SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SPEEDWAY MOTORSPORTS, INC.
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(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule, or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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[Speedway Motorsports logo appears here]
U.S. Highway 29 North
Concord, North Carolina 28026
Dear Stockholder: March 26, 1999
You are cordially invited to attend the Annual Meeting of Stockholders
to be held at 10:00 a.m. on May 5, 1999, at Lowe's Motor Speedway in
Concord, North Carolina. We look forward to greeting personally those
stockholders who are able to attend.
The accompanying formal Notice of Meeting and Proxy Statement describe
the matters on which action will be taken at the meeting.
Whether or not you plan to attend the meeting on May 5, it is
important that your shares be represented. To ensure that your vote will
be received and counted, please sign, date and mail the enclosed proxy
at your earliest convenience. Your vote is important regardless of the
number of shares you own.
On behalf of the Board of Directors
Sincerely,
/s/ O. BRUTON SMITH
O. BRUTON SMITH
Chairman and Chief Executive Officer
VOTING YOUR PROXY IS IMPORTANT
PLEASE SIGN AND DATE YOUR PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
SPEEDWAY MOTORSPORTS, INC.
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NOTICE OF MEETING
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Concord, NC
March 26, 1999
The Annual Meeting of Stockholders of Speedway Motorsports, Inc.
("SMI") will be held at Lowe's Motor Speedway, located on U.S. Highway 29
North, Concord, North Carolina on May 5, 1999, at 10:00 a.m., for the
following purposes as described in the accompanying Proxy Statement:
1. To elect two (2) directors.
2. To consider and vote upon a proposal to ratify the election by the
Board of Directors of Deloitte & Touche LLP as the principal
independent auditors of SMI and its subsidiaries (collectively, the
"Company") for the year 1999.
3. To transact such other business as may properly come before the
meeting.
Only holders of record of SMI's common stock at the close of business
on March 8, 1999 will be entitled to vote at such meeting.
Whether or not you plan to attend the meeting, you are urged to
complete, sign, date and return the enclosed proxy promptly in the
envelope provided. Returning your proxy does not deprive you of your right
to attend the meeting and to vote your shares in person.
/s/ MARYLAUREL E. WILKS
MARYLAUREL E. WILKS
Secretary
Important Note: To vote shares of common stock at the Annual Meeting
(other than in person at the meeting), a stockholder must return a proxy.
The return envelope enclosed with the proxy card requires no postage if
mailed in the United States of America.
SPEEDWAY MOTORSPORTS, INC.
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PROXY STATEMENT
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March 26, 1999
GENERAL
Introduction
The Annual Meeting of Stockholders of Speedway Motorsports, Inc. ("SMI")
will be held on May 5, 1999 at 10:00 a.m., at Lowe's Motor Speedway, (the
"Annual Meeting"), for the purposes set forth in the accompanying notice. SMI's
principal executive offices are located at Lowe's Motor Speedway at U.S.
Highway 29 North, Concord, North Carolina, 28026. Only holders of record of
common stock of SMI, par value $.01 per share (the "Common Stock"), at the
close of business on March 8, 1999 (the "Record Date") will be entitled to
notice of, and to vote at, such meeting. This Proxy Statement is furnished in
connection with the solicitation by the Board of Directors of proxies to be
used at such meeting and at any and all adjournments thereof and is first being
sent to stockholders on or about the date hereof. Proxies in the accompanying
form, properly executed and duly returned and not revoked, will be voted at the
meeting (including adjournments). Where a specification is made by means of the
ballot provided in the proxies regarding any matter presented at the Annual
Meeting, such proxies will be voted in accordance with such specification. If
no specification is made, proxies will be voted (i) in favor of electing SMI's
two (2) nominees to the Board of Directors, and (ii) in favor of the selection
of Deloitte & Touche LLP as the principal independent auditors of SMI for the
year 1999.
Proxies should be sent to First Union Bank, Client Services Group - 1153,
1525 W.T. Harris Boulevard, Charlotte, North Carolina 28288-1153.
This Proxy Statement is furnished by SMI to stockholders of SMI in
connection with the upcoming Annual Meeting.
Ownership of Capital Securities
The following table sets forth certain information regarding ownership of
SMI's Common Stock as of March 8, 1999, by (i) each person or entity known to
SMI and its subsidiaries (collectively, the "Company") who beneficially owns
five percent or more of the Common Stock, (ii) each director and nominee to the
Board of Directors of SMI, (iii) each executive officer of SMI (including the
Chief Executive Officer), and (iv) all directors and executive officers of SMI
as a group. Except as otherwise indicated below, each of the persons named in
the table has sole voting and investment power with respect to the securities
beneficially owned by him or it as set forth opposite his or its name.
