SCHEDULE 14A
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:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (Section) 240.14a-11(c) or (Section)
240.14a-12
Circus Circus Enterprises, Inc.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
PRELIMINARY COPY
CIRCUS CIRCUS ENTERPRISES, INC.
3950 Las Vegas Boulevard South
Las Vegas, Nevada 89119
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 1999
----------------
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 Thursday, June 17, 1999, in the Islander Ballroom at
the Mandalay Bay Resort & Casino, 3950 Las Vegas Boulevard South, Las Vegas,
Nevada for the following purposes:
1. To elect two Class II directors, each to serve until the Annual
Meeting of Stockholders in 2002 and until his or her successor is elected
and qualified;
2. To amend the Company's Restated Articles of Incorporation to change
the name of the Company to [ ];
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, 2000;
4. To vote on three stockholder proposals opposed by the Board of
Directors; and
5. 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 19, 1999 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/ Michael S. Ensign
Michael S. Ensign
Chairman of the Board
Las Vegas, Nevada
April , 1999
PRELIMINARY COPY
CIRCUS CIRCUS ENTERPRISES, INC.
3950 Las Vegas Boulevard South
Las Vegas, Nevada 89119
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 1999
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
Islander Ballroom at the Mandalay Bay Resort & Casino, 3950 Las Vegas
Boulevard South, Las Vegas, Nevada, at 10:00 A.M., PDT, on Thursday, June 17,
1999, 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 May , 1999.
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 two nominees named therein
absent instructions therein to the contrary. Approval of the proposed
amendment to the Company's Restated Articles of Incorporation described in
this Proxy Statement (identified as Proposal 2 in the accompanying form of
proxy) requires the affirmative vote of the holders of not less than
shares, representing a majority of the shares of Common Stock issued and
outstanding on April 19, 1999, the record date for the determination of
stockholders entitled to receive notice of, and to vote at, the meeting (thus,
abstentions and broker non-votes will have the effect of a vote against
approval of the amendment). 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, 2000 (identified as Proposal 3 in the accompanying
form of proxy) and approval of each of the stockholder proposals described in
this Proxy Statement (identified as Proposals 4, 5 and 6 in the accompanying
form of proxy) each requires the affirmative vote of a majority of the votes
cast with respect to such proposal (without giving effect to abstentions and
broker non-votes), assuming that a quorum (determined in the manner described
above) is present or represented at the meeting. Under the rules of the New
York Stock Exchange (the "NYSE"), the election of directors, approval of the
proposed amendment to the Company's Restated Articles of Incorporation and
ratification of the appointment of the independent accountants are considered
by the NYSE to be "routine" items upon which brokerage firms may vote in their
discretion on behalf of their customers if such customers have not furnished
voting instructions within a specified period prior to 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 EACH OF THE NOMINEES NAMED IN THE
PROXY, IN FAVOR OF PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4, 5 AND 6. No
matter is expected to be considered at the meeting other than the proposals
referred to 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 who has given a proxy will not revoke such 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, the revocation of a proxy shall not be effective until written notice
of such revocation has been received by the Company and such 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 19, 1999 (the "Record Date") 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 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 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(1) of Class(1)
---------------- --------------------- -----------
Michael S. Ensign............................. 6,489,700(2) %
3950 Las Vegas Blvd. South
Las Vegas, Nevada 89119
William A. Richardson......................... 6,447,807(3) %
3950 Las Vegas Blvd. South
Las Vegas, Nevada 89119
Legg Mason, Inc............................... 9,245,979(4) %
100 Light Street
Baltimore, Maryland 21202
Trimark Financial Corporation................. 9,238,700(5) %
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario M5X 1E5
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(1) This information is as of the Record Date, except as otherwise indicated.
(2) All of these shares are owned by Mr. Ensign who has sole voting and
investment power with respect thereto.
2
(3) All of these shares are owned by Mr. Richardson who has sole voting and
investment power with respect thereto.
(4) Reflects the number of shares beneficially owned by Legg Mason, Inc. as
set forth in its Schedule 13-G dated February 12, 1999, including
7,274,716 shares as to which sole voting and dispositive power was
reported.
(5) Reflects the number of shares beneficially owned by Trimark Financial
Corporation as set forth in its Schedule 13-G dated February 1, 1999, as
to all of which shares sole voting and dispositive power was reported.
Management
The following table sets forth information 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 and all directors and executive
officers of the Company as a group.
Approximate
Number of Shares Percentage
Name Beneficially Owned(1) of Class(1)
---- --------------------- -----------
Michael S. Ensign............................. 6,489,700(2) %
William A. Richardson......................... 6,447,807(3) %
Glenn W. Schaeffer............................ 834,962(4) (5)
Yvette E. Landau.............................. 23,026(6) (5)
Les Martin.................................... 44,249(7) (5)
Antonio C. Alamo.............................. 392,749(8) (5)
Gregg H. Solomon.............................. 155,460(9) (5)
William E. Bannen, M.D. ...................... 37,500(10) (5)
Arthur H. Bilger.............................. 13,000(11) (5)
Rose McKinney-James........................... None -
Michael D. McKee.............................. 16,100(12) (5)
Donna B. More................................. 4,000(13) (5)
All directors and executive
officers as a group
(12 persons)................................. 14,458,553(14) %
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(1)This information is as 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 426,667 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 26 shares held in a retirement account, as to which Ms. Landau
has sole voting power. Also includes 23,000 shares which Ms. Landau is
entitled to purchase pursuant to stock options which are immediately
exercisable or will become exercisable within 60 days of the Record Date.
3
(7) Includes 5,361 shares owned by Mr. Martin who has sole voting and
investment power with respect thereto. Also includes 38,888 shares which
Mr. Martin is entitled to purchase pursuant to stock options which are
immediately exercisable or will become exercisable within 60 days of the
Record Date.
(8) Includes 269,415 shares owned by Mr. Alamo who has sole voting and
investment power with respect thereto. Also includes 123,334 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.
(9) Includes 38,794 shares owned by Mr. Solomon who has sole voting and
investment power with respect thereto. Also includes 116,666 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.
(10) Includes 33,500 shares as to which Dr. Bannen has sole voting and
investment power. Also includes 4,000 shares which Dr. Bannen is entitled
to purchase pursuant to stock options acquired as a formula award which
will become exercisable within 60 days of the Record Date.
(11) Includes 1,000 shares owned by Mr. Bilger who has sole voting and
investment power with respect thereto. Also includes 12,000 shares which
Mr. Bilger is entitled to purchase pursuant to stock options acquired as
formula awards which are immediately exercisable or will become
exercisable within 60 days of the Record Date.
(12) Includes 4,100 shares owned by Mr. McKee who shares with his wife the
voting and investment power with respect thereto. Also includes 12,000
shares which Mr. McKee is entitled to purchase pursuant to stock options
acquired as formula awards which are immediately exercisable or will
become exercisable within 60 days of the Record Date.
(13) Represents shares which Ms. More is entitled to purchase pursuant to
stock options acquired as a formula award which will become exercisable
within 60 days of the Record Date.
(14) Includes information for the individuals serving as directors and
executive officers of the Company as of the Record Date. The number of
shares beneficially owned by such group on such date includes
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 II directors expires at the Company's 1999 Annual Meeting of
Stockholders. The Board of Directors has fixed at two (2) the number of Class
II directors for the term commencing with the election of directors at the
meeting. Accordingly, at the meeting two (2) Class II directors are to be
elected, with each member to serve a three (3) year term until the 2002 Annual
Meeting of Stockholders and until his or her successor is elected and shall
have qualified. The two nominees named below are management's nominees for
election as Class II 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 either 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 either 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 2001 Annual Meeting of
Stockholders:
Arthur H. Bilger 1997
Mr. Bilger, 46, 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 and
Directors' Nominating Committees.
5
Director
Nominee or Director Since
------------------- --------
William E. Bannen, M.D. 1998
Dr. Bannen, 49, has held the position of Vice President/Chief
Medical Officer with Blue Cross Blue Shield of Nevada/HMO Nevada
in Las Vegas, Nevada ("Blue Cross Nevada") since January 1998. He
also has held the positions of Director--Network Administration
and Health Management and Medical Director with Blue Cross Nevada
since 1993 and 1991, respectively. His current positions with
Blue Cross Nevada include responsibility for medical management
and network contracting in the State of Nevada. Dr. Bannen, who
has been a member of the Company's Board of Directors since June
18, 1998, is also a member of the Board's Compensation and Com-
pliance Review Committees.
Rose McKinney-James 1999
Ms. McKinney-James, 47, has been the President and Chief Execu-
tive Officer of the Corporation for Solar Technology and Renew-
able Resources, a not-for-profit corporation engaged in the de-
velopment of solar technology, since January 1996. From October
1993 until December 1995, Ms. McKinney-James served as the Direc-
tor of the Nevada Department of Business and Industry, which has
administravtive oversight of 29 state regulatory agencies, boards
and commissions. From January 1989 until October 1993, she served
as a member of the Nevada Public Service Commission. Ms. McKin-
ney-James is on the board of directors of a number of community
and civic organizations including Ronald McDonald House and
United Way. Ms. McKinney-James, who has been a member of the
Company's Board of Directors since March 30, 1999, is also a mem-
ber of the Board's Audit Committee.
