COAST RESORTS, INC.
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
April 6, 2001
Dear (Name of Stockholder):
You are cordially invited to attend the 2001 Annual Meeting of Stockholders of
Coast Resorts, Inc., which will be held in the Bienville Room at The Orleans
Hotel and Casino, 4500 West Tropicana Avenue, Las Vegas, Nevada 89103, on
Wednesday, May 9, 2001 at 10:00 a.m. (Pacific Daylight Time). We hope you will
be able to attend the Annual Meeting in person and look forward to seeing you.
At the Annual Meeting, stockholders will be asked to elect three directors to
the Board of Directors. Class II directors will be elected to serve until the
2004 Annual Meeting of Stockholders and until their successors have been elected
and qualified. You are requested to give your prompt attention to this matter,
which is more fully described in the accompanying proxy materials.
Whether or not you plan to attend the Annual Meeting in person, it is important
that your shares be represented and voted at the Annual Meeting. Accordingly,
after reading the enclosed Notice of Annual Meeting and Proxy Statement, you are
urged to sign, date and return the enclosed proxy in the envelope provided at
your earliest convenience.
Thanks for taking the time to read this letter. Hope to see you at the meeting.
Sincerely,
Michael J. Gaughan
Chairman of the Board
and Chief Executive Officer
COAST RESORTS, INC.
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 6, 2001
The 2001 Annual Meeting of the Stockholders of Coast Resorts, Inc., a Nevada
corporation (the "Company"), will be held in the Bienville Room at The Orleans
Hotel and Casino, 4500 West Tropicana Avenue, Las Vegas, Nevada 89103, on
Wednesday, May 9, 2001, commencing at 10:00 a.m. (Pacific Daylight Time) for the
following purposes:
1. To elect three Class II directors to serve until the 2004 Annual Meeting of
Stockholders and until their successors are elected and qualified; and
2. To consider and act upon such other business as may properly come before the
Annual Meeting and at any adjournment or postponement thereof.
Pursuant to the Bylaws of the Company, the time and date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and at any adjournment or postponement thereof is fixed as of the close
of business on April 2, 2001. Accordingly, only stockholders of record as of the
close of business on April 2, 2001 will be entitled to vote at the Annual
Meeting and any adjournment or postponement thereof, notwithstanding any
transfer of stock on the books of the Company thereafter.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE RETURN
ENVELOPE, WHICH REQUIRES NO POSTAGE IN THE UNITED STATES.
Stockholders who attend the Annual Meeting may vote in person even though
they have previously mailed their Proxy.
By Order of the Board Directors
J. Tito Tiberti
Secretary
Las Vegas, Nevada
April 6, 2001
COAST RESORTS, INC.
4500 West Tropicana Avenue
Las Vegas, Nevada 89103
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 9, 2001
This Proxy Statement is first being mailed on or about April 6, 2001 to
stockholders of Coast Resorts, Inc., a Nevada corporation (the "Company"), of
record as of the close of business on April 2, 2001.
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of the Company for use at the Company's 2001 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 9, 2001 and at any
adjournment(s) or postponement(s) thereof. Pursuant to the Bylaws of the
Company, a Proxy must be filed with the Secretary of the Company at or before
the Annual Meeting in order to be valid. It may be revoked at any time prior to
its use by (1) providing a written revocation to the Secretary of the Company at
its offices, (2) executing and delivering a later dated Proxy, or (3) attending
the Annual Meeting and voting in person. Shares represented by an unrevoked
Proxy will be voted as directed by the stockholder. If no direction is given,
such shares will be voted for the election of the nominees named herein for
election as directors, and in the discretion of the proxy holders with respect
to any other matters properly presented to the Annual Meeting and at any
adjournment(s) or postponement(s) thereof and of which the Company had not
received notice before February 27, 2001.
VOTING RIGHTS
Only stockholders of record at the close of business on April 2, 2001 are
entitled to notice of and to vote at the Annual Meeting. On that date, there
were outstanding 1,463,177.94 shares of the Company's common stock, $.01 par
value (the "Common Stock"). The presence, either in person or by proxy, of
persons entitled to vote 50% of the Company's outstanding Common Stock is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Each share is entitled to one vote in connection with each matter
submitted for stockholder approval. Abstentions and any shares as to which a
broker or nominee has indicated that it does not have discretionary authority to
vote on a particular matter will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining whether approval of the stockholders has
been obtained with respect to any such matter and thus will have the effect of a
"No" vote in connection with each such matter. Abstentions and broker non-voters
will have no effect in connection with the election of directors.