Amount & Nature of
Beneficial Owner Beneficial Ownership Percent
- -------------------------------------------------------------------- ---------------------- ----------
O. Bruton Smith (1)(2) ........................................... 29,000,000 67.3%
Sonic Financial Corporation (2) .................................. 23,700,000 55.0
H.A. "Humpy" Wheeler (3)(8) ...................................... 591,600 1.4
William R. Brooks (4)(8) ......................................... 241,000 *
Edwin R. Clark (5)(8) ............................................ 85,300 *
William P. Benton (6)(8) ......................................... 60,000 *
Mark M. Gambill (7)(8) ........................................... 84,200 *
All directors and executive officers as a group (six persons) (1) 30,062,100 69.7
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* Less than one percent
(1) The shares of Common Stock shown as owned by such person or group include,
without limitation, all of the shares shown as owned by Sonic Financial
Corporation ("Sonic Financial") elsewhere in the table. Mr. Smith owns the
substantial majority of the common stock of Sonic Financial.
(2) The address of such person is P.O. Box 18747, Charlotte, North Carolina
28218.
1
(3) All the shares shown as owned by Mr. Wheeler, other than 10,400 shares
owned by him directly, underlie options granted by the Company.
(4) All the shares shown as owned by Mr. Brooks, other than 1,000 shares owned
by him directly, underlie options granted by the Company.
(5) All the shares shown as owned by Mr. Clark, other than 5,300 shares owned
by him directly, underlie options granted by the Company.
(6) All the shares shown as owned by Mr. Benton underlie options granted by the
Company.
(7) All the shares shown as owned by Mr. Gambill, other than 4,200 shares owned
by him directly, underlie options granted by the Company.
(8) All such options are currently exercisable. For additional information
concerning options granted to the Company's executive officers, see
"Executive Compensation" below.
Number of Shares Outstanding and Voting
SMI currently has authorized under its Certificate of Incorporation
200,000,000 shares of Common Stock, of which 41,512,121 shares are currently
issued and outstanding and entitled to be voted at the Annual Meeting. At the
meeting, holders of Common Stock will have one vote per share for an aggregate
total of 41,512,121 votes. A quorum being present, directors will be elected by
majority vote, and the actions proposed in the remaining items referred to in
the accompanying Notice of Meeting, will become effective if a majority of the
votes cast by shares entitled to vote on the subject matter is cast in favor
thereof. Abstentions and broker non-votes will not be counted in determining
the number of shares voted for any director-nominee or for any proposal.
A holder of Common Stock who signs a proxy card may withhold votes as to
any director-nominee by writing the name of such nominee in the space provided
on the proxy card.
Revocation of Proxy
Stockholders who execute proxies may revoke them at any time before they
are exercised by delivering a written notice to Marylaurel E. Wilks, the
Secretary of SMI, either at the Annual Meeting or prior to the meeting date at
the Company's offices at U.S. Highway 29 North, Concord, North Carolina 28026,
by executing and delivering a later-dated proxy, or by attending the meeting
and voting in person.
Expenses of Solicitation
The Company will pay the cost of solicitation of proxies, including the
cost of assembling and mailing this Proxy Statement and the materials enclosed
herewith. In addition to the use of the mails, proxies may be solicited
personally, or by telephone or telegraph, by corporate officers and employees
of the Company without additional compensation. The Company intends to request
brokers and banks holding stock in their names or in the names of nominees to
solicit proxies from their customers who own such stock, where applicable, and
will reimburse them for their reasonable expenses of mailing proxy materials to
their customers.
2000 Stockholder Proposals
In order for stockholder proposals intended to be presented at the 2000
Annual Meeting of Stockholders to be eligible for inclusion in the Company's
proxy statement and the form of proxy for such meeting, they must be received
by the Company at its principal offices in Concord, North Carolina no later
than November 26, 1999.
ELECTION OF DIRECTORS
Nominees for Election as Directors of SMI
Directors of SMI are elected at the Annual Meetings of stockholders of SMI
to serve staggered terms of three years and until their successors are elected
and qualified. The Board of Directors of SMI currently consists of six (6)
directors, two of whom must be elected at the Annual Meeting. The terms of
Messrs. Brooks and Gambill expire at the 1999 Annual Meeting, the terms of
Messrs. Wheeler and Clark expire at the 2000 Annual Meeting; and the terms of
Messrs. Smith and Benton expire at the 2001 Annual Meeting. Messrs. Brooks and
Gambill are standing for re-election at the 1999 Annual Meeting.