Class II--Nominees for election to serve until the 2002 Annual Meeting of
Stockholders:
William A. Richardson 1995
Mr. Richardson, 52, has been Vice Chairman of the Board since
June 18, 1998 and has been a member of the Board of Directors of
the Company since June 1, 1995. From June 1, 1995 until June 18,
1998 he served as Executive Vice President of the Company. For a
period of more than five years prior to joining the Company in
1995, 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. Mr. Richardson is a mem-
ber of the Board's Directors' Nominating Committee.
Donna B. More 1998
Ms. More, 41, has been a partner in the Chicago, Illinois law
firm of Freeborn & Peters since July 1994. Prior to assuming her
current position, Ms. More was Chief Legal Counsel for the Illi-
nois Gaming Board where she participated in the development and
administration of the regulatory process for riverboat casinos in
Illinois from November 1990 to July 1994. From May 1989 to Novem-
ber 1990 she was an Assistant United States Attorney, Criminal
Division of the United States Attorney's Office for the Northern
District of Illinois. Since 1991, Ms. More has also been an ad-
junct faculty member at Chicago-Kent College of Law where she
conducts a gaming law seminar. Ms. More, who has been a member of
the Company's Board of Directors since April 24, 1998, is a mem-
ber of the Board's Audit and the Compliance Review Committees.
6
Director
Nominee or Director Since
------------------- --------
Class III--Directors elected to serve until the 2000 Annual Meeting of
Stockholders:
Michael S. Ensign 1995
Mr. Ensign, 61, has been Chairman of the Board and Chief Execu-
tive Officer of the Company since January 16, 1998 and Chief Op-
erating Officer of the Company since June 1, 1995. From June 1,
1995 until January 16, 1998, Mr. Ensign also served as Vice
Chairman of the Board. For a period of more than five years prior
to joining the Company in 1995 upon its acquisition of the Gold
Strike Entities, Mr. Ensign was involved in an executive capacity
in the management and operations of the Gold Strike Entities.
Previously, 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 Board's Executive Committee.
Glenn W. Schaeffer 1996
Mr. Schaeffer, 45, 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. Mr. Schaeffer
is a member of the Board's Compliance Review Committee. He is
also a director of Weider Nutrition International, Inc. and Del
Webb Corporation.
Michael D. McKee 1996
Mr. McKee, 53, has been Executive Vice President of The Irvine
Company, a real estate development and investment company, since
April 1994 and Chief Financial Officer of such company since De-
cember 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
1987 to April 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 Board's Audit and the Compensation Committees. Mr.
McKee is also a director of Health Care Property Investors, Inc.,
Irvine Apartment Communities, Inc. and Realty Income Corporation.
Executive Officers Other Than Nominees and Directors
Yvette E. Landau, 42, is General Counsel, a Vice President and Secretary of
the Company. She also serves as a member of the Executive Committee of the
Circus and Eldorado Joint Venture, in which the Company is a 50% participant,
and as a member of the Management Committee of Detroit Entertainment, L.L.C.,
in which the Company owns a 45% interest. Ms. Landau has held the position of
General Counsel since June 1996. From January 1993 until she assumed the
position of General Counsel, 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, 42, is a Vice President and Chief Accounting Officer of the
Company, positions he has held since June 1997. He is also Corporate
Controller of the Company, a position he has held since November 1994.
7
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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than ten percent of
a registered class of the Company's equity securities (collectively, the
"reporting persons") to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and to furnish the Company with
copies of these reports. Based on the Company's review of the copies of these
reports and written representations received from reporting persons, the
Company believes that all filings required to be made by the reporting persons
for the period from February 1, 1998 through January 31, 1999 were made on a
timely basis.
8
MANAGEMENT REMUNERATION
Summary of Cash and Certain Other Compensation
The following table sets forth for each of the individuals named therein
(collectively the "named executive officers") certain summary information
concerning the compensation paid or accrued by the Company and its subsidiaries
for the fiscal years ended January 31, 1999, 1998 and 1997.
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($) ($)
--------- ---- --------- -------- ------------ ---------- ---------- ---------- ------------
Michael S. Ensign 1999 900,000 855,000 0 0 0 0 438(2)
Chairman of the Board 1998 678,125 0 0 0 0 0 375
and Chief Executive 1997 645,833 422,195 0 0 0 0 250
Officer
Glenn W. Schaeffer 1999 800,000 760,000 0 0 533,333 0 26,162(3)
President, Chief 1998 651,000 0 0 0 0 0 26,462
Financial Officer and 1997 620,000 405,307 0 0 0 0 26,734
Treasurer
William A. Richardson 1999 850,000 807,500 0 0 0 0 350(4)
Vice Chairman of the 1998 678,125 0 0 0 0 0 375
Board 1997 645,833 422,195 0 0 0 0 250
Yvette E. Landau 1999 175,000 175,000 0 0 27,500 0 625(5)
General Counsel, Vice 1998 133,333 133,424 0 0 0 0 500
President and Secretary 1997 115,270 115,285 0 0 15,000 0 438
Les Martin 1999 137,000 137,000 0 0 50,000 0 6,349(6)
Vice President and 1998 128,501 130,875 0 0 25,000 0 1,000
Chief Accounting 1997 112,500 112,500 0 0 0 0 1,000
Officer
Antonio C. Alamo(7) 1999 400,000 400,000 0 0 158,333 0 39,398(8)
Former Senior Vice 1998 400,000 400,000 0 0 0 0 40,566
President-Operations 1997 400,000 400,000 0 0 50,000 0 41,709
Gregg H. Solomon(9) 1999 400,000 400,000 0 0 151,667 0 438(10)
Former Senior Vice 1998 400,000 400,000 0 0 0 0 375
President-Operations 1997 400,000 400,000 0 0 50,000 0 313
- --------
(1) During each of the years ended January 31, 1999, 1998 and 1997, 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.
9
(2) This amount represents a contribution by the Company to its 401(k) Plan
for Mr. Ensign's benefit.
(3) Of this amount, $1,244 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$19,072 represents the present value (as more fully described in Note 11)
of the nonterm portion of the premium paid with respect to such split-
dollar policy, $5,408 represents disability insurance premiums and $438
represents a contribution by the Company to its 401(k) Plan for Mr.
Schaeffer's benefit.
(4) This amount represents a contribution by the Company to its 401(k) Plan
for Mr. Richardson's benefit.
(5) This amount represents a contribution by the Company to its 401(k) Plan
for Ms. Landau's benefit.
(6) Of this amount, $165 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$3,097 represents the present value (as more fully described in Note 11)
of the nonterm portion of the premium paid with respect to such split-
dollar policy, $2,087 represents disability insurance premiums and $1,000
represents a contribution by the Company to its 401(k) Plan for Mr.
Martin's benefit.
(7) Mr. Alamo served as a Senior Vice President-Operations until June 18,
1998, and in a nonexecutive capacity for the balance of the fiscal year
ended January 31, 1999.
(8) Of this amount, $1,696 represents the premium paid by the Company with
respect to the term life portion of a split-dollar life insurance policy,
$29,560 represents the present value (as more fully described in Note 11)
of the nonterm portion of the premium paid with respect to such split-
dollar policy, $7,792 represents disability insurance premiums and $350
represents a contribution by the Company to its 401(k) Plan for Mr.
Alamo's benefit.
(9) Mr. Solomon served as a Senior Vice President-Operations until June 18,
1998, and in a nonexecutive capacity for the balance of the fiscal year
ended January 31, 1999.
(10) This amount represents a contribution by the Company to its 401(k) Plan
for Mr. Solomon's benefit.
(11) The present value of the premium paid by the Company on the nonterm
portion of each of the split-dollar life insurance policies referred to
in Notes 3, 6 and 8, above, represents a value equivalent to the
interest-free use of such premium over the period from the date of
payment of such premium to the earliest date the Company is expected to
receive a refund of such premium, based on an interest rate of 8.2% per
annum. For fiscal 1998 and fiscal 1997 the amount was reported in the
same manner.
10
Options Granted in the Last Fiscal Year
The following table provides information concerning the options to purchase
the Company's Common Stock granted to the named executive officers during the
fiscal year ended January 31, 1999. The Company has never granted any stock
appreciation rights.