1
ELECTION OF DIRECTORS
Pursuant to the Articles of Incorporation and Bylaws of the Company, at the
Annual Meeting stockholders will elect three directors to serve until the 2004
Annual Meeting of Stockholders and until their successors are duly elected and
qualified. The Board has nominated the three current directors whose terms
expire at the Annual Meeting to stand for re-election at the Annual Meeting.
Such directors are Messrs. F. Michael Corrigan, Charles Silverman and Joseph A.
Blasco. The enclosed Proxy, unless indicated to the contrary, will be voted for
the Board's nominees.
Under the Company's Bylaws, in order to be effective, nominations by a
stockholder of a candidate for election as a director must be submitted to the
Secretary of the Company not later than sixty days in advance of the Annual
Meeting. Any such notice of nomination must set forth: (i) the name, age,
business address and residence address of each nominee proposed in such notice,
(ii) the principal occupation or employment of each such nominee, (iii) the
number of shares of capital stock of the Company beneficially owned by each such
nominee and (iv) such other information concerning each such nominee as would be
required under the rules and regulations of the Securities and Exchange
Commission ("SEC") in a proxy statement soliciting proxies for the election of
such nominees. Such notice must also include a written consent to serve as a
director, if elected, executed by each such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES LISTED ABOVE.
2
DIRECTORS AND EXECUTIVE OFFICERS
The following tables set forth the names and ages of the directors and
executive officers of the Company, their respective positions and the expiration
dates of their respective terms as of April 6, 2001.
Directors and Executive Officers
Term
Name Age Position(s) Held Expires
- ------------------- ----- ------------------------------------ -------
Nominees for Re-election
------------------------
F. Michael Corrigan 65 Director 2001
Charles Silverman 68 Director 2001
Joseph A. Blasco 57 Director 2001
Other Directors
---------------
Michael J. Gaughan 58 Chairman of the Board and 2003
Chief Executive Officer
Harlan D. Braaten 50 Director, President and 2003
Chief Operating Officer
Gage Parrish 47 Director, Vice President, 2003
Chief Financial Officer and
Assistant Secretary
Jerry Herbst 63 Director, Treasurer and 2002
Assistant Secretary
J. Tito Tiberti 55 Director and Secretary 2002
Franklin Toti 62 Director and Vice President 2002
of Casino Operations
F. Michael Corrigan. Mr. Corrigan was elected as a director of the Company
and its wholly owned subsidiary, Coast Hotels and Casinos, Inc. ("Coast Hotels")
effective as of March 1, 1996. His current term as a director expires in 2001.
Since July 1989, Mr. Corrigan has served as the chief executive officer of
Corrigan Investments, Inc., which owns and manages real estate in Nevada and
Arizona. In addition, Mr. Corrigan is the Chief Executive Officer of Corstan,
Inc., a mortgage banking company, and was previously the owner, President and
Chief Operating Officer of Stanwell Mortgage, a Las Vegas mortgage company.
Charles Silverman. Mr. Silverman was elected as a director of the Company
and Coast Hotels effective as of March 1, 1996. His current term as a director
expires in 2001. Mr. Silverman is the President and sole stockholder of
Yates-Silverman, Inc., which specializes in developing theme-oriented interiors
and exteriors and is a leading designer of hotels and casinos. Completed
projects of Yates-Silverman, Inc. include New York-New York, Excalibur, Circus
Circus, Luxor, the Trump Taj Mahal, Trump Castle and Atlantic City Showboat.
Yates-Silverman, Inc. also served as the principal designer for The Orleans and
the Suncoast. Mr. Silverman has served as the president of Yates-Silverman, Inc.
since its inception in 1971.
3
Joseph A. Blasco. Mr. Blasco was elected as a director of the Company and
Coast Hotels effective as of December 16, 1996. His current term as a director
expires in 2001. Since 1984, Mr. Blasco has been a partner in the real estate
development partnership that developed the Spanish Trail community in Las Vegas,
a project that includes over 1,200 homes, a 27-hole golf course and a country
club. Mr. Blasco is currently the managing General Partner of United Realty
Investments, a real estate development and management company in Las Vegas. He
is also general partner in two real estate development partnerships, Summer
Trail LLC and Trop-Edmond Ltd.
