<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COAST RESORTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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):
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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:
<PAGE>
COAST RESORTS, INC.
4500 WEST TROPICANA AVENUE
LAS VEGAS, NEVADA 89103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 13, 1998
The 1998 Annual Meeting of the Stockholders of Coast Resorts, Inc., a
Nevada corporation (the "Company"), will be held in the Mardi Gras Room at The
Orleans Hotel and Casino, 4500 West Tropicana Avenue, Las Vegas, Nevada 89103,
on Wednesday, May 13, 1998, commencing at 9:00 a.m. (Pacific Daylight Time) for
the following purposes:
1. To elect three Class II directors to serve until the 2001 Annual
Meeting of Stockholders and until their successors are elected and qualified
Class I directors; and
2. To consider and act upon such other business as may properly come
before the Annual Meeting and at any adjournment or postponement thereof.
Pursuant to the Bylaws of the Company, the time and date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and at any adjournment or postponement thereof is fixed as of the close
of business on April 13, 1998. Accordingly, only stockholders of record as of
the commencement of business on April 13, 1998 will be entitled to vote at the
Annual Meeting and any adjournment or postponement thereof, notwithstanding any
transfer of stock on the books of the Company thereafter.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE RETURN
ENVELOPE, WHICH REQUIRES NO POSTAGE IN THE UNITED STATES.
Stockholders who attend the Annual Meeting may vote in person even though
they have previously mailed their Proxy.
By Order of the Board Directors
/s/ J. Tito Tiberti
J. Tito Tiberti
Secretary
Las Vegas, Nevada
April 14, 1998
<PAGE>
COAST RESORTS, INC.
4500 WEST TROPICANA AVENUE
LAS VEGAS, NEVADA 89103
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1998
This Proxy Statement is first being mailed on or about April 14, 1998 to
stockholders of Coast Resorts, Inc., a Nevada corporation (the "Company"), of
record as of the close of business on April 13, 1998.
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of the Company for use at the Company's 1998 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 13, 1998, and at any
adjournment or postponement thereof. Pursuant to the Bylaws of the Company, a
Proxy must be filed with the Secretary of the Company at or before the Annual
Meeting in order to be valid. It may be revoked at any time prior to its use by
(1) providing a written revocation to the Secretary of the Company at its
offices, (2) executing and delivering a later dated Proxy, or (3) attending the
Annual Meeting and voting in person. Shares represented by an unrevoked Proxy
will be voted as directed by the stockholder. If no direction is given, such
shares will be voted for the election of the nominees named herein for election
as directors, and in the discretion of the proxy holders with respect to any
other matters properly presented to the Annual Meeting and at any adjournment or
postponement thereof.
VOTING RIGHTS
Only stockholders of record at the commencement of business on April 13,
1998 are entitled to notice of and to vote at the Annual Meeting. On that date,
there were outstanding 1,494.352.94 shares of the Company's common stock, $.01
par value (the "Common Stock"). The presence, either in person or by proxy, of
persons entitled to vote 50% of the Company's outstanding Common Stock is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Each share is entitled to one vote in connection with each matter
submitted for stockholder approval. Abstentions and any shares as to which a
broker or nominee has indicated that it does not have discretionary authority to
vote on a particular matter will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining whether approval of the stockholders has
been obtained with respect to any such matter and thus will have the effect of a
"No" vote in connection with each such matter submitted for stockholder
approval.
ELECTION OF DIRECTORS
Pursuant to the Articles of Incorporation and Bylaws of the Company, at the
Annual Meeting stockholders will elect directors to serve until the 2001 Annual
Meeting of Stockholders until their successors are duly elected and qualified.
The Board has nominated the three current directors to stand for re-election at
the Annual Meeting for the following terms: Messrs. F. Michael Corrigan, Charles
Silverman and Joseph Blasco- Class II for a term ending at the 2001 Annual
Meeting of Stockholders and until their successors have been elected and
qualified. The enclosed Proxy, unless indicated to the contrary, will be voted
for the Board's nominees.
