SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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|_| Preliminary Proxy Statement
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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
GB Holdings, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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1
[SANDS LOGO]
GB HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
YEAR 2001
I cordially invite you to attend our Annual Meeting of Stockholders for the year
2001.
Place: The Sands Copa Room
Sands Hotel and Casino
Indiana Avenue and Brighton Park
Atlantic City, New Jersey 08401
(609) 441-4000
Time: Wednesday, December 19, 2001
10:00 A.M
Items of
Business: o To elect seven directors each for a term of one (1)
year or until his respective successor is elected
and qualifies.
o To ratify the appointment by the Board of Directors
of Arthur Andersen LLP as the independent auditors of
the Company for the fiscal year ending December 31,
2001.
o To act upon any other business that properly comes
before the meeting.
Record Date: You can vote if you are a stockholder of record as of the
close of business on November 16, 2001.
Stockholder
List: A list of stockholders eligible to vote at the Annual Meeting
of Stockholders will be available for inspection at the annual
meeting, and at least ten days prior to the annual meeting, at
the executive offices of the Company at Indiana Avenue and
Brighton Park, Atlantic City, New Jersey, 08401 during regular
business hours.
Proxy Voting: Your vote is important. Whether you plan to attend the
annual meeting or not, please complete, date, and sign the
accompanying proxy card as soon as possible and return it
promptly in accordance with the instructions on the enclosed
proxy card.
Sincerely,
By Order of the Board of Directors:
/s/ Frederick H. Kraus
--------------------------------------
November 26, 2001 Frederick H. Kraus,
Atlantic City, New Jersey Secretary
GB Holdings, Inc.
[SANDS LOGO]
PROXY STATEMENT
GB HOLDINGS, INC.
C/O SANDS HOTEL AND CASINO
INDIANA AVENUE AND BRIGHTON PARK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-4000
This Proxy Statement is solicited by the Board of Directors of GB
Holdings, Inc. (the "Company" or "The Sands") and is being furnished to the
stockholders of the Company in connection with its annual meeting of
stockholders to be held in the Sands Hotel and Casino in Atlantic City, New
Jersey on December 19, 2001 at 10:00 A.M. local time, and at any adjournments of
that meeting. We are first mailing this proxy statement and the enclosed proxy
card to stockholders on or about November 27, 2001.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What am I being asked to vote on?
Item One: The election of seven nominees to the Board of
Directors.
Item Two: The appointment of Arthur Andersen LLP as the Company's
independent auditors.
What constitutes a quorum for purposes of voting?
A majority of the outstanding shares of common stock, represented
either in person or by proxy at the meeting, will constitute a quorum for the
transaction of business. As of the record date on November 16, 2001, there were
10,000,000 shares of common stock outstanding, which constitutes all of the
outstanding voting securities of the Company.
Abstentions and broker non-votes (shares held by a broker or nominee
that are represented at the meeting, but with respect to which the broker or
nominee is not empowered to vote on a proposal) are included in determining the
presence of a quorum.
How many votes are needed to approve each item?
The affirmative vote of a plurality of the votes of shares of common
stock present in person or represented by proxy at the meeting is required for
the election of directors. Ratification of the appointment of Arthur Andersen
LLP as the Company's independent auditors requires the affirmative vote of the
holders of a majority of the shares of common stock present in person or
represented by proxy at the meeting.
Abstentions will have no effect on the outcome of the election of
directors or the proposed ratification of the appointment of the Company's
independent auditors. For any other item, abstentions and broker non-votes will
not be counted in determining the number of shares necessary for approval.
Broker Voting: Under the rules of the American Stock Exchange, the
election of directors and the appointment of the Company's independent auditors
are both considered to be "routine" matters upon which a brokerage firm that
holds your shares in its name may vote on your behalf, if you have not furnished
the firm voting instructions within a specified period prior to the annual
meeting.
How many votes do I have?
Each share of The Sands common stock that you own entitles you to one
vote. The proxy card shows the number of shares that you owned as of the record
date for voting, which was November 16, 2001.
How do I vote?
You may vote by proxy card or you may vote in person at the annual
meeting. We encourage you to vote in advance by proxy--even if you plan to
attend the meeting.
