<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
ELSINORE CORPORATION
- - --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ELSINORE CORPORATION
202 FREMONT STREET
LAS VEGAS, NEVADA 89101
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
Notice is hereby given that the annual meeting of stockholders of Elsinore
Corporation, a Nevada corporation (the "Company"), will be held in the Kings
Pavillion at the Four Queens Hotel and Casino, 202 Fremont Street, Las Vegas,
Nevada, on May 11, 1995, at 9:30 o'clock a.m., for the following purposes:
(a) To elect six directors;
(b) To approve Amendment No. 2 to the 1993 Long-Term Stock Incentive Plan
to increase the number of shares available under the Plan to 1,980,000
from 1,200,000;
(c) To ratify the appointment of KPMG Peat Marwick as independent auditors
of the Company for the period ending December 31, 1995; and
(d) To transact any other business which may properly come before the
meeting.
Only stockholders of record on the books of the Company at the close of
business on March 15, 1995 will be entitled to notice of and to vote at the
meeting and at any postponements or adjournments thereof. The stock transfer
books will not be closed.
Stockholders are cordially invited to attend the meeting in person.
Stockholders who wish to have their stock voted and do not intend to attend the
meeting should complete, date and sign the enclosed proxy and return it
promptly by mail in the envelope provided. Stockholders who have previously
voted by proxy may attend the meeting and revoke their proxies by voting in
person.
On Behalf of the Board of Directors
Ernest E. East
Secretary
Las Vegas, Nevada
April 7, 1995
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. YOUR VOTE IS IMPORTANT.
<PAGE>
April 7, 1995
PROXY STATEMENT
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Elsinore Corporation (the "Company") to be used at the annual meeting of
stockholders to be held at the Four Queens Hotel and Casino, 202 Fremont
Street, Las Vegas, Nevada on May 11, 1995, at 9:30 o'clock a.m. and at any
postponements or adjournments thereof. The Company's principal executive
offices are located at 202 Fremont Street, Las Vegas, Nevada 89101, and its
telephone number is (702) 385-4011.
The Board of Directors of the Company has fixed March 15, 1995 as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting. As of such date, there were 15,635,218 shares of common stock,
$.001 par value per share (the "Common Stock") issued and outstanding held by
approximately 4,232 holders of record. Each share of Common Stock entitles the
holder thereof to one vote on all matters submitted to a vote of stockholders.
The Company's annual report to stockholders for the fiscal year ended December
31, 1994, including audited financial statements (the "Annual Report") is being
transmitted to stockholders of record as of March 15, 1995 concurrently with
this Proxy Statement. Stockholders are urged to read the Annual Report in its
entirety.
The presence in person or by proxy of the holders of a majority of the
Company's outstanding shares of Common Stock will constitute a quorum. The
affirmative vote of a plurality of the shares of Common Stock represented at
the meeting, in person or by proxy, will be necessary for the election of
directors. Proposals are approved if the number of shares voted in favor
exceeds the number voted against. Abstentions will be treated as negative votes
cast on a particular matter as well as shares present and represented for
purposes of establishing a quorum. If nominee record holders do not vote on
specific issues because they did not receive specific instructions on such
issues from the beneficial owners of such shares ("broker nonvotes"), such
broker nonvotes will not be treated as either votes cast or shares present or
represented for purposes of establishing a quorum.
All shares of the Company's Common Stock represented by properly executed
proxies will be voted at the meeting in accordance with the directions marked
thereon. If no directions are indicated, such proxies will be voted for all
matters set forth in the attached Notice of Meeting and in the discretion of
the proxy holder as to any other business which properly comes before the
meeting. Any stockholder who has given a proxy may revoke it at any time prior
to the voting of such proxy by timely submission of either written notice of
revocation or a duly executed later dated proxy, in either case directed to the
Secretary of the Company, or by attending the meeting and voting in person.