Under the Company's Bylaws, in order to be effective, nominations by a
stockholder of a candidate for election as a director must be submitted to the
Secretary of the Company not later than sixty days in advance of the Annual
Meeting. Any such notice of nomination must set forth: (I) the name, age,
business address and residence address of each nominee proposed in such notice,
(ii) the principal occupation or employment of each such nominee, (iii) the
number of shares of capital stock of the Company beneficially owned by each such
nominee and (iv) such other information concerning each such nominee as would be
required under the rules and regulations of the Securities and Exchange
Commission ("SEC") in a proxy statement soliciting proxies for the election of
such nominees. Such notice must also include a written consent to serve as a
director, if elected, executed by each such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES LISTED
ABOVE.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following tables set forth the names and ages of the directors and
executive officers of the Company, their respective positions and the expiration
dates of their respective terms.
DIRECTORS AND EXECUTIVE OFFICERS
Term as a
Director
Name Age Position(s) Held Expires
________________________________________________________________________________
NOMINEES FOR RE-ELECTION
------------------------
F. Michael Corrigan 62 Director 1998
Charles Silverman 65 Director 1998
Joseph Blasco 54 Director 1998
OTHER DIRECTORS
---------------
Michael J. Gaughan 55 Director, Chairman of the Board 2000
and Chief Executive Officer
Harlan D. Braaten 47 Director, President and Chief 2000
Operating Officer
Jerry Herbst 59 Director, Vice President, Treasurer 1999
and Assistant Secretary
J. Tito Tiberti 52 Director, Vice President and Secretary 1999
Gage Parrish 44 Director, Vice President, Chief Financial 2000
Officer and Assistant Secretary
MICHAEL J. GAUGHAN. Mr. Gaughan has been a director of the Company since
its formation in September 1995 and is the Chairman of the Board and Chief
Executive Officer of the Company. He is also a director and Chairman of the
Board and Chief Executive Officer of Coast Hotels and Casinos, Inc. ("Coast
Hotels") and a director and President of Coast West, Inc. ("Coast West"), both
subsidiaries of the Company. Mr. Gaughan was a general partner of the Barbary
Coast Hotel and Casino, a Nevada partnership (the "Barbary Coast Partnership"),
from its inception in 1979 until January 1, 1996, the effective date of the
reorganization (the "Reorganization") in which the Barbary Coast Partnership and
the Gold Coast Hotel and Casino, a Nevada limited partnership (the "Gold Coast
Partnership" and, together with the Barbary Coast Partnership, the "Predecessor
Partnerships"), were consolidated and reorganized pursuant to an Agreement and
Plan of Reorganization, as supplemented and amended, entered into among each of
the Predecessor Partnerships, Gaughan-Herbst, Inc., the sole general partner of
the Gold Coast Partnership, and the Company. Mr. Gaughan served as the managing
general partner of the Gold Coast Partnership from its inception in December
1986 until the effective date of the Reorganization. Mr. Gaughan and Mr. Herbst
were the sole shareholders of Gaughan-Herbst, Inc., which was the sole corporate
general partner of the Gold Coast Partnership prior to the Reorganization. Mr.
Gaughan has been involved in the gaming industry since 1960 and has been
licensed as a casino operator since 1967.
<PAGE>
HARLAN D. BRAATEN. Mr. Braaten joined the Company as the President, Chief
Financial Officer and a director in October 1995, and was appointed Chief
Operating Officer in February 1996. Mr. Braaten is also the President and Chief
Operating Officer of Coast Hotels. Prior to joining the Company, Mr. Braaten was
employed in various capacities, including the general manager and, most
recently, senior vice president treasurer and chief financial officer of Rio
Hotel & Casino, Inc. In Las Vegas. From March 1989 to February 1991, Mr. Braaten
was vice president, finance of MGM/Marina Hotel and Casino in Las Vegas, Nevada.