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants(1) Option Term(2)
- ---------------------------------------------------------------------- ---------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price(3) Expiration
Name Granted (#) Fiscal Year ($/Sh) Date(4) 5% ($) 10% ($)
---- ------------ ------------ -------- ---------- ---------- ----------
Michael S. Ensign....... 0 N/A N/A N/A N/A N/A
Glenn W. Schaeffer...... 333,333(1) 10.5 11.25 3/19/05 1,342,302 3,067,329
200,000(2) 6.3 11.25 3/19/05 805,382 1,840,400
William A. Richardson... 0 N/A N/A N/A N/A N/A
Yvette E. Landau........ 20,000(1) 0.6 11.25 4/14/04 67,041 149,485
7,500(2) 0.2 11.25 7/29/06 38,072 90,271
Les Martin.............. 33,333(1) 1.1 11.25 4/14/04 111,734 249,140
16,667(1) 0.5 11.25 8/25/07 99,245 242,438
Antonio C. Alamo........ 25,000(2) 0.8 11.25 12/17/06 134,673 322,737
133,333(1) 4.2 11.25 3/19/05 536,920 1,226,930
Gregg H. Solomon........ 25,000(2) 0.8 11.25 12/17/06 134,673 322,737
126,667(1) 4.0 11.25 3/19/05 510,077 1,165,589
- --------
(1) In accordance with the terms of this grant, the optionee surrendered to
the Company previously granted options to purchase three shares for every
two shares covered by this grant.
(2) In accordance with the terms of this grant, the optionee surrendered to
the Company previously granted options to purchase two shares for each
share covered by this grant.
11
Option Exercises During the Last Fiscal Year
No options to purchase the Company's Common Stock were exercised by the
named executive officers during the fiscal year ended January 31, 1999. The
following table provides certain information concerning the number and value
of options to purchase such Common Stock held by the named executive officers
as of the end of such fiscal year. The Company does not have any outstanding
stock appreciation rights.
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($)(1)
Shares Acquired ------------------------- -------------------------
Name on Exercise(#) Value Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------------- ----------- ------------- ----------- -------------
Michael S. Ensign....... 0 N/A 0 0 N/A N/A
Glenn W. Schaeffer...... 0 N/A 0 533,333 0 1,266,666
William A. Richardson... 0 N/A 0 0 N/A N/A
Yvette E. Landau........ 0 N/A 0 27,500 0 65,313
Les Martin.............. 0 N/A 0 50,000 0 118,750
Antonio C. Alamo........ 0 N/A 0 158,333 0 376,041
Gregg H. Solomon........ 0 N/A 0 151,667 0 360,209
- --------
(1) Represents, with respect to each share, the closing price for the Common
Stock on the New York Stock Exchange on January 31, 1999, less the
exercise price payable for such share.
Options Repriced
The following table provides information related to the repricing of certain
options held by executive officers of the Company which occurred during the
fiscal year ended January 31, 1999. The table also includes information
concerning the repricing of certain options held by the individuals then
serving as executive officers of the Company which occurred during the fiscal
year ended January 31, 1995. Such repricings are the only instances during the
last ten fiscal years in which the exercise price of any option granted by the
Company to any of its exeuctive officers has been repriced. The Company has
never granted, and thus has never repriced, any stock appreciation rights.
12
Ten Year Option/SAR Repricing(1)
(a) (b) (c) (d) (e) (f) (g)
Length of
Original
Number of Option Term
Securities Market Price Exercise Remaining
Underlying of Stock at Price at at
Options/ Time of Time of Date of
SARs Repricing or Repricing or New Repricing or
Repriced or Amendment Amendment Exercise Amendment
Name Date Amended(#) ($) ($) Price($) (Years)
---- -------- ----------- ------------ ------------ -------- ------------
Michael S. Ensign....... N/A 0 N/A N/A N/A N/A
Glenn W. Schaeffer...... 12/10/98 333,333(2) 11.25 25.25 11.25 6.27
12/10/98 100,000(3) 11.25 30.30 11.25 6.27
12/10/98 100,000(3) 11.25 32,825 11.25 6.27
William A. Richardson... N/A 0 N/A N/A N/A N/A
Yvette E. Landau........ 12/10/98 20,000(2) 11.25 21.25 11.25 5.35
12/10/98 7,500(3) 11.25 31.00 11.25 7.63
Les Martin 12/10/98 33,333(2) 11.25 21.25 11.25 5.35
12/10/98 16,667(2) 11.25 23.812 11.25 8.71
11/19/94 7,500 21.25 26.67 21.25 2.52
11/19/94 50,000 21.25 26.875 21.25 9.40
Antonio C. Alamo........ 12/10/98 25,000(3) 11.25 32.875 11.25 8.02
12/10/98 133,333(2) 11.25 25.25 11.25 6.27
Gregg H. Solomon........ 12/10/98 25,000(3) 11.25 32.875 11.25 8.02
12/10/98 126,667(2) 11.25 25.25 11.25 6.27
Clyde T. Turner......... 11/19/94 600,000 21.25 32.00 21.25 8.36
11/19/94 450,000 21.25 26.875 21.25 9.40
Kurt D. Sullivan........ 11/19/94 45,000 21.25 26.67 21.25 2.52
11/19/94 120,000 21.25 37.33 21.25 8.11
11/19/94 150,000 21.25 26.875 21.25 9.40
Mike Sloan.............. 11/19/94 90,000 21.25 22.42 21.25 7.09
11/19/94 150,000 21.25 37.33 21.25 8.11
11/19/94 75,000 21.25 26.875 21.25 9.40
Daniel N. Copp.......... 11/19/94 125,000 21.25 26.875 21.25 9.40
Terry L. Caudill........ 11/19/94 30,000 21.25 26.67 21.25 2.52
11/19/94 45,000 21.25 26.875 21.25 9.40
- --------
(1) The repriced options reflected in the table involved the optionee's
exchange of previously granted options for new options with similar terms,
with the following exceptions: (i) the exercise price, as more fully
described in the table, (ii) the earliest exercise date of the new options
is six months after the date of grant, and (iii) in the case of the
options repriced during the fiscal year ended January 31, 1999, the number
of shares, as more fully described in Notes 2 and 3.
(2) In accordance with the terms of this grant, the optionee surrendered to
the Company previously granted options to purchase three shares for every
two shares covered by this grant.
(3) In accordance with the terms of this grant, the optionee surrendered to
the Company previously granted options to purchase two shares for each
share covered by this grant.
13
Pension Plan Table
The following table sets forth information concerning the estimated annual
benefits payable pursuant to the Company's Supplementary Executive Retirement
Plan (the "SERP") at normal retirement (which is age 65), based on years of
service credited under the SERP and the participant's final compensation as
determined under the SERP:
PENSION PLAN TABLE
---------------------------------------------------------------------------------------------------------
Years of Service
----------------------------------------------------------------------------------------
Remuneration Less than 4 4 or 5 6 or 7 8 or 9 10 or 11 12 or 13 14 or more
---------------------------------------------------------------------------------------------------------
$ 200,000.00 $0.00 $ 40,000.00 $ 50,000.00 $ 60,000.00 $ 80,000.00 $ 100,000.00 $ 120,000.00
---------------------------------------------------------------------------------------------------------
$ 450,000.00 $0.00 $ 90,000.00 $112,500.00 $135,000.00 $180,000.00 $ 225,000.00 $ 270,000.00
---------------------------------------------------------------------------------------------------------
$ 700,000.00 $0.00 $140,000.00 $175,000.00 $210,000.00 $280,000.00 $ 350,000.00 $ 420,000.00
---------------------------------------------------------------------------------------------------------
$ 950,000.00 $0.00 $190,000.00 $237,500.00 $285,000.00 $380,000.00 $ 475,000.00 $ 570,000.00
---------------------------------------------------------------------------------------------------------
$1,200,000.00 $0.00 $240,000.00 $300,000.00 $360,000.00 $480,000.00 $ 600,000.00 $ 720,000.00
---------------------------------------------------------------------------------------------------------
$1,450,000.00 $0.00 $290,000.00 $362,500.00 $435,000.00 $580,000.00 $ 725,000.00 $ 870,000.00
---------------------------------------------------------------------------------------------------------
$1,700,000.00 $0.00 $340,000.00 $425,000.00 $510,000.00 $680,000.00 $ 850,000.00 $1,020,000.00
---------------------------------------------------------------------------------------------------------
$1,950,000.00 $0.00 $390,000.00 $487,500.00 $585,000.00 $780,000.00 $ 975,000.00 $1,170,000.00
---------------------------------------------------------------------------------------------------------
$2,200,000.00 $0.00 $440,000.00 $550,000.00 $660,000.00 $880,000.00 $1,100,000.00 $1,320,000.00
---------------------------------------------------------------------------------------------------------
(1) The SERP, which was approved by the Compensation Committee of the Board of
Directors, became effective on June 18, 1998.
(2) The Pension Plan Table set forth above describes the retirement benefit
which may become payable to a participant in the SERP (based on the
benefit payable to "Tier I" participants, which provides the plan's
highest benefit levels. The amount of a participant's remuneration for
purposes of determining benefits under the Pension Plan Table is his or
her highest annual compensation during the five-year period ending on the
participant's termination of employment with the Company (or a shorter
period if the participant has not worked for five years at the time of
terminating his or her employment). Annual compensation for this purpose
is the participant's base salary plus his or her bonus. The SERP limits
the amount of bonus that may be taken into account for this purpose to
150% of base salary. A participant is credited with a year of service
under the SERP for each period of 12 full months of employment with the
Company, but service credit for periods prior to 1998 is limited to ten
years.
