SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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
Circus Circus Enterprises, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
CIRCUS CIRCUS ENTERPRISES, INC.
2880 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 24, 1997
----------------
To the Stockholders of
Circus Circus Enterprises, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Circus
Circus Enterprises, Inc. (the "Company"), a Nevada corporation, will be held
at 10:00 A.M., PDT, on Tuesday, June 24, 1997, in the Grand Ballroom at Luxor
Hotel and Casino, 3900 Las Vegas Boulevard South, Las Vegas, Nevada for the
following purposes:
1. To elect three Class III directors, each to serve until the Annual
Meeting of Stockholders in 2000 and until his successor is elected and
qualified;
2. To approve amendments to the Company's 1989 and 1993 stock option
plans and 1991 stock incentive plan;
3. To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as independent auditors of the Company to examine and report on its
financial statements for the fiscal year ending January 31, 1998; and
4. To transact such other business as may properly be brought before the
meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on April 25, 1997 are
entitled to notice of, and to vote at, the meeting or any adjournment(s)
thereof.
Whether or not you plan to be present at the meeting, you are requested to
complete, sign and return the enclosed proxy so that your shares will be
represented. The giving of such proxy will not affect your right to vote in
person should you later decide to attend the meeting. Please return your proxy
promptly in the enclosed envelope which requires no postage if mailed within
the United States. YOUR ATTENTION IS DIRECTED TO AN ADMISSION TICKET FOR THE
MEETING WHICH IS INCLUDED IN THE ACCOMPANYING PROXY STATEMENT.
By Order of the Board of Directors,
/s/ Clyde T. Turner
Clyde T. Turner
Chairman of the Board
Las Vegas, Nevada
April 30, 1997
CIRCUS CIRCUS ENTERPRISES, INC.
2880 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 24, 1997
This Proxy Statement is furnished to stockholders of Circus Circus
Enterprises, Inc. (the "Company"), a Nevada corporation, in connection with
the solicitation of proxies on behalf of the Board of Directors of the Company
for use at the Annual Meeting of Stockholders of the Company to be held in the
Grand Ballroom at Luxor Hotel and Casino, 3900 Las Vegas Boulevard South, Las
Vegas, Nevada, on Tuesday, June 24, 1997, and at any and all adjournments
thereof, for the purpose of considering and acting upon the matters referred
to in the preceding Notice of Annual Meeting and more fully discussed below.
This Proxy Statement and the accompanying form of proxy were first mailed to
stockholders of the Company entitled to notice of, and to vote at, the meeting
on or about April 30, 1997.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock issued and outstanding is necessary to constitute a
quorum at the meeting. Shares represented at the meeting in person or by proxy
but not voted will nevertheless be counted for purposes of determining the
presence of a quorum. Accordingly, abstentions and broker non-votes (i.e.,
shares as to which a broker or nominee has indicated that it does not have
discretionary authority to vote) on a particular matter, including the
election of directors, will be treated as shares that are present and entitled
to vote for purposes of determining the presence of a quorum but will be
treated as not voted for purposes of determining the decision of stockholders
with respect to such matter. Directors will be elected by a plurality of the
votes cast. Only votes cast for a nominee will be counted, except that proxies
in the accompanying form which are properly executed, duly returned to the
Company and not revoked will be voted for the three nominees named therein in
the absence of instructions to the contrary. Approval of amendments to the
Company's 1989 and 1993 stock option plans and 1991 stock incentive plan
(Proposal 2) and ratification of the appointment of Arthur Andersen LLP to
examine and report on the Company's financial statements for the fiscal year
ending January 31, 1998 (Proposal 3) each requires the affirmative vote of a
majority of the votes cast with respect to such proposal, assuming that a
quorum (determined in the manner described above) is present or represented at
the meeting.
Proxies in the accompanying form which are properly executed, duly returned
to the Company and not revoked will be voted in accordance with the
instructions therein. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, SUCH
PROXIES WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES NAMED IN THE
PROXY AND IN FAVOR OF PROPOSALS 2 AND 3. No matter is expected to be
considered at the meeting other than the proposals set forth in the
accompanying Notice of Annual Meeting, but if any other matters are properly
brought before the meeting for action, it is intended that the persons named
in the proxy and acting thereunder will vote in accordance with their
discretion on such matters. The presence at the meeting of a stockholder will
not revoke his proxy. However, a proxy may be revoked at any time before it is
voted by written notice to the Company, addressed to Yvette E. Landau,
Secretary, at the
principal offices of the Company or by giving written notice to the Company at
the meeting; however, a revocation shall not be effective until such written
notice has been received by the Company and a revocation shall not affect a
vote on any matter cast prior to such receipt.
RECORD DATE AND SHARES OUTSTANDING
The close of business on April 25, 1997 has been fixed as the record date
for the determination of stockholders entitled to receive notice of, and to
vote at, the meeting. The stock transfer books will not be closed. At the
close of business on the record date, there were issued and outstanding
94,862,033 shares of the Company's Common Stock. At the meeting, each
stockholder entitled to vote at the meeting will be entitled to cast one vote
in person or by proxy for each share of Common Stock held by such stockholder.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 25, 1997 regarding
each person known to the Company to beneficially own more than five percent of
its Common Stock.
APPROXIMATE
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
---------------- ------------------ -----------
Michael S. Ensign................................ 6,501,933(1) 6.85%
2880 Las Vegas Blvd. South
Las Vegas, Nevada 89109
William A. Richardson............................ 6,457,807(2) 6.81%
2880 Las Vegas Blvd. South
Las Vegas, Nevada 89109
FMR Corp......................................... 11,846,150(3) 12.49%
82 Devonshire Street
Boston, Massachusetts 02109-3614
J.P. Morgan & Co., Incorporated.................. 11,466,325(4) 12.09%
60 Wall Street
New York, New York 10260
- --------
(1) On April 25, 1997, all of these shares were owned by Mr. Ensign who had
sole voting and investment power with respect thereto.
(2) On April 25, 1997, all of these shares were owned by Mr. Richardson who
had sole voting and investment power with respect thereto.
(3) Reflects the number of shares beneficially owned by FMR Corp. as set forth
in its Schedule 13-G dated February 14, 1997, including 64,800 shares as
to which sole voting power was reported and 11,846,150 shares as to which
sole dispositive power was reported.
(4) Reflects the number of shares beneficially owned by J.P. Morgan & Co.,
Incorporated as set forth in its Schedule 13-G dated March 31, 1997,
including 7,698,470 shares as to which sole voting power was reported and
63,615 shares as to which such power was reported as shared, and
11,280,010 shares as to which sole dispositive power was reported and
98,715 shares as to which such power was reported as shared.
2
MANAGEMENT
The following table sets forth information as of April 25, 1997 with respect
to the beneficial ownership of the Company's Common Stock by each director,
each nominee for election as a director at the meeting, each executive officer
named in the Summary Compensation Table appearing on page 8 and all directors
and executive officers of the Company as a group.
APPROXIMATE
NUMBER OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF CLASS
---- ------------------ -----------
Clyde T. Turner.................................. 2,417,284(1) 2.49%
Michael S. Ensign................................ 6,501,933(2) 6.85%
William A. Richardson............................ 6,457,807(3) 6.81%
Glenn W. Schaeffer............................... 768,295(4) (5)
Antonio C. Alamo................................. 349,415(6) (5)
Gregg H. Solomon................................. 108,794(7) (5)
Kurt D. Sullivan................................. 270,000(8) (5)
Richard P. Banis................................. 11,093(9) (5)
Arthur H. Bilger................................. 1,000(10) (5)
Richard A. Etter................................. 1,000(11) (5)
Michael D. McKee................................. 4,100(12) (5)
All directors and executive
officers as a group
(13 persons).................................... 16,991,095(13) 17.32%
- --------
(1) Includes 33,600 shares held in a living trust pursuant to which Mr.
Turner and his wife share voting and investment power and 100 and 250
shares, respectively, held in the individual retirement accounts of Mr.
Turner and his wife. Also includes 2,383,334 shares which Mr. Turner is
entitled to purchase pursuant to stock options which are immediately
exercisable or will become exercisable within 60 days of the record date.
(2) All of these shares are owned by Mr. Ensign who has sole voting and
investment power with respect thereto.
(3) All of these shares are owned by Mr. Richardson who has sole voting and
investment power with respect thereto.
(4) Includes 408,295 shares owned by Mr. Schaeffer who has sole voting and
investment power with respect thereto. Also includes 360,000 shares which
Mr. Schaeffer is entitled to purchase pursuant to stock options which are
immediately exercisable or will become exercisable within 60 days of the
record date.
(5) Less than 1%.
(6) Includes 269,415 shares owned by Mr. Alamo who has sole voting and
investment power with respect thereto. Also includes 80,000 shares which
Mr. Alamo is entitled to purchase pursuant to stock options which are
immediately exercisable or will become exercisable within 60 days of the
record date.
(7) Includes 38,794 shares owned by Mr. Solomon who has sole voting and
investment power with respect thereto. Also includes 70,000 shares which
Mr. Solomon is entitled to purchase pursuant to stock options which are
immediately exercisable or will become exercisable within 60 days of the
record date.
(8) Represents shares which Mr. Sullivan is entitled to purchase pursuant to
stock options which are immediately exercisable or will become
exercisable within 60 days of the record date.
(9) Includes 6,659 shares held in a living trust pursuant to which Mr. Banis
and his wife share the voting and investment power. Also includes 4,434
shares held in trust by Mr. Banis' wife for their children, as to which
she has sole voting and investment power.
3
(10) All of these shares are owned by Mr. Bilger who has sole voting and
investment power with respect thereto.
(11) All of these shares are held in a living trust pursuant to which
Mr. Etter and his wife share the voting and investment power.
(12) All of these shares are owned by Mr. McKee who shares with his wife the
voting and investment power with respect thereto.
(13) Includes information for the individuals serving as directors and
executive officers of the Company as of April 25, 1997. The number of
shares beneficially owned by such group on such date includes 3,258,334
shares which may be acquired pursuant to options which are immediately
exercisable or will become exercisable within 60 days of the record date.
----------------
4
ELECTION OF DIRECTORS
In accordance with the Company's Bylaws, as amended, the Board of Directors
of the Company is divided into three (3) classes, with the total number of
directors established from time to time by resolution of the Board of
Directors at not less than six (6) nor more than eleven (11) and the
respective numbers of directors in the classes being established from time to
time by resolution of the Board such that at least one-fourth of the directors
are elected annually. The current number of directors is eight (8), including
three (3) Class I directors, two (2) Class II directors and three (3) Class
III directors. Each class serves three years, with the terms of office of the
respective classes expiring in successive years. The term of office of the
Class III directors expires at the Company's 1997 Annual Meeting of
Stockholders. Accordingly, at the meeting, three (3) Class III directors are
to be elected, with each member to serve a three (3) year term until the 2000
Annual Meeting of Stockholders and until his successor is elected and shall
have qualified. The three nominees named below, all of whom are presently
directors of the Company, are management's nominees for election as Class III
directors and, except as indicated in the next paragraph, the proxies
solicited by management will be voted for such nominees in the absence of
instructions to the contrary.
Management has no reason to believe that any of its nominees will be unable
or unwilling to serve if elected to office and, to the knowledge of
management, each of its nominees intends to serve the entire term for which
election is sought. However, should any nominee of management become unable or
unwilling to accept nomination or election as a director of the Company, the
proxies solicited by management will be voted for the election in his stead of
such other person as management may recommend.
NOMINEES AND DIRECTORS
Information with respect to each nominee and each of the Company's directors
who will continue to serve in that capacity following the meeting is set forth
in the following table:
DIRECTOR
NOMINEE OR DIRECTOR SINCE
------------------- --------
CLASS I--DIRECTORS ELECTED TO SERVE UNTIL THE 1998 ANNUAL MEETING OF
STOCKHOLDERS:
Richard P. Banis 1996
Mr. Banis, 52, was President of the Company from August 1988 un-
til he retired in July 1991. Until his retirement, Mr. Banis was
also the Company's Chief Operating Officer and a member of the
Company's Board of Directors, positions he had held since
September 1984 and December 1983, respectively. He was also the
Chief Accounting Officer and Chief Financial Officer of the Com-
pany from June 1981 and January 1984, respectively, through Au-
gust 1984. Mr. Banis, who has held his current position on the
Company's Board of Directors since October 14, 1996, is also a
member of the Compliance Review Committee of the Company's Board
of Directors.
Arthur H. Bilger 1997
Mr. Bilger, 44, a private investor, was President and Chief Oper-
ating Officer of New World Communications Group Incorporated, a
television broadcasting and production company, for a period of
two years until January 1997. From 1990 until he joined New
World, Mr. Bilger was a principal of Apollo Advisors, L.P. and
Lion Advisors, L.P., entities engaged in the investment of capi-
tal in acquisitions and corporate restructurings. Mr. Bilger, who
previously served on the Company's Board of Directors from 1983
until 1989 and has held his current position on the Board since
February 28, 1997, is also a member of the Board's Executive,
Compensation and Directors' Nominating Committees.
5
DIRECTOR
NOMINEE OR DIRECTOR SINCE
------------------- --------
Richard A. Etter 1996
Mr. Etter, 58, was Chairman of the Board and Chief Executive Of-
ficer of Bank of America--Nevada for a period of more than five
years prior to his retirement on May 1, 1996, after 30 years with
the bank. Mr. Etter, who has been a member of the Company's Board
of Directors since October 14, 1996, is also a member of the Au-
dit and the Compliance Review Committees of the Company's Board
of Directors. Mr. Etter is an advisory director of Bank of Ameri-
ca--Nevada.
CLASS II--DIRECTORS ELECTED TO SERVE UNTIL THE 1999 ANNUAL MEETING OF
STOCKHOLDERS:
Clyde T. Turner 1993
Mr. Turner, 59, has been Chief Executive Officer of the Company
since February 24, 1994 and Chairman of the Board of the Company
since July 8, 1994. From February 19, 1993 until June 1, 1995 he
also served as President of the Company and from February 19,
1993 until March 22, 1994, he served as the Company's Chief Fi-
nancial Officer. Mr. Turner is also a member of the Executive and
the Directors' Nominating Committees of the Company's Board of
Directors. Prior to joining the Company, Mr. Turner was Executive
Vice President, Chief Financial Officer and Treasurer of Mirage
Resorts, Incorporated (formerly Golden Nugget, Inc.) from March
1979 to October 1992. Previously, he was a founding and Managing
Partner and Director of Nevada's first state-wide accounting firm
from December 1966 through February 1979 specializing in con-
struction, banking and governmental clients and was concurrently
a member of the Nevada Gaming Commission from 1970 to 1973,
authoring a major revision to the Commission's regulations gov-
erning the internal controls and procedures of casinos. He also
serves as a Director and First Vice President of the Boys and
Girls Club of Las Vegas Foundation.
William A. Richardson 1995
Mr. Richardson, 50, has been Executive Vice President and a mem-
ber of the Board of Directors of the Company since June 1, 1995.
For a period of more than five years prior to assuming his pres-
ent positions with the Company, Mr. Richardson was involved in an
executive capacity in the management and operations of the Gold
Strike Entities which were acquired by the Company on June 1,
1995.
CLASS III--NOMINEES FOR ELECTION TO SERVE UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS:
Michael S. Ensign 1995
Mr. Ensign, 59, has been Vice Chairman of the Board and Chief Op-
erating Officer of the Company since June 1, 1995. For a period
of more than five years prior to assuming his present positions
with the Company upon its acquisition of the Gold Strike Enti-
ties, Mr. Ensign was involved in an executive capacity in the
management and operations of the Gold Strike Entities. Previous-
ly, Mr. Ensign was employed by the Company for a period of 10
years and held the position of Chief Operating Officer at the
time of his departure from the Company in 1984 to devote his full
time to the Gold Strike Entities. Mr. Ensign is a member of the
Executive and the Directors' Nominating Committees of the
Company's Board of Directors.
6
DIRECTOR
NOMINEE OR DIRECTOR SINCE
------------------- --------
Glenn W. Schaeffer 1996
Mr. Schaeffer, 43, has been President, Chief Financial Officer
and Treasurer of the Company since June 1, 1995 and a member of
the Board of Directors since March 4, 1996. From 1993 until the
Company's acquisition of the Gold Strike Entities on June 1,
1995, Mr. Schaeffer was involved in an executive capacity in the
management and operations of the Gold Strike Entities. Prior
thereto, Mr. Schaeffer was President of the Company from June
1991 until February 1993 and Chief Financial Officer and a direc-
tor of the Company from 1984 until February 1993.
Michael D. McKee 1996
Mr. McKee, 51, has been Executive Vice President of The Irvine
Company, a real estate development and investment company, since
April 1994 and Chief Financial Officer since December 1996. Prior
to joining The Irvine Company, Mr. McKee was the Managing Partner
of the Orange County, California office of the law firm of Latham
& Watkins, of which he was a partner from January 1986 to March
1994. Mr. McKee, who has been a member of the Company's Board of
Directors since November 30, 1996, is also a member of the Audit
and the Compensation Committees of the Company's Board of Direc-
tors. Mr. McKee is also a director of Health Care Property In-
vestors, Inc., Irvine Apartment Communities, Inc. and Realty In-
come Corporation.
EXECUTIVE OFFICERS OTHER THAN NOMINEES AND DIRECTORS
Antonio C. Alamo, 55, has been a Senior Vice President--Operations of the
Company since June 1, 1995. Prior to assuming his current position with the
Company, Mr. Alamo was from January 1, 1995 involved in the management and
operations of the Gold Strike Entities. Previously, Mr. Alamo was the
Executive Vice President and Chief Operating Officer of MGM Grand Hotel,
Casino and Theme Park from July 1994 to December 1994 and its Senior Vice
President and General Manager from January 1992 to July 1994.
Gregg H. Solomon, 39, has been a Senior Vice President--Operations of the
Company since June 1, 1995. Prior to assuming his current position with the
Company, Mr. Solomon was for a period of more than five years involved in the
management and operations of the Gold Strike Entities, most recently as
Director of Operations for the Gold Strike Entities and General Manager of the
Gold Strike Hotel & Gambling Hall.
Kurt D. Sullivan, 45, has been a Senior Vice President--Operations of the
Company since June 1, 1995 and was a member of the Board of Directors from
February 24, 1994 until November 30, 1996. From February 24, 1994 until he
assumed the position of Senior Vice President--Operations, Mr. Sullivan was an
Executive Vice President and Chief Operating Officer of the Company. Prior
thereto, Mr. Sullivan, who has been with the Company for more than 15 years,
held a number of other positions, most recently, as the general manager at
Circus Circus--Las Vegas.
Yvette E. Landau, 40, has been General Counsel and Secretary of the Company
since June 1996. From January 1993 until she assumed her current positions,
Ms. Landau served as Associate General Counsel of the Company. From 1984 until
she joined the Company in 1993, Ms. Landau was engaged in the private practice
of law in Phoenix, Arizona as a partner in the law firm of Snell & Wilmer.
Les Martin, 40, has been Corporate Controller of the Company since November
1994. He joined the Company in April 1984 and, until he assumed his present
position, was employed as Manager of Financial Reports. Mr. Martin is a
certified public accountant and, prior to joining the Company, was employed
with a national public accounting firm.
