the exercise price of an option award, any shares tendered or withheld to satisfy a tax withholding obligation in connection with any award, any shares repurchased by us using option exercise proceeds and any shares subject to an SAR award that are not issued in connection with the stock settlement of that award on its exercise will not replenish the Restated Plan share reserve.
Awards that will be settled solely in cash will not reduce the share reserve and will not reduce the shares authorized for grant to a participant in any calendar year. Awards granted or shares of our common stock issued under the Restated Plan upon the assumption of, or in substitution or exchange for, outstanding equity awards previously granted by an entity acquired by us or any of our subsidiaries (referred to as “substitute awards”) will not reduce the share reserve under the Restated Plan. Additionally, if a company acquired by us or any of our subsidiaries has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition, the unused shares under that pre-existing plan may be used for awards under the Restated Plan and will not reduce the share reserve under the Restated Plan, but only if the awards are made to individuals who were not employed by or providing services to us or any of our subsidiaries immediately prior to such acquisition.
Types of Awards. The Restated Plan permits us to grant stock option awards, SAR awards, restricted stock awards, stock unit awards, performance awards and other stock-based awards to eligible recipients. These types of awards are described in more detail below.
Options. Employees of our Company or any subsidiary may be granted options to purchase common stock that qualify as “incentive stock options” within the meaning of Code Section 422, and any eligible recipient may be granted options to purchase common stock that do not qualify as incentive stock options, referred to as “nonqualified stock options.” The per share exercise price to be paid by a participant at the time an option is exercised may not be less than 100% of the fair market value of one share of our common stock on the date of grant (or 110% for incentive stock options granted to a holder of more than 10% of our common stock), unless the option is granted as a substitute award as described above. “Fair market value” under the Restated Plan as of any date means the closing sale price of a share of our common stock on the Nasdaq on the applicable date. As of April 24, 2024, the closing sale price of a share of our common stock on the Nasdaq was $3.12.
The total purchase price of the shares to be purchased upon exercise of an option will be paid by the participant in cash unless the Compensation Committee allows exercise payments to be made, in whole or in part, (i) by means of a broker-assisted sale and remittance program, (ii) by delivery to us of shares of common stock already owned by the participant, or (iii) by a “net exercise” of the option in which a portion of the shares otherwise issuable upon exercise of the option are withheld by us, or such other method permitted by the Compensation Committee. Any shares delivered or withheld in payment of an exercise price will be valued at their fair market value on the exercise date.
An option will vest and become exercisable at such times, in such installments and subject to such conditions as may be determined by the Compensation Committee, and no option may have a term greater than 10 years from its date of grant (or five years for incentive stock options granted to a holder of more than 10% of our common stock). No dividends or dividend equivalents may be paid with respect to shares subject to an option.
The aggregate fair market value of shares of our common stock with respect to which incentive stock options granted to any participant may first become exercisable during any calendar year may not exceed $100,000. Any incentive stock options that become exercisable in excess of this amount will be treated as nonqualified stock options. The maximum number of shares that may be issued upon the exercise of incentive stock option awards under the Restated Plan is equal to the size of the Restated Plan’s share reserve as described above, and as proposed to be increased.
Stock Appreciation Rights. A SAR award provides the right to receive a payment from us equal to the difference between (i) the fair market value as of the date of exercise of the number of shares of our common stock as to which the SAR is being exercised, and (ii) the aggregate exercise price of that number of shares. The Compensation Committee determines whether payment will be made in shares of our common stock, cash or a combination of both. The exercise price per share of a SAR award will be determined by the Compensation Committee, but may not be less than 100% of the fair market value of one share of our common stock on the date of grant, unless the SAR is granted as a substitute award as described earlier. No dividends or dividend equivalents may be paid or credited with respect to shares subject to a SAR award. A SAR award may not have a term greater than 10 years from its date of grant, and will be subject to such other terms and conditions, consistent with the terms of the Restated Plan, as may be determined by the Compensation Committee.
Restricted Stock Awards. A restricted stock award is an award of our common stock that vests at such times and in such installments as may be determined by the Compensation Committee. Until it vests, the shares subject to the award are subject to restrictions on transferability and the possibility of forfeiture. The Compensation Committee may impose such restrictions or conditions to the vesting of restricted stock awards as it deems appropriate, including that the participant remain continuously in our service for a certain period or that we, or any of our subsidiaries or business units, satisfy specified performance goals. Any dividends or distributions payable with respect to shares that are subject to the unvested portion of a restricted stock award will be subject to the same restrictions and risk of forfeiture as the underlying shares to which such dividends or distributions relate. Participants are entitled to vote shares of restricted stock prior to the time they vest.
Stock Unit Awards. The grant of a stock unit provides the right to receive the fair market value a share of our common stock, payable in cash, shares, or a combination of both as determined by the Compensation Committee. A stock unit award vests at such times and in such installments as may be determined by the Compensation Committee. Until it vests, a stock unit award is subject to restrictions on transferability and the possibility of forfeiture. Stock unit awards will be subject to such terms and conditions, consistent with the other provisions of the Restated Plan, as may be determined by the Compensation Committee. The Compensation Committee may provide for the payment or crediting of dividend equivalents on stock unit awards and other stock-based awards, but any dividend equivalents paid or credited on unvested awards will be subject to the same vesting conditions as the underlying units or share equivalents.
Performance-Based Awards. A performance-based award is any type of award that is only vested or paid if certain performance conditions are met. The Compensation Committee will establish one or more measures of corporate, business unit, or individual performance that must be attained, and the performance period over which the specified performance is to be attained, as a condition to the vesting, exercisability, lapse of restrictions, and/or settlement in cash or shares of the award. The Compensation Committee will determine the extent to which performance goals have been attained and other applicable terms and conditions have been satisfied and the degree to which vesting, exercisability, lapse of restrictions, and/or settlement in cash or shares of a performance award has been earned. The Compensation Committee may provide for the payment of dividends or dividend equivalents on full-value performance-based awards, but any dividends or dividend equivalents will be subject to the same performance and vesting restrictions as the awards are.
The pre-established performance goals set by the Compensation Committee will be determined in its discretion, and may be based on one or more of the following performance measures: (i) net earnings or net income; (ii) earnings before one or more of interest, taxes, depreciation, amortization and share-based compensation expense; (iii)
earnings per share (basic or diluted); (iv) revenue; (v) gross profit; (vi) operating income; (vii) profitability as measured by return ratios (including, but not limited to, return on operating assets, return on assets, return on equity, return on invested capital and return on revenue) or by the degree to which any of the foregoing earnings measures exceed a percentage of revenue or gross profit; (viii) cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital); (ix) market share; (x) margins (including, but not limited to, one or more of gross, operating and net earnings margins); (xi) stock price; (xii) total stockholder return; (xiii) asset quality; (xiv) non-performing assets; (xv) operating assets; (xvi) balance of cash, cash equivalents and marketable securities; (xvii) cost and expense management; (xviii) economic value added or similar value added measurements; (xix) improvement in or attainment of working capital levels; (xx) productivity ratios; (xxi) employee retention or satisfaction measures; (xxii) safety record; (xxiii) customer satisfaction; (xxiv) debt, credit or other leverage measures or ratios; (xxv) implementation or completion of critical projects; (xxvi) marketing-spending efficiency; and (xxvii) core non-interest income. The Compensation Committee may select one measure or multiple measures for assessing performance, and the measurement may be based upon Company-wide, subsidiary or business unit, or individual performance, and may be expressed in absolute amounts, on a per share basis, as a growth rate or change from preceding periods, or by relative comparison to the performance of other companies, indices or other external measures. The Compensation Committee may adjust or modify the performance period or performance goals.
Other Stock-Based Awards. The Compensation Committee may grant awards of common stock and other awards that are valued by reference to and/or payable in shares of our common stock under the Restated Plan. The Compensation Committee has complete discretion to determine the terms and conditions of such awards.
Vesting. The Plan allows for awards subject to either time-based vesting or performance-based vesting, or both.