Michael J. Gaughan. Mr. Gaughan has been a director of the Company since its
formation in September 1995 and is the Chairman of the Board and Chief Executive
Officer of the Company. His current term as a director expires in 2003. He is
also a director and Chairman of the Board and Chief Executive Officer of Coast
Hotels. Mr. Gaughan was a general partner of the Barbary Coast Partnership from
its inception in 1979 until January 1, 1996, the effective date of the
reorganization in which the Barbary Coast Partnership and the Gold Coast
Partnership consolidated with Coast Resorts and Coast Hotels (the
"Reorganization"). Mr. Gaughan served as the managing general partner of the
Gold Coast Partnership from its inception in December 1986 until the effective
date of the Reorganization. Mr. Gaughan and Mr. Herbst were the sole
stockholders of Gaughan-Herbst, Inc., which was the sole corporate general
partner of the Gold Coast Partnership prior to the Reorganization. Mr. Gaughan
has been involved in the gaming industry since 1960 and has been licensed as a
casino operator since 1967.
Harlan D. Braaten. Mr. Braaten joined the Company as the President, Chief
Financial Officer and a director in October 1995, and was appointed Chief
Operating Officer in February 1996. His current term as a director expires in
2003. Mr. Braaten is also the President and Chief Operating Officer of Coast
Hotels. Prior to joining the Company, Mr. Braaten was employed in various
capacities, including the general manager and, most recently, senior vice
president, treasurer and chief financial officer of Rio Hotel and Casino, Inc.
in Las Vegas. From March 1989 to February 1991, Mr. Braaten was vice president,
finance of MGM/Marina Hotel and Casino in Las Vegas, Nevada. Prior thereto, from
November 1983 to March 1989, Mr. Braaten was property controller for Harrah's in
Reno, Nevada. Mr. Braaten has over 22 years of experience in the Nevada gaming
industry.
Jerry Herbst. Mr. Herbst has been a director, Treasurer and Assistant
Secretary of the Company and Coast Hotels since their formation in September
1995. His current term as a director expires in 2002. Mr. Herbst has been the
president of Terrible Herbst Oil Company, an owner and operator of gas stations
and car washes, since 1959. Mr. Herbst and Mr. Gaughan were the sole
stockholders of Gaughan-Herbst, Inc., which was the sole corporate general
partner of the Gold Coast Partnership prior to the formation of Coast Hotels.
Mr. Herbst has served as a member of the board of directors of Nevada Power
Company since 1990 and of Edelbrock Corporation since 1994.
J. Tito Tiberti. Mr. Tiberti has been a director and Secretary of the
Company and Coast Hotels since their formation in September 1995. His current
term as a director expires in 2002. Mr. Tiberti is the president, a director and
a stockholder of, and together with his immediate family, controls Tiberti
Construction, a construction company which served as the general contractor for
the construction of The Orleans and the Suncoast and is also serving as general
contractor for our planned expansions and remodel at The Orleans and the
Suncoast. He has also served as managing general partner of The Tiberti Company,
a real estate rental and development company, since 1971. The Tiberti Company is
the lessor of the real property site for The Orleans. Mr. Tiberti has been
involved in the gaming industry for 22 years and was a general partner of the
Barbary Coast Partnership prior to the formation of the Company and Coast
Hotels.
4
Gage Parrish. Mr. Parrish was named Vice President, Finance, Assistant
Secretary and a director of the Company and Coast Hotels in October 1995 and was
promoted to Chief Financial Officer in February 1996. His current term as a
director expires in 2003. From 1986, until the Reorganization, he was the
Controller and Chief Financial Officer of the Gold Coast Partnership. From 1981
to 1986, Mr. Parrish served as Assistant Controller of the Barbary Coast
Partnership. Mr. Parrish is a certified public accountant and has approximately
22 years of experience in the gaming industry.
Franklin Toti. Mr. Toti has been a director of the Company and Coast Hotels
since October 5, 1998. His current term expires in 2002. He has been Vice
President of Casino Operations for the Company and Coast Hotels since January 1,
1996. Mr. Toti was a general partner and Casino Manager of the Barbary Coast
Partnership from its inception in 1979 until January 1, 1996, the effective date
of the Reorganization. Mr. Toti has 40 years of experience in the gaming
industry.
Directors of the Company who are also employees of the Company or Coast
Hotels receive no compensation for service on the Board of Directors or its
committees. All other directors receive an annual director's fee of $24,000,
payable quarterly in arrears. Directors may also be reimbursed for out-of-pocket
expenses incurred in connection with attending Board of Director or committee
meetings.