By Proxy: To vote by proxy card, you should complete, sign and
date the enclosed proxy card and return it promptly in the
enclosed envelope. One of the individuals named on your proxy
card (your "proxy") will vote your shares as you direct on
your proxy card. If you do not make specific selections, your
proxy will vote your shares as recommended by the current
Board of Directors, in this manner:
"FOR" the election of the seven director nominees;
"FOR" the ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors.
Can I revoke my proxy after I have sent it in?
Yes. You may revoke your vote at any time before the proxy
is exercised in the following ways:
You may attend and vote in person at the meeting, which
automatically revokes any previously received vote from you.
You may send in a later-dated proxy card. This will
automatically revoke your earlier vote.
2
You may notify the Secretary of the Company that you wish to
revoke your previously mailed proxy card. This must be done in
writing and sent to his attention at this address:
Frederick H. Kraus, Secretary
GB Holdings, Inc.
c/o Sands Hotel and Casino
Indiana Avenue and Brighton Park
Atlantic City, New Jersey 08401
What if my shares are held in the name of my broker, bank, or another
institution?
You may vote now by mailing in the enclosed proxy card. If you
want to vote in person at the meeting, you must bring to the
meeting an account statement or a letter from your institution
indicating that you were the beneficial owner of the shares on
November 16, 2001, the record date for voting.
3
ITEM 1
ELECTION OF DIRECTORS
Our Board of Directors currently consists of seven members, although
the Board has the authority to change the number of directors in its sole
discretion. At each annual meeting, all directors are elected to hold office
until the next annual meeting.
If any director resigns, dies, or is otherwise unable to serve out his
term, the Board may fill such vacancy. Each of the nominees has consented to
serve if elected. If any of them becomes unavailable to serve as a director, the
Board may designate a substitute nominee. In that case, the persons named as
proxies will vote for the substitute nominee designated by the Board.
The Board has nominated each of the seven current directors for
re-election. For biographical information about each of these nominees, please
see "Directors and Executive Officers" beginning on page 4.
The Board recommends a vote "FOR" each of these nominees:
Carl C. Icahn
Martin Hirsch
John P. Saldarelli
Michael L. Ashner
Alfred J. Luciani
Auguste E. Rimpel, Jr.
Harold First
DIRECTORS AND EXECUTIVE OFFICERS
The information set forth below is submitted with respect to the
nominees for re-election and executive officers who are not directors.
Name Age Position
- --------------------------- --- --------------------------------------------
Carl C. Icahn (1) 65 Chairman of the Board
Martin Hirsch (2) 46 Director
John P. Saldarelli (3) 60 Director
Michael L. Ashner (4) 49 Director
Harold First (5) 65 Director
Auguste E. Rimpel, Jr. (6) 62 Director
Alfred J. Luciani (7) 56 President, Chief Executive Officer and
Director
Frederick H. Kraus (8) 52 Executive Vice President, General Counsel
Timothy A. Ebling (9) 43 Executive Vice President, Chief Financial Officer,
Principal Accounting Officer
4
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(1) Carl C. Icahn has served as Chairman of the Board and a Director of
Starfire Holding Corporation (formerly Icahn Holding Corporation), a
privately-held holding company, and Chairman of the Board and a
Director of various subsidiaries of Starfire's, including ACF
Industries, Incorporated, a privately-held railcar leasing and
manufacturing company, since 1984. He has also been Chairman of the
Board and President of Icahn & Co., Inc., a registered broker-dealer
and a member of the National Association of Securities Dealers, since
1968. Since November 1990, Mr. Icahn has been Chairman of the Board of
American Property Investors, Inc., the general partner of American Real
Estate Partners, L.P., a public limited partnership that invests in
real estate. Mr. Icahn has been a Director of Cadus Pharmaceutical
Corporation, a firm that holds various biotechnology patents, since
1993. Since August 1998 he has also served as Chairman of the Board of
Lowestfare.com, LLC, an internet travel reservations company. From
October 1998, Mr. Icahn has been the President and a Director of
Stratosphere Corporation that operates the Stratosphere Hotel and
Casino. Mr. Icahn received his B.A. from Princeton University. Since
September 29, 2000, Mr. Icahn has served as the Chairman of the Board
of GB Holdings, Inc., GB Property Funding, Inc. and Greate Bay Hotel &
Casino, Inc. ("GBHC"), which owns and operates the Sands Hotel and
Casino in Atlantic City, NJ. Reference is made to certain other matters
relating to Mr. Icahn as set forth under the heading "Other Matters" in
the Company's filing on Form 10-K filed with the Commission on April 2,
2001 and incorporated by reference herein.