Prior thereto, from November 1983 to March 1989, Mr. Braaten was property
controller for Harrah's in Reno, Nevada. Mr. Braaten has over 18 years of
experience in the Nevada gaming market.
JERRY HERBST. Mr. Herbst has been a director, Vice President, Treasurer
and Assistant Secretary of the Company since its formation in September 1995.
He is also a director and Vice President, Treasurer and Assistant Secretary of
Coast Hotels and of Coast West. Mr. Herbst has been the president of Terrible
Herbst Oil Company, an owner and operator of gas stations and car washes, since
1959. Mr. Herbst and Mr. Gaughan were the only shareholders of Gaughan-Herbst,
Inc., which was the sole corporate general partner of the Gold Coast Partnership
prior to the effective date of the Reorganization. Mr. Herbst has served as a
member of the board of directors of Bank of America since 1977 and of Nevada
Power Company since 1990.
J. TITO TIBERTI. Mr. Tiberti has been a director, Vice President and
Secretary of the Company since its formation in September 1995. He is also a
director and Vice President and Secretary of Coast Hotels and of Coast West.
Mr. Tiberti is the president, a director and a shareholder of, and together with
his immediate family controls, J. A. Tiberti Construction Company, Inc.
("Tiberti Construction"), a construction company which served as the general
contractor for the construction of The Orleans Hotel and Casino. He has also
served as managing partner of The Tiberti Construction Company, a real estate
rental and development company, since 1971. The Tiberti Company is the lessor
of the real property site for The Orleans. Mr. Tiberti has been involved in the
gaming industry for 18 years and was a general partner of the Barbary Coast
Partnership prior to the effective date of the Reorganization.
GAGE PARRISH. Mr. Parrish was named Vice President, Finance, Assistant
Secretary and a director of the Company and Coast Hotels in October 1995 and was
promoted to Chief Financial Officer in February 1996. Since 1986, he had been
the Controller and Chief Financial Officer of the Gold Coast Partnership prior
to the effective date of the Reorganization. From 1981 to 1986, Mr. Parrish
served as Assistant Controller of the Barbary Coast Partnership. Mr. Parrish is
a certified public accountant and has approximately 17 years experience in the
gaming industry.
F. MICHAEL CORRIGAN. Mr. Corrigan was elected as a director of the Company
and Coast Hotels effective as of March 1, 1996. Since July 1989, Mr. Corrigan
has served as the chief executive officer of Corrigan Investments, Inc., which
owns and manages real estate in Nevada and Arizona. In addition, Mr. Corrigan
is the chief executive officer of Corstan, Inc., a mortgage servicing company,
and was previously the owner, president and chief operating officer of Stanwell
Mortgage, a Las Vegas mortgage company.
CHARLES SILVERMAN. Mr. Silverman was elected as a director of the Company
and Coast Hotels effective as of March 1, 1996. Mr. Silverman is the president
and sole stockholder of Yates-Silverman, Inc., which specializes in developing
theme-oriented interiors and exteriors and is a leading designer of hotels and
casinos. Completed projects of Yates-Silverman, Inc. include New York, New
York, Excalibur, Circus Circus, Luxor, the Trump Taj Mahal, Trump Castle, and
Atlantic City Showboat. Yates-Silverman, Inc. worked on The Orleans. Mr.
Silverman has served as the president of Yates-Silverman, Inc. since its
inception in 1971.
JOSEPH BLASCO. Mr. Blasco was elected as a director of the Company and
Coast Hotels effective as of December 16, 1996. Since 1984, Mr. Blasco has been
a partner in the real estate development partnership which developed in Spanish
Trail community in Las Vegas, a project which includes over 1,200 homes, a 27-
hole golf course and a country club. Mr. Blasco is currently involved in
building The Centre and The Reserve at Spanish Trail, a mixed use commercial
development of office, retail and rental units.
Directors of the Company who are also employees of the Company receive no
compensation for service on the Company's Board of Directors or its committees.