Board of Directors and Committees to the Board
The Board of Directors held nine meetings during 2000. During 2000, each
director attended at least 75% of the aggregate number of meetings of the Board
and the respective Committees on which he served while a member thereof. The
Board of Directors has three standing committees: the Compliance Committee, the
Audit Committee and the Compensation Committee.
The Compliance Committee, which consists of Messrs. Corrigan and Blasco as
well as, two other employees of Coast Hotels, was established in December 1999.
It held two meetings in 2000. The Compliance Committee monitors the Company's
compliance with federal, state and local laws and regulations, including
specifically but not exclusively, State of Nevada gaming regulations accounting
policies.
The Compensation Committee, which was created in July 1996, consists of
Messrs. Corrigan, Silverman and Blasco. The Compensation Committee held one
meeting during the year 2000. No member of the Committee is a former or current
officer or employee of the Company or any of its subsidiaries. The functions
performed by the Compensation Committee include oversight of executive
compensation, review of the Company's overall compensation programs, and
administration of certain of the Company's incentive compensation programs.
5
The Audit Committee, which was created in March 1996, consists of Messrs.
Corrigan and Blasco. The Audit Committee held three meetings during 2000. No
member of the Committee is a former or current officer or employee of the
Company or any of its subsidiaries. The functions performed by the Audit
Committee include review of the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process. The Company's independent
auditors are responsible for expressing an opinion on the conformity of our
audited financial statements to generally accepted accounting principles. The
Audit Committee also reviews and makes recommendations to the Board of Directors
with respect to any contracts which the Company proposes to enter with companies
in which other members of the Board of Directors or Company officers have an
interest or are operated or owned by a relative of a member of the Board of
Directors of a Company officer.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth all compensation earned by or paid by Coast
Hotels during 1998, 1999 and 2000 to each executive officer (the "Named
Executive Officers") whose compensation exceeded $100,000 in all capacities in
which they served.
Summary Compensation Table
Annual Compensation
-----------------------------------------
All Other
Name And Principal Position Year Salary Bonus Compensation(1)
---- -------- -------- --------------
Michael J. Gaughan................ 2000 $300,000 $ -- $ 4,361
Chairman of the Board and 1999 $300,000 $ -- $ 4,000
Chief Executive Officer of 1998 $300,000 $ -- $ 5,000
the Company and Coast Hotels
Harlan D. Braaten................. 2000 $300,000 $150,000 $ 4,361
President and 1999 $275,000 $137,500 $ 3,150
Chief Operating Officer of 1998 $250,000 $125,000 $ 5,000
the Company and Coast Hotels
Gage Parrish...................... 2000 $225,000 $ -- $ 4,361
Vice President, Chief Financial 1999 $212,500 $ 15,000 $ 3,900
Officer and Asst. Secretary of 1998 $200,000 $ -- $ 5,000
the Company and Coast Hotels
(1) The amounts reflect matching contributions paid to our 401(k) Profit Sharing
Plan and Trust.
6
Employment Agreement
Effective as of January 1, 1999, Coast Hotels entered into an employment
agreement with Harlan Braaten, President and Chief Operating Officer. The
agreement has a term of three years and provides for Mr. Braaten to receive a
base salary of $250,000 for the first year and $300,000 for the second and third
years. The agreement may be terminated upon 30 days notice by Mr. Braaten and at
any time by Coast Hotels. In addition, in the event of a termination of Mr.