2
It is intended that the proxies in the accompanying form will be voted at
the meeting for the election to the Board of Directors of the following
nominees, each of whom has consented to serve if elected: William R. Brooks and
Mark M. Gambill, each to serve a three year term until the 2002 Annual Meeting
of Stockholders and until his successor shall be elected and shall qualify,
except as otherwise provided in SMI's Certificate of Incorporation and Bylaws.
Both of the nominees are presently directors of SMI. If for any reason either
nominee named above is not a candidate when the election occurs, it is intended
that proxies in the accompanying form will be voted for the election of the
other nominee named above and may be voted for any substitute nominee or, in
lieu thereof, the Board of Directors may reduce the number of directors in
accordance with SMI's Certificate of Incorporation and Bylaws.
The name, age, present principal occupation or employment and the material
occupations, positions, offices or employments for the past five years of each
SMI director, director-nominee, executive officer and executive manager are set
forth below.
O. Bruton Smith, 72, has been Chief Executive Officer and a director of
Charlotte Motor Speedway, Inc. ("CMS"), a wholly-owned subsidiary of SMI, since
1975. He was a founder of CMS in 1959 and was an executive officer and director
of CMS until 1961, when it entered reorganization proceedings under the
bankruptcy laws. Mr. Smith became Chairman and Chief Executive Officer,
President and a director of Atlanta Motor Speedway, Inc. ("AMS") upon acquiring
it in 1990. He became Chief Executive Officer of SMI upon its organization in
December 1994 and became the Chairman and CEO of Bristol Motor Speedway, Inc.
("BMS") upon its acquisition in January 1996, Sears Point Raceway ("SPR") upon
its acquisition in November 1996, and Texas Motor Speedway ("TMS") in 1995. Mr.
Smith became the President of Las Vegas Motor Speedway ("LVMS") upon its
acquisition on December 1, 1998. Mr. Smith also is the Chairman, Chief
Executive Officer, a director and controlling stockholder of Sonic Automotive,
Inc. ("SAI"), (NYSE: symbol SAH), and serves as the president and a director of
each of SAI's operating subsidiaries. SAI is believed to be one of the ten
largest automobile retail dealership groups in the United States and is engaged
in the acquisition and operation of automobile dealerships principally in the
southeastern United States. Mr. Smith has entered into an employment agreement
with SAI pursuant to which he has agreed to devote 50% of his business time to
the affairs of SAI. Mr. Smith also owns and operates Sonic Financial, among
other private businesses.
H.A. "Humpy" Wheeler, 60, was hired by CMS in 1975 and has been a director
and General Manager of CMS since 1976. Mr. Wheeler was named President of CMS
in 1980 and became a director of AMS upon its acquisition in 1990. He became
President, Chief Operating Officer and a director of SMI upon its organization
in December 1994. Mr. Wheeler has been a Vice President and a director of BMS
and SPR since their acquisition in 1996, and of TMS since its formation in
1995. Mr. Wheeler also became Vice President of LVMS upon its acquisition on
December 1, 1998.
William R. Brooks, 49, joined Sonic Financial from PricewaterhouseCoopers
in 1983. Mr. Brooks has been Vice President of CMS for more than five years and
has been Vice President and a director of AMS, BMS and SPR since their
acquisition, and TMS since its formation. Mr. Brooks became Vice President of
LVMS upon its acquisition on December 1, 1998. Mr. Brooks has been Vice
President, Treasurer, Chief Financial Officer and a director of SMI since its
organization in December 1994 and has been the President and a director of
Speedway Funding Corp., the Company's financing subsidiary, since 1995. Mr.
Brooks has also served as a director of SAI since its formation in 1997 and
served as its Chief Financial Officer from February to April 1997.
Edwin R. Clark, 44, became Vice President and General Manager of AMS in
1992 and was promoted to President and General Manager of AMS in 1995. Prior to
that appointment, he had been CMS' Vice President of Events since 1981. Mr.
Clark became Executive Vice President of SMI upon its organization in December
1994 and became a director of SMI in 1995.
William P. Benton, 75, became a director of SMI in 1995. Since January
1997, Mr. Benton has been the Executive Director of Ogilvy & Mather, a
world-wide advertising agency. He is also a consultant to the Chairman and
Chief Executive Officers of TI Group and Allied Holdings, Inc. Prior to his
appointment at Ogilvy & Mather, Mr. Benton served as Vice Chairman of Wells,
Rich, Greene/BDDP Inc., an advertising agency with offices in New York and
Detroit. Mr. Benton retired from Ford Motor Company as its Vice President of
Marketing Worldwide in 1984 after a 37-year career with that company. In
addition, Mr. Benton serves as a director of SAI.