7
MANAGEMENT REMUNERATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to the
Company's Chief Executive Officer and each of the Company's six other most
highly compensated officers during the year ended January 31, 1997
(collectively the "named executive officers") for the fiscal years ended
January 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- --------------------- ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ LTIP COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) ($) SARS(#) PAYOUTS($) ($)
--------- ---- --------- -------- ------------ ---------- ---------- ---------- ------------
Clyde T. Turner 1997 826,667 540,410 0 0 0 0 80,543(3)
Chairman of the Board 1996 800,000 920,240 0 0 2,000,000(2) 0 39,420
and Chief Executive 1995 802,120 0 0 0 1,500,000(4) 0 39,420
Officer
Michael S. Ensign(5) 1997 645,833 422,195 0 0 0 0 0
Vice Chairman of the 1996 416,666 479,292 0 0 0 0 2,367
Board and Chief 1995 -- -- -- -- -- -- --
Operating Officer
Glenn W. Schaeffer(5) 1997 620,000 405,307 0 0 0 0 26,421(6)
President, Chief 1996 400,000 460,120 0 0 900,000 0 102,900
Financial Officer and 1995 -- -- -- -- -- -- --
Treasurer
William A.
Richardson(5) 1997 645,833 422,195 0 0 0 0 0
Executive Vice 1996 416,666 479,292 0 0 0 0 2,167
President 1995 -- -- -- -- -- -- --
Antonio C. Alamo(5) 1997 400,000 400,000 0 0 50,000 0 41,396(7)
Senior Vice President- 1996 266,667 266,304 0 0 200,000 0 25,129
Operations 1995 -- -- -- -- -- -- --
Gregg H. Solomon(5) 1997 400,000 400,000 0 0 50,000 0 0
Senior Vice President- 1996 266,667 266,304 0 0 200,000 0 0
Operations 1995 -- -- -- -- -- -- --
Kurt D. Sullivan 1997 400,000 400,000 0 0 50,000 0 15,642(8)
Senior Vice President- 1996 466,666 266,304 0 0 0 0 17,032
Operations 1995 600,000 0 0 0 465,000(9) 0 14,782
- --------
(1) During each of the years ended January 31, 1997, 1996 and 1995, certain
of the individuals named in column (a) received personal benefits not
reflected for such years in the respective amounts set forth for such
individual in columns (c), (d) and (e), the dollar value of which did not
for any of such individuals for any of such years exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported for such
individual in columns (c) and (d) for such year.
(footnotes continued on page 9)
8
(2) Mr. Turner paid the Company a purchase price of $1 per share, or an
aggregate of $2,000,000, in consideration for the Company's grant of the
option to purchase these shares.
(3) Of this amount, $3,825 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$71,535 represents the present value (as more fully described in Note 10)
of the non-term portion of the premium paid with respect to such split-
dollar policy, and $5,183 represents disability insurance premiums.
(4) Includes both an original option for 450,000 shares and a replacement
option for the same number of shares which was issued in connection with
a repricing of options pursuant to which Mr. Turner surrendered the
original 450,000-share option. Also includes a replacement option for
600,000 shares which was issued in connection with the aforementioned
repricing of options pursuant to which an option for 600,000 shares
received by Mr. Turner in fiscal 1994 was surrendered.
(5) This individual was not employed by the Company during the period from
February 1, 1994 through May 31, 1995.
(6) Of this amount, $1,088 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$19,925 represents the present value (as more fully described in Note 10)
of the non-term portion of the premium paid with respect to such split-
dollar policy, and $5,408 represents disability insurance premiums.
(7) Of this amount, $1,480 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$32,124 represents the present value (as more fully described in Note 10)
of the non-term portion of the premium paid with respect to such split-
dollar policy, and $7,792 represents disability insurance premiums.
(8) Of this amount, $962 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$13,207 represents the present value (as more fully described in Note 10)
of the non-term portion of the premium paid with respect to such split-
dollar policy, and $1,473 represents disability insurance premiums.
(9) Represents a net increase during the year of only 150,000 shares. The
balance of these shares are covered by options granted to Mr. Sullivan
upon his surrender for cancellation of other options to purchase an
aggregate of 315,000 shares.
(10) The present value of the premium paid by the Company on the non-term
portion of each of the split-dollar life insurance policies referred to
in Notes 3, 6, 7 and 8, above, represents a value equivalent to the
interest-free use of such premium over the period from the date of
payment of such premium to the earliest date the Company is expected to
receive a refund of such premium, based on an interest rate of 8.2% per
annum. For fiscal 1996 and fiscal 1995, the amounts reported include the
entire premium paid.
9
OPTIONS GRANTED IN THE LAST FISCAL YEAR
The following table provides information related to options to purchase the
Company's Common Stock granted to the named executive officers during the
fiscal year ended January 31, 1997. The Company has never granted any stock
appreciation rights.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- -------------------------------------------------------------------- ---------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE(2) EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE(3) 5% ($) 10% ($)
---- ---------- ------------ -------- ---------- ---------- ----------
Clyde T. Turner......... 0 N/A N/A N/A N/A N/A
Michael S. Ensign....... 0 N/A N/A N/A N/A N/A
Glenn W. Schaeffer...... 0 N/A N/A N/A N/A N/A
William A. Richardson... 0 N/A N/A N/A N/A N/A
Antonio C. Alamo........ 50,000 15.2 32.875 12/17/06 1,033,746 2,619,714
Gregg H. Solomon........ 50,000 15.2 32.875 12/17/06 1,033,746 2,619,714
Kurt D. Sullivan........ 50,000 15.2 31.000 7/29/06 974,787 2,470,300
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(1) Illustrates the value that might be realized upon the exercise of an
option immediately prior to the expiration of its term, assuming specified
compounded rates of appreciation in the value of the Company's Common
Stock over the term of the option. Assumed rates of appreciation are not
necessarily indicative of future stock performance.
(2) Options may be exercised with cash, other shares of the Company's Common
Stock or a combination of cash and such shares at the discretion of the
committee which administers the Company's stock option plans.
(3) Options are subject to termination prior to their stated expiration dates
in certain instances relating to termination of employment.
OPTION EXERCISES IN LAST FISCAL YEAR
The following table provides information related to options to purchase the
Company's Common Stock exercised by the named executive officers during the
fiscal year ended January 31, 1997 and the number and value of options to
purchase such Common Stock held as of the end of such fiscal year. The Company
does not have any outstanding stock appreciation rights.
10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END(#) SARS AT FY-END($)(2)
SHARES ACQUIRED ------------------------- -------------------------
NAME ON EXERCISE(#) VALUE REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------------- ----------- ------------- ----------- -------------
Clyde T. Turner......... 0 N/A 1,566,667 1,483,333 16,850,002 10,599,998
Michael S. Ensign....... 0 N/A 0 0 N/A N/A
Glenn W. Schaeffer...... 0 N/A 180,000 720,000 1,295,000 5,180,000
William A. Richardson... 0 N/A 0 0 N/A N/A
Antonio C. Alamo........ 0 N/A 40,000 210,000 400,000 1,718,750
Gregg H. Solomon........ 10,000 116,875 30,000 210,000 300,000 1,718,750
Kurt D. Sullivan........ 0 N/A 265,000 100,000 3,710,000 912,500
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(1) Represents, with respect to each share purchased, the market value of such
share on the date of purchase (based on the average of the reported high
and low sale prices for the Common Stock on the New York Stock Exchange on
the date of exercise), less the exercise price paid for such share.
(2) Represents, with respect to each share, the closing price for the Common
Stock on the New York Stock Exchange on January 31, 1997, less the
exercise price payable for such share (and, in the case of options to
purchase 2,000,000 shares for which Mr. Turner paid a $2,000,000 purchase
price, less the purchase price paid for such option).
COMPENSATION OF DIRECTORS
The directors of the Company who are not otherwise employees of the Company
receive cash compensation for their services as follows: (i) $30,000 per year;
(ii) $1,500 for each meeting of the Board of Directors attended; and
(iii) $1,000 ($1,500 in the case of the committee chairman) for each meeting
of a committee of the Board attended. All of the Company's directors are
entitled to reimbursement of the out-of-pocket expenses incurred in attending
Board and committee meetings.
Pursuant to the Company's 1991 Stock Incentive Plan (the "1991 Plan"), each
director of the Company who is not an employee of the Company is entitled to
receive on the date of the meeting and annually on the date of each subsequent
annual meeting of stockholders during the term of the 1991 Plan following
which he continues to serve as a director of the Company, as a formula award,
an option to purchase 10,000 shares of the Company's Common Stock. The
exercise price per share for each option granted as a formula award is the
average of the Fair Market Values (as defined) for the fifth (5th) through the
ninth (9th) "business days" following the date of grant. For purposes of the
preceding sentence, "Fair Market Value" is defined in the 1991 Plan as the
mean of the high and low per share trading prices for the Common Stock as
reported in The Wall Street Journal for New York Stock Exchange Composite
Transactions. A formula award becomes exercisable when, and only if, the
optionee continues to serve as a director until the first annual meeting of
the Company's stockholders held following the year in which the award is
granted. Unless forfeited in accordance with the terms of the 1991 Plan, a
formula award becomes exercisable as to 40% of the shares subject thereto
after one year, as to 70% of the shares subject thereto after two years, and
as to 100% of the shares subject thereto after three
11
years and, unless earlier exercised or forfeited, remains exercisable for a
period of ten years from the date of the grant.
Effective April 25, 1997, the Company terminated a Retirement Plan for
Outside Directors which had been adopted in 1995. The purpose of the plan was
to provide directors of the Company who were not employees of the Company with
post-retirement benefit payments in recognition of their service to the
Company and to ensure that the overall compensation arrangements for
nonemployee directors were adequate to attract and retain highly qualified
individuals to serve on the Company's Board. Effective April 25, 1997, the
Company also terminated a consulting plan adopted during the prior fiscal year
pursuant to which an eligible director would be entitled to receive an annual
fee of $20,000 for up to five years following his retirement from the Board
for consulting services to be rendered to the Company following such
retirement. As a result of the termination of the aforementioned plans, none
of the Company's current or future directors will be entitled to receive
retirement benefits or consulting fees pursuant to either plan. Carl F. Dodge,
William N. Pennington and Arthur M. Smith (the "Compensated Directors") each
retired from the Board during the fiscal year ended January 31, 1997 and prior
to the termination of either plan. Upon their retirement from the Board, the
Compensated Directors each became entitled to receive a retirement benefit at
the rate of $20,000 per annum plus the annual fee payable to eligible
directors pursuant to the consulting plan. The retirement benefit was payable
based on the number of years of service, and, in the case of service of more
than ten years, for life. Upon the death of a Compensated Director prior to
his receipt of the annual retirement benefit for the shorter of 10 years or
the number of years of his service, his surviving spouse was entitled to
receive the benefit for a period of up to 10 years. In April 1997, the Company
secured the agreement of each of the Compensated Directors to accept a lump
sum cash payment ($200,608 to Mr. Dodge, $293,320 to Mr. Pennington and
$277,501 to Mr. Smith) in full settlement of its obligations to such
individuals under the plans. Each payment represented the actuarial present
value of the Company's accrued and unpaid obligation with respect to the payee
(including the aforementioned right of his spouse, should she survive him)
plus 25% and 10% premiums with respect to the retirement and consulting
components, respectively, to compensate the payees for mortality bias, in
accordance with the recommendation of the Company's compensation consultant.
EMPLOYMENT AGREEMENTS
Effective June 1, 1995, the Company entered into an employment agreement
with each of the named executive officers. Each such employment agreement
provides for an initial base salary (in the cases of Clyde T. Turner, Michael
S. Ensign, Glenn W. Schaeffer and William A. Richardson, with a mandatory
increase of 5% per year during the term of the agreement) plus any
discretionary increases as may be determined by the Board of Directors. In
addition, each such agreement provides for the employee's eligibility to
receive an annual bonus under the bonus plan described under "Executive
Officers Bonus Plan," below, established by the Company for its senior
executive officers to provide for the payment of bonus compensation based upon
financial or other performance criteria which is intended to conform to the
requirements that apply to "qualified performance based compensation" under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"). Each agreement further provides that the targeted annual bonus
shall not be less than 100% of the employee's then current base salary.
Additionally, each agreement provides that upon the termination of employment
by the employee upon the occurrence of certain events, including a "Change in
Control" or for other "Good Reason" or by the Company without "Cause," as each
such term is defined in the agreement (each, a "Designated Termination") or
the Company's failure to consent to any automatic one-year extension of
12
the agreement (or any automatic three-year extension in the case of Mr.
Turner's agreement), the Company will be obligated to pay the employee's then-
current base salary and targeted bonus (plus any other amounts due to, or for
the benefit of, the employee) for the greater of the remainder of the
agreement's then-current term or a period of 12 months (or a period of 36
months in the case of Mr. Turner's agreement) and all options to purchase the
Company's Common Stock held by the employee will become exercisable
immediately.
Mr. Turner's employment agreement provides for his employment as the
Company's Chairman of the Board and Chief Executive Officer for a current term
which expires on May 31, 1998, with subsequent automatic three-year renewal
terms subject to early termination by either Mr. Turner or the Company with
six months' notice prior to renewal. The agreement also provides for a current
base salary and a current annual target bonus in the amount of $840,000 each,
increasing to $882,000 effective June 1, 1997.
Mr. Ensign's employment agreement provides for his employment as the
Company's Vice Chairman of the Board and Chief Operating Officer for a current
term which expires on May 31, 1998, with subsequent one-year renewal terms,
subject to early termination by either Mr. Ensign or the Company with six
months' notice prior to renewal. The agreement also provides for a current
base salary and a current annual target bonus in the amount of $656,250 each,
increasing to $689,063 effective June 1, 1997.
Mr. Schaeffer's employment agreement provides for his employment as the
Company's President, Chief Financial Officer and Treasurer for a current term
which expires on May 31, 1998, with subsequent one-year renewal terms, subject
to early termination by either Mr. Schaeffer or the Company with six months'
notice prior to renewal. The agreement also provides for a current base salary
and a current annual target bonus in the amount of $630,000 each, increasing
to $661,500 effective June 1, 1997.
Mr. Richardson's employment agreement provides for his employment as the
Company's Executive Vice President for a current term which expires on May 31,
1998, with subsequent one-year renewal terms, subject to early termination by
either Mr. Richardson or the Company with six months' notice prior to renewal.
The agreement also provides for a current base salary and a current annual
target bonus in the amount of $656,250 each, increasing to $689,063 effective
June 1, 1997.
Mr. Alamo's employment agreement provides for his employment as a Senior
Vice President--Operations of the Company for a current term which expires on
May 31, 1998, with subsequent one-year renewal terms, subject to early
termination by either Mr. Alamo or the Company with six months' notice prior
to renewal. Mr. Alamo's employment agreement provides for a current base
salary and a current annual target bonus in the amount of $400,000 each.
Mr. Solomon's employment agreement provides for his employment as a Senior
Vice President--Operations of the Company for a current term which expires on
May 31, 1998, with subsequent one-year renewal terms, subject to early
termination by either Mr. Solomon or the Company with six months' notice prior
to renewal. Mr. Solomon's employment agreement provides for a current base
salary and a current annual target bonus in the amount of $400,000 each.
Mr. Sullivan's employment agreement provides for his employment as a Senior
Vice President--Operations of the Company for a current term which expires on
May 31, 1998, with subsequent one-year renewal terms, subject to early
termination by either Mr. Sullivan or the Company with six months' notice
prior to renewal. The agreement also provides for a current base salary and a
current annual target bonus in the amount of $400,000 each.
EXECUTIVE OFFICER BONUS PLAN
The Company has an Executive Officer Bonus Plan (the "Bonus Plan") which was
adopted by the Board of Directors on March 19, 1995 and approved by the
Company's stockholders on June 22, 1995. The Bonus
13
Plan was adopted for the purpose of implementing the bonus compensation
provisions of the Company's employment agreements with its officers, including
the ones described under "Employment Agreements", above.
The Bonus Plan is a performance bonus plan which is designed to provide
certain senior executives with incentive compensation based upon the
achievement of previously established performance goals. The Bonus Plan is
intended to provide an incentive for superior work and to motivate
participating officers toward even higher achievement and business results, to
tie their goals and interests to those of the Company and its stockholders and
to enable the Company to attract and retain highly qualified executive
officers. Executive officers at the level of vice president or above may be
eligible to participate in the Bonus Plan. Prior to, or at the time of,
establishment of the performance objectives for a performance period, which
will generally be the Company's fiscal year, the Committee designated under
the Bonus Plan (initially the Compensation Committee (the "Committee")) will
designate the specific executive officers who will participate in the Bonus
Plan for such performance period. Messrs. Turner, Ensign, Richardson and
Schaeffer were designated to participate in the Bonus Plan for the fiscal year
of the Company ended January 31, 1997.
The Bonus Plan is designed to comply with Section 162(m) of the Internal
Revenue Code, which limits the tax deductibility by the Company of
compensation paid to certain officers named in the compensation tables of its
proxy statement to $1,000,000 in any fiscal year of the Company. At the
beginning of each performance period and subject to the requirements of
Section 162(m), the Committee will establish performance goals, specific
performance objectives and objectively determinable computation formulae or
methods for determining each participant's bonus under the Bonus Plan for such
performance period. The performance goals may include any one or more of the
following corporate business criteria: pretax income, operating income, cash
flow, earnings per share, return on equity, return on invested capital or
assets, cost reductions and savings, return on revenues, or productivity. In
addition, to the extent consistent with the goal of providing for
deductibility under Section 162(m), performance goals may include a
participant's attainment of personal objectives with respect to any of the
foregoing performance goals or implementing policies and plans, negotiating
transactions and sales, developing long-term business goals or exercising
managerial responsibility.
At or after the end of each performance period, the Committee is required by
the terms of the Bonus Plan to certify in writing whether the previously
established performance goals and objectives have been satisfied in such
performance period. The actual bonus award for any participant for such
performance period shall then be determined based upon the previously
established computation formulae or methods. In no event will any bonus award
for any plan year exceed the lesser of 150% of the participant's annual base
salary as in effect at the beginning of the plan year or $1,500,000. The
Committee has no discretion to increase the amount of any participant's bonus
as so determined, but may reduce the amount of, or totally eliminate, such
bonus if the Committee determines, in its absolute and sole discretion, that
such a reduction or elimination is appropriate in order to reflect the
participant's performance or unanticipated factors. In no event will the
aggregate amount of all bonuses payable in any plan year under the Bonus Plan
exceed 10% of the Company's average annual income before taxes during the
preceding five fiscal years of the Company.
Approved awards under the Plan are payable in cash as soon as is practicable
after the end of each performance period and after the Committee has certified
in writing that the relevant performance goals were achieved. Awards that are
otherwise payable to a participant who is not employed by the Company as of
the last day of a performance period will be prorated or eliminated pursuant
to specified provisions of the Bonus Plan. A participant will recognize
ordinary taxable income upon receipt of payments under the Bonus Plan.
14
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
INTRODUCTION
The Company's policies and procedures relating to the compensation of its
executive officers during the fiscal year ended January 31, 1997 and the
respective levels and forms of their compensation, including awards made
pursuant to the Company's stock option and stock incentive plans (collectively
the "Plans"), were, except as indicated below, the responsibility of a
Compensation Committee (the "Compensation Committee") whose members were
selected by the Board from those directors not employees of the Company or any
subsidiary of the Company. The only individuals who participated in the
deliberations of the Compensation Committee during the fiscal year ended
January 31, 1997 were Tony Coelho, then the Committee's Chairman, and Fred W.
Smith, each of whom was a member of the committee throughout the entire fiscal
year, and Arthur M. Smith, who served on the committee from the beginning of
the fiscal year until his retirement from the Board on November 30, 1996. None
of aforementioned members of the Compensation Committee, who constituted the
only persons who served on such committee during fiscal 1997, has ever been an
officer or employee of the Company.