(3) As of January 31, 1999, the credited years of service of the named
executive officers for purposes of the SERP were as follows: Michael S.
Ensign -11 years; Glenn W. Schaeffer -11 years; William A. Richardson -11
years; Yvette E. Landau -6 years; Les Martin -11 years; Antonio C. Alamo -
11 years; and Gregg H. Solomon -11 years. It is estimated that for
purposes of determining the applicable benefit pursuant to the SERP, each
of the named executive officers will have 14 or more credited years of
service if he or she continues to be employed by the Company until his or
her normal retirement age under the SERP. The Company intends to fund the
benefits ultimately payable under the SERP through investments in life
insurance policies.
(4) The levels of benefits set forth in the Pension Plan Table are computed as
an annual benefit payable in the form of a straight-life annuity,
commencing following the participant's attainment of age 65, the normal
retirement age under the SERP. The benefits listed in the Pension Plan
Table are not subject to any deduction for Social Security or other offset
amounts.
14
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) $35,000 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 on
the date of the first annual meeting of stockholders following the grant, as
to 70% of the shares subject thereto on the date of the second annual meeting
of stockholders following the grant, and as to 100% of the shares subject
thereto on the date of the third annual meeting of stockholders following the
grant and, unless earlier exercised or forfeited, remains exercisable for a
period of ten years from the date of the grant. In the event of the
termination of a formula award holder's service as a director, other than "by
reason of retirement" (as defined), 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) automatically expire on (and may not be
exercised on) the effective date of such termination. As defined in the 1991
Plan, the phrase "by reason of retirement" means mandatory retirement pursuant
to Board policy or termination of service at a time when the optionee would be
entitled to a retirement benefit under the Circus Circus Employees' Profit
Sharing and Investment Plan as then in effect if the optionee were an employee
of the Company. In the event the termination of service as a director is by
reason of retirement, total and permanent disability or death, the then-
outstanding formula awards of such holder that have vested (including any
formula awards which vest on the date of termination) become exercisable,
whether or not they were previously exercisable, and expire one year after the
date of such termination or on the stated grant expiration date, whichever is
earlier.
On February 12, 1999, the Board of Directors adopted a 1999 Nonemployee
Directors Stock Option Plan (the "1999 Plan") providing for the issuance of up
to 100,000 shares of the Company's Common Stock pursuant to the exercise of
stock options granted to nonemployee directors of the Company under the 1999
Plan. On such date, the Board also granted to each of the individuals then
serving as nonemployee directors of the Company, William E. Bannen, Arthur H.
Bilger, Michael D. McKee and Donna B. More, an option to purchase 25,000
shares at a per share exercise price of $14.50, representing the closing price
of the Company's Common Stock on the New York Stock Exchange Composite Tape on
the date of the grants. Each option has a term of ten years, subject to
earlier termination upon the occurrence of certain events, and becomes
exercisable as to 8,333 shares on February 12, 2000 and February 12, 2001 and
as to 8,334 shares on February 12, 2002.
15
Employment Agreements
Michael S. Ensign, Glenn W. Schaeffer, William A. Richardson, Antonio C.
Alamo and Gregg H. Solomon are employed by the Company pursuant to employment
agreements which became effective on June 1, 1995. Each such employment
agreement provides for an initial base salary (in the cases of 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 and further provides that the targeted annual bonus
shall not be less than 100% of the employee's then current base salary. 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", including the removal of the employee from his position
as an executive officer of the Company, or by the Company without "Cause," as
each such term is defined in the agreement (each, a "Designated Termination")
or (in the case of an employee who has not previously made a "Continuation
Election", as such term is defined in the agreement) the Company's failure to
consent to any automatic one-year extension of the 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 and all options to purchase the Company's Common Stock held by
the employee will become exercisable immediately. Effective November 1, 1997,
each employment agreement was amended to provide that the Company may, with or
without cause, and without terminating the employee's employment, remove the
employee from his position as an executive officer of the Company upon 60
days' notice, in which event the employee may during such 60-day period elect
to continue as an employee of the Company in a nonexecutive capacity in
accordance with the other terms of his employment agreement, as amended (a
"Continuation Election"), or may elect to terminate the agreement for "Good
Reason".
The employment agreement of Mr. Ensign, the Company's Chairman of the Board,
Chief Executive Officer and Chief Operating Officer, provides for a current
expiration date of May 31, 2000, 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 minimum
base salary and a minimum annual target bonus in the amount of $723,516 each,
increasing to $759,692 effective June 1, 1999.
The employment agreement of Mr. Schaeffer, the Company's President, Chief
Financial Officer and Treasurer, provides for a current expiration date of May
31, 2000, 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 minimum base salary and a minimum
annual target bonus in the amount of $694,575 each, increasing to $729,304
effective June 1, 1999.
The employment agreement of Mr. Richardson, the Company's Vice Chairman,
provides for a current expiration date of May 31, 2000, 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 minimum base salary and a minimum annual target bonus in the
amount of $723,516 each, increasing to $759,692 effective June 1, 1999.
The employment agreement of Mr. Alamo, a Senior Vice President--Operations
of the Company, provides for a current expiration date of May 31, 2000, 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 minimum base salary and a minimum annual
target bonus in the amount of $400,000 each.
16
The employment agreement of Mr. Solomon, a Senior Vice President--Operations
of the Company, provides for a current expiration date of May 31, 2000, 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 minimum base salary and a minimum 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 Plan was adopted for the
purpose of implementing the bonus compensation provisions of the Company's
employment agreements with its officers, including the ones for participating
officers 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, currently the Compensation Committee (the "Committee"), will
designate the specific executive officers who will participate in the Bonus
Plan for such performance period. Messrs. Ensign, Schaeffer and Richardson
were designated to participate in the Bonus Plan for the fiscal year of the
Company ended January 31, 1999.
The Bonus Plan is designed to comply with Section 162(m) of the Internal
Revenue Code of 1986, as amended, 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 establishes 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
17
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.
18
REPORT OF THE BOARD OF DIRECTORS AND THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
Introduction
The Company's policies and procedures relating to the compensation of its
executive officers for the fiscal year ended January 31, 1999 ("Fiscal 1999")
and the decisions relating to the respective levels and forms of their
compensation, including awards made pursuant to the Company's stock option
plans (collectively the "Plans"), were, except as indicated below, the
responsibility of a Compensation Committee (the "Committee"). The individuals
who served on the Committee during Fiscal 1999 were selected by the Board of
Directors from those directors not employees of the Company or any subsidiary
of the Company, each of whom qualifies as a "non-employee director" for
purposes of Rule 16b-3 under the Securities Exchange Act of 1934 and as an
"outside director" for purposes of Section 162(m) of the Internal Revenue Code
of 1986 (the "Code"). The only individuals who participated in the
deliberations of the Committee relating to executive compensation during
Fiscal 1999 were Michael D. McKee and William E. Bannen. Mr. McKee served as a
member of the Committee for the entire fiscal year and Dr. Bannen became a
member of the Committee and its Chairman on June 18, 1998, and served in that
capacity for the remainder of Fiscal 1999. During the period from February 1,
1998 until June 18, 1998, Arthur H. Bilger served as a member of the Committee
but did not engage in any deliberations of the Committee relating to executive
compensation during Fiscal 1999. None of the aforementioned members of the
Committee, who constituted the only persons who served on the Committee during
Fiscal 1999, has ever been an officer or employee of the Company or any
subsidiary of the Company.
Compensation Policies
The Committee's principal objective is to promote growth in stockholder
value through the establishment and implementation of compensation policies
designed to attract, retain and motivate skilled and talented executives.
During Fiscal 1999, the Committee engaged in a comprehensive review of the
Company's executive compensation with the assistance of the Company's outside
compensation consultants. In its review of the Company's executive
compensation and the actions it took with respect to executive compensation in
Fiscal 1999, the Committee was guided by the following compensation policies:
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.
Fiscal 1999 Compensation
Consistent with the Committee's compensation policies, the Company's
compensation of its executive officers during Fiscal 1999 included a
combination of salary and cash bonuses to reward short-term performance. To
encourage and reward longer-term performance, certain of the stock options of
certain of the Company's executives were repriced in December 1998, as more
fully described under "Repricing of Stock Options," below. In order to enhance
the Company's ability to attract and retain highly qualified gaming executives
and other valued employees, the Committee also approved a Supplemental
Executive Retirement Plan in June 1998, which is more fully discussed under
"Supplemental Executive Retirement Plan," below.
19
In order to more nearly align the compensation of Michael S. Ensign, the
Company's Chief Executive Officer, Glenn W. Schaeffer, the Company's President
and Chief Financial Officer and William A. Richardson, Vice Chairman of the
Company's Board of Directors, with the compensation of similarly situated
executives at other comparable gaming companies, their respective salaries for
Fiscal 1999 were increased by the Committee above the minimum base salary
levels established under the terms of their 1995 employment agreements
following the Committee's review of publicly available information concerning
executive compensation at comparable gaming companies. The base salaries of
the Company's other named executive officers who have employment agreements
with the Company were maintained at the respective levels specified in their
employment agreements. The base salary of each of the other named executive
officers was fixed by Michael S. Ensign without reference to any specific
criteria at a level intended to make such officer's base salary approximately
equal to 50% of his or her total compensation that would be earned for the
year if the full amount of such officer's target bonus were paid.