Braaten's employment other than for failure to comply with Nevada gaming
regulations, failure to perform his duties, medical incapacity or his arrest on
a felony offense, Mr. Braaten will be entitled to receive a severance payment in
the amount of $300,000 plus any pro rata bonus payment and unvested stock
options to which he is entitled. Pursuant to the arrangement, Coast Resorts
granted Mr. Braaten options to purchase 30,415 shares of Coast Resorts, Inc. for
$100 per share. The option vested as to one-third of the shares on the grant
date, January 1, 1999, vested as to an additional one-third of the shares on
January 1, 2000 and vested as to the final one-third of the shares on January 1,
2001. The options expire on December 31, 2009.
Stock Options
Effective June 14, 1999 Coast Resorts issued options to purchase 5,000
shares of its common stock to its chief financial officer. The options vested in
one-third increments on June 14, 1999, June 14, 2000 and June 14, 2001. The
exercise price of the options is at $100 per share, which is equivalent to the
estimated fair value of Coast Resorts' common stock at the grant date.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We maintain numerous racetrack dissemination contracts with Las Vegas
Dissemination Company, Inc. ("LVDC"). Michael J. Gaughan's son is the president
and sole stockholder of LVDC. LVDC provides certain dissemination and
pari-mutuel services to the Gold Coast, the Barbary Coast, The Orleans and the
Suncoast. LVDC has been granted a license by the Nevada Gaming Authorities to
disseminate live racing for those events and tracks for which it contracts and
has been granted the exclusive right to disseminate all pari-mutuel services and
race wire services in the State of Nevada. Under these dissemination contracts,
we pay to LVDC an average of 3% of the wagers accepted for races held at the
racetracks covered by the respective contracts. We also pay to LVDC a monthly
fee for race wire services. For the fiscal years ended December 31, 1998, 1999
and 2000, we incurred expenses payable to LVDC of approximately $3.1 million,
$1.3 million and $1.6 million, respectively. The terms on which such services
are provided are regulated by the Nevada Gaming Authorities.
Tiberti Construction Company served as the general contractor for the
original construction of the Gold Coast and for certain expansions thereof, and
for the original construction of the Barbary Coast and all expansions thereof.
Tiberti Construction was also the general contractor for the original
construction of The Orleans, and for the expansions in 1997 and 1999, as well as
the general contractor for the construction of the Suncoast. J. Tito Tiberti
owns approximately 6.20 % of the outstanding common stock of Coast Resorts, and
is a director, Vice President and Secretary of Coast Hotels and Coast Resorts.
Mr. Tiberti is the president, a director and stockholder of, and together with
his immediate family members, controls Tiberti Construction. For the years ended
December 31, 1998, 1999 and 2000, we incurred expenses payable to Tiberti
Construction of approximately $3.7 million, $27.9 million and $108.5 million,
respectively.
7
We have entered into a ground lease with The Tiberti Company, a Nevada
general partnership, with respect to the real property on which The Orleans is
located. Mr. Tiberti, a director of Coast Hotels and a director and stockholder
of Coast Resorts, is the managing partner of The Tiberti Company. We paid rental
expenses to The Tiberti Company of $2.4 million per year for the fiscal years
ended December 31, 1998, 1999 and 2000.
Michael J. Gaughan and Franklin Toti are owners of LGT Advertising, which
serves as our advertising agency. LGT Advertising purchases advertising for our
casinos from third parties and passes any discounts directly through to us. LGT
Advertising receives no compensation or profit for such activities, and invoices
us for actual costs incurred. LGT Advertising uses our facilities and employees
in rendering its services, but does not pay any compensation to us for such use.
Messrs. Gaughan and Toti receive no compensation from LGT Advertising.
Advertising expenses payable to LGT Advertising were approximately $6.0 million,
$5.4 million and $6.5 million for the years ended December 31, 1998, 1999 and
2000, respectively.
We have purchased certain of our equipment and inventory for our operations
from RJS Inc., a Nevada corporation that is owned by Michael J. Gaughan's father
and Steven Delmont, our restaurant manager. RJS invoices us for actual costs
incurred. For the fiscal years ended December 31, 1998, 1999 and 2000, we
incurred expenses payable to RJS of approximately $829,000, $2.1 million and
$6.5 million, respectively.
Michael J. Gaughan is the majority stockholder of Nevada Wallboards, Inc., a
Nevada corporation ("Nevada Wallboards"), which prints wallboards and parlay
cards for use in our race and sports books. Mr. Gaughan receives no compensation
from Nevada Wallboards. For the fiscal years ended December 31, 1998 1999 and
2000, we incurred expenses payable to Nevada Wallboards of approximately
$186,000, $180,000 and $192,000, respectively.
Charles Silverman, a director of Coast Hotels and Coast Resorts, is the
president of Yates-Silverman, Inc., which served as the designer of The Orleans
and the Suncoast. For the fiscal years ended December 31, 1998, 1999 and 2000,
we incurred expenses payable to Yates-Silverman of $500,000, $721,000 and
$548,000, respectively.
Coast Hotels promotes The Orleans by advertising on NASCAR racecars operated
by Orleans Motorsports, Inc. In 1999 and 2000, we spent $300,000 and $180,000,
respectively, in connection with this promotion. Brendan Gaughan, the main
driver employed by Orleans Motorsports, is the son of Michael J. Gaughan.