Mark M. Gambill, 48, became a director of SMI in 1995. Mr. Gambill has
been employed continuously since 1972 by First Union Capital Markets and its
predecessor entities. First Union Capital Markets is an investment banking firm
headquartered in Richmond, Virginia, and is a wholly-owned subsidiary of First
Union Corporation. In 1996, he was named President of First Union Capital
Markets. Previously, Mr. Gambill acted as head of the Capital Markets division,
including
3
Corporate and Public Finance, Taxable Fixed Income, Municipal Sales and
Trading, Equity Sales, Trading and Research. Mr. Gambill has served on the
Board of Directors of First Union Capital Markets since 1983.
William E. Gossage, 37, became Vice President and General Manager of TMS
in August 1995. Before that appointment, he was Vice President of Public
Relations at CMS from 1989 to 1995. Mr. Gossage previously worked with Miller
Brewing Company in its motorsports public relations program and served in
various public relations and managerial capacities at two other
NASCAR-sanctioned speedways.
M. Jeffrey Byrd, 47, was hired March 1, 1996 as Vice President and General
Manager of BMS. Prior to working at BMS, Mr. Byrd had been continuously
employed by RJR Nabisco for 23 years in various sports marketing positions,
most recently as Vice President of business development for its Sports
Marketing Enterprises affiliate.
Steven Page, 43, was hired effective November 18, 1996 as President and
General Manager of SPR. Prior to being hired by SMI, Mr. Page had been
continuously employed for several years as President of Brenda Raceway
Corporation, which owned and operated SPR before its acquisition by the
Company. Mr. Page also spent eleven years working for the Oakland A's baseball
franchise in various marketing positions.
R. Christopher Powell, 39, was hired effective December 16, 1998 as
Executive Vice President and General Manager of LVMS. Mr. Powell spent eleven
years working for Sports Marketing Enterprises, a division of R. J. Reynolds
Tobacco Co. ("RJR"). Since 1994, he served as manager of media relations and
publicity on the NASCAR Winston Cup program. Mr. Powell's previous duties
include publicity and event operations on other RJR initiatives, including NHRA
Drag Racing and the Vantage and Nabisco golf sponsorships.
Joseph Phelps, 39, currently the President and General Manager of Speedway
Systems LLC d/b/a Finish Line Events, has been with the Company since September
1993. Mr. Phelps spent over ten years in the hotel and hospitality services
industry. His experience includes food and beverage services, and the design,
construction and operations of major hotels.
Committees of the Board of Directors and Meetings
There are two standing committees of the Board of Directors of SMI, the
Audit Committee and the Compensation Committee. The Audit Committee currently
consists of Messrs. Benton and Gambill. The Compensation Committee is comprised
of Messrs. Benton, Gambill and Smith. Set forth below is a summary of the
principal functions of each committee and the number of meetings held during
1998.
Audit Committee. The Audit Committee, which held two meetings in 1998,
recommends the appointment of the Company's independent auditors, determines
the scope of the annual audit to be made, reviews the conclusions of the
auditors and reports the findings and recommendations thereof to the Board,
reviews with the Company's auditors the adequacy of the Company's system of
internal control and procedures and the role of management in connection
therewith, reviews transactions between the Company and its officers, directors
and principal stockholders, and performs such other functions and exercises
such other powers as the Board from time to time may determine.
Compensation Committee. The Compensation Committee, which held four
meetings in 1998, administers certain compensation and employee benefit plans
of the Company, annually reviews and determines executive officer compensation,
including annual salaries, bonus performance goals, bonus plan allocations,
stock option grants and other benefits, direct and indirect, of all executive
officers and other senior officers of the Company. The Compensation Committee
administers the 1994 Stock Option Plan and the Employee Stock Purchase Plan,
and periodically reviews the Company's executive compensation programs and
takes action to modify programs that yield payments or benefits not closely
related to Company or executive performance. The policy of the Compensation
Committee's program for executive officers is to link pay to business strategy
and performance in a manner which is effective in attracting, retaining and
rewarding key executives while also providing performance incentives and
awarding equity-based compensation to align the long-term interests of
executive officers with those of Company stockholders. It is the Compensation
Committee's objective to offer salaries and incentive performance pay
opportunities that are competitive in the marketplace.
The Company currently has no standing nominating committee.