The Fiscal 1999 target bonus of each executive officer at the level of vice
president or above whose total cash compensation could exceed $1 million in
Fiscal 1999 (including Michael S. Ensign, who is discussed under "Compensation
of the Chief Executive Officer," below) was fixed by the Committee at a level
equal to his base salary. The bonus paid to each officer for Fiscal 1999 was
determined in part under the terms of the Company's 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, and in part at the discretion of the Committee. The portion of each
bonus awarded under the Bonus Plan for Fiscal 1999 was determined under a
formula established by the Committee with respect to Fiscal 1999 consistent
with the terms of the Bonus Plan (the "Bonus Plan Formula"). Pursuant to the
Bonus Plan Formula, the amount of each such executive officer's bonus
determined under the Bonus Plan, up to a maximum of 50%, could be earned based
on a comparison of the Company's adjusted net revenues for the period from
June 1, 1998 through January 31, 1999 (the "Performance Period") with certain
predetermined target levels. Pursuant to the Bonus Plan Formula, the other 50%
of each such executive officer's bonus determined under the Bonus Plan could
be earned if the Company achieved a cash flow margin for the Performance
Period at or above a level determined by reference to the cash flow margins
achieved by a predetermined group of other gaming companies, based on publicly
available financial information. The portion of each such executive officer's
target bonus reserved for determination on a discretionary basis was fixed by
the Committee at the amount which, if fully paid, would not exceed the
limitations applicable to deductible compensation under Section 162(m) of the
Code.
Following the end of Fiscal 1999, the Committee certified that the
performance targets established for the Performance Period had been met or
exceeded, permitting a payment of 100% of the bonuses payable under the Bonus
Plan Formula. Based on the Committee's subjective evaluation of their
respective levels of management responsibilities without reference to any
specific measure of corporate performance, discretionary bonuses were awarded
for Fiscal 1999 to each of the executive officers eligible for bonuses under
the Bonus Plan such that each such executive officer's total bonus for Fiscal
1999 was equal to 95% of his target bonus for the period.
Bonus awards to the executives not covered by the Bonus Plan are currently
paid quarterly and in Fiscal 1999 were determined based on the Chief Executive
Officer'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.
Supplemental Executive Retirement Plan
In August 1998, the Compensation Committee approved a Supplemental Executive
Retirement Plan (the "SERP") which is designed generally to provide annual
retirement benefits to eligible employees, including the Company's executive
officers, determined by reference to a normal retirement at age 65, taking
into account the
20
eligible employee's years of service credited under the SERP and his or her
highest annual compensation during the five-year period ending on termination
of employment with the Company. The SERP was approved by the Committee as part
of the Committee's efforts in Fiscal 1999 to enhance the Company's ability to
attract and retain highly qualified key employees in an environment where
competition for highly qualified employees has intensified in part as a result
of the continued development of large casino-resort properties, particularly
in Las Vegas. In determining the levels of retirement benefits applicable to
the Company's eligible employees under the SERP, the Committee took into
account the significant gap between actual compensation levels for eligible
employees, including executives, and the retirement benefits that are likely
to be available under tax-qualified retirement plans, and determined that a
supplementary executive retirement plan established on a "non-qualified" basis
(so that the benefit levels would not be subject to the limitations otherwise
applicable under the Code) would be valuable in filling this gap for the
Company's key employees. The Committee also included features in the SERP that
linked eligibility for benefits to continued service to the Company over a
long-term and restricted participants' ability to accept employment with
competitors of the Company (restrictions that would not be permitted in a tax-
qualified retirement plan). In light of the above, the Committee determined
that the adoption of the SERP, as part of the Company's overall executive
compensation arrangements, would encourage the development of longer term
relationships between the Company and its qualified key employees.
Repricing of Stock Options
The Company's stock option plans are intended to provide a means of granting
awards that increase the employee's motivation and incentive through the
opportunity to benefit from appreciation in the value of the Company's stock.
In Fiscal 1999, the Committee made no grants of stock options to the Company's
executive officers other than stock options which were granted in connection
with the December 10, 1998 repricing of the stock options of the Company's
executives (as described below in more detail). The Committee approved the
repricing in order to provide an increased incentive on the part of the
affected optionees to exert their best efforts on behalf of the Company. The
repriced options were granted with an exercise price of $11.25, representing
the fair market value of the Company's Common Stock on the grant date. The
repriced options of the Company's executive officers all had exercise prices
of $21.25 or higher. Each executive whose options were repriced was required,
as a condition of the repricing, to surrender to the Company previously
granted options. If the repriced options carried an exercise price in excess
of $30, the executive was required to surrender an option for two shares for
each one share covered by the new option, while repriced options carrying an
exercise price of $30 or less required the surrender of three shares for every
two shares covered by the new option. On the date of the repricing, the
repriced options held by the Company's executive officers had exercise prices
that had exceeded the level at which the Company's Common Stock had traded
during the preceding eight to 21 months (depending on the exercise price
carried by the particular option). Each repriced option was granted on the
same terms and conditions as the previously granted options that were
surrendered, except: (i) the exercise price of the new grant was $11.25 (the
fair market value of the Common Stock on the date of the repricing); (ii) the
number of shares subject to the newly granted option was less than the number
of shares for which options were surrendered by the executive (as described
above); and (iii) the earliest exercise date of the new options is June 10,
1999 (six months after the date of grant). The terms on which repriced options
were granted were uniform with respect to optionees, with no distinctions on
the basis of the executives' levels of supervisory or management
responsibilities or their potential contribution to the Company's long-term
success. Except as indicated, the respective numbers and terms of the options
already held by the Company's executive officers was not a factor in the
Committee's awards of stock options during Fiscal 1999. As a result of the
repricing, the Committee believes it has restored the incentive value of the
repriced options, linking the value of these options to the subsequent
performance of the Company's Common Stock.
21
Policy Regarding Deductibility of Compensation for Tax Purposes--Compliance
with Code Section 162(m)
Section 162(m) of 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.
Performance-based compensation will not be subject to the deduction limitation
if certain requirements set forth in the Code and applicable Treasury
Regulations are met. The Committee's policy during Fiscal 1999 was to
structure the performance-based portion of the compensation of the Company's
executive officers whose compensation might be subject to the limitations of
Code Section 162(m) so as to permit the compensation paid to such executives
to be allowed as a deduction. This was done by establishing a portion of the
possible bonuses for such officers' compensation in Fiscal 1999 under the
Bonus Plan, administered in a manner that complies with the requirements for a
performance-based compensation exemption under Code Section 162(m), and by
establishing a separate portion of the possible bonus awards for these
executives at a level that was anticipated to be fully deductible under
Section 162(m) without regard to the exemption for performance-based
compensation.
Compensation of the Chief Executive Officer
The compensation of Michael S. Ensign, the Company's Chief Executive Officer
who served in such capacity throughout Fiscal 1999, consisted of a base salary
and bonus which were determined by the Committee. In order to more nearly
align his compensation with the compensation of similarly situated executives
at comparable gaming companies, Mr. Ensign's salary for Fiscal 1999 was
increased by the Committee above the minimum base salary level established
under the terms of his 1995 employment agreement following the Committee's
review of publicly available information concerning executive compensation at
comparable gaming companies.
The Committee fixed Mr. Ensign's Fiscal 1999 target bonus at a level equal
to his base salary. The bonus paid to Mr Ensign for Fiscal 1999 was determined
in part under the terms of the Bonus Plan and in part at the discretion of the
Committee. The portion of his bonus awarded under the Bonus Plan was
determined under the Bonus Plan Formula, pursuant to which up to a maximum of
50% could be earned based on a comparison of the Company's adjusted net
revenues for the Performance Period with certain predetermined target levels.
Pursuant to the Bonus Plan Formula, the other 50% of the bonus determined
under the Bonus Plan could be earned if the Company achieved a cash flow
margin for the Performance Period at or above a level determined by reference
to the cash flow margins achieved by a predetermined group of other gaming
companies, based on publicly available financial information. The portion of
Mr. Ensign's target bonus reserved for determination on a discretionary basis
was fixed by the Committee at the amount which, if fully paid, would not
exceed the limitations applicable to deductible compensation under Section
162(m) of the Code.