Transferability of Awards. In general, no right or interest in any award under the Restated Plan may be assigned or transferred by a participant, except by will or the laws of descent and distribution. However, the Compensation Committee may provide that an award (other than an incentive stock option) may be transferable by gift to a participant’s family member (which includes, but is not limited to, relatives, persons sharing a participant’s household, and certain trusts, foundations and other entities) or pursuant to a domestic relations order. Any permitted transferee of an award will remain subject to all the terms and conditions of the award applicable to the participant.
Effect of Termination of Service. If a participant’s employment or other service relationship with us and our subsidiaries is terminated, the Restated Plan provides that unvested portions of his or her outstanding awards will be forfeited and vested portions of outstanding option and SAR awards will continue to be exercisable for a period of either three months or one year after termination, depending on the reason for the termination, unless the termination is for cause. In that case, the vested but unexercised portions of option and SAR awards will also be terminated. The Compensation Committee may provide for different termination consequences in an individual award agreement.
Unless defined differently in an agreement between a participant and us, “cause” for termination is generally defined in the Restated Plan to involve (i) conviction or commission of a felony, (ii) fraud or dishonesty against the Company or an affiliate or in the course of fulfilling the participant’s duties, (iii) failure or refusal to perform his or her duties in any material respect, (iv) illegal drug use or alcohol abuse on Company or affiliate premises or at a Company or affiliate sponsored event, (v) conduct which in the good faith and reasonable determination of the Compensation Committee demonstrates gross unfitness to provide services to the Company or an affiliate, or (vi) material violation of any contract between the participant and the Company or an affiliate or of any statutory duty of the participant to the Company or an affiliate.
Change in Control. If a change in control of our Company that involves a corporate transaction occurs, then the consequences will be as described in this paragraph unless the Compensation Committee provides otherwise in an applicable award agreement. If an outstanding award is continued, assumed or replaced by the surviving or successor entity in connection with a corporate transaction, and if within one year after the change in control a participant’s employment or other service is involuntarily terminated without cause, (i) each of the participant’s outstanding options and SARs will become exercisable in full and remain exercisable for one year, and (ii) each of the participant’s unvested full value awards will fully vest. For these purposes, a performance-based full value award will be considered fully vested if the performance goals are deemed to have been satisfied at the target level of performance and the vested portion of the award at that level of performance is proportionate to the portion of the performance period elapsed prior to the participant’s termination of employment or other service.
If any outstanding award is not continued, assumed or replaced in connection with a change in control involving a corporate transaction, then (i) all outstanding options and SARs will become fully exercisable for a period of time prior to the effective time of the corporate transaction and will then terminate at the effective time of the corporate transaction, and (ii) all full value awards will fully vest immediately prior to the effective time of the corporate transaction. In this scenario, performance-based full value awards will be considered fully vested in the same manner as described above, except that the proportionate vesting amount will be determined with respect to the portion of the performance period that elapsed prior to the change in control. Alternatively, if outstanding awards are not continued, assumed or replaced, the Compensation Committee may elect to terminate such awards in exchange for a payment with respect to each award in an amount equal to the excess, if any, between the fair market value of the shares subject to the award immediately prior to the effective date of such corporate transaction (which may be the fair market value of the consideration to be received in the corporate transaction for the same number of shares) over the aggregate exercise price (if any) for the shares subject to such award (or, if there is no excess, such award may be terminated without payment).
If a change in control of our Company that does not involve a corporate transaction occurs, the Compensation Committee may, in its discretion, take such action as it deems appropriate with respect to outstanding awards, which may include (i) providing that outstanding awards will vest and become exercisable or payable, in whole or in part, prior to or upon consummation of such change in control, or upon termination of a participant’s employment or other service under specified conditions after the change in control, or (ii) providing for the cancellation of any outstanding award in exchange for a payment equal to the intrinsic value of the award at the time of the change in control.
For purposes of the Restated Plan, the following terms have the meanings indicated:
A “change in control” generally refers to a corporate transaction as defined below, the acquisition by a person or group of more than one-third of the voting power of our stock, or certain changes in the composition of our Board within a twelve-month period.
A “corporate transaction” generally means (i) a sale or other disposition of all or substantially all of the assets of the Company, or (ii) a merger, consolidation, share exchange or similar transaction involving the Company, regardless of whether the Company is the surviving corporation.
Share Adjustment Provisions. If certain transactions with our stockholders occur that cause the per share value of our common stock to change, such as stock splits, spin-offs, stock dividends or certain recapitalizations (referred to as “equity restructurings”), the Compensation Committee will equitably adjust (i) the class of shares issuable and the maximum number and kind of shares subject to the Restated Plan, (ii) outstanding awards as to the class, number of shares and exercise price per share, and (iii) award limitations prescribed by the Restated Plan. In connection with other types of transactions that may also affect our common stock, such as reorganizations, mergers or consolidations, the Compensation Committee may make similar equitable adjustments in its discretion.
Deferral of Payouts. The Compensation Committee may permit or require the deferral by a participant of the receipt of shares or cash in settlement of any full value award or cash incentive award under the Restated Plan, and will prescribe the terms, conditions and procedures for such deferrals.
Effective Date and Term of the Restated Plan. The Restated Plan will become effective on the date it is approved by our stockholders. Unless terminated earlier by the Board, the Restated Plan will terminate on the tenth anniversary of its effective date. Awards outstanding under the Restated Plan at the time it terminates will continue in accordance with their terms.
Amendment of the Plan. Our Board may amend the Restated Plan at any time, but no amendments will be effective without stockholder approval if such approval is required under applicable laws or regulations or under stock exchange rules. Our Board also may suspend or terminate the Restated 2016 Plan at any time. No amendment of the Restated Plan may materially impair the rights of a participant under any outstanding award without the consent of the affected participant, except for amendments necessary to comply with applicable laws or stock exchange rules.
Clawback.All awards under the Restated Plan will be subject to mandatory repayment by the participant to the Company to the extent such participant is or becomes subject to any clawback or recoupment policy adopted by the Company or any affiliate including policies intended to comply with applicable laws, rules, or regulations (including but not limited to the requirements of Section 10D of the Securities Exchange Act of 1934, as amended, and applicable Nasdaq listing rules or any
applicable laws or listing requirements which impose mandatory recoupment). Awards will be automatically unilaterally amended to comply with any such compensation recovery policy. For more information about the Company’s current executive compensation recoupment policies, see “Compensation Discussion and Analysis— Other Compensation Policies.”
In addition, the Restated Plan provides for the reimbursement or forfeiture of awards (including time-based awards) received by our NEOs in the event that we are required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the securities laws.
U.S. Federal Income Tax Consequences
The following is a general summary of the principal United States federal income tax consequences to the Company and to participants subject to U.S. taxation with respect to awards granted under the Restated Plan, based on current statutes, regulations and interpretations. The applicable statutory and regulatory provisions are also subject to change, as are their interpretations and applications, which may vary in individual circumstances. This summary is general in nature and not intended as tax advice to participants, who should consult their own tax advisors. Income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.
Nonqualified Stock Options. If a participant is granted a nonqualified stock option under the Restated Plan, the participant will not recognize taxable income upon the grant of the option. Generally, the participant will recognize ordinary income at the time of exercise in an amount equal to the difference between the fair market value of the shares acquired at the time of exercise and the exercise price paid. The participant’s basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of our common stock on the date the option was exercised. Any subsequent gain or loss will be taxable as a short-term or long-term capital gain or loss (depending on the applicable holding period). The Company will generally be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes as ordinary income.
Incentive Stock Options. If a participant is granted an incentive stock option under the Restated Plan, the participant will not recognize taxable income upon grant of the option. Additionally, if applicable holding period requirements (a minimum of two years from the date of grant and one year from the date of exercise) are met, the participant will not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares acquired at the time of exercise over the aggregate exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If shares acquired upon exercise of an incentive stock option are held for the holding period described above, the gain or loss (in an amount equal to the difference between the fair market value on the date of sale and the exercise price) upon disposition of the shares will be treated as a long-term capital gain or loss, and the Company will not be entitled to any deduction. Except in the event of death, if the holding period requirements are not met, the incentive stock option will be treated as one that does not meet the requirements of the Code for incentive stock options and the tax consequences described for nonqualified stock options will generally apply.