During 1998, there were four meetings of the Board of Directors of SMI,
with each director attending at least seventy-five percent of the meetings
(and, as applicable, committees thereof).
4
INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP to
serve as the principal independent auditors of the Company for the year 1999.
Deloitte & Touche LLP has acted in such capacity for the Company since its
organization in December 1994. This selection is submitted for approval by the
stockholders at the Annual Meeting.
Representatives of Deloitte & Touche LLP will attend the Annual Meeting.
They will have an opportunity to make a statement if they so desire, and to
respond to appropriate questions.
MANAGEMENT
Directors of SMI
For information with respect to the Board of Directors of SMI, see
"Election of Directors."
Executive Officers of SMI
Messrs. Smith, Wheeler, Brooks, and Clark are the executive officers of
SMI. Each executive officer serves as such until his successor is elected and
qualified. No executive officer of SMI was selected pursuant to any arrangement
or understanding with any person other than SMI. For further information with
respect to Messrs. Smith, Wheeler, Brooks and Clark as officers of SMI, see
"Election of Directors."
EXECUTIVE COMPENSATION
Compensation Committee Report
The following is an explanation of the Company's executive officer
compensation program as in effect for 1998:
1998 Officer Compensation Program
The 1998 executive officer compensation program of the Company had three
primary components: (i) base salary, (ii) short-term incentives under the
Company's executive bonus plan, and (iii) long-term incentives which consisted
solely of stock option grants made under the 1994 Stock Option Plan (for
officers other than the Chief Executive Officer). Executive officers (including
the Chief Executive Officer) were also eligible in 1998 to participate in
various benefits plans similar to those provided to other employees of the
Company. Such benefits plans are intended to provide a safety net of coverage
against various events, such as death, disability and retirement.
Base salaries (including that of the Chief Executive Officer) were
established on the basis of non-quantitative factors such as positions of
responsibility and authority, years of service and annual performance
evaluations. They were targeted to be competitive principally in relation to
other motorsports racing companies (such as some of those included in the Peer
Group Index in the performance graph elsewhere herein), although the
Compensation Committee also considered the base salaries of certain other
amusement, sports and recreation companies not included in the Peer Group Index
because the Compensation Committee considered those to be relatively comparable
industries.
The Company's executive bonus plan established a potential bonus pool for
the payment of year-end bonuses to Company officers and other key personnel
based on 1998 performance and operating results. Under this plan, aggressive
revenue and profit target levels were established by the Compensation Committee
as incentives for superior individual, group and Company performance. Each
executive officer was eligible to receive a discretionary bonus based upon
individually established subjective performance goals. The Compensation
Committee approved cash incentive bonuses in amounts ranging from 0.43% to
1.37% of the Company's 1998 operating income.
Awards of stock options under SMI's 1994 Stock Option Plan are based on a
number of factors in the discretion of the Compensation Committee, including
various subjective factors primarily relating to the responsibilities of the
individual officers for and contribution to the Company's operating results (in
relation to the Company's other optionees), their expected future contributions
and the levels of stock options currently held by the executive officers
individually and in the aggregate. Stock option awards to executive officers
have been at then-current market prices in order to align a portion of an
executive's net worth with the returns to the Company's stockholders. For
details concerning the grant of options to the executive officers named in the
Summary Compensation Table below, see "Executive Compensation -- Fiscal
Year-End Option Values."
5
As noted above, the Company's compensation policy is primarily based upon
the practice of pay-for-performance. Section 162(m) of the Internal Revenue
Code imposes a limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to named executive officers. The 1994
Stock Option Plan was created with the intention that all compensation
attributable to stock option exercises should qualify as deductible
performance-based compensation. The Committee currently believes that,
generally, the Company should be able to continue to manage its executive
compensation program to preserve federal income tax deductions.
Chief Executive Officer Compensation
The Committee's members other than Mr. Smith annually review and approve
the compensation of Mr. Smith, the Company's Chief Executive Officer. Mr. Smith
also participates in the executive bonus plan, with his bonus tied to corporate
revenue and profit goals. His maximum possible bonus is 2.5% of the Company's
1998 operating income. The Committee believes that Mr. Smith is paid a
reasonable salary. Mr. Smith is the only employee of the Company not eligible
for stock options. Since he is a significant stockholder in the Company, his
rewards as Chief Executive Officer reflect increases in value enjoyed by all
other stockholders.