(2) Martin Hirsch has served as a Vice President of American Property
Investors, Inc. since March 18, 1991, where he is involved in
investing, managing and disposing of real estate properties and
securities. Mr. Hirsch was elected as Executive Vice President and
Director of Acquisitions of American Property Investors, Inc. in 2000.
From January 1986 to January 1991, he was at Integrated Resources, Inc.
as a Vice President where he was involved in the acquisition of
commercial real estate properties and asset management. From 1985-1986,
he was a Vice President of Hall Financial Group where he acquired and
financed commercial and residential properties. Mr. Hirsch currently
serves on the Board of Directors of Stratosphere Corp. He received his
MBA from The Emory University Graduate School of Business. Mr. Hirsch
has served as a Director of Holdings and GB Property Funding since
September 29, 2000 and as a Director of GBHC since February 28, 2001.
(3) John P. Saldarelli has served as Vice President, Secretary and
Treasurer of American Property Investors, Inc. (general partner of
American Real Estate Partners L.P.) since March 18, 1991. In June,
2000, Mr. Saldarelli was given the additional title of Chief Financial
Officer. Mr. Saldarelli was also President of Bayswater Realty
Brokerage Corp. from June 1987 until November 19, 1993, and Vice
President of Bayswater Realty & Capital Corp. from September 1979 until
April 15, 1993. In October 1998, Mr. Saldarelli was appointed to the
Board of Directors of Stratosphere. Mr. Saldarelli has served as a
Director of Holdings, and GB Property Funding since December 13, 2000
and GBHC since February 28, 2001.
5
(4) Michael L. Ashner has served as Chairman, President and CEO of Winthrop
Associates, a real estate consulting firm, since 1995. Mr. Ashner has
also served as General Partner of Cecil Associates, a limited liability
company that owns twenty Comfort Inns, since 1996. Mr. Ashner has been
CEO of Newkirk Associates, a limited liability company that owns and
manages more than 40 million square feet of office and retail space,
since 1997. Mr. Ashner has also been Managing Director of AP-USX, LLC,
a limited liability company that owns a 28 million square foot office
tower, since 1998. Since 1999, Mr. Ashner has served as President and
CEO of Presidio Capital Corporation, an investment banking firm. Mr.
Ashner has been President and CEO since 2000 of GFB-AP Fort, LLC, a
limited liability company involved in independent and assisted living
communities. Mr. Ashner has been President and Sole Shareholder since
1981 of Exeter Capital Corporation, which provides real estate
consulting to real estate investors. Mr. Ashner currently serves as a
director of the following publicly traded companies: Nexthealth, Inc.,
NBTY, Inc., Interstate Hotel Corporation and Burnham Pacific
Properties. Mr. Ashner has served as a Director of Holdings and GB
Property Funding since September 29, 2000, a Member of the Audit
Committee of Holdings since October 3, 2000 and as a Director of GBHC
since May 9, 2001.
(5) Harold First has been a financial consultant since 1993. From December
1990 through January 1993, Mr. First served as Chief Financial Officer
of Icahn Holding Corp., a privately held holding company. He has served
as a director of Taj Mahal Holding Corporation, a public casino and
gaming corporation, Trump Taj Mahal Realty Corporation, a privately
held real estate company, Memorex Telex N.V., a public technology
company, Trans World Airlines, Inc., a public airline company, ACF
Industries, Inc., a privately held railcar leasing and manufacturing
company, Cadus Pharmaceutical Corporation, a biotech research company,
Talk.com, a public long distance telephone service company, Marvel
Entertainment Group, Inc., a public entertainment company, Toy Biz,
Inc., a public toy company and vice chairman of the board of directors
of American Property Investors, Inc., the general partner of American
Real Estate Partners, L.P., a public limited partnership that invests
in real estate. Mr. First currently serves on the boards of directors
of Panaco Inc., an oil and gas drilling company, and Philip Services
Corporation, a leading integrated provider of industrial and metals
services. He is a Certified Public Accountant and holds a B.S. from
Brooklyn College. Mr. First has served as a Director and Member of the
Audit Committee of Holdings since April 25, 2001, and as a Director of
GB Property Funding and GBHC since June 6, 2001.