All other directors receive an annual director's fee of $24,000, payable
quarterly in arrears. Directors may also be reimbursed for out-of-pocket
expenses incurred in connection with attending Board of Director or committee
meetings.
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES TO THE BOARD
The Board of Directors held ten regular meetings during 1997. During 1997,
each director attended at least 75% of the aggregate number of meetings of the
Board and the respective Committees on which he served while a member thereof.
The Board of Directors has two standing committees: the Audit Committee and the
Compensation Committee.
The Audit Committee, which was established in March, 1996, consisted of
Messrs. Corrigan and Blasco. The Audit Committee held two meetings during the
year 1997. The Audit Committee has responsibility for consulting with the
Company's officers regarding the appointment of independent public accountants
as auditors, discussing the scope of the auditor's examination and reviewing
annual financial statements, related party transactions, potential conflict
situations and corporate accounting policies.
The Compensation Committee, which was established in July, 1996, consisted
of Messrs. Corrigan, Silverman and Blasco in 1997. The Compensation Committee
held one meeting during the year 1996. No member of the Committee is a former
or current officer or employee of the Company or any of its subsidiaries. The
functions performed by the Compensation Committee include oversight of executive
compensation, review of the Company's overall compensation programs, and
administration of certain of the Company's incentive compensation programs.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Predecessor
Partnerships and the Company during 1995, 1996 and 1997 to each executive
officer (the "Named Executive Officers") whose compensation exceeded $100,000
(or would have exceeded $100,000 had such person been employed for the full
year), in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All Other
---------
Annual Compensation Compensation
------------------- ------------
Name and Principal Position Year Salary Bonus
--------------------------- ---- ------ -----
<S> <C> <C> <C> <C>
Michael J. Gaughan........................ 1997 $300,000 $ -- $ 4,750
Partner, Gold Coast Partnership and 1996 300,000 195,000 4,750(3)
Barbary Coast Partnership (1995); 1995 -- -- 628,000(5)
Chairman of the Board and Chief
Executive Officer of the Company
Harlan D. Braaten......................... 1997 $250,000 $250,000(4) $ 4,750
President and Chief Operating Officer, 1996 250,000 162,500 --
the Company(1) 1995 34,406(1) -- --
Gage Parrish.............................. 1997 $200,000 $ -- $ 4,750
Chief Financial Officers, Gold Coast 1996 150,000 52,500 3,040(3)
Partnership and the Company(2) 1995 128,741 25,000 3,840(3)
</TABLE>
(1) Mr. Braaten joined the Company in October 1995 as President and Chief
Financial Officer of the Company and Coast Hotels. Mr. Braaten was
appointed as Chief Operating Officer of the Company and Coast Hotels in
February 1996.
(2) Mr. Parrish served as Vice President, Finance and Controller of the Company
and Coast Hotels from September 1995 to February 1996, Mr. Parrish was
named Chief Financial Officer of the Company and Coast Hotels.
(3) The amount reflects matching contributions paid to the Company's 401(k)
Profit Sharing Plan and Trust.
(4) Amounts shown include guaranteed payments paid to Michael J. Gaughan under
the partnership agreements of the Barbary Coast Partnership and the Gold
Coast Partnership. Mr. Gaughan received no compensation from the
Predecessor Partnerships except as set forth above, although Mr. Gaughan
participated pro rata with the other partners in the distributions made by
the Predecessor Partnerships.
<PAGE>
CERTAIN EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Braaten pursuant to which Mr.