Compensation Committee
William P. Benton, Chairman
Mark M. Gambill
O. Bruton Smith
Compensation of Officers
The following table sets forth compensation paid by or on behalf of the
Company to the Chief Executive Officer of the Company and to its other
executive officers for services rendered during the Company's fiscal years
ended December 31, 1998, 1997 and 1996:
Summary Compensation Table
Long-Term
Compensation
Annual Compensation (1) Awards
Number of
Shares
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus (2) Compensation Options (3) Compensation (4)
- ------------------------------------- ------ ----------- ------------- ----------------- ------------- -----------------
O. Bruton Smith 1998 $350,000 $1,092,000 $ 103,256(5) -- -0-
Chairman and Chief 1997 350,000 1,039,000 108,313(5) -- -0-
Executive Officer of SMI 1996 350,000 975,000 99,288(5) -- -0-
H.A. "Humpy" Wheeler 1998 250,000 764,000 (6) -- $2,600
President and Chief 1997 250,000 727,000 (6) -- 2,600
Operating Officer of SMI; 1996 250,000 685,000 (6) -- 2,500
President and General
Manager of CMS
William R. Brooks 1998 175,000 340,000 (6) -- 2,600
Vice President, Treasurer 1997 175,000 294,000 (6) -- 2,600
and Chief Financial Officer of SMI 1996 175,000 273,000 (6) 100,000 2,500
Edwin R. Clark 1998 102,500 150,000 (6) -- 2,600
Executive Vice President 1997 102,500 309,600 (6) -- 2,600
of SMI; President and 1996 102,500 205,600 (6) -- 2,500
General Manager of AMS
- ---------
(1) Does not include the dollar value of perquisites and other personal
benefits.
(2) The amounts shown are cash bonuses earned in the specified year and paid in
the first quarter of the following year.
(3) The 1994 Stock Option Plan was adopted in December 1994. The number of
shares underlying options is, in the case of each executive officer, the
sum of shares available upon exercise of incentive stock options and
non-statutory stock options, giving effect to the two for one stock split
effected as of March 15, 1996 in the form of a 100% Common Stock dividend
(the "Stock Split"). No options were granted to the Company's executive
officers in 1998 or 1997.
6
(4) Includes Company match to 401(k) plan.
(5) Amount represents share of split-dollar insurance premium treated as
compensation to Mr. Smith. See "Smith Life Insurance Arrangements." Mr.
Smith also received certain perquisites and other personal benefits
totaling not more than $50,000.
(6) The aggregate amount of perquisites and other personal benefits received
did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for such executive officer.
Fiscal Year-End Option Values
The following table sets forth information concerning outstanding options
to purchase Common Stock held by executive officers of the Company at December
31, 1998 adjusted to reflect the Stock Split.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Shares Acquired on Value Realized on
Options Exercised Options Exercised
Name in 1998 in 1998
- ------------------------------ -------------------- -------------------
H.A. "Humpy" Wheeler ......... 4,196 $95,000
William R. Brooks ............ -- --
Edwin R. Clark ............... -- --
Number of Securities Value of Unexercised
Underlying Unexercised Options at In-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End ($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------ ----------------------------------- --------------------------
H.A. "Humpy" Wheeler ......... 581,174/0 $13,931,000/0
William R. Brooks ............ 240,000/0 3,700,000/0
Edwin R. Clark ............... 80,000/0 1,770,000/0
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(1) Year-end value is based on the December 31, 1998 closing sales price for
the Company's common stock of $28.50 per share, less the applicable
aggregate option exercise price(s) of in-the-money options, multiplied by
the number of unexercised in-the-money options which are exercisable and
unexercisable, respectively.
Smith Life Insurance Arrangements
In 1995, the Compensation Committee (excluding Mr. Smith) approved the
establishment of a "split-dollar" life insurance plan for the benefit of Mr.
Smith. Pursuant to such plan, the Company entered into split-dollar insurance
agreements whereby split-dollar life insurance policies in the total face
amount of $17,167,000 (individually, a "Policy" or together the "Policies")
would be purchased and held in trust for the benefit of Mr. Smith's lineal
descendants. The Company has agreed to pay the annual (or shorter period)
premium payments on the Policies.
Upon payment of the death benefit or upon the surrender of a Policy for
its cash value, the Company will receive an amount equal to the Company's
Split-Dollar Interest (as defined below). The Company's Split-Dollar Interest
equals, in the case of the payment of the death benefit, the cumulative
payments made by the Company towards the premiums under a Policy less any
portion of such payments charged as compensation to Mr. Smith (the
"Reimbursable Payment"). The Company's Split-Dollar Interest equals, in the
case of surrender of a Policy for its cash value, the lesser of (i) the net
cash value of such Policy and (ii) the Reimbursable Payment.