Following the end of Fiscal 1999, the Committee certified that the
performance targets established for the Performance Period had been met or
exceeded, permitting a payment of 100% of the bonuses payable under the Bonus
Plan Formula. Based on the Bonus Plan Formula, Mr. Ensign received a bonus for
Fiscal 1999 under the Bonus Plan of $800,000. Based on the Committee's
subjective evaluation of his level of management responsibilities without
reference to any specific measure of corporate performance, a discretionary
bonus was awarded for Fiscal 1999 to Mr. Ensign such that his total bonus for
Fiscal 1999 was equal to 95% of his target bonus for the period. The Committee
believes that the method of measuring operating performance utilized in Fiscal
1999 to determine the levels of bonuses under the Bonus Plan, including that
of Mr. Ensign, is more appropriate than criteria based upon the market price
of the Company's Common Stock. This view is based on the Committee's belief
that while the performance of the Company's Common Stock over a longer period
is a
22
meaningful measure of the Company's performance, over the period of a single
fiscal year, an officer's annual compensation should not generally be so
closely tied to the vagaries of the stock market.
Compensation Committee Board of Directors
William E. Bannen, Chairman Michael S. Ensign, Chairman
Michael D. McKee William E. Bannen, M.D.
Arthur H. Bilger
Michael D. McKee
Donna B. More
William A. Richardson
Glenn W. Schaeffer
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The only individuals who served as members of the Company's Compensation
Committee during the fiscal year ended January 31, 1999 are Arthur H. Bilger
(a director of the Company who served until June 18, 1998) and the committee's
current members, Michael D. McKee, who served for all of fiscal 1999, and
William E. Bannen, who became a member of the committee and it's Chairman on
June 18, 1998. 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.
The only individual who served on the Board of Directors during the fiscal
year ended January 31, 1999 and participated in the determination of the
compensation of the Company's executive officers for such fiscal year while
also serving as an officer or employee of the Company was Michael S. Ensign.
See "Report of the Board of Directors and the Compensation Committee on
Executive Compensation." Mr. Ensign served as the Company's Chief Executive
Officer and as the Company's Chief Operating Officer for all of fiscal 1999.
Glenn W. Schaeffer, who served as the Company's President, Chief Financial
Officer and Treasurer for all of fiscal 1999, William A. Richardson, who
served as the Company's Vice Chairman of the Board from April 23, 1998 through
the balance of fiscal 1999 and as the Company's Executive Vice President for
all of fiscal 1999, and Richard P. Banis, a former officer of the Company who
served as a director of the Company until June 18, 1998, did not participate
in deliberations concerning the compensation of the Company's executive
officers for fiscal 1999.
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 a hotel and
casino it owns which is 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.
23
During fiscal 1999 the Lakeview Property was closed due to damage from a
fire and is currently being reconstructed. In 1998, the Company conveyed to
Lakeview its rights to the name "Hacienda" which Lakeview intends to use at
the Lakeview Property when it is reopened. In exchange for the Company's right
to the name Hacienda, Lakeview transferred to the Company its rights to the
"Gold Strike" name which is the moniker for two of the Company's properties.
24
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return (assuming reinvestment
of dividends) from January 31, 1994 to January 31, 1999, on the Company's
Common Stock with (i) the Dow Jones Industry Group (Casinos) (the "Casino
Group") and (ii) the Standard & Poor's 500 Stock Index (the "S&P 500 Index").
The graph assumes an investment of $100 on January 31, 1994 in each of the
Company's Common Stock, the stocks comprising the Casino Group and the stocks
comprising the S&P 500 Index.
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
[CHART APPEARS HERE]
.
1/31/94 1/31/95 1/31/96 1/31/97 1/31/98 1/31/99
Circus Circus $100 $72 $86 $95 $62 $37
Casino Group 100 69 86 85 80 55
S&P 500 Index 100 101 139 176 223 296
25
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 one meeting during the fiscal year ended
January 31, 1999, 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 Arthur H. Bilger, Chairman, and Michael S. Ensign.
The Audit Committee, which held five (5) meetings during the fiscal year
ended January 31, 1999, 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 Michael D. McKee, Chairman, Donna B. More and Rose McKinney-James.
The Compensation Committee, which held nine (9) meetings during the fiscal
year ended January 31, 1999, 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, as determined by the
Compensation Committee, the compensation of officers of the Company; (ii)
recommending to the Board of Directors appropriate levels (and the appropriate
forms) of compensation for such officers, (iii) performing such additional
functions as shall be authorized from time to time by the Board of Directors
relating to any stock option, stock purchase, stock incentive or other benefit
plan approved by the Board, including the administration of each stock option
and stock incentive plan of the Company currently in effect; and (iv) securing
the services of such professional consultants or other persons or firms, and
taking such other actions as the Compensation Committee deems necessary or
appropriate in connection with the performance of its duties. The current
members of the Compensation Committee are William E. Bannen, Chairman, and
Michael D. McKee.
The Directors' Nominating Committee, which held two (2) meetings during the
fiscal year ended January 31, 1999, evaluates and presents to the Board of
Directors, for its consideration, candidates to fill
26
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 E. Landau, General Counsel, Circus
Circus Enterprises, Inc., 3950 Las Vegas Boulevard South, Las Vegas, Nevada
89119. The current members of the Directors' Nominating Committee are William
A. Richardson, Chairman, and Arthur H. Bilger.
The Compliance Review Committee, which held three (3) meetings during the
fiscal year ended January 31, 1999, 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 Donna
B. More, Chairperson, William E. Bannen and Glenn W. Schaeffer.
The Board of Directors held a total of seven (7) meetings during the fiscal
year ended January 31, 1999. 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 certain transactions during the fiscal year ended
January 31, 1999 to which the Company was a party and a director or executive
officer of the Company or an immediate family member of such a director or
executive officer had an interest, see "Compensation Committee Interlocks and
Insider Participation."
Donna B. More, who is a member of the Board of Directors, is a partner in
the Chicago, Illinois law firm of Freeborn & Peters. During the fiscal year
ended January 31, 1999, such firm provided legal services to the Elgin,
Illinois joint venture entity in which the Company is a 50% participant. It
has also provided legal services to such joint venture entity during the
current fiscal year and it is anticipated that it will do so in the future.
Bottles of wine selected from five world class wine collections owned by
William A. Richardson, Vice Chairman of the Company, are being purchased for
sale at Aureole, an independently managed restaurant located in the Company's
recently opened Mandalay Bay Resort & Casino, and at other venues owned and
operated by the Company within the resort. Aureole, which features a four-
story wine tower, is owned by the Company and operated by Aureole Swan Court
LLC (the "Manager"), an unaffiliated third party which supervises the
management and operation of this restaurant. The value of the collections was
determined by an independent third party. The decision to purchase the wine
for resale at Aureole, representing approximately 95% of the total purchase
price, was made by the restaurant's wine master, who is an independent
consultant hired by the Manager. The decision to purchase the balance of the
wine was made by the food and beverage director for Mandalay Bay. The
aggregate price to be paid for the wine is $877,910, which is approximately
$104,278 below the independent third party's valuation. The terms of the
transaction were reviewed and approved by the Audit Committee of the Company's
Board of Directors.
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO CHANGE THE
COMPANY'S NAME
On March 3, 1999, the Board of Directors of the Company approved an
amendment to Article I of Company's Restated Articles of Incorporation to
change the Company's name to "[ ]".
27
The Board recommends to stockholders approval of the amendment at the meeting.
If the amendment is approved, Article I will be amended to read in its
entirety as follows:
"The name of the corporation is [ ]."
The Board of Directors believes the proposed name will better describe the
Company as it has evolved today. By identifying the Company with its newest
and largest resort, the new name will emphasize the Company's ownership and
operation of large casino resorts that target a broad range of clientele. It
will also identify the Company with its Masterplan Mile where the Company's
current development is concentrated. The Board also believes that the use of
the word "[ ]" in the name will more effectively identify to persons not
personally acquainted with the Company the nature of its business as a
developer, owner and operation of hotel/casino resorts.
The Board of Directors of the Company has approved the proposed amendment.
However, the amendment will not be adopted unless at least shares of
Common Stock, representing a majority of such shares outstanding on the Record
Date, are voted "For" its approval. If the amendment is approved by the
stockholders at the meeting, it will become effective when the Company files
with the Secretary of State of the State of Nevada a certificate with respect
to the amendment in accordance with the Nevada Revised Statutes.
The enclosed form of proxy provides a means for stockholders to vote for the
proposed amendment, to vote against the proposed amendment, or to abstain from
voting with respect to the proposed amendment. The individuals designated as
proxies will vote each properly executed proxy received in time for the
meeting as the proxy specifies. Any abstention or broker non-vote with respect
to the proposed amendment will have the effect of a vote against the proposed
amendment. The shares represented by a proxy which is executed and returned
but does not specify otherwise will be voted FOR approval of the proposed
amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT.
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, 2000. 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.
STOCKHOLDER PROPOSALS
The Company has been notified that stockholders intend to present the three
proposals set forth below for consideration at the meeting. The proposals have
been carefully considered by the Board of Directors. For the reasons stated
after each proposal and its supporting statement, the Board of Directors
recommends a vote against each proposal.
Stockholder Proposal Number 1--Resolution to Maximize Value
The following stockholder proposal has been submitted to the Company for
consideration at the meeting by William Steiner, 4 Radcliff Drive, Great Neck,
New York 11024, the owner of 1,550 shares of the Company's Common Stock. The
text of the proposal, exactly as submitted to the Company, is as follows:
28
Resolved that the shareholders of Circus Circus Enterprises, Inc.