Restricted Stock. A participant will not recognize taxable income when an award of restricted stock is granted and the Company will not be entitled to a tax deduction at such time, unless the award holder makes an election under Section 83(b) of the Code to be taxed at grant. If such an election is made, the award holder will recognize compensation taxable as ordinary income (and subject to income tax withholding in the case of employees) at the time of the grant equal to the fair market value of the shares of restricted stock at such time. The Company is entitled to a corresponding deduction at the time ordinary income is recognized by the award holder.
Other Awards. The current federal income tax consequences of other awards authorized under the Restated Plan generally follow certain basic patterns. Stock unit awards and other equity-based awards generally result in income recognition by a participant at the time payment of such an award is made in an amount equal to the amount paid in cash or the then-current fair market value of the shares received, as applicable. SAR awards result in income recognition by a participant at the time such an award is exercised in an amount equal to the amount paid in cash or the then-current fair market value of the shares received by the participant, as applicable. In each of the foregoing cases, the Company will generally have a corresponding deduction at the time the participant recognizes ordinary income.
Section 162(m) of the Code. Section 162(m) of the Code places a $1,000,000 annual limit on the compensation deductible by the Company paid to “covered employees.” Therefore, the Company will be unable to receive a full income tax deduction for any award granted to a covered person under Section 162(m) under the Restated Plan to the extent it causes such
employee’s annual compensation to exceed $1,000,000.
Section 409A of the Code. The foregoing discussion of tax consequences of awards under the Restated Plan assumes that the award discussed is either not considered a “deferred compensation arrangement” subject to Section 409A of the Code, or has been structured to comply with its requirements. If an award is considered a deferred compensation arrangement subject to Section 409A but fails to comply, in operation or form, with the requirements of Section 409A, the affected participant would generally be required to include in income when the award vests the amount deemed “deferred,” would be required to pay an additional 20 percent income tax on such amount, and would be required to pay interest on the tax that would have been paid but for the deferral.
Plan Benefits
The Awards under the Restated Plan are within the discretion of the Compensation Committee. As a result, except as provided below, the benefits that will be awarded to employees and consultants under the Restated Plan are not determinable at this time.
The 2016 Plan’s share reserve will not be sufficient to settle certain awards of previously granted PSUs if such awards vest at maximum level. If the Restated Plan is approved, the increase in the share reserve may be used to settle these outstanding awards.
In addition, under the Company’s current director compensation program, each of our Outside Directors receives an annual RSU award with an aggregate grant date value equal to $10,000. The 2016 Plan’s share reserve was not sufficient for these grants, which are typically made in March of each year. If the Restated Plan is approved, these grants of RSUs to Outside Directors for 2024 will be made pursuant to the Restated Plan. For more information about the Company’s current director compensation program, see “Certain Information Regarding the Board — Director Compensation.”
The following table sets forth, with respect to the individuals and groups named below, the awards to be received under the Restated Plan, to the extent currently determinable:
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INFORMATION REGARDING DIRECTORS
Information regarding our Board as of April 21, 2021 is as follows:
Number of Shares Subject to RSUs | Number of Shares Subject to PSUs | |||
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Erwin |
| Haitzmann; Chairman of the Board and Co-Chief Executive Officer | — | 97,164 |
Peter |
| Hoetzinger; Vice Chairman of the Board, Co-Chief Executive Officer and President | — | 97,164 |
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| 34,702 | ||
Nikolaus Strohriegel; Managing Director of Century Resorts Management GmbH and Executive Vice President, Operations - Canada and Europe | — | 24,292 | ||
Executive Group | — | 312,316 | ||
Non-Executive Director Group | (1) | — | ||
Non-Executive Officer Employee Group | — | 194,999 |
(1) These consist of annual RSU awards with a grant date value equal to approximately $10,000 made to each non-employee director.
In addition, information on equity awards granted under the 2016 Plan in recent years to our NEOs is available in the “2023 Grants of Plan-Based Awards” table and the “Outstanding Equity Awards as of December 31, 2023” table, above.
Vote Required
The affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote is required to approve this Proposal No. 4. Abstentions effectively count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.
MNDED AND M |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN. |
Information regarding our Board as of April 25, 2024 is as follows:
NAME | AGE | POSITION HELD |
Erwin Haitzmann | 70 | Chairman of the Board and Co-Chief Executive Officer |
Peter Hoetzinger | 61 | Vice Chairman of the Board, Co-Chief Executive Officer and President |
Gottfried Schellmann | 70 | Director |
Dinah Corbaci | 69 | Director |
Eduard Berger | 55 | Director |
ERWIN HAITZMANN holds a Doctorate and a Masters degree in Social and Economic Sciences from the University of Linz, Austria (1980). Dr. Haitzmann has extensive casino gaming experience ranging from dealer to various casino management positions and has served on numerous casino company boards worldwide. Dr. Haitzmann has been employed full-time by us since May 1993 and has been employed as either our Chief Executive Officer or Co-Chief Executive Officer since March 1994. Dr. Haitzmann has served as a director since March 1994. In determining that Dr. Haitzmann should serve as a director, the Board identified Dr. Haitzmann'sHaitzmann’s extensive experience in the gaming industry and general executive management experience. In determining that Dr. Haitzmann should serve as Chairman of the Board, the Board identified Dr. Haitzmann’s length of service with us, his vast and extensive knowledge of the domestic and international casino industry and his knowledge of our overall business.
PETER HOETZINGER received a Masters degree from the University of Linz, Austria (1986). Thereafter, he was employed in several managerial positions in the gaming industry with Austrian casino companies and has served on numerous casino company boards worldwide. Mr. Hoetzinger has been employed full-time by us since May 1993. He has served as our President since 2000 and our Co-Chief Executive Officer since March 2005. Mr. Hoetzinger has served as a director since March 1994. In determining that Mr. Hoetzinger should serve as a director, the Board identified Mr. Hoetzinger’s extensive experience in the domestic and international casino industry, general executive management experience and his knowledge of our overall business.
GOTTFRIED SCHELLMANN graduated from University of Vienna with a Law degree and is a Certified Tax Advisor in Austria. After having worked for several firms, including KPMG Germany, as a tax and accounting manager, he formed Schellmann & Partner in 1993, where he specialized in tax and accounting work for provinces and municipalities in Austria. In 1999, he sold Schellmann & Partner to KPMG and served from 1999 to 2008 as a partner. He was a part of the Confederation Fiscale Europeenne, the umbrella organization of the European Associations of Tax Advisors in Brussels, Belgium, from 1994 to 2014, holding roles as a representative on the Tax Committee from 1994 to 2004, Chair of the Indirect Tax Committee from 2005 to 2008, Chair of the Tax Committee from 2009 to 2012 and Vice President from 2013 to 2014. Since 2009, he has been a partner in Mueller & Schellmann, a boutique tax advisory company that he formed with a partner in 2009. He is also currently a member of the Worshipful Company of Tax Advisors in London. He is oneIn 2022, he was elected as a member of the main co-authors, together with certain officerssupervisory board of the Austrian MinistryAcademy of Finance,Sciences and appointed as chair of the Austrian corporate tax code.audit committee. Mr. Schellmann has served as a director since January 1997. In determining that Mr. Schellmann should serve as a director, the Board identified Mr. Schellmann’s extensive experience in international taxation, risk management, oversight and his general executive management experience.
DINAH CORBACI holds a Doctorate degree in Law from the University of Salzburg, Austria (1981). After her practice on the Austrian Court in Salzburg, she began working at IBM in 1984 where she served as Account Manager for large Austrian governmental customers. During her tenure at IBM from 1984 to 2009, she was responsible for all Austrian governmental customers regarding their strategic hardware development. As Software Account Manager for Software and Solutions, Dr. Corbaci was responsible for Austrian governmental customers’ application modernization and compliance with guidelines for the use of such software. Since August 2009, Dr. Corbaci has served as managing director of her private consulting firm, Dinah Corbaci Consulting for Information Technology, from which she retired in June 2017. Dr. Corbaci has served as a director since April 2000. In determining that Dr. Corbaci should serve as a director, the Board identified Dr. Corbaci’s extensive experience with e-business solutions, transactions with governmental authorities, risk management, oversight and her general executive management experience.