Braaten is entitled to receive a minimum base salary of $250,000. In addition,
in the event of a termination of Mr. Braaten's employment other than for
failure to comply with Nevada gaming regulations or his arrest on a felony
offense, Mr. Braaten will be entitled to receive a severance payment in an
amount equal to one year's base salary plus any pro rata bonus payment to which
he is entitled. The agreement also provides that in the event the Company makes
an initial public offering of the common stock of the Company, Mr. Braaten will
receive an option to acquire a number of share of such common stock of the
Company equal to two percent of the Company common stock issued and outstanding
(giving effect to the initial public offering) at the initial public offering
price. The option, if granted, will be vested as of the initial public offering
date with respect to one-third of the shares covered thereby, and will vest with
respect to one-third of the shares covered thereby on each of the first and
second anniversaries of the initial public offering. Mr. Braaten's employment
agreement further provides that if Messrs. Gaughan and Herbst cease to own in
the aggregate at least five percent of the outstanding stock of the Company,
then Mr. Braaten will be entitled to receive $250,000 from the Company if he is
terminated by the Company within six months after the date on which the
collective ownership of Company stock by Messrs. Gaughan and Herbst is less than
five percent of the outstanding stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until June 1996, the Company did not have a compensation committee or other
committee of the Board of Directors performing equivalent functions. During the
fiscal year ended December 31, 1997, the compensation paid to Michael J. Gaughan
was the same determined pursuant to the terms of the partnership agreements of
the Predecessor Partnerships. The compensation paid to Messrs. Braaten and
Parrish in fiscal year 1996 was determined by the Board of Directors of the
Company. All subsequent and future compensation determinations with respect to
the Named Executive Officers were recommended by the Compensation Committee and
voted upon by those members of the Board of Directors who are not Named
Executive Officers
BONUS PLAN
In fiscal 1996, the Company established a bonus plan designed to reward
executive officers and other key employees for their contributions to the
Company's business objectives and operating results. Bonuses may be awarded in
the discretion of the Board of Directors based upon achievement of financial
targets established by the Board of Directors on an annual basis, and generally
will be equal to a percentage of the recipient's base salary, depending on the
target achieved.
RETIREMENT PLAN
The Company maintains a defined contribution (401(k)) plan for its employees.
All employees not covered by the collective bargaining agreements are eligible
to participate. The employees may elect to defer up to 15% of their annual
compensation, subject to statutory limits. The Company makes matching
contributions of 50% of the first 6% of the employees' contribution. The
Company's contribution expense for the plan was approximately $1,176,000 and
$842,000 for the years ended December 31, 1996 and 1997 respectively. In
addition to the Company's 401(k) contributions, the Company contributes to
multi-employer plans under the collective bargaining agreements at the Barbary
Coast. The amount contributed for 1996 and 1997 was approximately $274,000 and
$313,000, respectively.
CERTAIN TRANSACTIONS
The Company maintains numerous racetrack dissemination contracts with Las
Vegas Dissemination Company, Inc. ("LVD"). John Gaughan, Michael J. Gaughan's
son, is the president and sole shareholder of LVD. LVD provides certain
dissemination and pari-mutuel services to the Gold Coast, Barbary Coast and The
Orleans. LVD has been granted a license by the Nevada Gaming Authorities to
disseminate live racing for those events and tracks for which it contracts and
has been granted the exclusive right to disseminate all pari-mutuel services and
race wire services in the State of Nevada. Under these dissemination contracts,
the Company pays to LVD an average of 3% of the wagers accepted for races held
at the racetracks covered by the respective contracts. The Company also pays to
LVD a monthly fee for race wire services. For the fiscal year ended December
31, 1997, the Company incurred expenses payable to LVD of approximately $1.1
million. The terms on which such services are provided are regulated by the
Nevada Gaming Authorities.
<PAGE>
Tiberti Construction served as the general contractor for the original
construction of the Gold Coast and for certain expansions thereof, and for the
original construction of the Barbary Coast and all expansions thereof. Tiberti
Construction was also the general contractor for the construction of The Orleans
and for the Phase II expansion in 1997. Tiberti Construction entered into a
guaranteed maximum price contract with the Company for the construction of
buildings and site improvements for a price not to exceed $100.0 million. This
amount was subsequently modified by the parties to $112.5 million. J. Tito
Tiberti owns approximately 6.7% of the outstanding common stock of Coast
Resorts, and is a director, Vice President and Secretary of the Company and
Coast Hotels and a direct of Coast West. Mr. Tiberti is the president, a
director and shareholder of an together with his immediate family members
controls Tiberti Construction. For the year ended December 31, 1997 Coast Hotel
and Casinos, Inc. incurred expenses payable to Tiberti Construction of
approximately $26.2 million.