(6) Auguste E. Rimpel, Jr. has been a retired partner of
PricewaterhouseCoopers LLP (PwC) since 2000. He was with PwC and its
predecessor firm, Price Waterhouse, since 1983, most recently as
Managing Partner of International Consulting Services for the
Washington Consulting Practice of the firm. Prior to his tenure at PwC,
he served as a Partner with Booz Allen & Hamilton, Inc. and as a Vice
President of Arthur D. Little International, Inc. Dr. Rimpel currently
serves as Chairman of the Board of Trustees of the University of the
Virgin Islands. Dr. Rimpel has served as a Director and Member of the
Audit Committee of Holdings since April 25, 2001, and as a Director of
GB Property Funding and GBHC since June 6, 2001.
(7) Alfred J. Luciani, was elected as a member of the Board and President
and Chief Executive Officer of Holdings on October 3, 2000. Mr. Luciani
was elected as a member of the Board of GBHC and GB Property Funding on
March 5, 2001 and has served as President and Chief Executive Officer
of GBHC since November 5, 1999. Mr. Luciani had operated his own
consulting company, Luciani & Associates for the prior four years.
Prior to that, he served as President and Chief Executive Officer and
Director of Development of the Mashantucket Pequot Gaming Enterprise
(Foxwoods). Mr. Luciani was a director for Gold River Hotel and Casino
Corporation when it filed for reorganization under Chapter 11 of the
United States Bankruptcy Code, as amended, in February 1996.
6
(8) Frederick H. Kraus has served as Executive Vice President, General
Counsel and Secretary of each of the companies since 1998. Mr. Kraus
also served as a Director of each of the companies from January 1998 to
October 3, 2000 for Holdings and February 28, 2001 for GBHC and GB
Property Funding. Prior to 1998, Mr. Kraus served as Vice President,
Corporate Counsel and Secretary since 1994.
(9) Timothy A. Ebling has served as Executive Vice President, Chief
Financial Officer of each of the companies since 1998. Mr. Ebling also
served as a Director of each of the companies from January 1998 to
October 3, 2000 for Holdings and February 28, 2001 for GBHC and GB
Property Funding. Prior to 1998, Mr. Ebling served as Vice President of
Finance since 1994.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 29, 2000, a bankruptcy plan under Chapter 11 of the
Bankruptcy Code involving the Company and its subsidiaries sponsored by an
affiliate of Mr. Carl C. Icahn (the "Plan") became effective (the "Effective
Date"). Under the Plan, entities controlled by Mr. Icahn (the "Icahn Entities")
purchased 5,375,000 shares of Common Stock for an aggregate purchase price of
$65,000,000 and received 1,850,561 shares of Common Stock in connection with the
exchange of $62,833,000 principal amount of 10 7/8 First Mortgage Notes due
January 15, 2004 of GB Property Funding Corp. ("Funding") for $37,870,000
principal amount of 11% First Mortgage Notes of Funding due 2005.
GBHC's rights to the trade name "Sands" (the "Trade Name") were derived
from a license agreement between Greate Bay Casino Corporation ("GBCC") and an
unaffiliated third party. Amounts payable by the Sands for these rights were
equal to the amounts paid to the unaffiliated third party. As a result of the
Confirmation Order of the Bankruptcy Court and the occurrence of the Effective
Date and under the terms of the Plan, GBHC was assigned by High River Limited
Partnership, an entity controlled by Mr. Icahn ("High River"), the rights under
a certain agreement with the owner of the Trade Name to use the Trade Name as of
the Effective Date. High River received no payments for its assignment of these
rights. Payment is made directly to the owner of the Trade Name. The calculation
of the license fee is the same as under the previous agreement.