COMPENSATION POLICIES
The Company's current policies with respect to executive compensation are as
follows:
1. To establish compensation programs designed to attract and retain
highly-qualified executives.
2. To provide motivation to the Company's executives through compensation
that is correlated to the performance of the individual and to the
performance of the Company.
3. To compensate executives in a manner that rewards both current
performance and longer-term performance.
4. To provide executives with a financial interest in the success of the
Company similar to the interests of the Company's stockholders.
Consistent with the aforementioned policies, the Company's compensation of
its executive officers during the year ended January 31, 1997 involved a
combination of salary and cash bonuses to reward short-term performance. It
also involved grants of stock options to certain of the Company's executive
officers, including three of the named executive officers other than the
Company's Chief Executive Officer, to encourage and reward longer-term
performance.
The base salary of each of the Company's named executive officers, including
that of the Chief Executive Officer, was established under the terms of an
employment agreement approved by the Board of Directors in March 1995 and
described under "Management Renumeration--Employment Agreements," and the base
salary of each of the Company's other executive officers was fixed by the
Compensation Committee without reference to any specific criteria at a level
intended to make such officer dependent for an estimated 50% of his or her
compensation on bonuses earned over the year, assuming the receipt of bonuses
approximating such officer's target bonus.
Bonus awards for fiscal 1997 to executive officers at the level of vice
president or above whose total cash compensation could exceed $1 million in
fiscal 1997 were made pursuant to the Executive Officer Bonus Plan (the "Bonus
Plan") described under "Management Remuneration--Executive Officer Bonus
Plan," which was approved by the Company's stockholders on June 22, 1995. Such
bonuses were determined in accordance with
15
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/\ DETACH AND RETAIN THIS ADMISSION TICKET /\
[CIRCUS TENT LOGO
APPEARS HERE] ADMISSION TICKET
CIRCUS CIRCUS ENTERPRISES, INC.
STOCKHOLDER NAME(S): _____________________________ 1997 Annual Meeting
(PLEASE PRINT) Tuesday, June 24, 1997
10:00 A.M. PDT
_____________________________ The Grand Ballroom
Luxor Hotel and Casino
STOCKHOLDER ADDRESS: _____________________________ 3900 Las Vegas Boulevard
South
_____________________________ Las Vegas, Nevada
If you plan to attend the Annual Meeting of Stockholders, please so
indicate by marking the appropriate box on your proxy card. Space
limitations make it necessary to limit attendance to stockholders.
Registration will begin at 9:00 A.M., PDT. "Street name" holders will
need to bring a copy of a brokerage statement reflecting stock ownership
as of April 25, 1997.
--------------
THIS ADMISSION TICKET SHOULD NOT BE RETURNED WITH YOUR PROXY BUT SHOULD
BE RETAINED AND BROUGHT WITH YOU TO THE ANNUAL MEETING. To be eligible
for a drawing for Vacation Packages at selected Circus properties, you
must attend the Annual Meeting and present this Admission Ticket at the
time of your registration.
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/\ DETACH AND RETAIN THIS ADMISSION TICKET /\
ADMISSION TICKET
1997 Annual Meeting
of
CIRCUS CIRCUS ENTERPRISES, INC.
--------------
Agenda
1. To elect three Class III directors;
2. To approve amendments to the Company's 1989 and
1993 stock option plans and 1991 stock incentive
plan;
3. To ratify the appointment of Arthur Andersen LLP
as independent auditors to examine and report on
the financial statements for the fiscal year
ending January 31, 1998; and
4. To transact such other business as may properly
be brought before the meeting or any
adjournment(s) thereof.
--------------
(See Reverse Side)
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the terms of the Bonus Plan by the adjustment of the target bonuses set forth
in the respective officers' employment agreements pursuant to a formula
established by the Compensation Committee based solely on a comparison of the
Company's operating income for the period from February 1, 1996 through
January 31, 1997 (the "Performance Period") with predetermined target levels
of operating income established for the Performance Period. Bonus awards to
executives not covered by the Bonus Plan are currently paid quarterly and, in
fiscal 1997, were determined based on the Compensation Committee's subjective
evaluation of such executives' respective levels of supervisory or management
responsibilities and individual performances, without reference to any
specific measure of corporate performance.
The Compensation Committee's awards under the Plans (which, in fiscal 1997,
consisted solely of stock options) are intended to provide executives with
increased motivation and incentive to exert their best efforts on behalf of
the Company by enlarging their personal stake in the Company's success through
the opportunity to acquire an increased stock ownership in the Company and to
benefit from appreciation in the value of the Company's stock. Awards made
pursuant to the Plans in fiscal 1997 were based on the Compensation
Committee's subjective evaluation of the respective levels of supervisory or
management responsibilities of recipients of awards and their potential
contribution to the Company's long-term success. In arriving at its decisions
regarding awards pursuant to the Plans, the Compensation Committee considers,
among other factors, the respective numbers and terms of the options already
held by the Company's executive officers. The Company's past performance was
not a factor in the Compensation Committee's awards of stock options during
fiscal 1997. In accordance with the provisions of the Plans, the Compensation
Committee issued all of the stock options granted in fiscal 1997 at exercise
prices equal to the market value of the Company's Common Stock on the date of
the grant, thus linking the value of such options to the subsequent
performance of the Company's Common Stock and thereby giving the holders of
the options an interest in the Company's performance similar to that of its
stockholders.
POLICY REGARDING DEDUCTIBILITY OF COMPENSATION FOR TAX PURPOSES--COMPLIANCE
WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to a public company for compensation over $1 million
paid to its chief executive officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limitation if certain requirements are met. The
Compensation Committee's policy during fiscal 1997 was to structure the
performance-based portion of the compensation of the Company's executive
officers in a manner that would comply with Section 162(m) whenever, in the
judgment of the Compensation Committee, to do so would be consistent with the
objectives of the compensation plan under which the compensation would be
payable. The performance-based portion of the compensation paid to the
Company's executive officers in fiscal 1997 consisted of options and cash
bonuses awarded pursuant to plans approved by the Company's stockholders and
such compensation was intended to constitute awards pursuant to such plans
which will be fully deductible under Section 162(m).
16
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of Clyde T. Turner, the Company's Chief Executive Officer
who served in such capacity throughout the year ended January 31, 1997,
consisted of salary (as specified in his employment agreement) and a cash
bonus (determined based on the target bonus specified in his employment
agreement, as adjusted in accordance with the Bonus Plan administered by the
Compensation Committee). Mr. Turner's base salary and target bonus for fiscal
1997 were specified in his existing employment agreement approved by the Board
of Directors in 1995. Such base salary and target bonus bear no specific
relationship to any particular measure of the Company's performance. The bonus
paid to Mr. Turner for fiscal 1997 was determined by adjustment of the
aforementioned target bonus pursuant to a formula established by the
Compensation Committee based solely on a comparison of the Company's operating
income for the Performance Period with predetermined target levels of
operating income established for the Performance Period. The Compensation
Committee believes that the measure of operating performance utilized in
fiscal 1997 to determine the amount of bonuses under the Bonus Plan, including
that of Mr. Turner, is more appropriate than criteria based upon the market
price of the Company's Common Stock. This view is based on the Compensation
Committee's belief that while the performance of the Company's Common Stock
over a longer period is a meaningful measure of the Company's performance,
over the period of a single fiscal year, an officer's annual compensation
should not be so closely tied to the vagaries of the stock market.
COMPENSATION COMMITTEE
Tony Coelho, Chairman
Arthur M. Smith
Fred W. Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The individuals who served as members of the Company's Compensation
Committee during fiscal 1997 were Tony Coelho, Chairman and Fred W. Smith,
each of whom served throughout the entire fiscal year, and Arthur M. Smith who
served on the committee from the beginning of the fiscal year until his
retirement from the Board on November 30, 1996. No other person served on the
Compensation Committee during the last fiscal year. None of the aforementioned
members of the Compensation Committee is an officer or other employee, or
former officer, of the Company or of any subsidiary of the Company.
Effective January 1, 1994, the Company and Scores, Inc. entered into an
agreement pursuant to which Scores, Inc. subleased 50% of the aircraft hangar
space leased by the Company from an unaffiliated third party and for which the
Company paid in 1994, 1995 and 1996 rent at a monthly base rate of $8,894,
$9,339 and $9,806, respectively, plus allocable utility costs. The agreement,
which was for a term that expired on December 31, 1996, required Scores, Inc.
to pay the Company rent at the rate of $5,000 per month. Fred W. Smith, a
director of the Company until his resignation on February 5, 1997, holds a
one-third ownership interest in Scores, Inc. The transaction was reviewed and
approved by the Audit Committee of the Company's Board of Directors, with Fred
W. Smith, then a member of the Audit Committee, abstaining.
17
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return (assuming reinvestment
of dividends) from January 31, 1992 to January 31, 1997, on the Company's
Common Stock with (i) the Standard & Poor's 500 Stock Index (the "S&P 500
Index") and (ii) the Dow Jones Industry Group (Casinos) (the "Industry
Group"). The graph assumes an investment of $100 on January 31, 1992 in each
of the Company's Common Stock, the stocks comprising the S&P 500 Index and the
stocks comprising the Industry Group.
The historical stock price performance of the Company's Common Stock shown
on the graph below is not necessarily indicative of future price performance.
The graph below shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement or any portion
hereof into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 and shall not otherwise be deemed filed under
such Acts.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[LINE GRAPH APPEARS HERE]
- ----------------------------------------------------------------------------------
1/31/92 1/31/93 1/31/94 1/31/95 1/31/96 1/31/97
- ----------------------------------------------------------------------------------
Circus Circus $100 $145 $146 $106 $126 $140
- ----------------------------------------------------------------------------------
S&P 500 100 111 125 126 174 220
- ----------------------------------------------------------------------------------
Industry Group 100 167 233 162 193 192
- ----------------------------------------------------------------------------------
Circus Circus S&P 500 Industry Group
_____ ..... -----
Source:Media General Financial Services, Inc., Richmond, Virginia.
18
INFORMATION CONCERNING COMMITTEES OF THE BOARD OF DIRECTORS
Among the current committees of the Company's Board of Directors are an
Executive Committee, an Audit Committee, a Compensation Committee, a
Directors' Nominating Committee and a Compliance Review Committee.
The Executive Committee, which held two (2) meetings during the fiscal year
ended January 31, 1997, has and may exercise all of the powers of the Board of
Directors (other than the Board's power to elect officers of the Company)
during the period between meetings of the Board of Directors except as
reserved to the Board of Directors or as delegated by the Company's Bylaws or
by the Board of Directors to another standing or special committee of the
Board or as may be prohibited by law. The current members of the Executive
Committee are Clyde T. Turner, Chairman, Michael S. Ensign and Arthur H.
Bilger.
The Audit Committee, which held seven (7) meetings during the fiscal year
ended January 31, 1997, reports periodically to the Board of Directors
concerning the functions of the committee. The functions of the Audit
Committee include (i) reviewing and making recommendations to the Board of
Directors with respect to the engagement of an independent accounting firm to
audit the Company's financial statements for the then current fiscal year;
(ii) instructing the certified public accountants to expand the scope and
extent of the annual audits of the Company into areas of any concern to the
Audit Committee, and, at its discretion, directing other special
investigations to ensure the objectivity of the financial reporting of the
Company; (iii) reviewing the reports submitted by the certified public
accountants and reporting thereon to the Board of Directors with such
recommendations as the Audit Committee may deem appropriate; (iv) meeting with
such officers and department managers of the Company as the Audit Committee
deems necessary in order to determine the adequacy of the Company's accounting
principles and financial and operating policies, controls and practices, its
public financial reporting policies and practices, and the results of the
Company's annual audit; (v) meeting periodically with members of the Company's
internal audit department and reviewing the reports of such department; (vi)
conducting inquiries into any of the foregoing, the underlying and related
facts, including such matters as the conduct of the Company's personnel, the
integrity of the Company's records, the adequacy of the procedures and the
legal and financial consequences of such facts; and (vii) retaining and
deploying such professional assistance, including outside counsel and
auditors, as the Audit Committee deems necessary or appropriate, in connection
with the exercise of its powers. The current members of the Audit Committee
are Richard A. Etter, Chairman, and Michael D. McKee.
The Compensation Committee, which held five (5) meetings during the fiscal
year ended January 31, 1997, reports periodically to the Board of Directors
concerning the functions of the committee. The Compensation Committee's
functions include (i) reviewing on a periodic basis the compensation of the
Company's officers; (ii) recommending to the Board of Directors appropriate
levels of compensation, including retirement, medical and incentive programs,
for the Company's officers; and (iii) retaining such professional consultants
or other assistance as the committee deems necessary or appropriate in
connection with the performance of its duties. The Compensation Committee's
functions also include administration of the Company's stock option and stock
incentive plans, including the issuance of stock options or other awards
pursuant to such plans. The current members of the Compensation Committee are
Michael D. McKee, Chairman, and Arthur H. Bilger.
The Directors' Nominating Committee, which held three (3) meetings during
the fiscal year ended January 31, 1997, evaluates and presents to the Board of
Directors, for its consideration, candidates to fill
19
positions on the Board of Directors. The Directors' Nominating Committee will
consider individuals recommended by stockholders. Any stockholder who wishes
to recommend a prospective nominee for the Board of Directors for the
committee's consideration may write Yvette Landau, General Counsel, Circus
Circus Enterprises, Inc., 2880 Las Vegas Boulevard South, Las Vegas, Nevada
89109. The current members of the Directors' Nominating Committee are Arthur
H. Bilger, Chairman, Michael S. Ensign and Clyde T. Turner.
The Compliance Review Committee, which held one (1) meeting during the
fiscal year ended January 31, 1997, assists the Board of Directors in the
implementation and administration of the Company's Gaming Compliance Program
which has been created for the purpose of (i) ensuring compliance with gaming
laws applicable to the business operations of the Company; (ii) advising the
Board of Directors of the Company of any gaming law compliance problems or
situations which may adversely affect the objectives of gaming control; and
(iii) performing due diligence in respect of proposed transactions and
associations. The current members of the Compliance Review Committee are
Richard P. Banis, Chairman, and Richard A. Etter.
The Board of Directors held a total of seven (7) meetings during the fiscal
year ended January 31, 1997. During such fiscal year, each director attended
75% or more of the total number of meetings of the Board and the committees of
the Board on which he served that were held during the periods he served.
CERTAIN TRANSACTIONS
For information concerning a transaction with an entity in which Fred W.
Smith, then a director of the Company, owns an interest, see "Compensation
Committee Interlocks and Insider Participation."
Circus Circus Casinos, Inc. ("CCC"), a wholly owned subsidiary of the
Company, and Lakeview Company ("Lakeview"), a Nevada general partnership of
entities owned by Michael S. Ensign, William A. Richardson and their family
members and another individual, are parties to a consulting agreement, dated
as of June 1, 1995 (the "Consulting Agreement"), pursuant to which Lakeview is
provided executive level management services with respect to its Gold Strike
Inn and Casino located near Boulder City, Nevada (the "Lakeview Property").
For such services, Lakeview is obligated to pay an annual consulting fee of
$120,000, which is intended to compensate the Company for the services
rendered by its executive officers and is subject to renegotiation if CCC
determines that the executive level of management services required pursuant
to the Consulting Agreement exceed contemplated levels. The Consulting
Agreement also obligates Lakeview to reimburse CCC for compensation or other
out-of-pocket expenses (other than the compensation of executive officers of
the Company and its subsidiaries) associated with the services provided to the
Lakeview Property pursuant to the Consulting Agreement. The purpose of the
Consulting Agreement is to compensate the Company for any time devoted by
Messrs. Ensign, Richardson or other company personnel to the Lakeview
Property, which Messrs. Ensign and Richardson elected to retain at the time of
the Company's acquisition of their interests in a group of other entities
known as the Gold Strike Entities. The Lakeview Property was retained by
Messrs. Ensign and Richardson because of their intention to transfer their
interests in the property to various members of their respective families.
Pursuant to an agreement entered into on February 28, 1997 (the "transaction
date"), the Company purchased from William Ensign, the son of Michael S.
Ensign, 38,486 shares of the Company's Common Stock on March 3, 1997. The
shares were purchased for $1,300,442, or $33.79 per share. The purchase price
represented the 20-day average of the closing prices of the Common Stock, as
reported on the New York Stock Exchange Composite Tape, during the 30 trading
days ending on the transaction date, after eliminating the five highest and
the five lowest closing prices during such period. The transaction was
reviewed and its terms approved by the Audit Committee of the Company's Board
of Directors.
During the fiscal year ended January 31, 1997, certain of the Company's
properties purchased an aggregate of $82,628 of bakery products from an entity
owned by Steve M. Pennington, the son of William N. Pennington who served as a
member of the Company's Board of Directors until October 1, 1996. The
transactions were reviewed and ratified by the Audit Committee of the
Company's Board of Directors.
20
APPROVAL OF AMENDMENTS TO THE COMPANY'S
1989 AND 1993 STOCK OPTION PLANS AND
1991 STOCK INCENTIVE PLAN
DESCRIPTION OF THE AMENDMENTS
The Board of Directors has, subject to approval of the Company's
stockholders, amended the Company's 1989 Stock Option Plan (the "1989 Plan"),
1991 Stock Incentive Plan (the "1991 Plan") and 1993 Stock Option Plan (the
"1993 Plan"), as more fully described below, in order to permit income
attributable to the exercise of options granted pursuant to such plans
following the meeting to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Internal Revenue Code of 1996, as amended
(the "Code"), and consistent with the applicable provisions of Treasury
Regulations issued pursuant to Section 162(m). Section 162(m) generally
disallows a tax deduction to a publicly owned company for compensation in
excess of $1 million paid to the company's chief executive officer or to any
of its four other most highly compensated executive officers. However,
qualifying "performance-based compensation" is not subject to the deduction
limitation imposed under Section 162(m). Amendments to the 1989 Plan, the 1991
Plan and the 1993 Plan (collectively, the "Plans") are being presented to the
Company's stockholders for approval which, if approved by stockholders, will
limit the number of shares of the Company's Common Stock for which options may
be granted to any participant in any fiscal year to 100,000 under the 1989
Plan, 200,000 under the 1991 Plan and 1,000,000 under the 1993 Plan. The text
of each amendment is set forth in Appendix A. The Board of Directors has
established the aforementioned limits at the respective levels indicated with
the intention of minimizing the risk that such limitations could contribute to
a competitive disadvantage for the Company should it, at some future date, be
competing with another company for the services of an individual whose
availability to the Company should be deemed by the Board to be important to
the Company. The foregoing limitations, which will be subject to proportional
adjustment in the event of certain changes in the Company's capitalization
(such as a stock split), are intended to permit income attributable to stock
options granted pursuant to the Plans to qualify as "performance-based
compensation" within the meaning of Section 162(m) and applicable Treasury
Regulations. A special transitional rule contained in the Treasury Regulations
permits certain plans (including the Plans) to be deemed to be in compliance
with certain Section 162(m) "performance-based compensation" requirements (as
discussed further under "Federal Tax Aspects of the Plans") during a reliance
period which ends with respect to the Plans as of the date of the meeting. As
a consequence, the aforementioned amendments to the Plans have been adopted,
and are being proposed for stockholder approval, in order to permit the income
attributable to option grants made under the Plans after the date of the
meeting to be treated as "performance-based compensation." In the absence of
such amendments, the number of shares that may be subject to options granted
to an individual under a Plan will only be limited by the number of options
from time to time available under such Plan, and any options granted pursuant
to the Plans after the date of the meeting will not satisfy the "performance-
based compensation" requirements applicable to stock option grants under the
general provisions of the Treasury Regulations. The Board's Compensation
Committee (the "Committee"), which administers each of the Plans, has informed
the Board that the Committee has made no determination as to the recipients of
or the numbers of shares to be covered by future grants under the Plans.