The Company has entered into a lease with The Tiberti Company, a Nevada
general partnership, with respect to the real property on which The Orleans is
located. Mr. Tiberti, a director of the Company and a director and shareholder
of Coast Resorts, is the managing partner of The Tiberti Company. For the
fiscal year ended December 31, 1997, the Company paid rental expenses to The
Tiberti Company of approximately $2.1 million.
Michael J. Gaughan, Franklin Toti and Leo Lewis are the owners of LGT
Advertising, which serves as the advertising agency for the Gold Coast, the
Barbary Coast and The Orleans. LGT Advertising purchases advertising for the
Company's casinos from third parties and passes any discounts directly through
to the Company. LGT Advertising receives no compensation or profit for such
activities, and invoices the Company for actual costs incurred. LGT Advertising
uses the Company's facilities and employees in rendering its services, but does
not pay any compensation to the Company for such use. None of Messrs. Gaughan,
Toti or Lewis receives any compensation from LGT Advertising. For the fiscal
year ended December 31, 1997, Coast Hotels and Casinos, Inc. incurred expenses
payable to LGT Advertising of approximately $7.5 million.
The Company has purchased certain of its equipment and inventory for its
respective operations from RJS, a Nevada corporation that is owned by Michael J.
Gaughan's father and Steven Delmont, the Company's restaurant manager ("RJS").
RJS invoices the Company for actual costs incurred. For the fiscal year ended
December 31, 1997, the company incurred expenses payable to RJS of approximately
$1.4 million.
Michael J. Gaughan is the majority shareholder of Nevada Wallboards, Inc., a
Nevada corporation ("Nevada Wallboards"), which prints wallboards and parlay
cards for the use in the Company's race and sports books. Mr. Gaughan receives
no compensation from Nevada Wallboards. The Company expects to continue to
purchase wallboards and parlay cards from Nevada Wallboards. For the fiscal
year ended December 31, 1997, Coast Hotels and Casinos, Inc. incurred expenses
payable to Nevada Wallboards of approximately $198,000.
Charles Silverman, a director of the Company and Coast Hotels is the president
of Yates-Silverman, Inc., which has been retained by the Company as the designer
of The Orleans. For the fiscal year ended December 31, 1997, Coast Hotels and
Casinos, Inc. incurred expenses payable to Yates-Silverman of $176,500.
The foregoing transactions are believed to have been on terms no less
favorable to Coast Hotels and Casinos, Inc. than could have been obtained from
unaffiliated third parties and were approved by a majority of the disinterested
directors of the Company. Any future transactions between the Company and its
officers, directors, principal shareholders or affiliates will be on terms no
less favorable to the Company than may be obtained from unaffiliated third
parties, and will be approved by a majority of the disinterested directors of
the Company.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Rules adopted by the SEC under Section 16(a) of the Securities Exchange Act of
1934 (the "Exchange Act") require the Company's officers and directors, and
persons who own more than ten percent of the issued and outstanding shares of
the Company's equity securities, to file reports of their ownership, and changes
in ownership, of such securities with the SEC on SEC Forms 3, 4 or 5, as
appropriate. Such persons are required by the SEC's regulations to furnish the
Company with copies of all forms they file pursuant to Section 16(a).
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during its most recent fiscal year, and any written
representations provided to it, the Company believes that each of the officers,
directors, and owners of more than 10% of the outstanding Common Stock of the
Company are in compliance with Section 16(a) of the Securities Exchange Act of
1934 for the year 1997.