The Company will pay the costs of preparing and mailing its proxy soliciting
material. The Company is mailing copies of this material to all stockholders of
record and will request banks and brokers to forward copies of such material to
persons for whom they hold stock of the Company and to request authority for
execution of the proxies. The Company will reimburse such banks and brokers for
their reasonable out-of-pocket expenses incurred in connection with the
distribution of proxy materials. Such expenses are not expected to exceed
$10,000. In addition to the solicitation of proxies by mail, certain directors,
officers and other employees of the Company may solicit proxies by mail,
telephone or in person. No additional compensation will be paid for such
solicitation. The Company has retained Skinner & Co. to assist in the
solicitation of proxies for estimated fees and expenses of approximately $8,500
plus reasonable out-of-pocket expenses. This solicitation will be by mail,
telephone and other means.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the names and addresses of all persons who
beneficially owned, to the knowledge of the Company, more than 5% of the
outstanding shares of Common Stock on March 15, 1995, and the number of shares
beneficially owned by each director or nominee, each executive officer named in
the Summary Compensation Table and all directors and executive officers as a
group. Shares are beneficially owned by a person if he or she currently owns
such shares or has or will have the right to acquire such shares within 60 days
of March 15, 1995. Unless otherwise noted, the persons named in the table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-----------------------------
NUMBER OF
NAME AND ADDRESS OF OWNER SHARES PERCENT OF CLASS
- - ------------------------- --------- ----------------
<S> <C> <C>
Frank L. Burrell, Jr.............................. 1,442,166(1) 9.2%
c/o Elsinore Corporation
202 Fremont Street
Las Vegas, NV 89101
Cundill Value Fund, Ltd........................... 803,900(2) 5.1%
1200 Sun Life Plaza
1100 Melville Street
Vancouver, B.C. V6E 4A6
Goldsmith Financial Corporation................... 1,204,030(3) 7.7%
11350 McCormick Road, Suite 200
Hunt Valley, Maryland 21031
Mojave Partners, L.P.............................. 1,302,382(4) 8.3%
181 Maple Street
Stowe, Vermont 05672
Howard R. Carlson................................. 10,000(5) *
Edward M. Fasulo.................................. 80,234(6) *
Richard A. LeVasseur.............................. 93,734(7) *
Julian H. Levi.................................... 2,112 *
Thomas E. Martin.................................. 257,160(8) 1.6%
Robert A. McKerroll............................... 6,000 *
All directors and executive officers as a group
(11 persons)..................................... 1,899,838(9) 11.8%
</TABLE>
- - --------
*Less than one percent.
(1) Includes 100,000 shares subject to immediately exercisable options.
(2) Based solely on information set forth in Schedule 13D and amendments
thereto jointly filed with the Securities and Exchange Commission by Peter
Cundill & Associates (Bermuda) Ltd. ("PCB") and Cundill Value Fund, Ltd.
("Value Fund") through March 15, 1995. Pursuant to an agreement between PCB
and Value Fund, PCB has sole voting power, and PCB and Value Fund share
dispositive power, over the 803,900 shares of Common Stock indicated in the
table. PCB may be deemed a beneficial owner of such shares. PCB's address
is Clarendon House, Church Street, Hamilton, Bermuda.
(3) Based solely on information set forth in Schedule 13D and amendments
thereto filed with the Securities and Exchange Commission by Goldsmith
Financial Corporation through March 15, 1995.
(4) Based solely on information set forth in Schedule 13D and amendments
thereto filed with the Securities and Exchange Commission by Mojave
Partners, L.P. through March 15, 1995. Includes 122,382 shares of Common
Stock subject to immediately exercisable warrants at an exercise price of
$5.50 per share.
(5) Consists of 10,000 shares held by the Howard R. and Jeanne M. Carlson
Trust.
(6) Includes 63,333 shares subject to immediately exercisable options.
(7) Includes 63,333 shares subject to immediately exercisable options.
(8) Includes 200,000 shares subject to immediately exercisable options.
(9) Includes 449,999 shares subject to immediately exercisable options.
2
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1 ON THE PROXY CARD)
Effective April 1, 1995, the Board of Directors was reduced from seven to six
director positions. It is intended that the shares represented by the enclosed
proxy will be voted, unless authority is withheld, for the election of the six
nominees named below. All nominees currently serve as directors of the Company.
All directors elected will serve until the next annual meeting of
stockholders or until their respective successors have been duly elected and
qualified. In the event that any nominee should become unavailable to serve as
a director, the proxy will be voted for the remaining nominees and for any
substitute nominee designated by the current directors; alternatively, the size
of the Board of Directors may be reduced. The Board knows of no reason why any
of the nominees would be unable to serve.
The Board of Directors unanimously recommends a vote FOR all nominees listed
below.