Corporation urge the Circus Circus Enterprises, Inc. Board of Directors to
arrange for the prompt sale of Circus Circus Enterprises, Inc. to the highest
bidder.
Stockholder's Supporting Statement
The purpose of the Maximize Value Resolution is to give all Circus Circus
Enterprises, Inc. shareholders the opportunity to send a message to the Circus
Circus Enterprises, Inc. Board that they support the prompt sale of Circus
Circus Enterprises, Inc. to the highest bidder. A strong and or majority vote
by the shareholders would indicate to the board the displeasure felt by the
shareholders of the shareholder returns over many years and the drastic action
that should be taken. Even if it is approved by the majority of the Circus
Circus Enterprises, Inc. shares represented and entitled to vote at the annual
meeting, the Maximize Value Resolution will not be binding on the Circus
Circus Enterprises, Inc. Board. The proponent however believes that if this
resolution receives substantial support from the shareholders, the board may
choose to carry out the request set forth in the resolution.
The prompt auction of Circus Circus Enterprises, Inc. should be accomplished
by any appropriate process the board chooses to adopt including a sale to the
highest bidder whether in cash, stock, or a combination of both. It is
expected that the board will uphold its fiduciary duties to the utmost during
the process.
The proponent further believes that if the resolution is adopted, the
management and the board will interpret such adoption as a message from the
company's stockholders that it is no longer acceptable for the board to
continue with its current management plan and strategies.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION.
Board of Directors' Statement in Opposition to Stockholder Proposal Number 1
For the reasons set forth below, the Board of Directors of the Company
believes that the approval of the proposed resolution would not be in the best
interest of the Company or its stockholders.
The proposed resolution calls for the prompt sale of the Company to the
highest bidder without regard to the adequacy of the consideration and without
regard to the relative benefits to stockholders of other alternatives. The
implementation of the proposed resolution would be totally inconsistent with
the Board's duty to maximize stockholder value and protect the interests of
all of the Company's stockholders.
Consistent with its fiduciary duty, the Board of Directors seeks to manage
the Company's affairs in a manner it believes to be in the best interests of
the Company and its stockholders. To this end, the Board will carefully
consider any bona fide proposal which it believes has the potential to
increase stockholder value, including a bona fide proposal for the acquisition
of the Company. However, the fiduciary duty of the Board will not permit it to
facilitate a bid that does not reflect the intrinsic value of the Company.
The initiation of an "auction" in the manner contemplated by the proposed
resolution would, in the opinion of the Board, be inconsistent with the
stockholders' interests. In the Board's opinion, the initiation of such an
auction could create a "forced sale" atmosphere which could have the effect of
reducing the perceived value of the Company to a "fire sale" level, thus
forcing the Company to negotiate with bidders from a position of weakness.
Moreover, the uncertainty created by a publicly announced auction could
adversely affect the Company's relationships with its lenders, customers,
suppliers, employees and other constituencies, thus potentially lowering
rather than raising the value of the Company.
Management welcomes input from the Company's stockholders and will carefully
consider meaningful suggestions it receives to increase or maximize
stockholder value. However, for the reasons set forth above, the Board of
Directors unanimously urges a vote against the foregoing proposal.
The Board of Directors recommends a vote AGAINST Stockholder Proposal Number
1.
----------------
29
Stockholder Proposal Number 2--To Reconfigure the Board of Directors
The following stockholder proposal has been submitted to the Company for
consideration at the meeting on behalf of the California Public Employees'
Retirement System, Lincoln Plaza, 400 P Street, Sacramento, California 95814,
the owner of 853,300 shares of the Company's Common Stock. The text of the
proposal, exactly as submitted to the Company, is as follows:
Resolved, that the Board of Directors of Circus Circus Enterprises, Inc (the
Company) amend the Company's Bylaws to require that, at the earliest practical
date, a majority of the Board be comprised of Independent Directors. For the
purposes of this proposal, "Independent Directors" shall mean a director who:
(i) has not been employed by the Company in an executive capacity within
the last five years;
(ii) is not, and is not affiliated with a company that is, an advisor or
consultant to the Company, or a significant customer or supplier of
the Company;
(iii) has no personal services contract(s) with the Company or the
Company's senior management;
(iv) is not affiliated with a not-for-profit entity that receives
significant contributions from the Company;
(v) is not employed by a public company at which an executive officer of
the Company serves as a director;
(vi) has not had a relationship described in (i) through (v) above with any
affiliate of the Company; and
(vii) is not a member of the immediate family of any person described in
(i) through (vi) above.
The shareholders further recommend that this provision, after adoption by
the Board, may only be amended by the affirmative vote of the holders of the
outstanding common stock of the Company.
Stockholder's Supporting Statement
How important is the Board of Directors? As a trust fund with over 853,300
shares of the Company's stock, held for the benefit of our 1 million fund
participants, the California Public Employees' Retirement System (CalPERS)
believes that the Board is of paramount importance. Through this proposal, we
seek to promote strong, objective leadership on the Board.
The benefits of independent directors are generally well accepted. A
November 1992 survey of 600 directors of Fortune 1,000 corporations, conducted
by Directorship and endorsed by the Business Roundtable, found that 93 percent
believed that a majority of the Board should be composed of outside,
independent directors. A majority also believed that the nominating committee
should consist entirely of outside, independent directors. We agree.
The Company's Board is currently comprised of 8 directors. Only 4 meet the
criteria specified in the proposal, whereas the remainder have some
affiliation with the Company. We believe that the best way to ensure that this
Company's shareholders are always considered first is to instill
independence--independence from other affiliations and alliances.
Help us send a message to this Board. Please VOTE FOR THIS PROPOSAL.
30
Board of Directors' Statement in Opposition to Stockholder Proposal Number 2
The Board of Directors believes that individuals who are not part of the
Company's management should, to the extent consistent with the sound
administration of the election process, constitute a majority of the Board's
members. However, for the reasons discussed below, the Board believes that the
approval of the proposed resolution would not serve the best interests of the
Company or its stockholders.
The current Board has a total of eight members. Of these members, we believe
a majority of five should be deemed "independent" because each:
(i) Has never been employed by the Company in an executive capacity;
(ii) Is not, and is not affiliated with an entity that is, a
significant advisor, consultant, customer or supplier of the
Company;
(iii) Has no personal service contract(s) with the Company or the
Company's senior management;
(iv) Is not affiliated with not-for-profit entities which receive
significant contributions from the Company;
(v) Is not employed by a public company at which an executive officer
of the Company serves as a director;
(vi) Has not had a relationship described in (i) through (v) with any
affiliate of the Company; and
(vii) Is not a member of the immediate family of any person who has any
of the relationships described in (i) through (vi).
Of these five members, four would be deemed "independent directors" even as
that term is narrowly defined in the proposed resolution--a confirmation of the
Company's commitment to securing qualified independent directors. The fifth
would also be deemed "independent" under the proposal's narrow definition but
for the payment of legal fees to the law firm in which such director is a
member. Such fees are for legal services provided by the law firm to joint
ventures in which the Company is a participant. These fees have an
insignificant impact on the compensation paid to this director from the law
firm. We believe this director, who has extensive expertise in Illinois gaming
regulatory matters and resides in the Chicago area near the site of the
Company's only joint venture property located outside of Nevada, makes a
significant contribution to the Company as a member of the Board. The proposal
would exclude an individual with this director's qualifications from the
definition of an "independent director," as the proposal narrowly defines that
term, solely on account of her law firm's receipt of any legal fees from the
Company's joint ventures, notwithstanding her satisfaction of all of the
criteria described above. This clearly demonstrates in our view the undesirable
consequences of adopting a narrow inflexible standard for "independent"
directors which judges candidates solely on their "independence" without regard
to their other qualifications.
To address the need for independent directors, the Directors' Nominating
Committee attempts to seek out and present to the Board for its consideration
qualified individuals, with an emphasis on individuals who would
31
constitute "independent directors" if elected to the Board. The task of
identifying qualified individuals who are both independent and willing to
serve on the board of directors of a public company is, in the Board's
opinion, more burdensome for corporations engaged in the business of gaming
due to the regulatory burden imposed on the directors of such corporations.
Specifically, the regulatory provisions in a number of jurisdictions require
the members of the Board to submit to a detailed inquiry into their personal
affairs in connection with an investigation to determine their suitability to
serve in that capacity. These regulatory provisions also impose on the members
of the Company's Board their compliance with ongoing reporting requirements.
Accordingly, while the Board endorses the policy of maintaining a majority of
independent directors, to the extent consistent with the sound administration
of the selection process, it urges stockholders to vote against the foregoing
proposal which focuses on a director's independence (as narrowly defined in
the proposed resolution) rather than an evaluation of candidates which takes
into consideration all relevant facts, including the individuals'
independence.
The Board of Directors recommends a vote AGAINST Stockholder Proposal Number
2.