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of the common stock of the Company as of April 13, 1998 (i) each
person who, to the Company's knowledge, owns more than 5% of the outstanding
common stock, (ii) each director of the Company, (iii) each other person named
in the Summary Compensation Table below and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Name(1) Number of Percentage
- ---- --------- ----------
Shares
------
<S> <C> <C>
Michael J. Gaughan 447,576.04 29.95%
Jerry Herbst 255,738.08 17.11%
Jimma Lee Beam 104,529.41 6.99%
Franklin Toti 99,776.47 6.68%
J. Tito Tiberti 92,826.47(2) 6.21%
Harlan D. Braaten -- --
Gage Parrish -- --
Joseph Blasco -- --
F. Michael Corrigan 3,263.24 .22%
Charles Silverman -- --
All directors and executive officers as a group
(8 persons) 799,403.83 53.49%
</TABLE>
______________________________________________
(1) The address of Messrs. Gaughan and Toti is 4500 West Tropicana Avenue, Las
Vegas, Nevada 89103. The address of Mr. Herbst is 5195 Las Vegas Boulevard
South, Las Vegas, Nevada 89119. The address of Mr. Tiberti is 1806 South
Industrial Road, Las Vegas, Nevada 89102. The address of Ms. Beam is 2409
Windjammer Way, Las Vegas, Nevada 89107. The address of Mr. Corrigan is 4100
West Flamingo Road, Las Vegas, Nevada 89103.
(2) Includes 3,475 shares held by Mr. Tiberti's daughter, as to which Mr.
Tiberti disclaims beneficial ownership.
There is no public market for the Company's common stock.
<PAGE>
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31, 1997,
including the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, without the exhibits thereto, was on April 14, 1998, mailed
to stockholders of record at the close of business on April 13, 1998.
The company will provide a copy of the Annual Report and of the exhibits to
its Annual Report on Form 10-K for the fiscal year ended December 31, 1997 upon
the written request of any beneficial owner of the Company's securities as of
the record date for the Annual Meeting and reimbursement of the Company's
reasonable expenses. Such request should be addressed to Gage Parrish, Vice
President and Chief Financial Officer, 4500 West Tropicana Avenue, Las Vegas,
Nevada 89103.
COMPENSATION COMMITTEE REPORT
The Compensation committee of the Board of Directors was appointed in June
1996. For compensation decisions in 1997 and following, the Compensation
Committee will review and recommend compensation levels for executive officers
of the Company and oversee and administer the Company's executive compensation
programs. The Compensation Committee recommends, and the Board of Directors
determines compensation levels for the executive officers of the Company. All
members of the Compensation Committee are outside directors, who are not
eligible to participate in any of the compensation programs that the Committee
oversees.
The Company's executive compensation plans are designed to attract, retain,
motivate and appropriately reward individuals who are responsible for the
Company's short and long-term profitability, growth and return to stockholders.
Compensation for the Company's executive officers generally consists of salary
and an annual incentive award under the bonus plan. In the future, compensation
is expected to include long-term incentive awards such as stock options.
Executive officers also participate in a 401(k) plan, a medical plan and other
benefit plans available to employees generally.
Pay levels for executives generally are expected to be based on the level of
responsibility, scope and complexity of the executive's position relative to
other senior management positions internally and at other competitive gaming
companies.
The determination of salary increases, annual incentive awards and long-term
incentive awards is expected to be reviewed annually based on the performance of
the Company. Also factored into these decisions will be each executive's
individual performance and contribution to the Company's future positioning.
Although the components of compensation (salary, annual bonuses and long-term
incentive awards) will be reviewed separately, compensation decisions are
expected to be made based on a review of the total compensation level awarded
compared to other executives with similar gaming companies. In establishing
1997 compensation for the named executive officers, the Board of Directors took
into account the compensation paid to Messrs. Gaughan and Parrish and the levels
of compensation paid to executives in the gaming industry generally.
For the year 1998 it was determined that compensation levels for key
executives would remain the same as that for 1997 with performance based bonuses
to be awarded at the end of the year based on achievement by the Company of
targeted performance criteria.