In the event a Policy is surrendered or terminated prior to his death, Mr.
Smith has agreed to reimburse the Company for the positive amount, if any, by
which the Reimbursable Payment exceeds the net cash value of such Policy. Mr.
Smith's promise is evidenced by a promissory note in favor of the Company,
which note includes a limited guaranty by Sonic whereby Sonic will permit
amounts owed by Mr. Smith to the Company to be offset by amounts owed to Sonic
by AMS.
Compensation Committee Interlocks and Insider Participation
Messrs. Benton, Gambill and Smith served on the Company's Compensation
Committee during 1998. Mr. Smith serves as the Chief Executive Officer of the
Company. Mark M. Gambill is the President of First Union Capital Markets, the
investment banking firm which acted as a lead underwriter in the Company's
initial public offering in February 1995, the Company's additional equity
offering in March 1996, and the Company's offering of 5 3/4% convertible
subordinated debentures in October 1996, and co-managed the Company's offering
of 8 1/2% senior subordinated notes in August 1997.
The Company pays the annual (or shorter period) premiums on split dollar
life insurance policies for the benefit of Mr. Smith. See "Executive
Compensation -- Smith Life Insurance Arrangements."
Mr. Smith is the only officer of SMI to have served on the compensation
committee of another entity during 1998. He served as a member of the Board of
Directors and the Compensation Committee for SAI during 1998. Mr. Smith
received aggregate salary and other annual compensation of $737,500 from SAI
during 1998.
7
Director Compensation
Members of the Board of Directors who are not employees of the Company
each received in 1998 an option to purchase 20,000 shares of the Company's
common stock at $24.8125 for services as directors. The Company also reimburses
all directors for their expenses incurred in connection with their activities
as directors of SMI. Directors who are also employees of the Company receive no
additional compensation for serving on the Board of Directors. For additional
information concerning the Formula Stock Option Plan for SMI's outside
directors, see the Company's December 31, 1998 Audited Consolidated Financial
Statements.
Stockholder Return Performance Graph
Set forth below is a line graph comparing the cumulative stockholder
return on the Company's Common Stock against the cumulative total return of
each of the Standard & Poor's 500 Stock Index, the Russell 2000 Stock Index,
and a Peer Group Index for the period commencing February 24, 1995 and ending
December 31, 1998. The Russell 2000 Index was included in 1998 because
management believes, as a small-cap index, it more closely represents companies
with market capitalization similar to the Company's than the Standard & Poor's
500 Stock Index. The companies used in the Peer Group Index in 1995 consist of
Churchill Downs Incorporated, International Speedway Corporation, and Walt
Disney Co.; in 1996 also include Penske Motorsports and Dover International
Raceway; in 1997 also include Grand Prix of Long Beach; and in 1998 also
include Action Performance, which are all publicly traded companies known by
the Company to be involved in the amusement, sports and recreation industries.
Churchill Downs Incorporated, Gaylord Entertainment Company, Hollywood Park,
Inc., International Family Entertainment, which is no longer a publicly traded
company, and Grand Prix of Long Beach, which was acquired by Dover
International Raceway, are no longer included in the Peer Group Index. The
graph assumes that $100 was invested on February 24, 1995 in each of the
Company's Common Stock, the Standard & Poor's 500 Stock Index, the Russell 2000
Stock Index, and the Peer Group Index companies and that all dividends were
reinvested.
[Performance Graph appears here with the following plot points]
Speedway Motorsports, Inc. S&P 500 Composite New Peer Group Old Peer Group Russell 2000 Index
02/24/95 100.00 100.00 100.00 100.00 100.00
06/30/95 115.00 115.00 113.00 111.00 105.00
12/31/95 159.00 129.00 112.00 124.00 111.00
06/30/96 272.00 142.00 120.00 120.00 119.00
12/31/96 223.00 159.00 133.00 132.00 132.00
06/30/97 230.00 192.00 154.00 155.00 155.00
12/31/97 263.00 212.00 171.00 190.00 188.00
06/30/98 271.00 248.00 179.00 202.00 200.00
12/31/98 302.00 268.00 165.00 176.00 174.00
8
CERTAIN TRANSACTIONS
CMS holds a note from a partnership in which the Company's Chief Executive
Officer is a partner. The outstanding balance due thereunder was $798,000 at
December 31, 1998, including accrued interest. The note due from such
partnership is collateralized by certain land owned by the partnership and is
payable on demand. The note bears interest at 1% over prime.