----------------
Stockholder Proposal Number 3--To Eliminate Classified Board of Directors
The following stockholder proposal has been submitted to the Company for
action at the meeting by Charles Miller, 23 Park Circle, Great Neck, New York
11024, the owner of 300 shares of the Company's Common Stock. The text of the
proposal is as follows:
"RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to
declassify the Board of Directors so that all directors are elected
annually, such declassification to be effected in a manner that does not
affect the unexpired terms of directors previous elected."
Stockholder's Supporting Statement
The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable for
it's implementation of those policies. I believe that the classification of
the Board of Directors, which results in only a portion of the Board being
elected annually, is not in the best interests of the Company and its
stockholders.
I believe that the Company's classified Board of Directors maintains the
incumbency of the current Board and therefore of current management, which in
turn limits management's accountability to stockholders.
The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an opportunity
to register their views on the performance of the Board collectively and each
director individually. I believe this is one of the best methods available to
stockholders to insure that the Company will be managed in a manner that is in
the best interests of the stockholders.
I believe that concerns expressed by companies with classified boards that
the annual election of all directors could leave companies without experienced
directors in the event that all incumbents are voted out by stockholders, are
unfounded. In my view, in the unlikely event that stockholders vote to replace
all directors, this decision would express stockholder dissatisfaction with
the incumbent directors and reflect the need for change.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION.
32
Board of Directors' Statement in Opposition to Stockholder Proposal Number 3
The Board of Directors disagrees with the suggestion in the supporting
statement to this proposal that the election of each director every year would
increase management's accountability to stockholders. Each of the Company's
directors is subject to the same standard of performance and responsibility to
serve the stockholders' interests throughout his or her term of office,
whether such term is three years or one year. Accordingly, the accountability
of the Company's directors is not diminished merely because they are not
elected annually. More significantly, the Board believes that the election of
directors by classes -- a common practice that has been adopted by many
publicly owned companies including more than 300 of the 500 companies
comprising the Standard & Poor's 500 Stock Price Index--offers significant
advantages which the proposal and the supporting statement fail to address.
The Board of Directors believes that the current division of the Company's
Board into three classes, with one class being elected each year for a three-
year term, provides the benefits of both continuity and stability in the
membership of the Board and its policies.
Classification of the Board promotes greater continuity of experience since
it increases the likelihood that at all times at least a majority of the
Board's members will have experience and familiarity with the business affairs
and operations of the Company. This continuity of experience, in the opinion
of the Board, permits more effective long-term strategic planning which can
contribute to the creation of long-term value for the stockholders.
The ability to offer a new candidate for election to the Board the prospect
of serving for a three-year term, coupled with the opportunity to benefit from
the experience of the continuing directors, in the opinion of the Board,
enhances the Company's ability to attract prominent and well-qualified
individuals who are able to commit the time and resources to understand the
Company and its operations. The Company believes the ability to offer a new
director the prospect of serving for a three-year term is of particular
benefit to corporations such as the Company that are engaged in the business
of gaming due to the regulatory burden imposed on the directors of such
corporations. Specifically, the regulatory provisions in a number of
jurisdictions require directors to submit to a detailed inquiry into their
personal affairs in connection with an investigation to determine their
suitability to serve in that capacity. In addition, these regulatory
provisions require the Company's directors to comply with ongoing reporting
requirements.
A classified board also encourages unsolicited bidders for control of the
Company to initiate arm's-length discussions with the Board, which is in a
position to best represent the interests of all of the stockholders, and under
such circumstances affords the Board the opportunity to perform its fiduciary
duty to the stockholders in a more orderly manner. At the same time, annual
elections, pursuant to which approximately one-third of the Board is elected
each year, offer stockholders an effective means to communicate their views on
the performance of the Board while maintaining the basic integrity of
corporate policy year to year for the benefit of all who rely on it.
The Board of Directors recommends a vote AGAINST Stockholder Proposal Number
3.
PROPOSALS OF STOCKHOLDERS FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders (addressed to the Company, 3950 Las Vegas Boulevard
South, Las Vegas, Nevada 89119, Attention: General Counsel) must be received
by the Company not later than January , 2000 to be considered for inclusion
in management's
33
proxy statement and form of proxy for that meeting. A proposal which does not
comply with the applicable requirements of Rule 14a-8 under the Securities
Exchange Act of 1934 will not be included in management's proxy soliciting
material for the 2000 Annual Meeting of Stockholders.
A stockholder of the Company may wish to have a proposal presented at the
2000 Annual Meeting of Stockholders, but not to have such proposal included in
the Company's proxy statement and form of proxy relating to that meeting. If
notice of any such proposal (addressed to the Company, 3950 Las Vegas
Boulevard South, Las Vegas, Nevada 89119, Attention: General Counsel) is not
received by the Company by March , 2000, then such proposal shall be deemed
"untimely" for purposes of Rule 14a-4(c) promulgated under the 1934 Act and,
therefore, the individuals named in the proxies solicited on behalf of the
Board of Directors of the Company for use at the Company's 2000 Annual Meeting
of Stockholders will have the right to exercise discretionary voting authority
with respect to such proposal.
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 $ 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/ Michael S. Ensign
Michael S. Ensign
Chairman of the Board
Las Vegas, Nevada
April , 1999
34
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 Michael S. Ensign 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 Islander
Ballroom at Mandalay Bay Resort & Casino, 3950 Las Vegas Boulevard South,
Las Vegas, Nevada, on Thursday, June 17, 1999 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:
(Change of address--Comments)
The election of two Class II Directors
to serve until their respective successors -------------------------------
are elected and shall qualify.
-------------------------------
Nominees:
-------------------------------
Class II William A. Richardson and Donna B. More
-------------------------------
This proxy will be voted as specified on the reverse side. If no specification
is made, this proxy will be voted FOR each nominee for director named above, FOR
approval of the proposed amendment to the Restated Articles of Incorporation,
FOR ratification of the appointment of Arthur Andersen LLP, and AGAINST approval
of the three stockholder proposals listed on the reverse side as Proposals 4, 5
and 6.
+-------------+
| SEE REVERSE |
| SIDE |
+-------------+
- --------------------------------------------------------------------------------
*DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET*
ADMISSION TICKET
1999 Annual Meeting
of
Circus Circus Enterprises, Inc.
-----------------------------------
Agenda
1. To elect two Class II directors;
2. To approve an amendment to the Restated Articles of Incorporation for the
purpose of changing the Company's name to [ ];
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, 2000;
4. To vote on three stockholder proposals opposed by the Board of Directors; and
5. To transact such other business as may properly be brought before the meeting
or any adjournment(s) thereof.
(See Reverse Side)
Please mark your
[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 each nominee listed on the reverse side, FOR Proposals 2 and 3 and AGAINST Proposals 4, 5 and
6.
+----------------------------------------------------------------------------------------------------------------------------------+
| The Board of Directors recommends a vote FOR each nominee listed on the reverse side and FOR Proposals 2 and 3. |
+----------------------------------------------------------------------------------------------------------------------------------+
| FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN|
|1. Election of [_] [_] 2. Approval of an [_] [_] [_] 3. Ratification of the [_] [_] [_] |
| Directors. amendment to Articles I appointment of Arthur |
| (see reverse) of the Restated Articles Andersen LLP as |
| of Incorporation to independent auditors to |
| FOR, except vote withheld change the Company's name examine and report on |
| for the following nominee: to [ ]. the Company's financial |
| statements for the |
| -------------------------- fiscal year ending |
| January 31, 2000. |
+----------------------------------------------------------------------------------------------------------------------------------+
+-----------------------------------------------------------------------+
| The Board of Directors recommends a vote AGAINST Proposals 4, 5 and 6.|
+-----------------------------------------------------------------------+
| FOR AGAINST ABSTAIN |
| 4. Stockholder Proposal-- [_] [_] [_] |
| Resolution to Maximize |
| Value. |
| |
| 5. Stockholder Proposal--To [_] [_] [_] |
| Reconfigure the Board of |
| Directors |
| |
| 6. Stockholder Proposal--To [_] [_] [_] |
| Eliminate Classified Board |
| of Directors |
+-----------------------------------------------------------------------+
7. 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.
SIGNATURE(S)____________________________ DATE__________ The undersigned hereby revokes any proxy heretofore given to vote upon
Please date this proxy and sign your name as it appears or act with respect to such shares and hereby ratifies and confirms all
hereon. When there is more than one owner, each should that the proxies listed on the reverse side, or either of them, may
sign. When signing as an attorney, administrator, lawfully do by virtue hereof.
executor, guardian or trustee, please add your title as
such. If executed by a corporation, give title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
*DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET*
[LOGO OF
CIRCUS CIRCUS] ADMISSION TICKET
CIRCUS CIRCUS ENTERPRISES, INC.
1999 Annual Meeting
Thursday, June 17, 1999
10:00 A.M. PDT
Islander Ballroom
Mandalay Bay Resort & Casino
3950 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 19, 1999.
-------------------------------
This Admission Ticket should not be returned with your proxy but should be retained and brought with you to the Annual Meeting.