EDUARD BERGER is a Graduate of the Austrian Business School in Vienna (1987). Mr. Berger has more than 30 years of experience in banking. From 1990 to 2000, Mr. Berger built up the Austrian equity business for Deutsche Bank. From 2000 to 2008, Mr. Berger was Managing Director at Unicredit Group. Within Unicredit Group, Mr. Berger was a member of the Board of Creditanstalt INM AG, the equity brokerage unit of the group. Mr. Berger managed the Austrian equity business and was responsible for the European Equity Sales division of Unicredit Group. In 2008, Mr. Berger joined Credit Agricole-Cheuvreux, a leading European brokerage house, as CEO of their Austrian operation. Since 2011, Mr. Berger has served as a partner and member of the Executive Board of Wiener Privatbank SE, an independent private bank in Vienna specializing in private banking services, asset and wealth management, brokerage and real estate services, and as a member of the Board at Wiener Privatbank’s Asset Management unit, Matejka & Partner. Mr. Berger was appointed to the Board in February 2018. In determining that Mr. Berger should serve as a director, the Board identified Mr. Berger’s experience in international banking and finance, equity sales, corporate finance and asset management.
There are no family relationships between or among our directors or executive officers.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics that applies to all directors, executive officers and employees. A complete text of this Code of Business Conduct and Ethics is available on the Investor Relations – Governance section of our website (www.cnty.com/investor/governance/facts-overview/). Any future amendments to or waivers of the Code of Business Conduct and Ethics will be posted to the Investor Relations – Governance – Facts & Overview section of our website.
The following table sets forth information as of April 21, 2021,25, 2024, regarding common stock ownership by each named executive officer and each member of our Board, and all of our executive officers and directors as a group. For both tables below, theThe number of shares indicated as beneficially owned by each person listed below is calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule 13d-3(d), shares not outstanding that are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed. Accordingly, share ownership includes shares that may be acquired upon the exercise of options, warrants, rights or conversion privileges that are exercisable on April 21, 2021,25, 2024, or will become exercisable within 60 days of that date (by June 20, 2021)24, 2024). For both tables below, the percentage ownership of each person listed below is based on the 29,575,96230,682,603 shares outstanding as of April 21, 2021.25, 2024. Unless otherwise indicated in the footnotes and subject to community property laws where applicable, each of the named persons or entities has sole voting and investment power with respect to the shares shown as beneficially owned.
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NAME OF BENEFICIAL OWNER |
| COMMON STOCK |
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| OPTIONS EXERCISABLE OR VESTING WITHIN 60 DAYS |
| AMOUNT OF BENEFICIAL OWNERSHIP |
| PERCENT OF CLASS | COMMON STOCK | OPTIONS EXERCISABLE OR VESTING WITHIN 60 DAYS | AMOUNT OF BENEFICIAL OWNERSHIP | PERCENT OF CLASS | |||||
Erwin Haitzmann | (A) | 1,200,000 | (C) |
| 450,000 |
| 1,650,000 |
| 5.6% | (1) | 1,468,649 | (3) | 112,500 | 1,581,149 | 5.2% | |||
Peter Hoetzinger | (A) | 1,228,852 | (D) |
| 450,000 |
| 1,678,852 |
| 5.7% | (1) | 1,484,801 | (4) | 112,500 | 1,597,301 | 5.2% | |||
Gottfried Schellmann | (A) | 84,000 |
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| 6,250 |
| 90,250 |
| * | (1) | 85,357 | 25,000 | 110,357 | * | ||||
Dinah Corbaci | (A) | 21,300 |
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| 37,950 |
| 59,250 |
| * | (1) | 32,657 | 46,700 | 79,357 | * | ||||
Eduard Berger | (A) | — |
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| 6,250 |
| 6,250 |
| * | (1) | 1,357 | 25,000 | 26,357 | * | ||||
Margaret Stapleton | (B) | 26,682 |
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| 75,000 |
| 101,682 |
| * | (2) | 163,436 | (5) | — | 163,436 | * | |||
Timothy Wright | (B) | 2,905 |
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| 30,000 |
| 32,905 |
| * | (2) | 48,767 | 30,000 | 78,767 | * | ||||
Andreas Terler | (A) | 7,130 |
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| 75,000 |
| 82,130 |
| * | (1) | 67,415 | 12,500 | 79,915 | * | ||||
Nikolaus Strohriegel | (A) | 17,000 |
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| 25,000 |
| 42,000 |
| * | (1) | 69,904 | 6,250 | 76,154 | * | ||||
All directors and executive officers as a group (ten persons) |
| 2,587,869 |
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| 1,190,450 |
| 3,778,319 |
| 12.8% | |||||||||
All executive officers and directors as a group (nine persons) | 3,422,343 | 370,450 | 3,792,793 | 12.4% |
* Less than 1%.
(1)The address for the persons listed is Untere Viaduktgasse 2, 1030 Vienna, Austria.
(2)The address for the persons listed is 455 East Pikes Peak Ave., Suite 210, Colorado Springs, CO 80903.
(3)Flyfish Management & Consulting AG (“Flyfish”), a Swiss corporation that is wholly owned by Dr. Haitzmann, owns 1,200,000 of the reported shares (see “Executive Agreements”), and Dr. Haitzmann owns 268,649 of the reported shares.
(4)The Hoetzinger Family Foundation owns 1,077,084 of the reported shares, Focus Lifestyle and Entertainment AG (“Focus”), a Swiss corporation that is a wholly-owned subsidiary of Mr. Hoetzinger’s family foundation, owns 262,917 of the reported shares (see “Executive Agreements”), and Mr. Hoetzinger owns 144,800 of the reported shares.
(5)Ms. Stapleton owns 163,311 of the reported shares and her spouse owns 125 of the reported shares.
The following table sets forth information as of April 21, 2021,25, 2024, regarding common stock ownership by beneficial owners of more than five percent (5%) of our outstanding common stock that have publicly disclosed their ownership, except for our Co-Chief Executive Officers, whose stock ownership is set forth in the table above.
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NAME AND ADDRESS OF BENEFICIAL OWNER | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP |
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| PERCENT OF CLASS |
Janus Henderson Group plc | 2,296,002 | (A) |
| 7.8% |
BlackRock, Inc. | 2,048,526 | (B) |
| 6.9% |
Royce & Associates, LP | 1,930,215 | (C) |
| 6.5% |
Rice Hall James & Associates, LLC | 1,857,633 | (D) |
| 6.3% |
AWM Investment Company, Inc. | 1,522,888 | (E) |
| 5.1% |
NAME AND ADDRESS OF BENEFICIAL OWNER | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | PERCENT OF CLASS | ||
Royce & Associates, LP | 2,527,441 | (1) | 8.2% | |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 1,963,192 | (2) | 6.4% | |
Nokomis Capital, L.L.C. 1717 McKinney Avenue Suite 850 Dallas, TX 75202 | 1,788,205 | (3) | 5.8% | |
The Vanguard Group PO Box 2600 V26 Valley Forge, PA 19482 | 1,677,455 | (4) | 5.5% |
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(1)Based solely on a Schedule 13G/A filed on January 23, 2024. Royce & Associates, LP has sole voting and dispositive power with respect to 2,527,441 shares.
(2)Based solely on a Schedule 13G/A filed on January 29, 2024. BlackRock, Inc. has sole voting power with respect to 1,899,053 shares and sole dispositive power with respect to 1,963,192 shares.
(3)Based solely on a Schedule 13G filed on February 14, 2024. Nokomis Capital, L.L.C. has shared voting and dispositive power with respect to 1,788,205 shares.
(4)Based solely on a Schedule 13G filed on February 13, 2024. The Vanguard Group has shared voting power with respect to 40,056 shares, sole dispositive power with respect to 1,626,541 shares and shared dispositive power with respect to 50,914 shares.
Dr. Haitzmann, our Chairman and Co-Chief Executive Officer, is a Malta citizen, and Mr. Hoetzinger, our Vice Chairman, Co-Chief Executive Officer and President is an Austrian citizen. Dr. Haitzmann and Mr. Hoetzinger have established wholly-owned companies or family trusts to hold a certain portion of their respective interests in us. See “Security Ownership of Certain Beneficial Owners and Management.”