Sonic Financial, an affiliate of the Company through common ownership, has
made several loans and cash advances to AMS prior to 1996. Such loans and
advances stood at approximately $2.6 million at December 31, 1998. Of such
amount, approximately $1.8 million bears interest at 3.83% per annum. The
remainder of the amount bears interest at 1% over prime.
From time to time during 1998, the Company paid certain expenses and made
cash advances for various corporate purposes on behalf of Sonic Financial. At
December 31, 1998, the Company had a net receivable from Sonic Financial of
approximately $1,040,000.
Prior to the completion of SMI's initial public offering, CMS joined with
Sonic Financial in filing consolidated federal income tax returns for several
years. It did so for the period of 1995 ending with the restructuring
consummated prior to the completion of the initial public offering. Under
applicable federal tax law, each corporation included in Sonic Financial's
consolidated return is jointly and severally liable for any resultant tax.
Under a tax allocation agreement dated January 27, 1995, however, CMS agreed to
pay Sonic Financial, in the event that additional federal income tax is
determined to be due, an amount equal to CMS' separate federal income tax
liability computed for all periods in which CMS and Sonic Financial have been
members of Sonic Financial's consolidated group. Also pursuant to such
agreement, Sonic Financial agreed to indemnify CMS for any additional amount
determined to be due from Sonic Financial's consolidated group in excess of the
federal income tax liability of CMS for such periods. The tax allocation
agreement establishes procedures with respect to tax adjustments, tax claims,
tax refunds, tax credits and other tax attributes relating to periods ending
prior to the time that CMS left Sonic Financial's consolidated group. Pursuant
to such agreement, amounts payable by CMS for tax adjustments, if any, shall in
no event exceed the sum of $1.8 million plus the amount of any tax adjustments
for which CMS may receive future tax benefits.
At December 31, 1998, the Company had a note receivable from the Company's
Chairman and Chief Executive Officer for approximately $842,000, including
accrued interest. The principal balance of the note represents premiums paid by
the Company under the split-dollar life insurance trust arrangement on behalf
of the Chairman, in excess of cash surrender value, see "Smith Life Insurance
Arrangements". The note bears interest at 1% over prime.
At December 31, 1998, the Company owed $1,542,000 to a former shareholder
and executive officer of LVMS who is now a LVMS officer and employee. The
amount is due in equal monthly payments through December 2003 at 6.4% imputed
interest.
For information concerning certain transactions in which Messrs. Smith and
Gambill have an interest, see "Compensation Committee Interlocks and Insider
Participation."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
SMI's executive officers, directors and persons who own more than ten percent
(10%) of SMI's Common Stock to file initial reports of ownership and changes in
ownership with the SEC. Additionally, SEC regulations require that SMI identify
any individuals for whom one of the referenced reports was not filed on a
timely basis during the most recent fiscal year or prior fiscal years. To SMI's
knowledge, based solely on review of reports furnished to it, all Section 16(a)
filing requirements applicable to its executive officers, directors and more
than 10% beneficial owners were complied with, except that Messrs. Benton and
Gambill inadvertently filed late one report on Form 5 showing the issuance, in
1998, of options to acquire 20,000 shares each of Common Stock pursuant to the
Formula Stock Option Plan.
OTHER MATTERS
In the event that any matters other than those referred to in the
accompanying Notice should properly come before and be considered at the Annual
Meeting, it is intended that proxies in the accompanying form will be voted
thereon in accordance with the judgment of the person or persons voting such
proxies.
9
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APPENDIX
SPEEDWAY MOTORSPORTS, INC.
P R O X Y
Concord, North Carolina
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Mr. H.A. Wheeler and Mr. O. Bruton Smith
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated below, all the shares of
the Common Stock of Speedway Motorsports, Inc. held of record by the
undersigned on March 8, 1999 at the Annual Meeting of Stockholders to be held
on May 5, 1999 or any adjournment thereof.
1. ELECTION OF DIRECTORS
Nominees: William R. Brooks and Mark M. Gambill (Mark only one of the
following boxes.)
[ ] VOTE FOR both nominees listed above, except vote withheld as to the
following nominee (if any):
--------------------------------------------------------
[ ] VOTE WITHHELD as to all nominees.
2. SELECTION OF AUDITORS
To ratify the election of Deloitte & Touche LLP as the principal independent
auditors of SMI and its subsidiaries for the year 1999 (Mark only one of the
following boxes).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE MARK, SIGN BELOW, DATE AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE FURNISHED.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Shares
--------------------
Dated , 1999
--------------
--------------------------
Signature
--------------------------
Signature if held jointly
[ ] Please mark here if
you intend to attend
the Meeting of
Stockholders.