INFORMATION CONCERNING NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
NAME, POSITION WITH COMPANY, YEAR
PRINCIPAL OCCUPATION FIRST
AND OTHER DIRECTORSHIPS AGE ELECTED
---------------------------- --- -------
<S> <C> <C>
Frank L. Burrell, Jr................................................ 67 1991
Chairman and Chief Executive Officer of the Company since
January 1993 and March 1993, respectively; Managing General Partner
since 1977 of Burrell & Co., a securities broker-dealer; Director
of Home Federal Financial Corporation.
Howard R. Carlson................................................... 74 1993
Retired business and banking executive.
Edward M. Fasulo.................................................... 50 1987
Senior Vice President and Assistant Secretary of the Company
since June 1992; Vice President of the Company from June 1986
to June 1992; Executive Vice President and Chief Operating Officer
since March 1993 of Four Queens, Inc., a wholly owned
subsidiary of the Company.
Julian H. Levi...................................................... 85 1978
Professor of Law, University of California,
Hastings College of Law, San Francisco, since 1978.
Thomas E. Martin.................................................... 53 1990
President and Chief Operating Officer of the Company since
January 1993 and March 1993, respectively; President
and Chief Executive Officer of Four Queens, Inc. since
March 1993; Chairman and Chief Executive Officer of Gas
Dynamics, Inc. from July 1991 to January 1993; Executive
Vice President, Chief Financial Officer and Director of Gas
Dynamics, Inc. from February 1990 to July 1991; Executive
Vice President, Restaurants of Ramada, Inc. from 1986 to
1989; Executive Vice President and Chief Financial Officer of
Ramada, Inc. from 1982 to 1987; and Director of Ramada, Inc.
from 1982 to 1989.
Robert A. McKerroll................................................. 65 1993
President and Chief Executive Officer of Foothill Bank,
Mountain View, California, since 1987.
</TABLE>
3
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
In addition to the executive officers of the Company who are also directors,
the executive officers of the Company are as follows:
Gary R. Acord was named Chief Financial Officer of the Company on April 1,
1995. Prior to joining the Company, for the past 15 years, Mr. Acord was
associated with KPMG Peat Marwick LLP, where he was the managing partner of the
firm's Las Vegas office and an audit partner in the firm's Pacific Southwest
practice. Mr. Acord's practice focused on serving gaming industry clients both
within and outside Nevada and he served as the leader of KPMG's International
Gaming Practice. A certified public accountant in Nevada, California, Arizona
and Mississippi, Mr. Acord is a member of the American Institute and Nevada
Society of Certified Public Accountants. He serves on the Accounting Advisory
Council of the University of Nevada-Las Vegas, the gaming committee of the
Nevada Society of C.P.A.'s and the Board of Trustees of the Nevada Development
Authority. Mr. Acord holds a master of accounting degree from the University of
Arizona.
John G. Cook was named Vice President-Facilities Management of the Company in
July 1994. Mr. Cook has more than 40 years' experience in construction, design,
engineering and construction management. He has supervised a broad variety of
construction assignments covering commercial, industrial, and institutional
projects. From August 1993 to July 1994, Mr. Cook served as a consultant to the
Company in connection with the development of its Native American casino
projects. Prior to such consulting work, Mr. Cook served as Senior Vice
President-Development of Al Copeland Enterprises, Inc. of New Orleans,
Louisiana, where he managed development and expansion programs for Popeye's,
Church's and Copeland's Cajun Restaurants. Prior to that, he served as a
consultant with respect to restaurant design and construction in Dallas, Texas.
Ernest E. East was named Vice President-General Counsel and Secretary of the
Company in November 1994. From June 1991 until August 1994, Mr. East was Vice
President and General Counsel of Trump Hotels and Casino Resorts, during which
time he served as Senior Vice President-Administration and Corporate Affairs
for each of the Trump Taj Mahal, Trump's Castle and the Trump Plaza in Atlantic
City, New Jersey. From 1984 until 1991, Mr. East served as Vice President and
General Counsel of Del Webb Corporation.
Rodolfo E. Prieto was named a Senior Vice President of the Company on
December 5, 1994. Prior to joining the Company, Mr. Prieto since 1982 served
with Aztar Corporation, which owns and operates casinos and casino/hotels in
Las Vegas, Nevada, Atlantic City, New Jersey, and Laughlin, Nevada. From 1989
through 1994, Mr. Prieto served as Executive Vice President and Assistant
General Manager of Operations at Aztar's Tropicana Resort and Casino. From 1986
to 1989, he was Senior Vice President of Hotel Operations for the Tropicana
Resort and Casino in Las Vegas, and from 1982 to 1986 he was Vice President of
Hotel Operations at Tropworld in Atlantic City. Prior to joining the Aztar
Corporation, Mr. Prieto worked for Hilton International for 10 years and
Holiday Inns for 11 years.