Our Audit Committee Charter provides that the Audit Committee must approve transactions between us and related parties for actual or apparent conflicts of interest. The Audit Committee defines a related party transaction as one between our directors and executive officers, their immediate family members and entities in which they hold a 5% or greater beneficial ownership interest, where the aggregate amount is expected to exceed $120,000 in any calendar year.
The Audit Committee approved the management agreements between us and entities indirectly owned by our Co-Chief Executive Officers, as described under “Executive Agreements.”
OVERVIEW OF COMPENSATION GOALS AND OBJECTIVES
The Compensation Committee is responsible for reviewing and setting the compensation of our named executive officers:
NAME | TITLE |
Erwin Haitzmann | Chairman of the Board and Co-Chief Executive Officer |
Peter Hoetzinger | Vice Chairman of the Board, Co-Chief Executive Officer and President |
Margaret Stapleton | Chief Financial Officer and Corporate Secretary |
Timothy Wright | Chief Accounting Officer and Corporate Controller |
Andreas Terler | Managing Director of Century Resorts Management GmbH (“CRM”) |
Nikolaus Strohriegel | Managing Director of CRM and |
In order to better align the long-term interests of our executives with our stockholders and to attract and retain highly qualified executives, our compensation programs have been designed to provide competitive levels of compensation that integrate pay with our performance, with an emphasis on recognizing individual initiative and achievements.
We base our compensation primarily on our named executive officers’ experience, expertise and performance, with a portion of potential compensation dependent upon our successful long-term performance and position in the international gaming industry. The Compensation Committee believes that the compensation program for our named executive officers is designed to reward long-term performance.performance by tying a significant portion of overall compensation to long-term financial objectives. The Compensation Committee also believes that our compensation program motivates our named executive officers to deliver financial results that meet or exceed our expectations, seek and develop new gaming opportunities, and effectively manage our widespread international operations.
During 2016, following significant outreach by us to our major stockholders, the Compensation Committee revised the design of our executive compensation program to, among other things, increase the amount and type of performance-based compensation granted to our executive officers. The Compensation Committee developed (i) an annual incentive plan, which provides for cash awards to senior management based on the Company’s achievement of certain performance measures, and (ii) a long-term incentive plan for senior management, which provides for the annual grant of PSUs to senior management. The Compensation Committee also adoptedbelieves that using a comprehensive Compensation Policy, which is described in “Compensation Policy” below.
The Compensation Committee typically makes awards under the annual incentive planlong-term compensation model motivates our named executive officers to bring about sustainable performance and long-term incentive plan during the first quarter of each year. In 2020, due to the disruptions and uncertainties presented by the coronavirus (“COVID-19”) as discussed below, the Compensation Committee deferred consideration of these awards to October 2020. loyalty.
For more information regarding our annual and long-term incentive plans, including actions taken by the Compensation Committee in 2020,2023, see “Elements of Compensation” below.
2023 Performance and Results
Our company develops and operates gaming establishments as well as related lodging, horse racing (including off-track betting) and entertainment facilities primarily in North America. Our main goal is to grow our business by actively pursuing the development or acquisition of new gaming opportunities and growing and reinvesting in our existing properties. During 2023, our NEOs completed two acquisitions. In April 2023, we purchased 100% of the membership interests in Nugget Sparks, LLC, which owns Nugget Casino in Reno-Sparks, Nevada, for approximately $105.6 million after working capital adjustments. In July 2023, we purchased the operations of Rocky Gap in Flintstone, Maryland, for approximately $59.2 million after working capital adjustments. These acquisitions are consistent with our business strategy and will further increase and diversify our operations in the United States. Our NEOs also continued to manage two significant development projects in Missouri, with both projects scheduled to be completed in 2024. In 2023, our NEOs negotiated and completed the sale and leaseback of our real estate in Canada to subsidiaries of VICI Properties, Inc. (“VICI”) for a purchase price of CAD 221.7 million ($162.6 million based on the exchange rate on September 6, 2023).
Our 2023 financial results compared to the year ended December 31, 2022 were as follows:
Net operating revenue for the year ended December 31, 2023 was $550.2 million, a 28% increase
Earnings from operations for the year ended December 31, 2023 were $64.0 million, a decrease of 5%
Net loss attributable to Century Casinos, Inc. stockholders for the year ended December 31, 2023 was $28.2 million, a decrease of 454%
Adjusted EBITDAR* for the year ended December 31, 2023 was $114.0 million, a 10% increase
Basic loss per share for the year ended December 31, 2023 was $0.93
The closing price of our common stock was $4.88 on December 29, 2023, a 31% decrease compared to the closing price on December 30, 2022
COMPANY BUSINESS DEVELOPMENTS
2020 Performance and Results
In late 2019, an outbreak of COVID-19 was identifiedIncreased interest expense negatively impacted net income (loss) attributable to Century Casinos, Inc. stockholders in China and has since spread throughout much2023. For the year ended December 31, 2023, interest expense increased $13.0 million due to additional properties added to our triple net lease with VICI, approximately $14.6 million due to increased borrowings under our credit agreement with Goldman Sachs Bank USA (the “Goldman Credit Agreement”) in April 2022 in connection with the acquisition of the world. To complyNugget Casino that was outstanding throughout 2023, increased interest rates on the term loan and borrowing on the revolving facility under our Goldman Credit Agreement, and $7.3 million related to the Century Downs Racetrack and Casino land lease debt extinguishment in connection with quarantines issued by governments to contain the spreadsale of COVID-19, we were required to close allthe real estate assets of our facilities between March 2020 and June 2020. These closures, along with additional closures that were required in December 2020 due to COVID-19, negatively impacted our 2020 results. Among other things, we were required to record impairments of intangible assets of certainCanada properties. We expect the situation will continue to have an adverse impact on our results in 2021. The duration and impact of the COVID-19 pandemic otherwise remains uncertain. The table below provides a summary of the time periods in 2020 and 2021 in which our casinos, hotels and other facilities were closed.
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During 2020, our named executive officers, along with many of our other employees, worked diligently to operate our casinos through the temporary closures. Our named executive officers voluntarily reduced their salaries during the three months that our casinos were temporarily closed from March 2020 to June 2020 as described below under “Elements of Compensation – Base Salary.” In addition, our named executive officers worked to integrate the operations of three casino properties that we acquired in December 2019, two in Missouri and one in West Virginia (the “Acquisition”). The financial results from the properties that we acquired in the Acquisition also impacted our 2020 results.
Our 2020 financial results were as follows:
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*Adjusted EBITDAEBITDAR is a non-GAAP financial measure. For a discussion and reconciliation of Adjusted EBITDAEBITDAR to the most directly comparable measure under United States generally accepted accounting principles (“GAAP”), see Item 6. “Selected Financial Data – Non-GAAP Measures – Adjusted EBITDA” in our Annual Report on Form 10-K for the year ended December 31, 2020.Appendix A.
Net operating revenue increased in 2020 compared to 2019 primarily due to increased revenue from our casinos acquired in the Acquisition in December 2019. Earnings from operations, net earnings and earnings per share for 2020 were negatively impacted by the temporary closures discussed above and the impairment of intangible assets due to COVID-19.
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Our Compensation Policy provides for (i) an annual incentive plan that rewards executives for the achievement of near-term corporate objectives and individual employee performance and provides a potential significant cash incentive-based award and (ii) a long-term incentive plan that is an equity award program that rewards executives based on their achievement of long-term corporate financial objectives and increases in total stockholder return. The Compensation Policy sets forth the following objectives in establishing compensation for our executives:
Aligning executive compensation with our corporate strategies, business objectives and the long-term interests of its stockholders;
Incentivizing executives to achieve key strategic, financial and operational performance measures by linking the annual incentive plan awards and long-term incentive plan awards to the achievement of performance goals in these areas;
Reinforcing executives’ incentive to increase the Company’s executives:stock price and maximize long-term, sustainable stockholder value, and promoting their retention, by providing a significant amount of total compensation opportunities in the form of equity;
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Successfully implementing the Company’s performance-based compensation philosophy;
Attracting and retaining individuals of superior ability and managerial talent; and
Encouraging employee retention through participation in the annual incentive plan and the long-term incentive plan.