The foregoing transactions are believed to have been on terms no less
favorable to us than could have been obtained from unaffiliated third parties
and were approved by a majority of our disinterested directors. Any future
transactions between us and our officers, directors, principal stockholders or
affiliates will be on terms no less favorable to us than may be obtained from
unaffiliated third parties, and will be approved by a majority of our
disinterested directors.
8
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Rules adopted by the SEC under Section 16(a) of the Securities Exchange Act
of 1934 (the "Exchange Act") require the Company's officers and directors, and
persons who own more than ten percent of the issued and outstanding shares of
the Company's equity securities, to file reports of their ownership, and changes
in ownership, of such securities with the SEC on SEC Forms 3, 4 or 5, as
appropriate. Such persons are required by the SEC's regulations to furnish the
Company with copies of all forms they file pursuant to Section 16(a).
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during its most recent fiscal year, and any written
representations provided to it, the Company believes that each of the officers,
directors, and owners of more than 10% of the outstanding Common Stock of the
Company are in compliance with Section 16(a) of the Securities Exchange Act of
1934 for the year 2000.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of the common stock of the Company as of April 2, 2001 (i) each person
who, to the Company's knowledge, owns more than 5% of the outstanding common
stock, (ii) each director of the Company, (iii) each other person named in the
Summary Compensation Table above and (iv) all directors and executive officers
of the Company as a group.
Name(1) Number of Shares Percentage
- -------------------------------------- ---------------- ----------
Michael J. Gaughan 455,103.97 31.10 %
Jerry Herbst 265,488.08 18.14 %
Jimma Lee Beam 104,529.41 7.14 %
Franklin Toti 99,776.47 6.82 %
J. Tito Tiberti(2) 90,751.47 6.20 %
Harlan D. Braaten(3) 30,415.00 2.04%
F. Michael Corrigan 5,263.24 *
Joseph A. Blasco 500.00 *
Charles Silverman 500.00 *
Gage Parrish (4) 3,333.33 *
All directors and executive officers 951,131.56 63.54 %
as a group (9 persons)
- --------------------------------------
* Less than one percent
(1) The address of Messrs. Gaughan and Toti is 4500 West Tropicana Avenue, Las
Vegas, Nevada 89103. The address of Mr. Herbst is 5195 Las Vegas Boulevard
South, Las Vegas, Nevada 89119. The address of Mr. Tiberti is 1806 South
Industrial Road, Las Vegas, Nevada 89102. The address of Ms. Beam is 2409
Windjammer Way, Las Vegas, Nevada 89107. The address of Mr. Corrigan is 4100
West Flamingo Road, Las Vegas, Nevada 89103.
(2) Includes 600 shares held by trusts for the benefit of Mr. Tiberti's children
and 2000 shares held by a partnership of which trusts for the benefit of Mr.
Tiberti's children are indirect partners, as to which Mr. Tiberti disclaims
beneficial ownership.
9
(3) Reflects shares that may be purchased upon exercise of a stock option.
Pursuant to his employment agreement, Mr. Braaten was granted an option to
purchase 30,415 shares of Coast Resorts, Inc. for $100 per share. One third
of the options vested on the grant date (January 1, 1999), one third vested
on January 1, 2000 and the remaining third vested on January 1, 2001.
(4) Reflects shares that may be purchased upon exercise of a stock option. Mr.
Parrish was granted an option to purchase 5000 shares of Coast Resorts, Inc.
for $100 per share. One third of the options vested on the grant date (June
14, 1999), one third vested on June 14, 2000, and the remaining third vest
on June 14, 2001.
There is no public market for the Company's common stock.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
2000, including the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, without the exhibits thereto, was mailed on April 6,
2001, to shareholders of record as of April 2, 2001.
The company will provide a copy of the Annual Report and of the exhibits to
its Annual Report on Form 10-K for the fiscal year ended December 31, 2000 upon
the written request of any beneficial owner of the Company's securities as of
the record date for the Annual Meeting and reimbursement of the Company's
reasonable expenses. Such request should be addressed to Gage Parrish, Vice
President and Chief Financial Officer, 4500 West Tropicana Avenue, Las Vegas,
Nevada 89103.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. During the year ended December 31, 2000, the
Audit Committee met three times. Management has the primary responsibility for
the financial statements and the reporting process. The Company's independent
auditors are responsible for expressing an opinion on the conformity of our
audited financial statements to generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board No. 1 (Independence Discussions with Audit Committees) and discussed with
them their independence from the Company and its management.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board approved, that
the audited financial statements be included in the Company's Annual Report on
SEC Form 10-K for the year ended December 31, 2000, for filing with the
Securities and Exchange Commission.