On October 12, 2001, the Icahn Entities, as holders of 11% Notes of
Funding due 2005, received a consent payment in the aggregate amount of
$1,118,670 in connection with Funding's solicitation of consents of holders to
certain amendments to the indenture governing such Notes.
7
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the beneficial ownership of Company common stock ("Common
Stock") as of November 16, 2001, for: (1) each director, (2) each executive
officer named in the Summary Compensation Table, and (3) the executive officers
and directors as a group. There were 10,000,000 shares of Common Stock
outstanding on November 16, 2001.
Name Number of Shares Percent
- ---- ---------------- -------
- -------------------------------------------------------------------------------
Carl C. Icahn 7,748,744 77.49%
- -------------------------------------------------------------------------------
Martin Hirsch -- --
- -------------------------------------------------------------------------------
John P. Saldarelli -- --
- -------------------------------------------------------------------------------
Michael L. Ashner -- --
- -------------------------------------------------------------------------------
Alfred J. Luciani -- --
- -------------------------------------------------------------------------------
Auguste E. Rimpel, Jr. -- --
- -------------------------------------------------------------------------------
Harold First -- --
- -------------------------------------------------------------------------------
Alfred J. Luciani -- --
- -------------------------------------------------------------------------------
Frederick H. Kraus -- --
- -------------------------------------------------------------------------------
Timothy A. Ebling -- --
- -------------------------------------------------------------------------------
Executive Officers and Directors 7,748,744 77.49%
- ------------------------------------------------------------------- -----------
8
PRINCIPAL STOCKHOLDERS
The table below shows the amount of Common Stock beneficially owned by
each person who to our knowledge owned 5% or more of our outstanding Common
Stock on November 16, 2001.
Name and Address Shares Owned Approximate %
---------------- ------------ -------------
Carl C. Icahn 7,748,744 77.49%
c/o Icahn Associates Corp.
767 Fifth Avenue, 47th Fl.
New York, NY 10153
Merrill Lynch & Co., Inc. 2,068,299 20.68%
World Financial Center
North Tower
250 Vesey Street
New York, NY 10381
9
THE BOARD OF DIRECTORS
The Board met five times in 2000. Each incumbent director attended more
than 75% of the year's board meetings and meetings of committees of which such
director was a member, during their respective periods of service.
MEMBERSHIP OF BOARD COMMITTEES
Name Board Audit1 Compensation2
---- ----- ------ -------------
Carl C. Icahn X
Martin Hirsch X x
John P. Saldarelli X
Michael L. Ashner X x x
Alfred J. Luciani X
Auguste E. Rimpel, Jr. X x
Harold First X x
- -----------
1 An Audit Committee charter in compliance with the requirements of the American
Stock Exchange (the "AMEX") was adopted in March 2001 in connection with the
listing of the Common Stock on the AMEX.
2 The Compensation Committee was established on November 22, 2000.
10
COMMITTEES OF THE BOARD
The Sands Board has two standing committees: (i) the Audit Committee
and (ii) the Compensation Committee.
AUDIT COMMITTEE
The Audit Committee is comprised of Messrs. Ashner, Rimpel and First
and provides oversight of the accounting, auditing, internal control and
financial reporting practices of the Company. The committee reviews the
independence of the independent auditors, recommends to the Board the engagement
and discharge of independent auditors, reviews with the independent auditors
their audit reports, their scope of review, their findings and their
recommendations. The committee reviews the scope and results of Company
procedures for internal auditing, the adequacy of internal accounting controls,
and directs and supervises special investigations. The committee meets both with
and without management in attendance. An Audit Committee charter in compliance
with the requirements of the American Stock Exchange (the "AMEX") was adopted in
March, 2001 in connection with the listing of the Common Stock on the AMEX. The
members of the Audit Committee are independent (as independence is defined in
Section 121(A) of the AMEX's listing standards). An annual report has been
prepared by the Audit Committee in which it discusses the duties it has
discharged on behalf of the Company. This report begins on page 13.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of Messrs. Hirsh and Ashner and
determines the salary, bonus and other compensation for executive officers of
the Company, as well as the overall employment and compensation practices of the
Company in general. The Compensation Committee was established on November 22,
2000. Although the Compensation Committee took no formal action between such
date and the end of the Company's fiscal year on December 31, 2000, an annual
report has been prepared by the Compensation Committee in which it discusses the
compensation of the Sands' executives and the philosophy behind that
compensation. This report begins on page 15.