In the Compensation Policy, the Compensation Committee adopted the following compensation “best practices,” which are designed to discourage unnecessary or excessive risk-taking behavior by the Company’s employees:
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Pay for performance. Executive performance-based compensation and payments awarded under the annual incentive plan and the long-term incentive plan are based on pre-determined, measurable performance objectives approved by the Compensation Committee.
Mix of incentives. A balance of short-term and long-term incentives is created through a mix of variable cash compensation awards and long-term equity awards.
Equity-based pay. A significant portion of the executives’ compensation is in the form of equity awards that emphasize long-term value creation.
At-risk pay. A significant portion of the executives’ compensation is “performance-based” or “at-risk.”
Significant vesting periods. Awards granted to executives under the long-term incentive plan will generally vest following the completion of a three-year performance period. Stock options granted to executives generally vest over a four-year period.
Compliance with additional compensation policies. Executives are required to comply with the Company’s Stock Ownership Policy, Hedging and Pledging Policy and Clawback Policy, which are described in more detail below.
At our 2016 annual meeting, our stockholders approved our 2016 Equity Incentive Plan, (the “2016 Plan”), which authorizes the issuance of 3,500,000 shares of our common stock. Awards under the 2016 Plan may be granted in the form of stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards. Awards under the 2016 Plan may be granted to our employees, consultants, advisors and non-employee directors. The 2016 Plan also includes a number of features that we believe are consistent with the interests of our stockholders and sound corporate governance practices, including:
No repricing of underwater options or stock appreciation rights without stockholder approval.
No discounted option or SAR grants.
No liberal share recycling or reload provisions.
No liberal definition of “change in control.”
No automatic accelerated vesting of equity awards upon a change in control.
Limit on non-employee director awards.
If approved by the stockholders, the Amended and Restated 2016 Equity Incentive Plan would increase the number of shares authorized for issuance under the plan by 2,430,400 shares. See Proposal No. 4, Approval of the Amended and Restated 2016 Equity Incentive Plan.
The executive compensation program is designed with our executive compensation objectives in mind and is comprised of fixed and variable pay plans, cash and non-cash plans, and short and long-term payment structures in order to recognize and reward executives for their contributions to us today and in the future.
Our current short-term executive compensation structure consists of base salary and annual incentive compensation in the form of performance-based cash bonuses. Our long-term executive compensation currently consists of PSU awards and, prior to 2017, consisted of stock option awards.awards (see “Long-Term Incentive Compensation – Replacement Options” below for information on stock options awarded in 2023). The Compensation Committee believes that granting PSU awards, which generally vest following the completion of a three-year performance period, and stock option awards, which generally vest over a four-year period, to our named executive officers promotes retention and motivates our named executive officers to achieve our long-term business objectives because the ultimate value of their equity awards is strongly related to their long-term contributions to our Company.
We continually assess and evaluate the internal and external competitiveness of all components of the executive compensation program. Internally, we look at critical and key positions that are directly linked to our profitability and viability. We seek to ensure that the appropriate hierarchy of jobs is in place with appropriate ratios of Chief Executive Officer compensation to other senior executive compensation. Due to the highly competitive nature of the gaming industry, it is important for our compensation plans to provide us with the ability to recruit, retain and internally develop top executive talent.
ROLES IN ESTABLISHING COMPENSATION
When determining the compensation of our named executive officers, the Compensation Committee conducts its own analysis, and solicits advice from internal company resources, which may include, but are not limited to, our Co-Chief Executive Officers and Chief Financial Officer. The Compensation Committee may also receive recommendations from an independent advisoradvisors that it retains from time to time, as was the case in developing aits revised compensation program in 2016.
Our Co-Chief Executive Officers annually review the performance of our named executive officers and, based on these reviews, recommend to the Compensation Committee compensation for all named executive officers.officers except themselves. The Compensation Committee reviews the recommendations and makes the final decisions regarding compensation paid to our senior executives, including base pay, annual incentive bonuses and equity awards.
The Compensation Committee has established a peer group of publicly-traded companies in the gaming, hospitality and restaurant industry (the “Peer Group”) based on data and recommendations initially provided by its independent advisor and supplemented by management. For 2020,2023, the Compensation Committee used the following Peer Group companies that were determined to have similarly sized revenuessimilar business characteristics in terms of size, business structure, operations in local and market values.international areas, and individual company features.
PEER GROUP COMPANIES | |
Penn National Gaming, Inc. (PENN) | RCI Hospitality Holdings, Inc. (RICK) |
Yum! Brands, Inc. (YUM) | Bally’s Corporation (BALY) |
Churchill Downs, Incorporated (CHDN) | Red Rock Resorts, Inc. (RRR) |
Golden Entertainment, Inc. (GDEN) | Monarch Casino & Resort, Inc. (MCRI) |
Caesars Entertainment Inc (CZR) | Playa Hotels & Resorts, N.V. (PLYA) |
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The Compensation Committee made2023 Peer Group contains the following changes tosame companies that were in the 2019 Peer Group for setting compensation levels for 2020 to align with our current business dynamics, including our increased size and scale following the Acquisition:
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In October 2020, the Compensation Committee used the Peer Group market data to assess the competitiveness of NEO compensation for base salary, annual and long-term incentives, and target total direct compensation. The Compensation Committee targeted the aggregate value of our total compensation for our NEOs to be competitive with the Peer Group market data.
2022. Historically, due to the highly specialized nature of our business, the Compensation Committee has relied on internal resources and limited the external resources considered when establishing compensation to only market and Peer Group data from the gaming industry. TheHowever, the Compensation Committee considers market data from the gaming industry as well as Peer Group data when determining NEO compensation.
CONSIDERATION OF SAY-ON-PAY RESULTS AND STOCKHOLDER INPUT
At our Annual Meeting of Stockholders held on June 5, 2020,7, 2023, we conducted our annual advisory vote on the 20192022 compensation program for our named executive officers (“Say-on-Pay”). The 20192022 compensation of our named executive officers received support from over 90% of the shares voted on the Say-on-Pay proposal. The Compensation Committee appreciates the support of its stockholders as evidenced by the 20202023 Say-On-Pay vote, and will continue to consider the outcome of our Say-on-Pay vote results and other stockholder input when determining the compensation of our named executive officers in the future.
Base Salary
The Compensation Committee sets base salaries for our named executive officers based on a variety of factors, including:
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the nature and responsibility of the position;
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the experience and contribution of the named executive officer;
the named executive officer’s performance, including whether individual objectives were met or exceeded during a particular period;
additional duties or responsibilities of the named executive officer or organizational changes in our Company;
the complexity of our international operations and transactions;
the amount of international travel by the named executive officer; and
retention.
The annual base salaries for our NEOs are presented in the table below.
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| 2019 BASE SALARY |
| 2020 BASE SALARY | 2022 BASE SALARY | 2023 BASE SALARY | CHANGE | ||||||
Erwin Haitzmann |
| $ | 606,288 |
| $ | 607,069 | 591,929 | 649,944 | 10% | ||||
Peter Hoetzinger |
| 606,216 |
| 600,446 | 591,406 | 676,950 | 14% | ||||||
Margaret Stapleton |
| 148,462 |
| 251,923 | 250,000 | 279,250 | 12% | ||||||
Timothy Wright |
| 135,000 |
| 201,538 | 200,000 | 223,400 | 12% | ||||||
Andreas Terler |
| 121,793 |
| 181,969 | 221,413 | 265,364 | 20% | ||||||
Nikolaus Strohriegel |
| 121,622 |
| 137,705 | 138,574 | 159,980 | 15% |
(1)Dr. Haitzmann’s annual base salary consisted of (i) €239,140 in 2023, which was $258,624 based on monthly average exchange rates in effect during 2023, and €220,000 in 2022, which was $231,929 based on monthly average
exchange rates in effect during 2022, and (ii) an annual management fee of $391,320 in 2023 and $360,000 in 2022 paid on a monthly basis to Flyfish.