IF APPROVED BY STOCKHOLDERS, THE PROPOSED AMENDMENTS WILL NOT INCREASE THE
NUMBER OF SHARES AVAILABLE UNDER ANY OF THE PLANS.
THE PLANS
Each of the Plans enables the Company to grant "incentive stock options", as
defined under Section 422 of the Code and nonqualified stock options (and, in
the case of the 1991 Plan, any combination of stock options,
21
restricted stock and performance share awards). As of April 25, 1997 an
aggregate of 2,416,650 shares of the Company's Common Stock were available for
new awards pursuant to the Plans, including 43,250 shares under the 1989 Plan,
435,700 shares under the 1991 Plan (including 378,000 shares reserved for
issuance to nonemployee directors pursuant to formula awards) and 1,937,700
shares under the 1993 Plan. As of such date (i) 960,400 shares had been issued
pursuant to the 1989 Plan and 496,350 shares were reserved for issuance upon
the exercise of outstanding options under such Plan, (ii) 181,800 shares had
been issued pursuant to the 1991 Plan and 2,382,500 shares were reserved for
issuance upon the exercise of outstanding options under such Plan, and (iii)
307,050 shares had been issued pursuant to the 1993 Plan and 755,250 shares
were reserved for issuance upon the exercise of outstanding options under such
Plan. Each of the Plans provides that if a stock option expires or is
terminated, canceled or surrendered for any reason without being exercised in
full, the unpurchased shares of Common Stock which were subject to such stock
option shall be available for issuance pursuant to future grants under such
Plan.
Each of the Plans permits grants to officers and other employees of the
Company and its subsidiaries with managerial or supervisory (and, in the case
of the 1989 and 1993 Plans, professional) responsibilities and the 1989 and
1993 Plans permit grants to consultants and advisors who render bona fide
services to the Company and its subsidiaries, in each case, where the
Committee determines that such officer, employee, consultant or advisor has
the capacity to make a substantial contribution to the success of the Company.
The 1991 Plan also provides for the annual grant of an option to purchase
10,000 shares of Common Stock as a formula award to each director of the
Company who is not an employee of the Company or any subsidiary of the
Company, as more fully described under "Management Remuneration--Compensation
of Directors". The number of individuals (other than directors who receive
formula awards) who currently would be eligible to receive options pursuant to
each of the Plans is approximately 125.
Each of the Plans is administered by a committee (currently the Compensation
Committee of the Board of Directors) consisting of two (2) or more persons,
each of whom must be a member of the Board of Directors (the "Committee").
Each Plan provides that, to the extent possible, and to the extent the Board
of Directors deems it necessary or appropriate, each member of the Committee
shall be a "Non-Employee Director" (as such term is defined in Rule 16b-3
under the Securities Exchange Act of 1934) and an "Outside Director" (as such
term is defined in Treasury Regulations Section 1.162-27 promulgated under the
Code). The Board of Directors may from time to time remove members from, or
add members to, the Committee. Vacancies on the Committee, howsoever caused,
are filled by the Board of Directors. Under the terms of each of the Plans,
the Committee has the authority to determine, subject to the terms and
conditions of such Plan, the persons to whom options are granted, the number
of options granted to each optionee and the terms and conditions of each
option, including its duration.
Under each of the Plans, incentive stock options may be granted for a term
of up to five years in the case of optionees who own in excess of 10% of the
combined voting power of all classes of the Company's stock and up to ten
years, in the Committee's sole discretion, in the case of all other optionees.
Nonqualified stock options may be granted for a term of up to ten years. The
Committee currently may grant stock options pursuant to each of the Plans to
purchase such number of shares of Common Stock (subject to the aggregate
limitation set forth in such Plan) as the Committee may, in its sole
discretion, determine. In granting stock options, the Committee, on an
individual basis, may under the terms of each of the Plans vary the number of
incentive stock options or nonqualified stock options as between optionees and
may grant incentive stock options and/or nonqualified stock options to an
optionee in such amounts as the Committee may determine in its sole
discretion.
Under each of the Plans, stock options may be granted to purchase Common
Stock at not less than the fair market value of the Common Stock as of the
date of grant (or 110% of the fair market value in the case of
22
incentive stock options granted to any officer or employee holding in excess
of 10% of the combined voting power of all classes of the Company's stock as
of the date of grant). No optionee may be granted incentive stock options to
purchase Common Stock which are exercisable for the first time by such
optionee in any calendar year under all of the Company's stock option plans
(including the Plans) having an aggregate fair market value (determined as of
the respective dates of grant) which exceeds $100,000. Other than the
limitation on the number of shares which may be issued pursuant to the Plan,
there is currently no limitation on the number of nonqualified stock options
which may be granted to any optionee pursuant to any of the Plans. Pursuant to
the terms of each of the Plans, the exercise price of an option must be paid
in cash, by check, bank draft or money order, or, in the discretion of the
Committee, with Common Stock of the Company (which may be by the optionee's
delivery of previously owned shares or the withholding of shares otherwise
issuable upon the exercise of the option) having a fair market value on the
date of exercise equal to the aggregate exercise price of the shares to be so
purchased, or a combination thereof.
The purchase price and the number and kind of shares that may be purchased
upon exercise of options granted pursuant to each Plan, and the number of
shares which may be granted pursuant to each Plan, are subject to adjustment
in certain events, including any stock splits, recapitalizations and
reorganizations.
The 1991 Plan permits the Committee to issue shares of Common Stock as a
"restricted stock" award to a participant subject to the terms and conditions
imposed by the Committee. Each certificate for restricted stock will be
registered in the name of the participant and deposited, together with a stock
power endorsed in blank, with the Company. There will be established for each
restricted stock award one or more restriction periods of such length as is
determined by the Committee, provided, however, that no restriction period may
exceed ten years from the date of grant. Shares of restricted stock may not be
sold, assigned, transferred, pledged or otherwise encumbered, except as
described below, during the applicable restriction period(s). Except for such
restrictions on transfer and such other restrictions as the Committee may
impose, the participant will have all the rights of a holder of Common Stock
as to such restricted stock. The Committee, in its sole discretion, may permit
or require the payment of any cash dividends on restricted stock to be
deferred and, if the Committee so determines, reinvested in additional
restricted stock or otherwise invested. At the expiration of each restriction
period, the Company will release to the participant (or the participant's
legal representative or designated beneficiary) certificates for the
restricted stock as to which any applicable restrictions and conditions have
been satisfied. Except as provided by the Committee at the time of grant or
otherwise, upon a termination of employment for any reason during a
restriction period all shares of restricted stock still subject to restriction
will be forfeited by the participant. As of the date hereof, no restricted
stock award has been made pursuant to the 1991 Plan.
The 1991 Plan also permits the Committee to grant awards of performance
shares measured in whole or in part by one or more performance criteria
including but not limited to the value of the Company's Common Stock, the
performance of the participant and the performance of the Company, a
subsidiary, a property or another business unit. Such awards may be payable in
Common Stock, cash or both, and subject to such restrictions and conditions,
as the Committee may determine. At the time of an award of performance shares,
the Committee may, in its sole discretion, determine one or more performance
periods and performance goals to be achieved during the applicable performance
period(s), subject to such later revisions as the Committee deems appropriate
to reflect significant unforeseen events such as changes in laws, regulations
or accounting practices, and unusual or nonrecurring items or occurrences. No
performance period shall exceed ten years from the date of grant. The
Committee will be responsible for determining the extent to which performance
goals have been attained or a degree of achievement between maximum and
minimum levels in order to evaluate the level of payment to be made, if any.
As of the date hereof, no performance shares have been awarded pursuant to the
1991 Plan.
23
The last reported sale price of the Company's Common Stock on the New York
Stock Exchange on April 25, 1997 was $23 7/8.
FEDERAL TAX ASPECTS OF THE PLANS
Set forth below is a general summary of the Federal income tax consequences
associated with each of the Plans.
Incentive Stock Options. Incentive stock options granted under a Plan are
intended to qualify for the favorable income tax treatment currently accorded
"incentive stock options" as defined under Section 422 of the Code. No Federal
income tax is imposed at the time an incentive stock option is granted or
exercised, provided, generally, that such exercise occurs not later than three
months after the termination of the optionee's employment with the Company or
a subsidiary.
While ordinarily no income is required to be recognized at the time an
incentive stock option is exercised, for purposes of the alternative minimum
tax imposed by Section 55 of the Code, an incentive stock option is treated as
a nonqualified option. See "Nonqualified Options", below. Therefore, the
excess of the fair market value of the shares of Common Stock subject to the
incentive stock option, determined at the time of exercise, over the exercise
price constitutes ordinary income for purposes of the alternative minimum tax.
For purposes of the alternative minimum tax, the basis of stock acquired
through the exercise of an incentive stock option is equal to the fair market
value taken into account in determining the amount of ordinary income
recognized for alternative minimum tax purposes.
If the shares of Common Stock acquired upon the exercise of an incentive
stock option are not disposed of within (i) two years of the date of grant or
(ii) one year after the exercise of such incentive stock option, then any gain
or loss realized upon a disposition of such Common Stock ordinarily will be
treated as long-term capital gain or loss. Under such circumstances, the
Company is not entitled to a tax deduction with respect to the grant or
exercise of the incentive stock option or the disposition of the shares
received upon its exercise. The optionee's basis (for purposes of determining
the amount of gain or loss on such disposition) in the shares of Common Stock
acquired upon the exercise of an incentive stock option is equal to the
exercise price paid for such shares.
If an optionee disposes of shares of Common Stock acquired pursuant to an
incentive stock option before the expiration of either of the required holding
periods described above, then the lesser of (i) the excess of the fair market
value of the shares of Common Stock at the time of exercise over the exercise
price paid for such shares or (ii) the gain realized upon such disposition,
will be treated as ordinary income at the time of disposition. Any gain in
excess of the amount so treated as ordinary income ordinarily will be treated
as capital gain. Such gain will be taxable as long-term capital gain if the
shares of Common Stock were held for at least one year prior to the
disposition. In the event of a disposition prior to the satisfaction of the
holding period requirements, the Company, subject to any applicable
limitations, is entitled to a compensation deduction in the year the income is
recognized as income for Federal income tax purposes by the optionee equal to
the amount of ordinary income recognized by the optionee.
Nonqualified Options. Nonqualified options granted under a Plan are not
intended to qualify for the favorable Federal income tax treatment accorded to
incentive stock options under the Plan. An optionee should not recognize any
income for Federal income tax purposes at the time of the grant of any
nonqualified option under a Plan. When the nonqualified option is exercised
however, the excess of the fair market value of the shares of Common Stock
acquired pursuant to such exercise, determined at the time of exercise, over
the option price
24
will constitute ordinary income to the optionee. Subject to applicable
limitations, the Company is entitled to a corresponding income tax deduction
equal to the amount of such ordinary income for the taxable year in which the
optionee is required to recognize such income for Federal income tax purposes.
Optionees who are subject to the short-swing profits restrictions of Section
16(b) of the Securities Exchange Act or 1934, as amended, unless they elect
within 30 days of exercising a nonqualified stock option to be taxed as of the
time of such exercise (on the basis of the fair market value of the stock at
such time), are permitted to defer the calculation and imposition of the tax
on the gain realized from the exercise until the earlier of (i) the expiration
of the six-month period under Section 16(b), or (ii) the first day on which
the sale of such stock at a profit will not subject such optionee to suit
under Section 16(b).
Taxation of Restricted Stock and Performance Share Awards. In general, a
recipient of a restricted stock award or performance shares, which may be
granted under the 1991 Plan, will be governed by Section 83 of the Code. Under
Code Section 83, if shares of the Company's Common Stock are transferred under
the 1991 Plan pursuant to a restricted stock or performance share award in
connection with the performance of services, the excess, if any, of the fair
market value of the shares received over the price paid, if any, for the
shares, is included in the income of the person performing the services as
ordinary income, and the Company will generally be entitled to a corresponding
deduction for the same amount (subject to the limitations under Code Section
162(m) noted below). The income and the Company's corresponding deduction are
generally recognized as of the time the shares are transferred or, if later,
at the time the shares cease to be subject to a substantial risk of forfeiture
(or become transferable free of such risk of forfeiture). The fair market
value of the shares is generally measured at the time of transfer or, if
later, when the substantial risk of forfeiture lapses (or when the shares
become transferable free of such risk of forfeiture). Notwithstanding the
general rule regarding the timing of the recognition of income and the
corresponding deduction by the Company with respect to restricted stock or
performance share awards that are subject to a substantial risk of forfeiture,
a special election can be made by the recipient of such shares under Code
Section 83(b) which permits the recipient to include in his or her income the
excess of the fair market value of the shares as of the date of transfer, in
which case the fair market value is determined without regard to the risk of
forfeiture. An individual must make this "83(b)" election no later than 30
days after the date of the transfer. If an individual makes this election,
there is no income recognition as a result of the later lapse of the
substantial risk of forfeiture. On a disposition of the shares, the recipient
will recognize long or short term capital gain or loss depending on how long
the shares have been held and the individual's basis in the shares. The
individual's basis will be equal to the amount, if any, paid for the shares,
plus any income required to be recognized on the acquisition (or on the date
the substantial risk of forfeiture lapses). The holding period will be
measured from the date of transfer if there is no substantial risk of
forfeiture or if an "83(b)" election has been properly made. If there is a
substantial risk of forfeiture and no "83(b)" election is made, the holding
period will be measured from the date income was recognized by the recipient
of the shares on account of the lapse of the risk of forfeiture.
Taxation of Capital Gains and Ordinary Income. Presently, the maximum
Federal income tax rate for individuals applicable to long-term capital gains
is 28%, whereas the maximum Federal income tax rate for individuals applicable
to ordinary income is 39.6%. Capital losses generally are only deductible
against capital gains and, for individuals, a limited amount ($3,000 per year)
of ordinary income.
Deductibility of Executive Compensation Under the Million Dollar Cap
Provisions of the Code. Section 162(m) of the Code sets limits on the
deductibility of compensation in excess of $1,000,000 paid by publicly held
companies to certain employees (the "Million Dollar Cap"). The Internal
Revenue Service (the "IRS") has also issued Treasury Regulations which provide
rules for the application of the Million Dollar Cap deduction
25
limitations. Compensation which is treated as qualified "performance-based
compensation" under these rules is exempt from the limitations of the Million
Dollar Cap. Income recognized as ordinary compensation income on the exercise
of options granted under the Plans should be treated as qualified
"performance-based compensation" for these purposes provided the Plans meet
certain requirements, and the option grant itself complies with specific rules
applicable on a grant by grant basis. The Plans must each include a limitation
on the number of shares that may be subject to options granted to any
individual employee during a specified period which has been disclosed to the
Company's stockholders, and the Plans, containing such limitation, must be
approved by the Company's stockholders. A transitional rule permitted the
Plans to be treated as complying with, among other things, the limitation on
the number of shares that may be subject to any individual's option grants
during a specified period. The transitional rule, however, terminates, as
noted above, at the end of the reliance period which, for the Plans, is the
date of the meeting. Once amended and approved by the Company's stockholders
as described above, the Plans will comply with IRS rules generally applicable
to stock option plans under the "performance-based compensation" exception to
the Million Dollar Cap. It is the Company's intention to administer the Plans
in accordance with all applicable requirements of the Million Dollar Cap rules
to qualify option grants for the "performance-based compensation" exemption,
including administration of each of the Plans by a committee of two or more
"outside" directors (as that term is used in the applicable Treasury
Regulations) whenever, in the judgment of the committee administering the
Plans, to do so would be consistent with the objectives of the Plan pursuant
to which the options are granted. Unlike the grants of options, grants of
restricted stock awards or performance shares under the Plans, if any, will
not qualify as "performance-based compensation" for these purposes and will be
included in the remuneration that is taken into account in applying the
Million Dollar Cap limitations.
26
The following table sets forth with respect to each Plan the number of
shares of Common Stock for which stock options have been granted from the
inception of such Plan through April 30, 1997 to (i) each of the named
executive officers, (ii) all current executive officers, as a group, (iii) all
current directors who are not executive officers, as a group, (iv) each
nominee for election as a director, and (v) all employees, including all
current officers who are not executive officers, as a group. No options have
been granted under any of the Plans to any associate of any of the Company's
current directors (which includes all of management's nominees for election as
directors of the Company) or executive officers. The options reflected in the
table are not necessarily indicative of the number of options that may be
granted in the future, or the individuals to whom such options may be granted,
pursuant to the Plans.
OPTIONS GRANTED(1)
---------------------------------
1993
NAME AND POSITION 1989 PLAN 1991 PLAN PLAN
----------------- --------- --------- -------
Clyde T. Turner.......................... -- 2,100,000(2) --
Chairman and Chief Executive Officer
Michael S. Ensign........................ -- -- --
Vice Chairman of the Board and Chief
Operating
Officer; Nominee for election as a
Director
Glenn W. Schaeffer....................... 270,000 1,050,000 --
President, Chief Financial Officer and
Treasurer;
Nominee for election as a Director
William A. Richardson.................... -- -- --
Executive Vice President
Antonio C. Alamo......................... -- -- 50,000
Senior Vice President--Operations
Gregg H. Solomon......................... -- 50,000 --
Senior Vice President--Operations
Kurt D. Sullivan......................... 140,000(3) 240,000(2) 300,000(2)
Senior Vice President--Operations
Michael D. McKee......................... -- -- --
Nominee for election as a Director
All Current Executive Officers, as a
group................................... 440,000(4) 3,470,000(5) 520,000(6)
All Current Directors who are not
Executive Officers, as a group.......... 150,000 -- --
Nonexecutive Officer Employees, as a
group .................................. 1,744,750(7) 2,440,500(8) 991,250(9)
- --------
(1) Expressed in numbers of shares, and includes options which have since
expired or have been canceled or surrendered, including options
surrendered in fiscal 1995 as described in Notes (2) through (9).
(2) Options to purchase 50% of these shares were granted to replace
surrendered options to purchase the balance of these shares.
(3) Includes options for 45,000 shares granted to replace surrendered options
for 45,000 shares.
27
(4) Includes options for 52,500 shares granted to replace surrendered options
for 52,500 shares.
(5) Includes options for 1,185,000 shares granted to replace surrendered
options for 1,185,000 shares.
(6) Includes options for 235,000 shares granted to replace surrendered options
for 235,000 shares.
(7) Includes options for 568,750 shares granted to replace surrendered options
for 568,750 shares.
(8) Includes options for 782,500 shares granted to replace surrendered options
for 782,500 shares.
(9) Includes options for 165,000 shares granted to replace surrendered options
for 165,000 shares.
----------------
Certain individuals not named in the preceding table have received options
to purchase five percent or more of the total shares authorized under the 1989
Plan and/or the 1991 Plan, including options which have since expired or have
been canceled or surrendered. Such individuals, none of whom is currently a
director or officer of the Company, and the respective numbers of options
(expressed in numbers of shares) granted under each Plan for which their
grants equaled or exceeded the aforementioned five percent level are as
follows: Richard Brand, Gregg Carano, Mel Larson and James Muir (75,000 each
under the 1989 Plan, and, in the case of Mr. Muir, 165,000 under the 1991
Plan), James Herman (80,000 under the 1989 Plan), Alven Hummel (135,000 under
the 1989 Plan), Robert Price (170,000 under the 1989 Plan), Mike Sloan
(195,000 under the 1989 Plan and 150,000 under the 1991 Plan), William Paulos
(420,000 under the 1991 Plan) and Benjamin Speidel (195,000 under the 1991
Plan).