Each of the members of the Audit Committee is independent as defined in Rule
4200(a)(14) of the National Association of Securities Dealers listing standards.
The Board of Directors has not adopted a written charter for the audit
committee.
10
The following fees were paid to PricewaterhouseCoopers for services provided
to the Company for the fiscal year ended December 31, 2000:
Audit Fees $206,000
Financial Information Systems Design and Implementation Fees $ 0
All Other Fees $ 49,000
Audit fees are the aggregate fees billed for professional services rendered
for the audit of the annual financial statements of the Company and its
subsidiaries for the most recent fiscal year and the reviews of the financial
statements included in the Forms 10-Q of the Company and its subsidiaries for
that fiscal year.
Financial information systems design and implementation fees are the
aggregate fees billed for services such as the operation or supervision of the
Company's information system or for the design or implementation of a hardware
or software system that aggregates source data underlying the financial
statements or generates information that is significant to the audit client's
financial statements rendered by the principal accountant for the most recent
fiscal year.
All other fees are the aggregate fees billed for services other than audit
and financial information systems and implementation services, rendered by
PricewaterhouseCoopers for the most recent fiscal year.
The Audit Committee has not considered whether the independent auditors
provision of non-audit services to the Company is compatible with the auditor's
independence.
By the Audit Committee
F. Michael Corrigan
Joseph A. Blasco
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors was appointed in June
1996. The Compensation Committee has reviewed and will review and recommend
compensation levels for executive officers of the Company and oversee and
administer the Company's executive compensation programs. The Compensation
Committee recommends, and the Board of Directors determines compensation levels
for the executive officers of the Company. All members of the Compensation
Committee are outside directors, who are not eligible to participate in any of
the compensation programs that the Committee oversees.
The Company's executive compensation plans are designed to attract, retain,
motivate and appropriately reward individuals who are responsible for the
Company's short and long-term profitability, growth and return to stockholders.
Compensation for the Company's executive officers generally consists of salary
and an annual bonus. In some cases, stock options are also awarded.
Executive officers also participate in a 401(k) plan, a medical plan and
other benefit plans available to employees generally.
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Pay levels for executives generally are based on the level of
responsibility, scope and complexity of the executive's position relative to
other senior management positions internally and at other competitive gaming
companies.
The determination of salary increases, annual bonus awards and long-term
incentive awards is expected to be reviewed annually based on the performance of
the Company. Also factored into these decisions will be each executive's
individual performance and contribution to the Company's future positioning.
Although the components of compensation (salary, annual bonuses and long-term
incentive awards) will be reviewed separately, compensation decisions are based
on a review of the total compensation level awarded compared to other executives
with similar gaming companies. In establishing 2000 compensation for the named
executive officers, the Board of Directors took into account the compensation
paid to Messrs. Gaughan, Braaten and Parrish in 1999, the levels of compensation
paid to executives in the gaming industry generally, and the performance of the
Company in the year 2000. During the year 2000 the net revenues of the Company
increased from $362,531,000 to $419,527,000 and the net income, before
extraordinary items, increased from $21,222,000 to $26,778,000. EBITDA increased
from $77,992,000 in 1999, to $98,290,000 in 2000 an increase of approximately
26%. Based upon this performance, and in Mr. Braaten's case under the terms of
his employment contract, Mr. Braaten received a bonus of $150,000. While the
Compensation Committee believed that Mr. Gaughan was entitled to a bonus for the
year 2000 in an amount at least equal to the bonus paid to Mr. Braaten, Mr.
Gaughan indicated to the Compensation Committee and the Board of Directors that
he did not wish to receive a bonus for the year 2000.
Compensation Committee Interlocks and Insider Participation
There are no members of the Compensation Committee that have been, or
currently are officers or employees of the Company or its subsidiaries. Mr.
Silverman is the president of Yates-Silverman, Inc., which served as the
designer of The Orleans and the Suncoast. For the fiscal years ended December
31, 1998, 1999 and 2000, we incurred expenses payable to Yates-Silverman of
$500,000, $721,000 and $548,000, respectively.