The(2)Mr. Hoetzinger’s annual base salary consisted of each(i) €239,140 in 2023, which was $285,630 based on monthly average exchange rates in effect during 2023, and €220,000 in 2022, which was $231,406 based on monthly average exchange rates in effect during 2022, and (ii) an annual management fee of $391,320 in 2023 and $360,000 in 2022 paid on a monthly basis to Focus.
(3)Mr. Terler’s annual base salary was €244,575 in 2023, which was $265,364 based on monthly average exchange rates in effect during 2023. Mr. Terler’s annual base salary was increased from €165,000 to €225,000 in April 2022. The U.S. dollar equivalent of his salary was $221,413 based on monthly average exchange rates in effect during 2022.
(4)Mr. Strohriegel’s annual base salary was €146,745 in 2023, which was $159,980 based on monthly average exchange rates in effect during 2023. Mr. Strohriegel’s annual base salary was increased from €125,000 to €135,000 in April 2022. The U.S. dollar equivalent of his salary was $138,574 based on monthly average exchange rates in effect during 2022.
(5)Differences in the Co-Chief Executive Officers has not been increased since 2013. The Compensation Committee increased Ms. Stapleton’s salary to $250,000 in October 2019 when her title changed to Chief Financial Officer. The Compensation Committee increased the following salaries in October 2019, effective January 1, 2020: Mr. Terler €165,000, Mr. Strohriegel €125,000 and Mr. Wright $200,000. The Compensation Committee did not adjustU.S. dollar equivalent of the salaries of any named executive officers during 2018. Dr. Haitzmann and Mr. Hoetzinger are due to the timing of payments throughout the year.
The Compensation Committee evaluates the salaries of the named executive officers when it is considering their total target compensation, including salary, annual bonuses and equity awards, which may beare currently in the form of PSUs or stock options.PSUs. In February 2023, effective January 2023, the Compensation Committee increased the base salaries of each of our named executive officers and the annual management fees paid to Flyfish and Focus for services rendered by the Co-CEOs. The Compensation Committee believes that the base salaries of the named executive officers are fair and competitive with those of executive officers at the Peer Group companies and other comparable companies in the gaming industry.
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Annual Incentive Compensation
The Compensation Committee considers salaries and bonuses and, in the case of our Co-Chief Executive Officers, the management agreements, in determining the competitiveness of the total compensation package. At the end of each fiscal year, the Compensation Committee determines whether NEOs will receive performance-based cash incentive compensation based on whether certain performance measures, which are achievedestablished early in the applicable fiscal year, are achieved.
The annual incentive award for such year. The awards are paid during2023 was based on the first quarter following the endachievement of the annual performance period.
In early 2020, prior to the COVID-19 shutdowns, management forecast net operating revenue, for the 2020 fiscal year to be used by the Compensation Committee in establishingexcluding Nugget Casino and Rocky Gap, over a target net operating revenue for the 2020 fiscal year, which would be used as the 2020one-year performance measure. Due to the onset of the COVID-19 pandemic, the Compensation Committee deferred to October 2020 its determination of 2020 target net operating revenue andperiod beginning on January 1, 2023, with threshold, target and maximum amounts payable under the 2020 annual incentive compensation program. At that time, the Compensation Committee determined to exclude net operating revenue from the months of March through May 2020 in establishing target net operating revenue, which resulted in amounts that were 75% of the target net operating revenue forecast by management. The target award amounts were establishedset at 75% of the 2019 target amounts,$402.1 million, $446.8 million and the target and maximum amounts payable similarly were adjusted to 75% of previously calculated maximum amounts. The Compensation Committee also deemed it appropriate to set a guaranteed minimum award for the 2020 performance period for the work done by the NEOs during the COVID-19 pandemic.$491.5 million, respectively. The amount of cash earned by award recipients following the end of the performance period could range from 100%0% to 150%200% of the target amount. If performance wasis between the threshold and target levels, or between the target and maximum levels, then the payout as a percentage of the target would beis determined by linear interpolation. TargetThreshold (50%), target (100%) and maximum (150%(200%) payout opportunities established for the 20202023 annual incentive plan awards for each NEO are set forth in the table below.
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NEO |
| TARGET |
| MAXIMUM | THRESHOLD | TARGET | MAXIMUM | ||||||
Erwin Haitzmann | $ | 168,750 |
| $ | 253,125 | $ | 125,000 | $ | 250,000 | $ | 500,000 | ||
Peter Hoetzinger |
| 168,750 |
| 253,125 | 125,000 | 250,000 | 500,000 | ||||||
Margaret Stapleton |
| 75,000 |
| 112,500 | 62,500 | 125,000 | 250,000 | ||||||
Timothy Wright |
| 75,000 |
| 112,500 | 62,500 | 125,000 | 250,000 | ||||||
Andreas Terler |
| 75,000 |
| 112,500 | 62,500 | 125,000 | 250,000 | ||||||
Nikolaus Strohriegel |
| 75,000 |
| 112,500 | 62,500 | 125,000 | 250,000 |
In October 2020,March 2024, the Compensation Committee utilizedreviewed the original forecasts provided by management excluding the months of March 2020 to May 2020 and excluding projectedCompany’s net operating revenue from Century Casino Bath to establish a target net operating revenue of $320.8 million on a local currency basis for the 2020 fiscal year. Our netresults. Net operating revenue for the year ended December 31, 2020 on a local currency basisCompany’s Canadian and excludingPoland properties was translated to US dollars with the exchange rates used in forecasting. Actual net operating revenue from March 2020 to May 2020 was $283.6$433.1 million which was belowfor the target levelperiod and resulted in the minimum annual incentive payout of 100% of the target amount. As a result, the Compensation Committee determined that the NEOs earned approximately 84.66% of the followingtargets set for cash bonuses under the annual incentive plan for 2020:2023:
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NEO | 2023 ACTUAL BONUS | |
Erwin Haitzmann | $ | 211,640 |
Peter Hoetzinger | 211,640 | |
Margaret Stapleton | 105,820 | |
Timothy Wright | 105,820 | |
Andreas Terler | 105,820 | |
Nikolaus Strohriegel | 105,820 |
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Long-term Incentive Compensation
Under our long-term incentive plan, the Compensation Committee grants PSUs annually, under which executive officers receive at-risk, performance-based compensation and payments based on pre-determined, measurable performance objectives approved by the Compensation Committee.