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENTS TO THE PLANS
The Company's Board of Directors has approved the amendments to the Plans.
However, such amendments will not be adopted unless the holders of at least a
majority of the shares of Common Stock present or represented at the meeting
and entitled to vote thereon are voted "FOR" approval of the amendments. The
enclosed form of proxy provides a means for stockholders to vote for the
amendments to the Plans, to vote against such amendments, or to abstain from
voting with respect to the amendments. Each properly executed proxy received
in time for the meeting will be voted as specified therein. If a stockholder
executes and returns a proxy but does not specify otherwise, the shares
represented by such stockholder's proxy will be voted FOR approval of the
amendments to the Plans.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENTS TO THE PLANS.
28
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending January 31, 1998. Although not
required by law or otherwise, the selection is being submitted to the
stockholders of the Company as a matter of corporate policy for their
approval. Arthur Andersen LLP, an international firm of certified public
accountants, has audited the financial statements of the Company since 1980.
It is anticipated that a representative of Arthur Andersen LLP will be
present at the meeting and, if present, such representative will be given the
opportunity to make a statement if he desires to do so. It is also anticipated
that such representative will be available to respond to appropriate questions
from stockholders.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Secretary of the Company at
the Company's principal executive offices by not later than December 31, 1997
to be considered for inclusion in management's proxy statement and form of
proxy for that meeting.
OTHER MATTERS
As of the date hereof, management does not intend to present, nor has it
been informed that other persons intend to present, any matters for action at
the meeting, other than those specifically referred to herein. If, however,
any other matters should properly come before the meeting, it is the intention
of the persons named in the proxies to vote the shares represented thereby in
accordance with their best judgment on such matters.
The expenses of soliciting proxies in the form included with this proxy
statement and the cost of preparing, assembling and mailing material in
connection with such solicitation of proxies will be borne by the Company. In
addition to the use of the mail, the Company's directors, executive officers
and employees may solicit proxies personally or by telephone or telegraph.
Also, the Company has retained Altman Group, Inc. to solicit proxies at an
estimated cost of $5,000 plus out-of-pocket expenses. The Company may
reimburse brokerage firms and other custodians, nominees or fiduciaries for
their reasonable expenses in forwarding proxy material to the beneficial
owners of shares.
A form of proxy is enclosed for your use. Please date, sign and return the
proxy at your earliest convenience in the enclosed envelope, which requires no
postage if mailed in the United States. A prompt return of your proxy will be
appreciated.
By Order of the Board of Directors,
/s/ Clyde T. Turner
Clyde T. Turner
Chairman of the Board
Las Vegas, Nevada
April 30, 1997
29
APPENDIX A
TEXT OF PROPOSED AMENDMENTS TO THE
1989 AND 1993 STOCK OPTION PLANS
AND THE 1991 STOCK INCENTIVE PLAN
1989 PLAN
RESOLVED, that the Company's 1989 Stock Option Plan be amended to add to
Section 2.5 thereof the following provision:
"Notwithstanding any provision to the contrary, the number of shares of
Common Stock for which Stock Options may be granted to any person pursuant
to the Plan during 1997 or during any subsequent calendar year shall not
exceed 100,000, provided, however, that such number shall be subject to
appropriate adjustment in accordance with Section 4.1."
1991 PLAN
RESOLVED, FURTHER, that the Company's Amended and Restated 1991 Stock
Incentive Plan be amended to add to paragraph 5(a) thereof, as a new clause
(v), the following provision:
"(v) Notwithstanding any provision to the contrary, the number of shares of
Common Stock for which options may be granted to any person pursuant to the
Plan during 1997 or during any subsequent calendar year shall not exceed
200,000, provided, however, that such number shall be subject to
appropriate adjustment in accordance with paragraph 7(f)."
1993 PLAN
RESOLVED, FURTHER, that the Company's 1993 Stock Option Plan be amended to
add to Section 2.5 thereof the following provision:
"Notwithstanding any provision to the contrary, the number of shares of
Common Stock for which Stock Options may be granted to any person pursuant
to the Plan during 1997 or during any subsequent calendar year shall not
exceed 1,000,000, provided, however, that such number shall be subject to
appropriate adjustment in accordance with Section 4.1."
Appendix B (Included in
the EDGAR filing only)
CIRCUS CIRCUS ENTERPRISES, INC.
1989 STOCK OPTION PLAN
(As Proposed to be Amended at the
1997 Annual Meeting of Stockholders)
1. PURPOSES OF THE PLAN
The purposes of this 1989 Stock Option Plan (the "Plan") are to enable
Circus Circus Enterprises, Inc. (the "Company") and its Subsidiaries to attract
and retain the services of key employees and persons with managerial, profes-
sional or supervisory responsibilities, including, but not limited to, members
of the Board of Directors, officers of, and consultants to, the Company,
responsible for the past and continued success of the Company, and to provide
them with increased motivation and incentive to exert their best efforts on
behalf of the Company by enlarging their personal stake in its success.
2. GENERAL PROVISIONS
2.1 Definitions
-----------
As used in the Plan:
(a) "Board of Directors" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, including any and
all amendments thereto.
(c) "Committee" means the committee appointed by the Board of Directors
from time to time to administer the Plan pursuant to Section 2.2
hereof.
(d) "Common Stock" means the Common Stock, par value $.01-2/3 per
share, of the Company.
(e) "Fair Market Value" means, with respect to the date a given Stock
Option is granted or exercised, the closing price on the applicable
date (or if there is no closing price, then the closing bid price)
of the Common Stock as reported on the New York Stock Exchange
Composite Tape, or if not reported thereon, then such price as
reported in the trading reports of the principal securities
exchange on which the Common Stock is listed, or if such stock is
not listed on a securities exchange in the United States, the mean
between the dealer closing "bid" and "ask" prices on the over-the-
counter market, as reported by the National Association of
Securities Dealers Automated Quotations Systems (NASDAQ), or
NASDAQ's successor, or if not reported on NASDAQ, on the basis of
such other method as the Committee shall, in good faith, determine
to be reasonable.
(f) "Incentive Stock Option" means an option granted under the Plan,
which is intended to qualify as an incentive stock option under
Section 422A of the Code.
(g) "Non-Qualified Stock Option" means an option granted under the Plan
which is not an Incentive Stock Option.
(h) "Participant" means a person to whom a Stock Option has been
granted under the Plan.
(i) "Stock Option" means an Incentive Stock Option or Non-Qualified
Option granted under the Plan.
(j) "Rule 16b-3" means such rule adopted under the Securities Exchange
Act of 1934, as amended, or any successor rule.
-2-
(k) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at
the time of the granting of the option, each of the corporations
other than the last corporation in the unbroken chain owns 50% or
more of the total voting power of all classes of stock in one of
the other corporations in such chain.
2.2 Administration of the Plan
--------------------------
(a) The Plan shall be administered by the Committee which shall at all
times consist of two (2) or more persons, each of whom shall be a
member of the Board of Directors. To the extent possible, and to
the extent the Board of Directors deems it necessary or
appropriate, each member of the Committee shall be a "Non-Employee
Director" (as such term is defined in Rule 16b-3) and an "Outside
Director" (as such term is defined in Treasury Regulations Section
1.162-27 promulgated under the Code). The Board of Directors may
from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused, shall be
filled by the Board of Directors. The Committee shall select one of
its members as Chairman, and shall hold meetings at such times and
places as it may determine.
(b) The Committee shall have the full power, subject to and within the
limits of the Plan, to: (i) interpret and administer the Plan, and
Stock Options granted under it; (ii) make and interpret rules and
regulations for the administration of the Plan and to make changes
in and revoke such
-3-
rules and regulations (and, in the exercise of this power, shall
generally determine all questions of policy and expediency that may
arise and may correct any defect, omission, or inconsistency in the
Plan or any agreement evidencing the grant of any Stock Option in a
manner and to the extent it shall deem necessary to make the Plan
fully effective); (iii) determine those persons to whom Stock
Options shall be granted and the number of Stock Options to be
granted to any person; (iv) determine the terms of Stock Options
granted under the Plan, consistent with the provisions of the Plan;
and (v) generally, exercise such powers and perform such acts in
connection with the Plan as are deemed necessary or expedient to
promote the best interests of the Company. The interpretation and
construction by the Committee of any provisions of the Plan or of
any Stock Option shall be final and conclusive.
(c) The Committee may act only by a majority of its members then in
office; however, the Committee may authorize any one or more of its
members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
(d) No member of the Committee shall be liable for any action taken or
omitted to be taken or for any determination made by him or her in
good faith relating to the Plan, and the Company shall indemnify
and hold harmless each member of the Committee against any cost or
expense (including counsel fees) or liability (including any sum
paid
-4-
in settlement of a claim with the approval of the Committee)
arising out of any act or omission in connection with the
administration or interpretation of the Plan, unless arising out of
such person's own fraud or bad faith.
2.3 Effective Date
--------------
The Plan shall become effective upon its adoption by the Board of
Directors, and Stock Options may be issued upon such adoption and from
time to time thereafter, subject, however, to approval of the Plan by
the affirmative vote of the holders of a majority of the shares of the
Common Stock present in person or by proxy and entitled to vote at an
annual meeting of the shareholders of the Company or at a special
meeting of shareholders of the Company expressly called for such
purpose, or any adjournments thereof, within 12 months after the
adoption of the Plan by the Board of Directors. If the Plan is not
approved at such annual or special meeting or at any adjournments
thereof, this Plan and all Stock Options previously granted there-
under become null and void.
2.4 Duration
--------
If approved by the shareholders of the Company, as provided in Section
2.3, unless sooner terminated by the Board of Directors, the Plan
shall remain in effect for a period of ten (10) years following its
adoption by the Board of Directors.
2.5 Shares Subject to the Plan
--------------------------
The maximum number of shares of Common Stock which may be subject to
Stock Options granted under the Plan shall be 1,500,000. The Stock
Options shall be subject to adjustment in accordance with Section 4.1,
and
-5-
shares to be issued upon exercise of the Stock Options may be either
authorized and unissued shares of Common Stock or authorized and
issued shares of Common Stock purchased or acquired by the Company for
any purpose. If a Stock Option or portion thereof shall expire or is
terminated, canceled or surrendered for any reason without being
exercised in full, the unpurchased shares of Common Stock which were
subject to such Stock Option or portion thereof shall be available for
future grants of Stock Options under the Plan. Notwithstanding any
provision to the contrary, the number of shares of Common Stock for
which Stock Options may be granted to any person pursuant to the Plan
during 1997 or during any subsequent calendar year shall not exceed
100,000, provided, however, that such number shall be subject to
appropriate adjustment in accordance with Section 4.1.
2.6 Amendments
----------
The Plan may be suspended, terminated or reinstated, in whole or in
part, at any time by the Board of Directors. The Board of Directors
may from time to time make such amendments to the Plan as it may deem
advisable, including, with respect to Incentive Stock Options,
amendments deemed necessary or desirable to comply with Section 422A
of the Code and any regulations issued thereunder; provided, however,
that, without the approval of the Company's shareholders, no amendment
shall be made which:
(a) materially increases the maximum number of shares of Common Stock
which may be subject to Stock Options granted under the Plan
(other than as provided in Section 4.1); or
-6-
(b) materially increases the benefits accruing to Participants under
the Plan; or
(c) extends the term of the Plan; or
(d) increases the period during which a Stock Option may be exercised
beyond ten years from the date of grant; or
(e) materially modifies the requirements as to eligibility for
participation in the Plan; or
(f) will cause options issued under the Plan to fail to meet the
requirements of Rule 16b-3.
Except as otherwise provided herein, termination or amendment of the Plan
shall not, without the consent of the Participant, affect such Participant's
rights under any Stock Option previously granted to such Participant.
2.7 Participants and Grants
-----------------------
Stock Options may be granted by the Committee to those persons who the
Committee determines have the capacity to make a substantial
contribution to the success of the Company; provided, however, that,
Stock Options may not be granted to members of the Committee. The
Committee may grant to Participants Stock Options to purchase such
number of shares of Common Stock (subject to the limitations of
Section 2.5) as the Committee may, in its sole discretion, determine.
In granting Stock Options under the Plan, the Committee, on an
individual basis, may vary the number of Incentive Stock Options or
Non-Qualified Stock Options as between Participants and may grant
Incentive Stock Options and/or Non-Qualified Options to a Participant
in such amounts as the Committee may determine in its sole discretion.
-7-
3. STOCK OPTIONS
3.1 General
-------
All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom granted
which agreement shall state the number of shares of Common Stock which
may be purchased upon the exercise thereof and shall contain such
investment representations and other terms and conditions as the
Committee may from time to time determine, or, in the case of
Incentive Stock Options, as may be required by Section 422A of the
Code, or any other applicable law.
3.2 Price
-----
Subject to the provisions of Section 3.6(d) and Section 4.1, the
purchase price per share of Common Stock subject to a Stock Option
shall, in no case, be less than one-hundred percent (100%) of the Fair
Market Value of a share of Common Stock on the date the Stock Option
is granted.
3.3 Period
------
The duration or term of each Stock Option granted the Plan shall be
for such period as the Committee shall determine but in no event more
than ten (10) years from the date of grant thereof.
3.4 Exercise
--------
Subject to Section 4.4, Stock Options may be exercisable immediately
upon granting of the Stock Option or at such other time or times as
the Committee shall specify when granting the Stock Option. Once
exercisable, a Stock Option shall be exercisable, in whole or in part,
by delivery of a written notice of
-8-
exercise to the Secretary of the Company at the principal office of
the Company specifying the number of shares of Common Stock as to
which the Stock Option is then being exercised together with payment
of the full purchase price for the shares being purchased upon such
exercise. Until the shares of Common Stock as to which a Stock Option
is exercised are issued, the Participant shall have none of the rights
of a shareholder of the Company with respect to such shares.
3.5 Payment
-------
The purchase price for shares of Common Stock as to which a Stock
Option has been exercised and any amount required to be withheld, as
contemplated by Section 4.3, may be paid:
(a) In United States dollars in cash, or by check, bank draft or money
order payable in United States dollars to the order of the
Company; or
(b) In the discretion of the Committee, by the delivery by the
Participant to the Company of shares of Common Stock having an
aggregate Fair Market Value on the date of payment equal to the
aggregate of the purchase price of Common Stock as to which the
Stock Option is then being exercised or by the withholding of
shares of Common Stock having such Fair Market Value upon the
exercise of such Stock Option; or
(c) In the discretion of the Committee, by a combination of both (a)
and (b) above.
The Committee may, in its discretion, impose limitations, conditions and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.
-9-
3.6 Special Rules for Incentive Stock Options
-----------------------------------------
Notwithstanding any other provision of the Plan, the following
provisions shall apply to Incentive Stock Options granted under the
Plan:
(a) Incentive Stock Options shall only be granted to Participants who
are employees of the Company or its Subsidiaries.
(b) To the extent that the aggregate Fair Market Value of Common Stock
with respect to which Incentive Stock Options are exercisable for
the first time by a Participant during any calendar year under
this Plan and any other Plan of the Company or a Subsidiary
exceeds $100,000, such Stock Options shall be treated as Non-
Qualified Stock Options.
(c) Any Participant who disposes of shares of Common Stock acquired
upon the exercise of an Incentive Stock Option by sale or exchange
either within two (2) years after the date of the grant of the
Incentive Stock Option under which the shares were acquired or
within one (1) year of the acquisition of such shares, shall
promptly notify the Secretary of the Company at the principal
office of the Company of such disposition, the amount realized,
the purchase price per share paid upon exercise and the date of
disposition.
(d) No Incentive Stock Option shall be granted to a Participant who,
at the time of the grant, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of
stock either of the Company or any parent or Subsidiary of the
Company, unless the purchase price of the shares of Common Stock
purchasable upon
-10-
exercise of such Incentive Stock Option is at least one-hundred
ten percent (110%) of the Fair Market Value (at the time the
Incentive Stock Option is granted) of the Common Stock and the
Incentive Stock Option is not exercisable more than five (5) years
from the date it is granted.
3.7 Termination of Employment
-------------------------
(a) In the event that a Participant (i) shall cease to be employed by
the Company or a Subsidiary because of his discharge for
dishonesty, or because he violated any material provision of any
employment or other agreement between him and the Company or a
Subsidiary, or (ii) shall voluntarily resign or terminate his
employment with the Company or a Subsidiary under or followed by
such circumstances as would constitute a breach of any material
provision of any employment or other agreement between him and the
Company or a Subsidiary, or (iii) shall have committed an act of
dishonesty not discovered by the Company or a Subsidiary prior to
the cessation of his employment with the Company or a Subsidiary,
but which would have resulted in his discharge if discovered prior
to such date, or (iv) shall, either before or after cessation of
his employment with the Company or a Subsidiary, without the
written consent of his employer, use (except for the benefit of
his employer) or disclose to any other person any confidential
information relating to the continuation or proposed continuation
of his employer's business or any trade secrets of the Company or
a Subsidiary obtained as a result of or
-11-
in connection with such employment, or (v) shall, either before or
after the cessation of his employment with the Company or a
Subsidiary, without the written consent of his employer, directly
or indirectly, give advice to, or serve as an employee, director,
officer, or trustee of, or in any similar capacity with, or
otherwise directly or indirectly participate in the management,
operation, or control of, or have any direct or indirect financial
interest in, any corporation, partnership, or other organization
which directly or indirectly competes in any respect with the
Company or its Subsidiaries, then forthwith from the happening of
any such event, any Stock Option then held by such Participant
shall terminate and become void to the extent that it then remains
unexercised. In the event that a Participant shall cease to be
employed by the Company or a Subsidiary for any reason other than
his death or one or more of the reasons set forth in the
immediately preceding sentence, subject to the condition that no
Stock Option shall be exercisable after the expiration of ten (10)
years from the date it is granted, or, in the case of a 10%
Stockholder, five (5) years from the date it is granted, such
Participant shall have the right to exercise the Stock Option at
any time within three (3) months after such termination of
employment to the extent his right to exercise such Stock Option
had accrued pursuant to this Plan at the date of such termination
and had not previously been exercised; such three-month limit
-12-
shall be increased to one year for any Participant who ceases to
be employed by the Company or a Subsidiary because he is
permanently and totally disabled (within the meaning of Section
22(e)(3) of the Code). Whether authorized leave of absence or
absence for military or governmental service shall constitute
termination of employment, for purposes of the Plan, shall be
determined by the Committee, which determination shall be final
and conclusive.
(b) If a Participant shall die while in the employ of the Company or a
Subsidiary or within a period of three months (one year in the
case of disability) after the termination of his employment with
the Company and all Subsidiaries and shall not have fully
exercised any Stock Option, the Stock Option may be exercised
subject to the condition that no Stock Option shall be exercisable
after the expiration of ten (10) years from the date it is
granted, or, in the case of a 10% Stockholder, five (5) years from
the date it is granted, to the extent that the Participant's right
to exercise such Stock Option had accrued pursuant to this Plan at
the time of his death and had not previously been exercised, at
any time within one year after the Participant's death, by the
personal representative of the Participant or by any person or
persons who shall have acquired the Stock Option directly from the
Participant by bequest or inheritance.