By the Compensation Committee
Charles Silverman
F. Michael Corrigan
Joseph Blasco
<PAGE>
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any eligible stockholder (as defined below) of the Company wishing to have a
proposal considered for inclusion in the Company's 1999 proxy solicitation
material must set forth such proposal in writing and file it with the Secretary
of the Company on or before December 28, 1998. The Board will review any
proposals from eligible stockholders which it receives by that date and will
determine whether any such proposals will be included in its 1999 proxy
solicitation materials. Any eligible stockholder is one who is the record or
beneficial owner of at least 1% or $1,000 in market value of securities entitled
to be voted on the proposal at that annual meeting and has held such securities
for at least one year and who shall continue to own such securities through the
date on which the annual meeting is held.
SOLICITATION OF PROXIES
The cost of this solicitations shall be borne by the Company. Proxies may be
solicited by mail, telephone, or telegraph, or personally by directors, officers
and regular employees of the Company, none of whom will receive any special
compensation for such services. The Company will reimburse persons holding
stock in their name or in the names of their nominees for reasonable expenses of
forwarding proxy materials to their principals.
OTHER BUSINESS
The Board does not know of any other business which will be presented for
consideration at the Annual Meeting. If any other business properly comes
before the Annual Meeting or at any adjournment or postponement thereof, the
proxy holders will vote in regard thereto according to their discretion insofar
as such proxies are not limited to the contrary. Pursuant to the Company's
Bylaws, in order to present business at the Annual Meeting other than that
proposed by the Board, a stockholder must give written notice to the Secretary
of the Company not later than sixty days in advance of the Annual Meeting. Any
such notice must set forth as to each matter the stockholder proposes to bring
before the meeting: (I) the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Company's books and records, of
the stockholder proposing such business, (iii) the class and number of shares of
the Company beneficially owned by the stockholder and (iv) any material interest
of the stockholder in such business.
By Order of the Board of Directors
/s/ J. Tito Tiberti
J. Tito Tiberti
Secretary
<PAGE>
PROXY
COAST RESORTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE
1998 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints Michael J. Gaughan, Harlan
D. Braaten, and J. Tito Tiberti, and each or any of them (and, if two or more of
them act hereunder, by action of a majority of them), attorneys and proxies with
full power of substitution, to represent the undersigned and to vote all shares
of Common Stock, $.01 par value, of Coast Resorts, Inc. (the Company), that the
undersigned would be entitled to vote if personally present at the 1998 Annual
Meeting of Stockholders of the Company to be held at 9:00 a.m. (Pacific Daylight
Time) at The Orleans Hotel and Casino, 4500 West Tropicana Avenue, Las Vegas,
Nevada 89103, on Wednesday, May 13, 1998, and at any and all adjournments or
postponements thereof (the "Meeting"), as herein specified (or, if no direction
is given, FOR the nominees named below) and in such proxyholder's discretion
upon any other matter that may properly come before the Meeting.
A. ELECTION OF DIRECTORS
CLASS II (for election to serve until the 2001 Annual Meeting of
Stockholders and until their successors are elected and have qualified): F.
MICHAEL CORRIGAN, CHARLES SILVERMAN, JOSEPH BLASCO.
_____ FOR all nominees listed above (except as marked to the contrary above):
-or-
_____ WITHHOLD AUTHORITY to vote for all nominees listed above.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
THAT NOMINEE'S NAME IN THE LISTS ABOVE.
B. IN THE DISCRETION OF THE PROXYHOLDERS with respect to any other matter
which may properly come before the Meeting. The Board of Directors is
not aware of any other matters that will be presented at the meeting.
THE SHARES VOTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER INSTRUCTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED ABOVE.
IMPORTANT: Please sign your name or names exactly
as they appear on this Proxy. When signing as attorney,
executor or administrator, trustee or guardian, please give
your full title as such. If shares are held jointly, EACH
holder should sign.
_______________________________________________
Signature
________________________________________________________
Signature
DATE:____________________________________________, 1998.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND RETURN
THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