11
DIRECTOR COMPENSATION
Annual Directors' Fees. We compensate directors who are not employees
of The Sands or its subsidiaries with a fee of $22,500 per year. We do not
compensate our employees for service as a director.
Meeting Expenses. We reimburse all employee and non-employee directors
for travel and other related expenses related to their attendance at board
meetings, committee meetings, annual meetings, and other Company business
functions.
COMPENSATION COMMITTEE INTERLOCKS and INSIDER PARTICIPATION
Mr. Icahn (including certain related entities) is actively involved in
the gaming industry and currently owns beneficially 77.49% of the Common Stock
outstanding. Casinos owned or managed by Mr. Icahn may directly or indirectly
compete with the Company. In addition, the potential for conflicts of interest
exists among the Company and Mr. Icahn for future business opportunities. Mr.
Icahn may intend to pursue other business opportunities and there is no
agreement requiring that such additional business opportunities be presented to
the Company.
EXECUTIVE COMPENSATION
Employment Agreements
The Company emerged from Chapter 11 reorganization on September 29,
2000, and is in the process of reviewing its compensation policies. The Company
has employment agreements with Timothy A. Ebling, Frederick H. Kraus and Signe
C. Huff. The key provisions of these agreements are outlined below.
Frederick H. Kraus, Executive Vice President, General Counsel and
Secretary of the Company, is under an employment agreement, amended as of March
11, 1998, in such capacities continuing through December 31, 2002. The terms of
the agreement provide for an annual base salary of $225,000, subject to annual
increases on each anniversary date of the agreement equal to no less than the
change in the Consumer Price Index, as defined, and no more than five percent.
Timothy A. Ebling, Executive Vice President and Chief Financial Officer
of the Company, is under an employment agreement, amended as of March 11, 1998,
in such capacities continuing through November 30, 2002. The terms of the
agreement provide for an annual base salary of $190,000, subject to annual
increases on each anniversary date of the agreement equal to no less than the
change in the Consumer Price Index, as defined, and no more than five percent.
In October 2000, Mr. Ebling's base salary was increased to $250,000 and the
Company and Mr. Ebling are in the process of negotiating a new employment
agreement at the same salary level.
Signe C. Huff, Senior Vice President -- Marketing Operations and Human
Resources, is under an employment agreement, amended as of March 11, 1998, in
such capacity continuing through November 30, 2002. The terms of the agreement
provide for an annual base salary of $165,000, subject to annual increases on
each anniversary date of the agreement equal to no less than the change in the
Consumer Price Index, as defined, and no more than five percent.
12
In addition, in connection with the Company's reorganization under
Chapter 11 of the Bankruptcy Code on September 29, 2000, the United States
Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court")
approved a Stay Bonus and Severance Plan for certain management employees,
including Mr. Kraus and Mr. Ebling. Under the Stay Bonus Plan, Mr. Kraus and Mr.
Ebling received a bonus equal to 75% of their base salary. To the extent
provided in the Severance Plan, if the Reorganized Entity, as defined in the
Severance Plan, terminated the employment of Mr. Kraus or Mr. Ebling without
cause, as defined in their employment agreements, Mr. Kraus and Mr. Ebling would
be entitled to a lump sum payment equal to the greater of two years of their
base salary or the remaining term of their employment agreements.
Employee Retirement Savings Plan
GBHC participated in the Hollywood Casino Corporation and Subsidiaries
Retirement Savings Plan (the "Savings Plan"), a qualified defined contribution
plan for the benefit of all of GBHC's employees who satisfy certain eligibility
requirements through December 31, 1998. The Savings Plan is qualified under the
requirements of Section 401(k) of the Internal Revenue Code allowing
participating employees to benefit from the tax deferral opportunities provided
therein. All employees of GBHC who have completed one year of service, as
defined, and who have attained the age of 21, are eligible to participate in the
Savings Plan.