-13-
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Changes in Capitalization
------------------------------------------
In the event of changes to the outstanding shares of Common Stock of
the Company through reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend,
stock consolidation or otherwise, or in the event of a sale of all or
substantially all of the assets of the Company, an appropriate and
proportionate adjustment shall be made in the number and kind of
shares as to which Stock Options may be granted. A corresponding
adjustment changing the number or kind of shares and/or the purchase
price per share of unexercised Stock Options or portions thereof which
shall have been granted prior to any such change, shall likewise be
made. Notwithstanding the foregoing, in the case of a reorganization,
merger or consolidation, or sale of all or substantially all of the
assets of the Company, in lieu of adjustments as aforesaid, the
Committee may in its discretion accelerate the date after which a
Stock Option may or may not be exercised or the stated expiration date
thereof. Adjustments or changes under this Section shall be made by
the Committee, whose determination as to what adjustments or changes
shall be made, and the extent thereof, shall be final, binding and
conclusive .
4.2 Non-Transferability
-------------------
No Stock Option shall be transferable except by will or the laws of
descent and distribution, nor shall any Stock Option be exercisable
during the Participant's lifetime by any person other than the
Participant or his guardian or legal representative.
-14-
4.3 Withholding
-----------
The Company's obligation under this Plan shall be subject to
applicable federal, state and local tax withholding requirements.
Federal, state and local withholding tax due at the time of a grant or
upon the exercise of any Stock Option may, in the discretion of the
Committee, be paid in shares of Common Stock already owned by the
Participant or through the withholding of shares otherwise issuable to
such Participant, upon such terms and conditions as the Committee
shall determine. If the Participant shall fail to pay, or make
arrangements satisfactory to the Committee for the payment, to the
Company of all such federal, state and local taxes required to be
withheld by the Company, then the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any
kind otherwise due to such Participant an amount equal to any federal,
state or local taxes of any kind required to be withheld by the
Company.
4.4 Compliance with Law and Approval of Regulatory Bodies
-----------------------------------------------------
No Stock Option shall be exercisable and no shares will be delivered
under the Plan except in compliance with all applicable Federal and
state laws and regulations including, without limitation, compliance
with all Federal and state securities laws and withholding tax
requirements and with the rules of all domestic stock exchanges on
which the Company's shares may be listed. Any share certificate issued
to evidence shares for which a Stock Option is exercised may bear
legends and statements the Committee shall deem advisable to assure
compliance with Federal and state laws and regulations. No Stock
Option shall be exercisable and no shares will
-15-
be delivered under the Plan, until the Company has obtained consent or
approval from regulatory bodies, Federal or state, having jurisdiction
over such matters as the Committee may deem advisable. In the case of
the exercise of a Stock Option by a person or estate acquiring the
right to exercise the Stock Option as a result of the death of the
Participant, the Committee may require reasonable evidence as to the
ownership of the Stock Option and may require consents and releases of
taxing authorities that it may deem advisable.
4.5 No Right to Employment
----------------------
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the
granting of any Stock Options hereunder, shall confer upon any
Participant under the Plan any right to continue in the employ of the
Company or any Subsidiary, or shall in any way affect the right and
power of the Company or any Subsidiary to terminate the employment of
any Participant under the Plan at any time with or without assigning a
reason therefor, to the same extent as might have been done if the
Plan had not been adopted.
4.6 Exclusion from Pension Computations
-----------------------------------
By acceptance of a grant of a Stock Option under the Plan, the
recipient shall be deemed to agree that any income realized upon the
receipt or exercise thereof or upon the disposition of the shares
received upon exercise will not be taken into account as "base
remuneration", "wages", "salary" or "compensation" in determining the
amount of any contribution to or payment or any other benefit under
any pension,
-16-
retirement, incentive, profit-sharing or deferred compensation plan of
the Company or any Subsidiary.
4.7 Abandonment of Options
----------------------
A Participant may at any time abandon a Stock Option prior to its
expiration date. The abandonment shall be evidenced in writing, in
such form as the Committee may from time to time prescribe. A
Participant shall have no further rights with respect to any Stock
Options so abandoned.
4.8 Interpretation of the Plan
--------------------------
Headings are given to the sections of the Plan solely as a convenience
to facilitate reference, such headings, numbering and paragraphing
shall not in any case be deemed in any way material or relevant to the
construction of the Plan or any provisions thereof. The use of the
masculine gender shall also include within its meaning the feminine.
The use of the singular shall also include within its meaning the
plural and vice versa.
4.9 Use of Proceeds
---------------
Funds received by the Company upon the exercise of Stock Options
granted under the Plan shall be used for the general corporate
purposes of the Company.
4.10 Construction of Plan
--------------------
The place of administration of the Plan shall be in the State of
Nevada, and the validity, construction, interpretation, administration
and effect of the Plan and of its rules and regulations, and rights
relating to the Plan, shall be determined solely in accordance with
the laws of the State of Nevada.
-17-
Appendix C (Included with
the EDGAR filing only)
CIRCUS CIRCUS ENTERPRISES, INC.
AMENDED AND RESTATED 1991 STOCK INCENTIVE PLAN
(As Proposed to be Amended at the
1997 Annual Meeting of Stockholders)
1. Purposes. The purposes of the Circus Circus Enterprises, Inc.
Amended and Restated 1991 Stock Incentive Plan (the"Plan") are (i) to promote
the long term financial interests and growth of Circus Circus Enterprises, Inc.
(the "Company") by motivating executive personnel by means of growth-related
incentives, providing incentive compensation opportunities that are competitive
with those of other major corporations and furthering the identity of interests
of participants with those of the stockholders of the Company, and (ii) to
strengthen the Company's ability to attract and retain the services of
experienced and knowledgeable non-employee directors and by encouraging such
directors to acquire an increased proprietary interest in the Company.
2. Definitions. The following definitions are applicable to the
Plan:
"Affiliate" means any entity 100 percent owned, directly or
indirectly, by the Company and any other entity more than 50 percent
of which is owned, directly or indirectly, by the Company and which is
so designated by the Committee.
"Code" means the Internal Revenue Code of 1986, as amended, and
any successor statute.
"Committee" means a committee of two or more directors of the
Company as shall be designated by the Board of Directors of the
Company from time to time. To the extent possible, and to the extent
the Board of Directors deems it necessary or appropriate, each member
of the Committee shall be a "Non-Employee Director" (as such term is
defined in Rule 16b-3) and an "Outside Director" (as such term is
defined in Treasury Regulations Section 1.162-27 promulgated under the
Code). The Board of Directors may from time to time remove members
from, or add members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors. The
Committee shall
select one of its members as Chairman, and shall hold meetings at such
times and places as it may determine.
"Common Stock" means the Common Stock, $.01-2/3 par value per
share, of the Company or such other securities as may be substituted
therefor pursuant to paragraph 7(f).
The "fair market value" of the Common Stock shall (except as
otherwise provided in paragraph 6(d)) mean the last reported sale
price of the Common Stock on the New York Stock Exchange Composite
Tape on the day fair market value is to be determined and, in absence
of any sale on such day, fair market value as the Committee shall, in
good faith, determine.
"Eligible Director" means a member of the Company's Board of
Directors who is not otherwise an employee of the Company or any
subsidiary of the Company.
"Employee Participant" means any officer or other key employee of
the Company or an Affiliate with managerial or supervisory
responsibilities whom the Committee determines has contributed
significantly to the Company's past success or is in a position to
influence its continued success who is selected by the Committee
(other than an employee of the Company who at the time that any share-
value incentive is granted under the Plan owns or, after giving effect
to the Common Stock to be issued or referenced under the share-value
incentive and under all other options, warrants and similar awards
with respect to the Company held by such employee, is deemed to own
10% or more of the total combined voting power or value of all classes
of stock of the Company).
"Formula Award" means an "Initial Grant" (as defined) made to an
Eligible Director pursuant to paragraph 6(b) or an "Annual Grant" (as
defined) made to an Eligible Director pursuant to paragraph 6(c).
"Rule 16b-3" means such rule adopted under the Securities Exchange
Act of 1934, as amended, or any successor rule.
3. Administration. The Plan shall be administered by the Committee.
Subject to the limitations of the Plan, the Committee shall have the sole and
complete authority: (i) to select Employee Participants in the Plan, (ii) to
make share-value
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incentive grants to Employee Participants in such forms and amounts as it shall
determine, (iii) to impose such limitations, restrictions and conditions upon
such share-value incentive grants to Employee Participants as it shall deem
appropriate, (iv) to interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(v) to correct any defect or omission or to reconcile any inconsistency in the
Plan or in any share-value incentive granted hereunder, and (vi) to make all
other determinations and to take all other actions necessary or advisable, in
its discretion, for the implementation and administration of the Plan. The
Committee may provide for the issuance of Common Stock to Employee Participants
as a stock grant for no consideration other than services rendered or, to the
extent permitted by applicable State law, to be rendered. The Committee's
determinations on matters within its authority shall be conclusive and binding
upon the Company and all other persons. All expenses associated with the Plan
shall be borne by the Company, subject to such allocation to its Affiliates and
operating units as it deems appropriate. The Committee may amend or modify any
share-value incentive grant to an Employee Participant in any manner to the
extent that the Committee would have had the authority under the Plan to
initially make such share-value incentive grant, but no such amendment or
modification shall impair the rights of any Employee Participant under any
share-value incentive grant without the consent of such Employee Participant.
4. Limitation on Aggregate Shares. The number of shares of Common
Stock with respect to which share-value incentives may be granted to Employee
Participants and Formula Awards may be made to Eligible Directors under the Plan
and which may be issued upon the exercise or payment thereof shall not exceed,
in the aggregate, 3,000,000 shares, and the number of such shares which shall be
available for issuance pursuant to Formula Awards made to Eligible Directors
under the Plan shall be 525,000; provided, however, that to the extent any
share-value incentives granted to Employee Participants or Formula Awards made
to Eligible Directors expire unexercised or unpaid or are canceled, terminated
or forfeited in any manner without the issuance of shares of Common Stock
thereunder, such shares shall again be available under the Plan. To the extent a
restricted stock grant or performance shares grant to an Employee Participant is
exercised for cash, it shall be treated as an issuance of a number of shares
equal to the number of shares upon which the restricted stock grant or
performance shares grant was based so as to reduce shares otherwise available
for the future issuance under the Plan. The 3,000,000 shares of Common Stock
which may be the subject of awards pursuant to the Plan may
-3-
be either authorized and unissued shares, treasury shares, or a combination
thereof, as the Committee shall determine.
5. Share-Value Incentives. The Committee may grant to Employee
Participants, in accordance with this paragraph 5 and other provisions of the
Plan, stock options, restricted stock and performance shares.
(a) Options.
(i) Options granted to an Employee Participant under the Plan
may be incentive stock options within the meaning of Section 422 of
the Code or any successor provisions, or in such other form,
consistent with the Plan, as the Committee may determine.
(ii) The option price per share of Common Stock for an option
granted to an Employee Participant shall be fixed by the Committee at
not less than 100% of the fair market value of a share of Common Stock
on the date of grant.
(iii) Options granted to an Employee Participant shall be
exercisable at such time or times as the Committee shall determine at
or subsequent to grant.
(iv) Options granted to an Employee Participant shall be
exercised in whole or in part by written notice to the Company (to the
attention of the Company's Corporate Secretary), signed by the
Employee Participant exercising the option, stating the number of
shares of Common Stock with respect to which the option is being
exercised and accompanied by payment in full of the option price.
Payment of the option price for an option granted to an Employee
Participant may be made, at the discretion of the optionee, and to the
extent permitted by the Committee, (A) in cash (including check, bank
draft, or money order), (B) in Common Stock (valued at the fair market
value thereof on the date of exercise), (C) by a combination of cash
and Common Stock or (D) with any other consideration deemed acceptable
by the Committee. The date both such notice and payment are received
by the office of the Corporate Secretary of the Company shall be the
date of exercise of the option as to the number of shares specified.
(v) Notwithstanding any provision to the contrary, the number of
shares of Common Stock for which options
-4-
may be granted to any person pursuant to the Plan during 1997 or
during any subsequent calendar year shall not exceed 200,000,
provided, however, that such number shall be subject to appropriate
adjustment in accordance with paragraph 7(f).
(b) Restricted Stock.
(i) The Committee may transfer to any Employee Participant
shares of Common Stock, subject to this paragraph 5(b) and such other
terms and conditions (including, without limitation, performance goals
similar to those described in paragraph 5(c)) as the Committee may
prescribe (such shares being called "restricted stock"). Each
certificate for restricted stock shall be registered in the name of
the Employee Participant and deposited, together with a stock power
endorsed in blank, with the Company.
(ii) There shall be established for each restricted stock grant
to an Employee Participant one or more restriction periods of such
length as shall be determined by the Committee. No restriction period
shall exceed 10 years from the date of the grant. Shares of restricted
stock may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as hereinafter provided, during the applicable
restriction period. Except for such restrictions on transfer and such
other restrictions as the Committee may impose, the Employee
Participant shall have all the rights of a holder of Common Stock as
to such restricted stock. The Committee, in its sole discretion, may
permit or require the payment of cash dividends to be deferred and, if
the Committee so determines, reinvested in additional restricted stock
or otherwise invested. At the expiration of each restriction period,
the Company shall redeliver to the Employee Participant (or the
Employee Participant's legal representative or designated beneficiary)
certificates deposited pursuant to this paragraph representing the
shares with respect to which the applicable restrictions and
conditions have been satisfied.
(iii) Except as provided by the Committee at the time of grant or
otherwise, upon termination of employment of an Employee Participant
for any reason during a restriction period applicable to restricted
stock of such Employee Participant, all shares still
-5-
subject to restriction shall be forfeited by the Employee Participant.
(c) Performance Shares. Performance shares, measured in whole or in
part by the value of shares of Common Stock, the performance of the participant,
the performance of the Company, its subsidiaries or any separate business units
or properties thereof, or any combination thereof, may be granted to Employee
Participants under the Plan. Such share-value incentives may be payable in
Common Stock, cash or both, and shall be subject to such restrictions and
conditions, as the Committee shall determine. At the time of a performance
shares grant to an Employee Participant, the Committee shall determine, in its
sole discretion, one or more performance periods and performance goals to be
achieved during the applicable performance periods. No performance period shall
exceed 10 years from the date of the grant. A performance shares grant to an
Employee Participant may be made subject to such later revisions as the
Committee shall deem appropriate to reflect significant unforeseen events such
as changes in laws, regulations or accounting practices, or unusual or
nonrecurring items or occurrences. The Committee shall determine the extent to
which performance goals have been attained or a degree of achievement between
maximum and minimum levels in order to evaluate the level of payment to be made,
if any.
(d) Time Limit. No share-value incentive granted to an Employee
Participant under the Plan shall be subject to exercise beyond and no conditions
or performance goals shall be susceptible of satisfaction beyond a period of 10
years after the date of the grant thereof.
6. Formula Awards to Eligible Directors.
(a) General. Each Formula Award granted under the Plan shall be
evidenced by an agreement (an "Agreement") duly executed on behalf of the
Company and by the Eligible Director to whom such Formula Award is granted and
dated as of the applicable date of grant. Each Agreement shall be signed on
behalf of the Company by an officer or officers delegated such authority by the
Committee using either manual or facsimile signature. Each Agreement shall
comply with and be subject to the terms and conditions of the Plan. Any
Agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan or this paragraph 6 as may be determined by the
Committee. All Formula Awards granted under the Plan shall be non-statutory
options not intended to qualify under Section 422 of the Code.
-6-
(b) Initial Grants. Subject to the limitation in paragraph 6(n), an
option to purchase 7,500 shares of Common Stock pursuant to clause (i) of this
paragraph 6(b) or 10,000 shares of Common Stock pursuant to clause (ii) of this
paragraph 6(b), as the case may be (as adjusted in each case pursuant to
paragraph 6(1)) (and in the case of each grant pursuant to clause (i) of this
paragraph 6(b), multiplied by the number of consecutive annual meetings of the
Company's stockholders, including the annual meeting at which stockholders
approve an amendment to the Plan providing for the grant of Formula Awards, at
which the Eligible Director in question was elected to serve as a Director of
the Company and/or after which he continued to be a Director of the Company)
shall be granted to:
(i) each member of the Company's Board of Directors (a
"Director") who is an Eligible Director immediately following the
annual meeting of the Company's stockholders at which stockholders
approve an amendment to the Plan providing for the grant of Formula
Awards, and
(ii) each other Eligible Director immediately following the annual
meeting of the Company's stockholders at which such Director is first
elected or immediately following the first annual meeting of the
Company's stockholders after such Eligible Director is first elected
or appointed by the Company's Board of Directors to be a Director,
whichever is applicable (each, an "Initial Grant"); provided, however,
that if an Eligible Director who previously received an Initial Grant
pursuant to this paragraph 6(b) terminates service as a Director and
is subsequently elected or appointed to the Company's Board of
Directors, such Director shall not be eligible to receive a second
Initial Grant pursuant to this paragraph 6(b), but shall be eligible
to receive only Annual Grants (as defined) pursuant to paragraph 6(c).
(c) Annual Grants. Subject to the limitation in paragraph 6(n), an
option to purchase 10,000 shares of Common Stock (as adjusted pursuant to
paragraph 6(1)) shall be granted automatically each year, immediately following
the annual meeting of the Company's stockholders, to each Director who is an
Eligible Director at such time and who is not entitled to receive an Initial
Grant pursuant to paragraph 6(b) immediately following such annual meeting
(each, an "Annual Grant").
-7-
(d) Formula Award Exercise Price. The exercise price per share for an
Initial Grant or an Annual Grant shall be the average of the Fair Market Values
(as hereinafter defined) for the fifth (5th) through the ninth (9th) business
days (which, for purposes of this paragraph 6(d) shall mean those days on which
the New York Stock Exchange is open for trading) following the date of grant.
For purposes of the preceding sentence, "Fair Market Value" equals the mean of
the high and low per share trading prices for the Common Stock as reported in
The Wall Street Journal for New York Stock Exchange Composite Transactions.
(e) Vesting and Exercisability. Except as otherwise provided in
paragraph 6(h), a Formula Award shall vest and become non-forfeitable when, and
only if, the optionee continues to serve as a Director until the first annual
meeting of the Company's stockholders held following the year in which the
option was granted. Except as otherwise provided in paragraph 6(h), a Formula
Award shall thereafter become exercisable according to the following schedule:
Period of Optionee's Continuous Portion of Formula
Service as a Director of the Award that is
Company Exercisable
------------------------------- ------------------
From the First Annual Meeting of
Stockholders subsequent to the grant to
the second Annual Meeting of Stockholders
subsequent to the grant . . . . . . . . . . 40%
From the second Annual Meeting of Stockholders
subsequent to the grant to the third
Annual Meeting of Stockholders subsequent to
the grant . . . . . . . . . . . . . . . . . 70%
From the third Annual Meeting of Stockholders
subsequent to the grant to the expiration
of the term of the Formula Award. . . . . . 100%
(f) Time and Manner of Exercise. Except as otherwise provided in this
paragraph 6(f), any vested Formula Award, to the extent the same is exercisable
in accordance with paragraph 6(e), is exercisable in whole or in part at any
time or from time to time until the expiration or termination of its term in
accordance with paragraph 6(h) by giving written notice, signed by the person
exercising the Formula Award, to the Company (to the attention of the Company's
Corporate Secretary) stating the number of shares of Common Stock with respect
to which the Formula Award is being exercised, accompanied by payment in full of
the option exercise price for the number of shares of Common Stock to be
purchased. The date both such notice and payment are received by the office of
the
-8-
Secretary of the Company shall be the date of exercise of the Formula Award as
to such number of shares. Notwithstanding any provision to the contrary, no
Formula Award may at any time be exercised with respect to a fractional share.