20202023 Performance Stock Units
In October 2020,February 2023, under the long-term incentive plan,2016 Plan, the Compensation Committee approved the grant of 2020 PSUs granted in 2023 (“2023 PSUs”) to our senior management. Each 20202023 PSU represents the right to receive one share of our common stock. The 20202023 PSUs vest based on our achievement of specified performance measures, consisting of relative total stockholder return (“TSR”) and Adjusted EBITDA,EBITDAR, over a three-year performance period, beginning January 1, 2020 excluding March 2020 to May 2020 due to COVID-19 and the projected Adjusted EBITDA from Century Casino Bath, which entered creditor’s voluntary liquidation following permanent closure of the casino in March 2020.2023. For the 20202023 PSUs, relative TSR is calculated as the difference, whether positive or negative, between our TSR minus the TSR of the Russell 3000 Index. Adjusted EBITDAEBITDAR is calculated as net (loss) earnings (loss) attributable to Century Casinos, Inc. shareholdersstockholders before interest expense (income), net, including interest expense related to the Master Lease, income taxes (benefit), depreciation, and amortization, non-controlling interests net earnings (loss)(losses) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, loss (gain) on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time items, such as acquisition and disposition costs and gain or loss. Expense related to the Company’s master lease for three properties acquired in the Acquisition is included in the interest expense (income), net line item.items. The relative TSR performance measure constitutes 25% of the PSU award and the Adjusted EBITDAEBITDAR performance measure constitutes 75% of the PSU award. The relative TSR and Adjusted EBITDAEBITDAR performance measures are calculated independently. Threshold, target and maximum payout opportunities established for the 20202023 PSUs will be used to calculate the number of shares that will be issuable when the award vests, which may range from 0% to 200% of the target amount. In order to earn any PSUs at the end of the performance period, the threshold level of either of the relative TSR or the Adjusted EBITDAEBITDAR performance measures, but not both, must be achieved. Any 20202023 PSUs that are earned are scheduled to vest and be settled in shares of the Company’s common stock following the end of the performance period. The Compensation Committee grants PSU awards which may contain different performance measures and other terms, to senior management on an annual basis. Threshold, target and maximum TSR and Adjusted EBITDAR performance measures for the 2023 PSUs are below:
NAME | THRESHOLD | TARGET | MAXIMUM | |||
Relative TSR | -10% | 0% | 10% | |||
Adjusted EBITDAR (in millions) | $ 288.6 | $ 320.6 | $ 352.7 |
The Compensation Committee granted the following target number of 20202023 PSUs to the named executive officers on October 7, 2020:February 8, 2023:
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NEO |
| TARGET NUMBER OF 2020 PSUs |
| GRANT DATE FAIR VALUE OF TARGET PSUs | TARGET NUMBER OF 2023 PSUs | GRANT DATE FAIR VALUE OF TARGET PSUs | ||||
Erwin Haitzmann |
| 69,063 |
| $ | 258,641 | 90,622 | $ | 819,453 | ||
Peter Hoetzinger |
| 69,063 |
| 258,641 | 90,622 | 819,453 | ||||
Margaret Stapleton |
| 28,681 |
| 107,410 | 32,365 | 292,659 | ||||
Timothy Wright |
| 22,945 |
| 85,929 | 22,656 | 204,867 | ||||
Andreas Terler |
| 28,681 |
| 107,410 | 32,365 | 292,659 | ||||
Nikolaus Strohriegel |
| 22,945 |
| 85,929 | 22,656 | 204,867 |
20182021 Performance Stock Units
In April 2018,February 2021, under the long-term incentive plan,program and pursuant to the 2016 Plan, the Compensation Committee approved the grant of 2018 PSUs (“2021 PSUs”) to our senior management. Each 20182021 PSU represented the right to receive one share of our common stock. The 20182021 PSUs vested based on our achievement of specified performance measures, consisting of relative TSR and Adjusted EBITDA,EBITDAR, over a three-year performance period, beginning January 1, 2018. Similar to the 2020 PSUs discussed above, for 2020 the Compensation Committee excluded March 2020 to May 2020 due to COVID-19 and the projected Adjusted EBITDA in 2020 from Century Casino Bath. The Compensation Committee also included forecasts for the properties acquired in the Acquisition.2021. For the 20182021 PSUs, relative TSR was calculated as the difference, whether positive or negative, between our TSR minus the TSR of the S-Network Global GamingRussell 3000 Index. The relative TSR performance measure constituted 25% of the PSU award and the Adjusted EBITDAEBITDAR performance measure constituted 75% of the PSU award. Threshold, target and maximum performance measures were -10%, 0%, and 10%, respectively, for relative TSR and $214.7 million, $238.6 million, and $262.4 million, respectively, for Adjusted EBITDAR. The relative TSR and Adjusted EBITDAEBITDAR performance measures were calculated independently. Threshold, target and maximum payout opportunities established for the 20182021 PSUs were used to calculate the number of shares that were issuable when the award vested, which ranged from 0% to 200% of the target amount. In order to earn any PSUs at the end of the performance period, the threshold level of either of the relative TSR or the Adjusted EBITDA performance measures, but not both, had to be achieved.
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In February 2021,March 2024, the Compensation Committee made a determination whetherregarding the number (if any) of shares of common stock were earned and issuable under the 20182021 PSU awards following the end of the three-year performance period. The Compensation Committee reviewed the Company’s TSR against the TSR of the S-Network Global GamingRussell 3000 Index and calculated the Company’s Adjusted EBITDAEBITDAR in accordance with the 20182021 PSU awards. Based on the Company’s negative relative TSR compared to the S-Network Global Gaming Indexof (47%) and Adjusted EBITDA thatEBITDAR of $294.0 million (Adjusted EBITDAR related to Nugget Casino and Rocky Gap was less than the threshold amount,excluded), the Compensation Committee determined that noapproved a payout factor of 150% of the target number of 2021 PSUs. When the 2021 PSUs were earned and vested, they were settled in shares of our common stock.
The following table shows the number of 2021 PSUs earned by the NEOs and settled in common stock on March 15, 2024:
NEO | NUMBER OF 2021 TARGET PSUs GRANTED | 2021 PSUs EARNED AT 150% PAYOUT FACTOR | |||
Erwin Haitzmann | 44,870 | 67,304 | |||
Peter Hoetzinger | 44,870 | 67,304 | |||
Margaret Stapleton | 18,634 | 27,950 | |||
Timothy Wright | 14,907 | 22,360 | |||
Andreas Terler | 18,634 | 27,950 | |||
Nikolaus Strohriegel | 14,907 | 22,360 |
Replacement Options
The stock options granted in 2023 (“2023 Options”) were replacement options granted to certain named executive officers and were not intended to serve as new equity grants or supplement other compensation paid to our named executive officers in accordance with our Compensation Policy. The 2023 Options replaced expiring already fully vested stock options held by Dr Haitzmann, Mr. Hoetzinger, Mr. Terler and Mr. Strohriegel (the “Original Options”) with an exercise price of $5.05, which were granted in December 2014 and would be issued. have expired in December 2024. The Original Options were cancelled and replaced with grants of the same number of options expiring in September 2033 which have a higher exercise price than the Original Options and are subject to re-vesting. The 2023 Options were granted on September 12, 2023, and are vested 25%
on the grant date, 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date and 25% on the third anniversary of the grant date. The 2023 Options have an exercise price of $5.61 per option, which represented the fair market value of a share of our stock on the grant date.
PERSONAL BENEFITS AND PERQUISITES
Our use of perquisites as an element of compensation is limited. The Compensation Committee does not view perquisites as a significant element of our compensation structure, but does believe that they can be used in conjunction with base salary to attract, motivate and retain individuals in a competitive environment. Besides certain life insurance contributions and change of control protections, we generally provide broad-based perquisites to our executives and other employees. Executives and all other employees are eligible to participate in various benefit programs such as medical, dental and vision insurance, life insurance, both short and long-term disability, and employer contributions to the Century Casinos, Inc. 401(k) Savings and Retirement Plan. Relocation benefits are available and are negotiated on an individual basis when an employee is hired.
In addition to our group benefits, Dr. Haitzmann and Mr. Hoetzinger are also entitled to:
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Mr. Hoetzinger’s policy provides a maximum life insurance benefit of €418,032 (approximately $512,464$462,932 based on the exchange rate in effect on December 31, 2020)2023), payable in either a single lump sum or as an annuity;
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Long term disability or death benefits equal to 1/12 of the executive’s annual salary in effect at the time of disability or death, paid monthly for a period of 12 months from the date of disability or death; and
The use of an automobile provided and paid for by us for business and personal purposes; provided, however, that Dr. Haitzmann may choose to receive a monthly car allowance in cash in lieu of our providing him with the use of an automobile.
Employment Agreements.We have entered into employment agreements with certain of our named executive officers, including our Co-Chief Executive Officers, which are described below under “Executive Agreements.” These agreements provide for severance compensation to be paid if the executives are terminated under certain conditions, such as a change“change of controlcontrol” or a termination without cause“cause” by us, each as is defined in the agreements.applicable agreement. For a summary of the material terms and conditions of our agreements with the named executive officers providing for payments in connection with termination of employment and changes in control of our Company, please see “Executive Compensation – 2023 Potential Payments upon Termination or Change in Control” below.
The change of control provisions and the related severance compensation provisions of the employment agreements with our named executive officers and our equity incentive plans are designed to meet the following objectives:
Change of Control. Many larger, established casino companies may consider companies at similar stages of growth as us as potential acquisition targets as a means of adding value to their company. In some scenarios, the potential for merger or acquisition may be in the best interests of our stockholders. In certain cases, we provide severance compensation if an executive is terminated as a result of a corporate transaction in order to maintain the continuity of management during the transaction and in order to promote the ability of our executive officers to act in the best interests of our stockholders even though there is a possibility that they could be terminated as a result of the transaction.
We define a A “change of control” is defined in the employment agreements for Dr. Haitzmann and Mr. Hoetzinger as follows:
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