Effective January 1, 1999, the Company administers and participates in
the Sands Retirement Plan, a qualified defined contribution plan for the benefit
of all of the Company's employees with the same requirements and benefits of the
predecessor plan. Except for the change in name, this plan remains substantially
unchanged.
The Savings Plan provides for a matching contribution by the Company
based upon certain criteria, including levels of participation by the Company's
employees. The Company incurred matching contributions totaling approximately
$753,000 for the year ended December 31, 2000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for, among other
things, reviewing related-party transactions, reviewing the engagement and
performance of the independent auditors for the Company, reviewing with the
auditors the plan and scope of the audit and the audit fees, monitoring the
adequacy of reporting and internal controls, and meeting periodically with
internal and independent auditors. In accordance with the rules of the American
Stock Exchange, all of the members of our Audit Committee are independent. The
Board has adopted a written Charter of the Audit Committee, a copy of which is
attached to the Company's report on Form 10-K filed with the Securities and
Exchange Commission on April 2, 2001 and incorporated herein by reference.
13
An Audit Committee meeting was held on March 20, 2001 and attended by
each of its then current members, Michael Ashner and Barbara Lang. Since April
25, 2001, the Audit Committee has been comprised of Messrs. Ashner, First and
Rimpel.
In connection with the meeting held on March 20, 2001, the Audit
Committee discussed with the independent auditors the matters required to be
discussed by Statements of Accounting Standards ("SAS") 61 and received the
written disclosures and the letter from the independent accountants required by
Independent Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees), and at such
meeting, discussed with the independent accountant the independent accountant's
independence. Based on the foregoing review and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 2000.
Fees
Fees of Arthur Anderson LLP for the fiscal year 2000 audit and review
of Forms 10-Q were $142,500. Aggregate fees billed for all other services
rendered by Arthur Andersen LLP for the fiscal year were approximately $409,000,
which included approximately $254,000 in consulting fees related to bankruptcy
and restructuring services rendered prior to the Effective Date.
Approved by the Audit Committee of the Board of Directors:
Michael L. Ashner
Harold First
Auguste E. Rimpel, Jr.
14
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors
is composed of Messrs. Hirsch and Ashner. The Committee is responsible for
establishing and administering the compensation philosophy, policies and
programs applicable to the executive officers of the Company, including specific
decisions regarding each executive officer's compensation and the overall
compensation practices of the Company.
The Sands is largely dependent upon the judgment, initiative and effort
of its executive officers for the successful conduct of its business. Therefore,
the Committee's primary objective is to establish plans that will attract,
retain, and motivate highly skilled and talented executives in a dynamic and
competitive industry. This is accomplished by ensuring that executive
compensation is competitive within the gaming industry as well as within other
public companies of similar size, scope, and revenues.
The Committee reflects the performance and contribution of each
executive officer in its compensation determinations.
The Company emerged from Chapter 11 reorganization on September 29,
2000, and is in the process of reviewing its compensation policies.
Approved by the Compensation Committee of the Board of Directors:
Martin Hirsch
Michael L. Ashner
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THE SANDS
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the Company's
Chief Executive Officer, and any person who served in such or similar capacity
during the fiscal year ended December 31, 2000, and each of its other four most
highly compensated executive officers who were serving as executive officers of
the Company at the end of the last completed fiscal year and whose total annual
salary and bonus exceeded $100,000 (the "named executive officers") for services
rendered during its fiscal years ended 1998, 1999, and 2000.
Annual Compensation Long-Term
----------------------------------------- Compensation
Other Annual Awards/ All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation (1)
--------------------------- ---- --------- --------- ------------ ------------ ----------------
Alfred J. Luciani 2000 $318,745 $ -- $ 18,000 $ -- $ 114
Chief Executive Officer, 1999 47,885 -- 3,000 -- --
President and Director 1998 -- -- -- -- --
Frederick H. Kraus 2000 235,815 176,861 10,800 -- 4,000
Executive Vice President, 1999 230,265 -- 10,800 -- 2,878
General Counsel, Secretary 1998 225,000 -- 10,800 -- 4,000
Timothy A. Ebling 2000 207,610 149,349 8,400 -- 4,000
Executive Vice President, 1999 194,446 -- 8,400 -- 3,514
Chief Financial Officer 1998 190,000 -- 8,400 -- 3,668
Principal Accounting Officer
William Cooney (2) 2000 214,038 -- -- -- 4,000
Vice President of 1999 193,558 -- -- -- 4,000
Marketing 1998 101,052 10,193 4,500 -- 2,782
Signe C. Huff (3) 2000 186,522 45,398 8,400 -- 4,000
Senior Vice President 1999 180,554 -- 8,400 -- 3,185
of Hotel Operations 1998 175,361 -- 8,400 -- 3,186
(1) Includes matching contributions by GBHC to The Sands Retirement Savings
Plan on behalf of the named executive officer.