(g) Payment of Exercise Price. Payment of the exercise price for a
Formula Award may be in cash or by bank-certified, cashier's, or personal check
or, to the extent permitted by the Committee, payment may be in whole or in part
by
(i) transfer to the Company of shares of the Common Stock having
a Fair Market Value (as defined in paragraph 6(d)) on the date of
exercise equal to the exercise price, or
(ii) delivery of instructions to the Company to withhold from the
shares of Common Stock that would otherwise be issued on the exercise
that number of such shares having a Fair Market Value (as defined in
paragraph 6(d)) equal to the exercise price.
If the Fair Market Value (as defined in paragraph 6(d)) of the number
of whole shares of Common Stock transferred or the number of whole shares of
Common Stock withheld is less than the total exercise price, the shortfall must
be paid in cash.
(h) Term of Formula Awards. Each Formula Award shall expire ten (10)
years from its date of grant, but shall be subject to earlier termination as
follows:
(i) In the event of the termination of a Formula Award holder's
service as a Director, other than by reason of retirement, total and
permanent disability, or death, the then-outstanding Formula Awards of
such holder (whether or not then vested and whether or not then
exercisable) shall automatically expire on (and may not be exercised
on) the effective date of such termination. For purposes of this
paragraph 6(h), the phrase "by reason of retirement" means (a)
mandatory retirement pursuant to Board policy or (b) termination of
service at a time when the holder would be entitled to a retirement
benefit under the Circus Circus Employees' Profit Sharing and
Investment Plan, as then in effect, if the holder were an employee of
the Company.
(ii) In the event of the termination of a Formula Award holder's
service as a Director by reason of retirement or total and permanent
disability, the then-
-9-
outstanding Formula Awards of such holder that have vested pursuant
to paragraph 6(e) (including, without limitation, any Formula Awards
or portions thereof which vest in accordance with paragraph 6(e) on
the date of termination) shall become exercisable, to the full extent
of the number of shares of Common Stock remaining covered by such
Formula Awards, regardless of whether such Formula Awards were
previously exercisable, and each such Formula Award shall expire one
year after the date of such termination or on the stated grant
expiration date, whichever is earlier.
(iii) In the event of the death of a Formula Award holder while
such holder is a Director, the then outstanding Formula Awards of such
holder that have vested pursuant to paragraph 6(e) (including, without
limitation, any Formula Awards or portions thereof which vest in
accordance with paragraph 6(e) on the date of death) shall become
exercisable, to the full extent of the number of shares of Common
Stock remaining covered by such Formula Awards, regardless of whether
such Formula Awards were previously exercisable, and each such Formula
Award shall expire one year after the date of death of such optionee
or on the stated grant expiration date, whichever is earlier.
Exercise of a deceased holder's Formula Awards that are still
exercisable shall be by the estate of such holder or by the person or persons to
whom the holder's rights have passed by will or the laws of descent and
distribution.
(i) Transferability. The right to exercise a Formula Award granted
under the Plan shall, during the lifetime of the Eligible Director to whom such
Formula Award was granted, be exercisable only by such recipient or pursuant to
a qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder (a "QDRO") and
shall not be assignable or transferable by such recipient other than by will or
the laws of descent and distribution or a QDRO. Any purported transfer contrary
to this provision will be null and void and without effect.
(j) Limitation of Rights. Neither the recipient of a Formula Award
under the Plan nor the recipient's successor or successors in interest shall
have any rights as a stockholder of the Company with respect to any shares of
Common Stock subject to a Formula Award granted to such person until the date of
issuance of a stock certificate for such shares of Common Stock.
-10-
(k) Limitation as to Directorship. Neither the Plan, nor the granting
of a Formula Award, nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express or implied,
that an Eligible Director has a right to continue as a Director for any period
of time or at any particular rate of compensation.
(1) Capital Adjustments. The number and class of shares with respect
to which a Formula Award may be granted to an Eligible Director under the Plan,
the number and class of shares subject to each outstanding Formula Award, and
the exercise price per share specified in each such Formula Award shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment or the payment of any stock dividend, or other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company. For purposes of the preceding sentence, the
Company shall be deemed to have received consideration for any shares issued
pursuant to this or any other employee benefit plan meeting the requirements of
Rule 16b-3.
(m) Limit on Awards to Eligible Directors. Notwithstanding any
provision of the Plan to the contrary, an Eligible Director shall not be
entitled to receive or participate in any award under the Plan other than
Formula Awards which are granted to such Eligible Director pursuant to
paragraphs 6(b) and 6(c) and meet all of the requirements of paragraph 6
applicable thereto.
(n) Termination of Formula Awards. Notwithstanding any provision to
the contrary, no Formula Award shall be granted pursuant to paragraph 6(b) or
6(c) on a date when the number of shares of Common Stock authorized for issuance
pursuant to the Plan and then available for issuance pursuant to new Formula
Awards is less than the aggregate number of such shares which would be issuable
pursuant to Formula Awards otherwise required to be granted on such date,
assuming the full vesting and exercise of such Formula Awards. In the event
Formula Awards are not granted as a result of the application of this paragraph
6(n), no Formula Awards shall thereafter be granted pursuant to the Plan.
(o) Conflicting Provisions. In the event of any conflict between a
provision of this paragraph 6 and a provision in any other paragraph of the Plan
with respect to Formula Awards, such provision of this paragraph 6 shall be
deemed to control.
-11-
7. Miscellaneous Provisions.
(a) Effective Date and Term. The Plan is effective as of the date it
is adopted by the holders of at least a majority of the outstanding shares of
the Company's Common Stock present in person or by proxy and entitled to vote at
the Company's 1991 Annual Meeting of Stockholders. Unless extended by the
stockholders of the Company and subject to paragraph 7(k), this Plan shall
expire upon the expiration of a ten-year period commencing on the effective date
of the Plan, however, the Plan shall continue thereafter to govern all awards
granted before that date until the exercise, expiration or cancellation of such
awards.
(b) Rights as Stockholder. An Employee Participant under the Plan
shall have no right as a holder of the Company's Common Stock with respect to
share-value incentives granted hereunder, and an Eligible Director shall have no
right as a holder of the Company's Common Stock with respect to Formula Awards
granted hereunder, unless and until certificates for shares of the Company's
Common Stock are issued to the Employee Participant or Eligible Director, as the
case may be. Common Stock issued to an Employee Participant pursuant to a share-
value incentive grant shall nevertheless be subject to such limitations and
restrictions contained in the agreement with respect to the grant.
(c) Funding of the Plan. The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the payment of any share value incentive
grant or Formula Award under the Plan.
(d) Agreements. Each share-value incentive granted to an Employee
Participant under the Plan shall be evidenced by an agreement in such form and
containing such terms and conditions (not inconsistent with the Plan) as the
Committee shall determine in its sole discretion.
(e) Non-Transferability. No share-value incentive grant to an
Employee Participant under the Plan, and no interest therein, shall be
transferable by the Employee Participant otherwise than by will or the laws of
descent and distribution or pursuant to a QDRO. All share-value incentive grants
to an Employee Participant shall be exercisable or received during the Employee
Participant's lifetime only by the Employee Participant or pursuant to a QDRO.
Any purported transfer contrary to this provision will be null and void and
without effect.
-12-
(f) Adjustments Upon Certain Changes. In the event of a merger,
consolidation, reorganization, recapitalization, spinoff, stock dividend or
stock split, or combination or other increase or reduction in the number of
issued shares of Common Stock, or extraordinary cash dividend or any other
similar event, the Board of Directors or the Committee may, in order to prevent
the dilution or enlargement of rights under share-value incentive grants or
Formula Awards, make such adjustments in the number and type of shares
authorized by the Plan, the number and type of shares covered by, or with
respect to which payments are measured under, outstanding share-value incentive
grants and the exercise prices specified therein as may be determined to be
appropriate and equitable.
(g) Tax Withholding. The Committee shall have the power to withhold,
or require an Employee Participant to remit to the Company, an amount sufficient
to satisfy any withholding or other tax due with respect to any amount payable
and/or shares issuable under the Plan, and the Committee may defer such payment
or issuance unless indemnified to its satisfaction. Subject to the consent of
the Committee, an Employee Participant may make an irrevocable election to have
shares of Common Stock otherwise issuable under a share-value incentive grant
withheld, tender back to the Company shares of Common Stock received pursuant to
a share-value incentive grant or deliver to the Company previously acquired
shares of Common Stock having a fair market value sufficient to satisfy all or
part of the participant's estimated tax obligations associated with the
transaction. Such election must be made by an Employee Participant prior to the
date on which the relevant tax obligation arises. The Committee may disapprove
of any election and may limit, suspend or terminate the right of an Employee
Participant to make such elections.
(h) Listing and Legal Compliance. The Committee may suspend the
exercise or payment of any share value incentive grant or Formula Award so long
as it determines that securities exchange listing, or any registration, approval
or other action under any gaming or securities laws or regulations, is required
in connection therewith and has not been completed on terms acceptable to the
Committee. The Committee shall have the right to condition any such issuance or
transfer upon receipt by the Company of written undertakings to comply with such
restrictions on subsequent disposition of such shares as the Committee or the
Company shall reasonably deem necessary or advisable as a result of any
applicable law, regulation or official interpretations thereof, and certificates
representing such shares may be legended to reflect any such restrictions or may
be made subject to a stop transfer restriction with the Company's transfer
agent.
-13-
(i) Beneficiary Designation. Subject to paragraphs 6(i) and 7(e),
each Employee Participant and Eligible Director may name, from time to time,
beneficiaries (who may be named contingently or successively) to whom benefits
under the Plan are to be paid in the event of such Employee Participant's or
Eligible Director's death before they receive any or all such benefits. Each
designation will revoke all prior designations by the same Employee Participant
or Eligible Director, shall be in a form prescribed by the Committee, and will
be effective only when filed by the Employee Participant or Eligible Director in
writing with the Committee during the Employee Participant's or Eligible
Director's lifetime. In the absence of any such designation, vested benefits
remaining unpaid at the Employee Participant's or Eligible Director's death
shall be paid to the Employee Participant's or Eligible Director's estate.
(j) Rights of Participants. Nothing in the Plan shall interfere with
or limit in any way the right of the Company or any subsidiary to terminate any
Employee Participant's employment at any time, nor confer upon any Employee
Participant any right to continue in the employ of the Company or any subsidiary
for any period of time or to continue his or her present or any other rate of
compensation. No employee shall have a right to be selected as an Employee
Participant, or, having been so selected, to be selected again as an Employee
Participant, except as may be provided in any written agreement between the
Company and such employee.
(k) Amendment, Suspension and Termination of Plan. The Board of
Directors may amend, terminate or suspend the Plan at any time, in its sole and
absolute discretion; provided, however, that if required to qualify the Plan
under Rule 16b-3, no amendment shall be made more than once every six (6) months
that would change the amount, price or timing of Formula Awards (or any other
provision of the Plan the amendment of which would cause the Plan to fail to
qualify under Rule 16b-3), other than to comport with changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income Security Act,
or the rules and regulations promulgated thereunder; and provided, further, that
no amendment shall be made without the approval of the Company's stockholders
that would
(i) materially increase the number of shares of Common Stock that
may be issued under the Plan, or
(ii) otherwise materially increase the benefits accruing to
participants under the Plan.
-14-
No amendment, suspension or termination of the Plan shall impair the
rights of Employee Participants under outstanding share-value incentive grants
or Eligible Directors under Formula Awards without the consent of the Employee
Participants and/or Eligible Directors affected thereby or make any change that
would disqualify the Plan, or any other plan of the Company intended to be so
qualified, from the exemption provided by Rule 16b-3.
(1) Misconduct. In the event that an Employee Participant (i) shall
cease to be employed by the Company or a subsidiary because of his discharge for
dishonesty, or because he violated any material provision of any employment or
other agreement between him and the Company or a subsidiary, or (ii) shall
voluntarily resign or terminate his employment with the Company or a subsidiary
under or followed by such circumstances as would constitute a breach of any
material provision of any employment or other agreement between him and the
Company or a subsidiary, or (iii) shall have committed an act of dishonesty not
discovered by the Company or a subsidiary prior to the cessation of his
employment with the Company or a subsidiary, but which would have resulted in
his discharge if discovered prior to such date, or (iv) shall, either before or
after cessation of his employment with the Company or a subsidiary, without the
written consent of the Company or a subsidiary, use (except for the benefit of
the Company or a subsidiary) or disclose to any other person any confidential
information relating to the continuation or proposed continuation of the
business or any trade secrets of the Company or a subsidiary obtained as a
result of or in connection with such employment, or (v) shall, either before or
after the cessation of his employment with the Company or a subsidiary, without
the written consent of the Company or a subsidiary, directly or indirectly, give
advice to, or serve as an employee, director, officer, or trustee of, or in any
similar capacity with, or otherwise directly or indirectly participate in the
management, operation, or control of, or have any direct or indirect financial
interest in, any corporation, partnership, or other organization which directly
or indirectly competes in any respect with the Company or its subsidiaries, or
(vi) shall cease to be employed by the Company or a subsidiary because of his
inability to continue as an employee under any law or governmental regulation,
including any Nevada gaming law or regulation, or (vii) shall voluntarily resign
or terminate his employment with the Company or a subsidiary under or followed
by such circumstances as would have rendered him unable to have continued as an
employee under any law or governmental regulation, including any Nevada gaming
law or regulation, then forthwith from the happening of any such event, any
share-value incentive grant then held by such Employee Participant shall
terminate and become void to the extent that, in the case of a stock option, it
then
-15-
remains unexercised and, in the case of any other share-value incentive grant,
any condition or performance goal under it then has not been met or satisfied.
Additional forfeiture provisions may be included within the terms of any share-
value incentive grant to an Employee Participant as may be determined by the
Committee in its discretion.
(m) Governing Law. The validity and construction of the Plan, its
rules and regulations and any agreements entered into thereunder shall be
governed by the laws of the State of Nevada (but not including choice of law
rules thereof).
-16-
Appendix D (Included with
the EDGAR filing only)
CIRCUS CIRCUS ENTERPRISES, INC.
1993 STOCK OPTION PLAN
(As Proposed to be Amended at the
1997 Annual Meeting of Stockholders)
1. PURPOSES OF THE PLAN
The purposes of this 1993 Stock Option Plan (the "Plan") are to enable
Circus Circus Enterprises, Inc. (the "Company") and its Subsidiaries to attract
and retain the services of officers and other key employees with managerial,
professional or supervisory responsibilities, to retain able consultants and
advisors and to motivate such persons to use their best efforts on behalf of the
Company.
2. GENERAL PROVISIONS
2. 1 Definitions
As used in the Plan:
(a) "Board of Directors" means the board of Directors of the
Company
(b) "Code" means the Internal Revenue Code of 1986, including
any and all amendments thereto.
(c) "Committee" means the committee appointed by the Board of
Directors from time to time to administer the Plan pursuant
to Section 2.2.
(d) "Common Stock" means the Company's Common Stock, $.01-2/3
par value.
(e) "Fair Market Value" means, with respect to a specific date,
the last reported sale price of the Common Stock on the NYSE
Composite Tape on the date such Fair Market Value is being
determined, and, in the absence of any sale on such day, the
Fair Market Value as determined in good faith by the
Committee on the basis of such quotations and other
considerations as the Committee deems appropriate.
(f) "Incentive Stock Option" means an option granted under the
Plan which is intended to
qualify as an incentive stock option under Section 422 of
the Code.
(g) "NYSE" means the New York Stock Exchange.
(h) "Non-Qualified Stock Option" means an option granted under
the Plan which is not an Incentive Stock Option.
(i) "Participant" means a person to whom a Stock Option has been
granted under the Plan.
(j) "Rule 16b-3" means Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, or any
successor rule.
(k) "Stock Option" means an Incentive Stock Option or a Non-
Qualified Stock Option granted under the Plan.
(l) "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Stock Option,
each of the corporations other than the last corporation in
the unbroken chain owns 50% or more of the total voting
power of all classes of stock in one of the other
corporations in such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the Committee which shall
at all times consist of two (2) or more persons, each of
whom shall be a member of the Board of Directors. To the
extent possible, and to the extent the Board of Directors
deems it necessary or appropriate, each member of the
Committee shall be a "Non-Employee Director" (as such term
is defined in Rule 16b-3) and an "Outside Director" (as such
term is defined in Treasury Regulations Section 1.162-27
promulgated under the Code). The Board of Directors may from
time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused,
shall be filled by the Board of Directors. The Committee
shall
-2-
select one of its members as Chairman, and shall hold
meetings at such times and places as it may determine.
(b) The Committee shall have the full power, subject to and
within the limits of the Plan, to: (i) interpret and
administer the Plan, and Stock Options granted under it;
(ii) make and interpret rules and regulations for the
administration of the Plan and to make changes in and revoke
such rules and regulations (and in the exercise of this
power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect,
omission, or inconsistency in the Plan or any agreement
evidencing the grant of any Stock Option in a manner and to
the extent it shall deem necessary to make the Plan fully
effective); (iii) determine those persons to whom Stock
Options shall be granted and the number of Stock Options to
be granted to any person; (iv) determine the terms of Stock
Options granted under the Plan, consistent with the
provisions of the Plan; and (v) generally, exercise such
powers and perform such acts in connection with the Plan as
are deemed necessary or expedient to promote the best
interests of the Company. The interpretation and
construction by the Committee of any provisions of the Plan
or of any Stock Option shall be final, binding and
conclusive.
(c) The Committee may act only by a majority of its members then
in office; however, the Committee may authorize any one (1)
or more of its members or any officer of the Company to
execute and deliver documents on behalf of the Committee.
(d) No member of the Committee shall be liable for any action
taken or omitted to be taken or for any determination made
by him or her in good faith with respect to the Plan, and
the Company shall indemnify and hold harmless each member of
the Committee against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of
a
-3-
claim with the approval of the Committee) arising out of any
act or omission in connection with the administration or
interpretation of the Plan, unless arising out of such
person's own fraud or bad faith.
2.3 Effective Date
The Plan shall become effective upon its adoption by the Board of
Directors, and Stock Options may be granted upon such adoption and
from time to time thereafter, subject, however, to approval of the
Plan by the affirmative vote of the holders of a majority of the
shares of the Common Stock present in person or by proxy and entitled
to vote at an annual meeting of the shareholders of the Company or at
a special meeting of the shareholders of the Company expressly called
for such purposes, or any adjournments thereof, within 12 months after
the adoption of the Plan by the Board of Directors. If the Plan is not
approved at such annual or special meeting or at any adjournments
thereof, this Plan and all Stock Options previously granted thereunder
shall become null and void.
2.4 Duration
If approved by the shareholders of the Company, as provided in Section
2.3, unless sooner terminated by the Board of Directors, the Plan
shall remain in effect for a period of ten (10) years following its
adoption by the Board of Directors.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may be subject to
Stock Options granted under the Plan shall be 3,000,000. The Stock
Options shall be subject to adjustment in accordance with Section 4.1,
as appropriate, and shares to be issued upon exercise of Stock Options
may be either authorized and unissued shares of Common Stock or
authorized and issued shares of Common Stock purchased or acquired by
the Company for any purpose. If a Stock Option or portion thereof
shall expire or is terminated, canceled or surrendered for any reason
without being exercised in full, the unpurchased shares of Common
Stock which were subject to such Stock Option or portion thereof shall
be available for future grants of Stock Options under the Plan.