By the Compensation Committee
Charles Silverman
F. Michael Corrigan
Joseph A. Blasco
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors of the
Company has selected PricewaterhouseCoopers as the Company's independent public
accountants and auditors for fiscal year ending December 31, 2001.
PricewaterhouseCoopers served as the Company's independent public accountants
and auditors for the fiscal year ending December 31, 2000. Stockholder's are not
being asked to vote in connection with the selection of the Company's
independent public accountants. A representative of PricewaterhouseCoopers will
be present at the Annual Meeting to respond to appropriate questions and to make
such statements as he may desire.
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STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any eligible stockholder (as defined below) of the Company wishing to have a
proposal considered for inclusion in the Company's 2002 proxy solicitation
material must set forth such proposal in writing and file it with the Secretary
of the Company on or before December 8, 2001. The Board will review any
proposals from eligible stockholders, which it receives by that date and will
determine whether any such proposals will be included in its 2002 proxy
solicitation materials. Any eligible stockholder is one who is the record or
beneficial owner of at least 1% or $1,000 in market value of securities entitled
to be voted on the proposal at that annual meeting who has held such securities
for at least one year and who shall continue to own such securities through the
date on which the annual meeting is held.
SOLICITATION OF PROXIES
The cost of this solicitation will be borne by the Company. Proxies may be
solicited by mail, telephone, or telegraph, or personally by directors, officers
and regular employees of the Company, none of whom will receive any special
compensation for such services. The Company will reimburse persons holding stock
in their name or in the names of their nominees for reasonable expenses of
forwarding proxy materials to their principals.
OTHER BUSINESS
The Board does not know of any other business, which will be presented for
consideration at the Annual Meeting. If any other business properly comes before
the Annual Meeting or at any adjournment(s) or postponement(s) thereof and the
Company did not receive notice of the business before February 27, 2001, the
proxy holders will vote in regard thereto according to their discretion.
Pursuant to the Company's Bylaws, in order to present business at the Annual
Meeting other than that proposed by the Board, a stockholder must give written
notice to the Secretary of the Company not later than sixty days in advance of
the Annual Meeting. Any such notice must set forth as to each matter the
stockholder proposes to bring before the meeting: (i) the reasons for conducting
such business at the meeting, (ii) the name and address, as they appear on the
Company's books and records, of the stockholder proposing such business, (iii)
the class and number of shares of the Company beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
By Order of the Board of Directors
J. Tito Tiberti
Secretary
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PROXY
COAST RESORTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE
2001 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints Michael J. Gaughan, Harlan
D. Braaten, and J. Tito Tiberti, and each or any of them (and, if two or more of
them act hereunder, by action of a majority of them), attorneys and proxies with
full power of substitution, to represent the undersigned and to vote all shares
of Common Stock, $.01 par value, of Coast Resorts, Inc. (the Company), that the
undersigned would be entitled to vote if personally present at the 2001 Annual
Meeting of Stockholders of the Company to be held at 10:00 a.m. (Pacific
Daylight Time) at The Orleans Hotel and Casino, 4500 West Tropicana Avenue, Las
Vegas, Nevada 89103, on Wednesday, May 9, 2001, and at any and all adjournments
or postponements thereof (the "Meeting"), as herein specified (or, if no
direction is given, FOR the nominees named below) and in such proxyholder's
discretion upon any other matter that may properly come before the Meeting.
A. ELECTION OF DIRECTORS
CLASS II (for election to serve until the 2004 Annual Meeting of
Stockholders and until their successors are elected and have qualified): F.
MICHAEL CORRIGAN, CHARLES SILVERMAN, JOSEPH A. BLASCO
____ FOR all nominees listed above (except as marked to the contrary above):
-or-
____ WITHHOLD AUTHORITY to vote for all nominees listed above.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
THAT NOMINEE'S NAME IN THE LIST ABOVE.
B. IN THE DISCRETION OF THE PROXYHOLDERS with respect to any other matter which
may properly come before the Meeting. The Board of Directors is not aware of
any other matters that will be presented at the meeting.
THE SHARES VOTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER INSTRUCTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED ABOVE.
IMPORTANT: Please sign your name or names exactly as they appear on this
Proxy. When signing as attorney, executor or administrator, trustee or guardian,
please give your full title as such. If shares are held jointly, EACH holder
should sign.
____________________________________
Signature
____________________________________
Signature
DATE:_________________________, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND
RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
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