(2) William Cooney has served as Executive Director of Slot Operations/Slot
Hosts, Vice President of Marketing and Vice President of Casino
Marketing during 2000. Prior to 2000, Mr. Cooney served as Vice
President of Player Development since 1999. Prior to 1999, Mr. Cooney
served as Executive Director of Player Development/Table Games since
1998. Prior to 1998, Mr. Cooney served as Director of Player
Development for both slots and table games since 1994.
(3) Signe C. Huff served as Senior Vice President of Hotel Operations since
1995. From 1989 to 1995 Ms. Huff served as Vice President of Hotel
Operations. Prior to 1989, Ms. Huff held various senior hotel operating
positions with GBHC.
(4) Represents payment of a Bankruptcy Court approved bonus for certain
management employees as an incentive for them to stay through the
bankruptcy proceedings (Stay Bonus).
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STOCK PERFORMANCE GRAPH
The Company listed its Common Stock on the American Stock Exchange on
March 27, 2001. Prior to such listing date, no public market existed for the
Common Stock, and therefore no meaningful comparison may be made between the
performance of the Common Stock and the returns of a broad equity market index
and industry index.
ITEM 2
APPROVAL AND RATIFICATION OF SELECTION OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS
The Board recommends a vote "FOR" Item 2.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") requires the directors and officers of the Company,
as well as any person who becomes the beneficial owner of more than 10% of a
registered class of the Company's equity securities (collectively, the
"Reporting Persons"), to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of The Sands
common stock and equity securities of the Company. The Reporting Persons are
required to furnish the Company with all Section 16(a) forms they file.
To our knowledge, based solely upon a review of copies of such reports
furnished to us by or on behalf of the Reporting Persons, all Section 16(a)
filing requirements applicable to the Reporting Persons have been complied with
during the fiscal year ended December 31, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
Our independent accountants for 2000 are Arthur Andersen LLP. Arthur
Andersen LLP is expected to have a representative present at the annual meeting
who will have the opportunity to make a statement if such representative desires
to do so and is expected to be available to respond to appropriate questions.
Arthur Andersen LLP has been formally engaged as the accountant to audit our
financial statements for the year ending December 31, 2001.
NEXT ANNUAL MEETING
Any stockholder intending to submit a proposal for inclusion in the
proxy statement for the 2002 annual meeting must meet the eligibility and other
criteria required under Rule 14a-8 of the Securities and Exchange Act of 1934,
as amended. The proposal must be in writing and delivered to our Secretary,
Frederick H. Kraus, no later than March 1, 2002 in order to be considered
timely. The 2002 annual meeting is tentatively scheduled for May 22, 2002.
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OTHER BUSINESS
The Board of Directors knows of no other business which will be
presented for action by the stockholders at this annual meeting. However, if any
business other than that set forth in the Notice and this proxy statement should
be presented at the annual meeting, the proxies named on the enclosed proxy card
will use their discretion to vote all proxies in accordance with their best
judgment. The Company will pay the cost of preparing and mailing this proxy
statement and proxy card to its stockholders.
The Company's 2000 annual report on SEC Form 10-K, including financial
statements for the period ended December 31, 2000, and the Company's quarterly
report on SEC Form 10-Q for the period ended September 30, 2001 accompany these
proxy materials. All are being mailed to stockholders of record as of November
16, 2001 on or about the 27th day of November, 2001.
By Order of the Board of Directors:
/s/ Frederick H. Kraus
- ------------------------------
Frederick H. Kraus
Secretary
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