Notwithstanding any provision to the contrary, the number of shares of
-4-
Common Stock for which Stock Options may be granted to any person
pursuant to the Plan during 1997 or during any subsequent calendar
year shall not exceed 1,000,000 provided, however, that such number
shall be subject to appropriate adjustment in accordance with Section
4.1.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in whole or in
part, at any time by the Board of Directors. The Board of Directors
may from time to time make such amendments to the Plan as it may deem
advisable, including, with respect to Incentive Stock Options,
amendments deemed necessary or desirable to comply with Section 422 of
the Code and any regulations issued thereunder; provided, however,
that without the approval of the Company's shareholders no amendment
shall be made which:
(a) Increases the maximum number of shares of Common Stock which
may be subject to Stock Options granted under the Plan (other
than as provided in Section 4.1, as appropriate); or
(b) Extends the term of the Plan; or
(c) Increases the period during which a Stock Option may be
exercised beyond ten years from the date of grant; or
(d) Otherwise materially increases the benefits accruing to
Participants under the Plan; or
(e) Materially modifies the requirements as to eligibility for
participation in the Plan; or
(f) Will cause Stock Options granted under the Plan to fail to
meet the requirements of Rule 16b-3.
Except as otherwise provided herein, termination or amendment of the Plan
shall not, without the consent of a Participant, affect such Participant's
rights under any Stock Option previously granted to such Participant.
-5-
2.7 Participants and Grants
Stock Options may be granted by the Committee to (i) officers and
other full-time salaried employees of the Company and its Subsidiaries
with managerial, professional or supervisory responsibilities and (ii)
consultants and advisors who render bona fide services to the Company
and its Subsidiaries, in each case, where the Committee determines
that such officer, employee, consultant or advisor has the capacity to
make a substantial contribution to the success of the Company. The
Committee may grant Stock Options to purchase such number of shares of
Common Stock (subject to the limitations of Section 2.5) as the
Committee may, in its sole discretion, determine. In granting Stock
Options under the Plan, the Committee, on an individual basis, may
vary the number of Incentive Stock Options or Non-Qualified Stock
Options as between Participants and may grant Incentive Stock Options
and/or Non-Qualified Stock Options to a Participant in such amounts as
the Committee may determine in its sole discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom
granted, which agreement shall state the number of shares of Common
Stock which may be purchased upon the exercise thereof and shall
contain such investment representations and other terms and conditions
as the Committee may from time to time determine, or, in the case of
Incentive Stock Options, as may be required by Section 422 of the
Code, or any other applicable law.
3.2 Price
Subject to the provisions of Sections 3.6(d) and 4.1, the purchase
price per share of Common Stock subject to a Stock Option shall, in no
case, be less than one hundred percent (100%) of the Fair Market Value
of a share of Common Stock on the date the Stock Option is granted.
-6-
3.3 Period
The duration or term of each Stock Option granted under the Plan shall
be for such period as the Committee shall determine but in no event
more than ten (10) years from the date of grant thereof.
3.4 Exercise
Subject to Section 4.4, Stock Options may be exercisable immediately
upon granting of the Stock Option or at such other time or times as
the Committee shall specify when granting the Stock Option. Once
exercisable, a Stock Option shall be exercisable, in whole or in part,
by delivery of a written notice of exercise to the Secretary of the
Company at the principal office of the Company specifying the number
of shares of Common Stock as to which the Stock Option is then being
exercised together with payment of the full purchase price for the
shares being purchased upon such exercise. Until the shares of Common
Stock as to which a Stock Option is exercised are issued, the
Participant shall have none of the rights of a shareholder of the
Company with respect to such shares.
3.5 Payment
The purchase price for shares of Common Stock as to which a Stock
Option has been exercised and any amount required to be withheld, as
contemplated by Section 4.3, may be paid:
(a) In United States dollars in cash, or by check, bank draft or
money order payable in United States dollars to the order of
the Company; or
(b) By the delivery by the Participant to the Company of whole
shares of Common Stock having an aggregate Fair Market Value
on the date of payment equal to the aggregate of the purchase
price of Common Stock as to which the Stock Option is then
being exercised or by the withholding of whole shares of
Common Stock having such Fair Market Value upon the exercise
of such Stock Option; or
(c) In the discretion of the Committee, by a combination of both
(a) and (b) above.
-7-
The Committee may, in its discretion, impose limitations, conditions and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the following
provisions shall apply to Incentive Stock Options granted under the
Plan:
(a) Incentive Stock Options shall only be granted to Participants
who are employees of the Company or its Subsidiaries.
(b) To the extent that the aggregate Fair Market Value of Common
Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any
calendar year under this Plan and any other Plan of the
Company or a Subsidiary exceeds $100,000, such Stock Options
shall be treated as Non-Qualified Stock Options.
(c) Any Participant who disposes of shares of Common Stock
acquired upon the exercise of an Incentive Stock Option by
sale or exchange either within two (2) years after the date
of the grant of the Incentive Stock Option under which the
shares were acquired or within one (1) year of the
acquisition of such shares, shall promptly notify the
Secretary of the Company at the principal office of the
Company of such disposition, the amount realized, the
purchase price per share paid upon exercise and the date of
disposition.
(d) No Incentive Stock Option shall be granted to a Participant
who, at the time of the grant, owns stock representing more
than ten percent (10%) of the total combined voting power of
all classes of stock either of the Company or any parent or
Subsidiary of the Company, unless the purchase price of the
shares of Common Stock purchasable upon exercise of such
Incentive Stock Option is at least one hundred ten percent
(110%) of the Fair Market Value (at the time the Incentive
Stock Option is
-8-
granted) of the Common Stock and the Incentive Stock Option
is not exercisable more than five (5) years from the date it
is granted.
3.7 Termination of Employment
(a) In the event a Participant's employment by, or relationship
with, the Company shall terminate for any reason other than
those reasons specified in Sections 3.7(b), (c), (d) or (e)
hereof while such Participant holds Stock Options granted
under the Plan, then all rights of any kind under any
outstanding Option held by such Participant which shall not
have previously lapsed or terminated shall expire
immediately.
(b) If a Participant's employment by, or relationship with, the
Company or its Subsidiaries shall terminate as a result of
such Participant's total disability, each Stock Option held
by such Participant (which has not previously lapsed or
terminated) shall immediately become fully exercisable as to
the total number of shares of Common Stock subject thereto
(whether or not exercisable to that extent at the time of
such termination) and shall remain so exercisable by such
Participant for a period of six months after termination
unless such Stock Option expires earlier by its terms. For
purposes of the foregoing sentence, "total disability" shall
mean permanent mental or physical disability as determined by
the Committee.
(c) In the event of the death of a Participant, each Stock Option
held by such Participant (which has not previously lapsed or
terminated) shall immediately become fully exercisable as to
the total number of shares of Common Stock subject thereto
(whether or not exercisable to that extent at the time of
death) by the executor or administrator of the Participant's
estate or by the person or persons to whom the deceased
Participant's rights thereunder shall have passed by will or
by the laws of descent or distribution, and shall remain so
exercisable for a period of
-9-
six months after such Participant's death unless such Stock
Option expires earlier by its terms.
(d) If a Participant's employment by the Company shall terminate
by reason of such Participant's retirement in accordance with
Company policies, each Stock Option held by such Participant
at the date of termination (which has not previously lapsed
or terminated) shall immediately become fully exercisable as
to the total number of shares of Common Stock subject hereto
(whether or not exercisable to that extent at the time of
such termination) and shall remain so exercisable by such
Participant for a period of three months after termination,
unless the Stock Option expires earlier by its terms.
(e) In the event the Company terminates the employment of a
Participant who at the time of such termination was an
officer of the Company and had been continuously employed by
the Company during the five year period immediately preceding
such termination, for any reason except "good cause"
(hereafter defined) and except upon such Participant's death,
total disability or retirement in accordance with Company
policies, each Stock Option held by such Participant (which
has not previously lapsed or terminated and which has been
held by such Participant for more than six months prior to
such termination) shall immediately become fully exercisable
as to the total number of shares of Common Stock subject
thereto (whether or not exercisable to that extent at the
time of such termination) and shall remain so exercisable for
a period of three (3) months after such termination unless
such Stock Option expires earlier by its terms. A termination
for "good cause" shall be deemed to have occurred only if the
Participant in question (i) is terminated by written notice
for dishonesty, because of his conviction of a felony, or
because of his violation of any material provision of any
employment or other agreement with the Company or any of its
Subsidiaries, or (ii) shall
-10-
voluntarily resign or terminate his employment with the
Company or any of its Subsidiaries under or followed by such
circumstances as would constitute a breach of any material
provision of any employment or other agreement between him
and the Company or any of its Subsidiaries, or (iii) shall
have committed an act of dishonesty not discovered by the
Company or any of its Subsidiaries prior to the cessation of
his employment with the Company or any of its Subsidiaries,
but which would have resulted in his discharge if discovered
prior to such date, or (iv) shall, either before or after
cessation of his employment with the Company or any of its
Subsidiaries, without the written consent of the Company or
any of its Subsidiaries, use (except for the benefit of the
Company or any of its Subsidiaries) or disclose to any other
person any confidential information relating to the
continuation or proposed continuation of the business or any
trade secrets of the Company or any of its Subsidiaries
obtained as a result of or in connection with such
employment, or (v) shall, either before or after the
cessation of his employment with the Company or any of its
Subsidiaries, without the written consent of the Company or
any of its Subsidiaries, directly or indirectly, give advice
to, or serve as an employee, director, officer, or trustee
of, or in any similar capacity with, or otherwise directly or
indirectly participate in the management, operation, or
control of, or have any direct or indirect financial interest
in, any corporation, partnership, or other organization which
directly or indirectly competes in any respect with the
Company or any of its Subsidiaries, or (vi) shall cease to be
employed by the Company or any of its Subsidiaries because of
his inability to continue as an employee under any law or
governmental regulation, including any Nevada gaming law or
regulation, or (vii) shall voluntarily resign or terminate
his employment with the Company or any of its Subsidiaries
under or followed by such circumstances as would have
rendered him unable to have
-11-
continued as an employee under any law or governmental
regulation, including any Nevada gaming law or regulation.
3.8 Effect of Leaves of Absence
It shall not be considered a termination of employment when a
Participant is on military or sick leave or such other type of leave
of absence which is considered a continuing intact the employment
relationship of the Participant with the Company or any of its
Subsidiaries. In case of such leave of absence, the employment
relationship shall be deemed to have continued until the later of (i)
the date when such leave shall have lasted ninety days in duration, or
(ii) the date as of which the Participant's right to reemployment
shall have no longer been guaranteed either by statute or contract.
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Changes in Capitalization
In the event of changes to the outstanding shares of Common Stock of
the Company through reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend,
stock consolidation or otherwise, or in the event of a sale of all or
substantially all of the assets of the Company, an appropriate and
proportionate adjustment shall be made in the number and kind of
shares as to which Stock Options may be granted. A corresponding
adjustment changing the number or kind of shares and/or the purchase
price per share of unexercised Stock Options or portions thereof which
shall have been granted prior to any such change shall likewise be
made. Notwithstanding the foregoing, in the case of a reorganization,
merger or consolidation, or sale of all or substantially all of the
assets of the Company, in lieu of adjustments as aforesaid, the
Committee may in is discretion accelerate the date after which a Stock
Option may or may not be exercised or the stated expiration date
thereof. Adjustments or changes under this Section shall be made by
the Committee, whose determination as to what adjustments or changes
shall be made, and the extent thereof, shall be final, binding and
conclusive.
-12-
4.2 Non-Transferability
No Stock Option shall be transferable except by will or the laws of
descent and distribution, nor shall any Stock Option be exercisable
during the Participant's lifetime by any person other than the
Participant or his guardian or legal representative.
4.3 Withholding
The Company's obligations under this Plan shall be subject to
applicable federal, state and local tax withholding requirements.
Federal, state and local withholding tax due at the time of a grant or
upon the exercise of any Stock Option may, in the discretion of the
Committee, be paid in shares of Common Stock already owned by the
Participant or through the withholding of shares otherwise issuable to
such Participant, upon such terms and conditions as the Committee
shall determine. If the Participant shall fail to pay, or make
arrangements satisfactory to the Committee for the payment, to the
Company of all such federal, state and local taxes required to be
withheld by the Company, then the Company shall, to the extent
permitted by law, have the right to deduct from any payment of any
kind otherwise due to such Participant an amount equal to any federal,
state or local taxes of any kind required to be withheld by the
Company.
4.4 Compliance with Law and Approval of Regulatory Bodies
No Stock Option shall be exercisable and no shares will be delivered
under the Plan except in compliance with all applicable federal and
state laws and regulations including, without limitation, compliance
with all federal and state securities laws and withholding tax
requirements and with the rules of NYSE and of all other domestic
stock exchanges on which the Common Stock may be listed. Any share
certificate issued to evidence shares for which a Stock Option is
exercised may bear legends and statements the Committee shall deem
advisable to assure compliance with federal and state laws and
regulations. No Stock Option shall be exercisable and no shares will
be delivered under the Plan, until the Company has obtained consent or
approval from regulatory bodies, federal or state, having jurisdiction
over such matters as the Committee may deem advisable. In the case
-13-
of the exercise of a Stock Option by a person or estate acquiring the
right to exercise the Stock Option as a result of the death of the
Participant, the Committee may require reasonable evidence as to the
ownership of the Stock Option and may require consents and releases of
taxing authorities that it may deem advisable.
4.5 No Right to Employment
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the
granting of any Stock Options hereunder, shall confer upon any
Participant under the Plan any right to continue in the employ of the
Company or any Subsidiary, or shall in any way affect the right and
power of the Company or any Subsidiary to terminate the employment of
any Participant at any time with or without assigning a reason
therefor, to the same extent as might have been done if the Plan had
not been adopted.
4.6 Exclusions from Pension Computations
By acceptance of a grant of a Stock Option under the Plan, the
recipient shall be deemed to agree that any income realized upon the
receipt or exercise thereof or upon the disposition of the shares
received upon exercise will not be taken into account as "base
remuneration", "wages", "salary" or "compensation" in determining the
amount of any contribution to or payment or any other benefit under
any pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
4.7 Abandonment of Options
A Participant may at any time abandon a Stock Option prior to its
expiration date. The abandonment shall be evidenced in writing, in
such form as the Committee may from time to time prescribe. A
Participant shall have no further rights with respect to any Stock
Option so abandoned.
4.8 Severability
If any of the terms or provisions of the Plan conflict with the
requirements of Rule 16b-3, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with the
requirements of Rule 16b-3.
-14-
4.9 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as a convenience
to facilitate reference, such headings, numbering and paragraphing
shall not in any case be deemed in any way material or relevant to the
construction of the Plan or any provision hereof. The use of the
masculine gender shall also include within its meaning the feminine.
The use of the singular shall also include within its meaning the
plural and vice versa.
4.10 Use of Proceeds
Funds received by the Company upon the exercise of Stock Options shall
be used for the general corporate purposes of the Company.
4.11 Construction of Plan
The place of administration of the Plan shall be in the State of
Nevada, and the validity, construction, interpretation, administration
and effect of the Plan and of its rules and regulations, and rights
relating to the Plan, shall be determined solely in accordance with
the laws of the State of Nevada.
-15-
PROXY
CIRCUS CIRCUS ENTERPRISES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a stockholder of Circus Circus Enterprises, Inc. (the
"Company"), a Nevada corporation, hereby appoints Clyde T. Turner and Yvette E.
Landau, and each of them, as the true and lawful attorneys and proxies of the
undersigned, with full power of substitution, for and in the name of the
undersigned, to vote and otherwise act on behalf of the undersigned at the
Annual Meeting of Stockholders of the Company to be held in the Grand Ballroom
at Luxor Hotel and Casino, 3900 Las Vegas Boulevard South, Las Vegas, Nevada, on
Tuesday, June 24, 1997 at 10:00 A.M., PDT, or at any adjournment or adjournments
thereof, with respect to all shares of the Company's Common Stock which the
undersigned would be entitled to vote, with all powers the undersigned would
possess if personally present, on the following matters:
The election of three Class III Directors (Change of address-Comments)
to serve until their respective successors
are elected and shall qualify. ---------------------------------
---------------------------------
Nominees:
---------------------------------
Class III Michael S. Ensign,
Glenn W. Schaeffer and ---------------------------------
Michael D. McKee
This proxy will be voted as specified on the reverse side. If no specification
is made, this proxy will be voted FOR all nominees for director named above, FOR
approval of amendments to the Company's 1989 and 1993 stock option plans and
1991 stock incentive plan, and FOR ratification of the appointment of Arthur
Andersen LLP.
-------------
SEE REVERSE
SIDE
-------------
- --------------------------------------------------------------------------------
/\ DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET /\
ADMISSION TICKET
1997 Annual Meeting
of
Circus Circus Enterprises, Inc.
--------------------------------
Agenda
1. To elect three Class III directors;
2. To approve amendments to the Company's 1989 and 1993 stock option
plans and 1991 stock incentive plan;
3. To ratify the appointment of Arthur Andersen LLP as independent
auditors to examine and report on the financial statements for the
fiscal year ending January 31, 1998; and
4. To transact such other business as may properly be brought before
the meeting or any adjournment(s) thereof.
--------------------------------
(See Reverse Side)
+
Please mark your + 1834
[X] votes as in this +++++
example.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR all nominees listed on the reverse side and FOR Proposals 2 and 3.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees listed on the reverse
side and FOR Proposals 2 and 3.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of
Directors (see [_] [_]
reverse side).
FOR, except vote withheld from the following nominee(s):
________________________________________________________
FOR AGAINST ABSTAIN
2. Approval of amendments
to the Company's 1989
and 1993 stock option [_] [_] [_]
plans and 1991 stock
incentive plan.
FOR AGAINST ABSTAIN
3. Ratification of the appointment of
Arthur Andersen LLP as
independent auditors to examine [_] [_] [_]
and report on the Company's
financial statements for the fiscal
year ending January 31, 1998.
In the discretion of the proxies on any other matters that may properly
come before the meeting or any adjournment thereof.
- --------------------------------------------------------------------------------
Change of
Address/Comments [_]
on reverse side
--------------------------------------
I/We plan to attend the Annual Meeting [_]
(Admission Ticket attached).
--------------------------------------
If more than one of the proxies listed on
the reverse side shall be present at the meeting
or any adjournment thereof, the majority of said
proxies so present and voting shall exercise all
of the powers conferred hereby.
The undersigned hereby revokes any proxy
heretofore given to vote upon or act with
respect to such shares and hereby ratifies and
confirms all that the proxies listed on the
reverse side, or any of them, may lawfully do by
virtue hereof.
SIGNATURE(S)_______________________________________________ DATE _____________
Please date this proxy and sign your name at it appears hereon. When there is
more than one owner, each should sign. When signing as an attorney,
administrator, executor, guardian or trustee, please add your title as such. If
executed by a corporation, give title as such.
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/\ DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET /\
ADMISSION TICKET
[CIRCUS TENT LOGO
APPEARS HERE]
CIRCUS CIRCUS ENTERPRISES, INC.
1997 Annual Meeting
Tuesday, June 24, 1997
10:00 A.M. PDT
The Grand Ballroom
Luxor Hotel and Casino
3900 Las Vegas Boulevard South
Las Vegas, Nevada
If you plan to attend the Annual Meeting of Stockholders, please so indicate by
marking the appropriate box on the attached proxy card. Space limitations make
it necessary to limit attendance to stockholders. Registration will begin at
9:00 A.M., PDT. "Street name" holders will need to bring a copy of a brokerage
statement reflecting stock ownership as of April 25, 1997.
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This Admission Ticket should not be returned with your proxy but should be
retained and brought with you to the Annual Meeting. To be eligible for a
drawing for Vacation Packages at selected Circus properties, you must attend
the Annual Meeting and present this Admission Ticket at the time of your
registration.