Effective April 1, 1995, James L. White, Senior Vice President-Finance,
Treasurer and Chief Financial Officer, and Richard A. LeVasseur, Director and
Senior Vice President, resigned their respective positions with the Company.
Frank L. Burrell, Jr., Chairman and Chief Executive Officer, has informed the
Company's Board of Directors that he will not be a candidate for reelection as
Chief Executive Officer following this year's annual meeting of stockholders on
May 11, 1995. Mr. Burrell will nominate Thomas E. Martin to succeed him as
Chief Executive Officer. Mr. Burrell will remain Chairman of the Board of the
Company. It is anticipated that, effective May 11, 1995, when Mr. Martin
becomes Chief Executive Officer, Rodolfo E. Prieto will assume the role of
Chief Operating Officer of the Company.
4
<PAGE>
COMMITTEES AND MEETINGS
The Board of Directors has established an Audit Committee, a Personnel and
Compensation Committee (the "Compensation Committee") and a Nominating
Committee. The membership of such committees is determined from time to time by
the Board of Directors. Currently, the Audit Committee consists of Professor
Julian H. Levi (Chairman) and Messrs. Carlson and McKerroll. The Compensation
Committee consists of Mr. Howard R. Carlson (Chairman) and Messrs. Levi and
McKerroll and the Nominating Committee consists of Professor Levi (Chairman),
Frank L. Burrell, Jr. and Thomas E. Martin.
The functions of the Audit Committee include reviewing the independence of
the independent auditors, recommending to the Board of Directors the engagement
and discharge of independent auditors, reviewing with the independent auditors
the plan and results of auditing engagements, approving or ratifying each
material professional service provided by independent auditors, considering the
range of audit and non-audit fees, reviewing the scope and results of the
Company's procedures for internal auditing and the adequacy of internal
accounting controls and directing and supervising special investigations.
The functions of the Compensation Committee include reviewing and
establishing the general employment and compensation practices and policies of
the Company and approving procedures for the administration thereof. The
Compensation Committee also establishes the awards under and administers the
Incentive Plan for Senior Executives. The Compensation Committee also makes
recommendations to the Board of Directors respecting the grant of options under
the Company's 1991 Stock Option Plan, the 1993 Long-Term Stock Incentive Plan
and administers such plans.
The functions of the Nominating Committee include advising the Board of
Directors on matters concerning the selection of candidates as nominees for
election as director. Stockholders who wish to recommend qualified candidates
to the Board of Directors should write to the Secretary of the Company, stating
in detail the candidate's qualifications. All such recommendations will be
brought to the attention of the Nominating Committee.
In 1994, the Board of Directors held nine meetings and took action by written
consent seven times, the Audit Committee held four meetings, and the
Compensation Committee held seven meetings. The Nominating Committee did not
meet in 1994. Each director attended more than 75% of the aggregate number of
meetings of the Board and the committees, if any, on which he served in 1994.
DIRECTOR'S FEES
Each non-employee director of the Company receives an annual fee of $25,000.
Committee chairs and members are paid an additional annual fee of $5,000 and
$2,500, respectively, for service as such. All fees are payable in four equal
quarterly installments which will be accelerated in the event of a change in
control of the Company. In addition, directors are reimbursed for out-of-pocket
expenses incurred in connection with attendance at board and committee
meetings.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid to Frank L. Burrell, Jr., the Company's Chairman and Chief
Executive Officer during the three years ended December 31, 1994, and each of
the other executive officers whose total annual salary and bonus exceeded
$100,000 in such years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
-------------------- --------------------------------
NAME AND SECURITIES ALL OTHER
PRINCIPAL UNDERLYING COMPEN-
POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) SATION($)
- - --------- ---- ---------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Frank L. Burrell, Jr.... 1994 227,991 -0- 100,000 2,310(1)
Chairman and Chief 1993 118,750 50,000 150,000 -0-
Executive Officer 1992 -0- -0- -0- -0-
Thomas E. Martin........ 1994 346,606 -0- 200,000 2,310(2)
President and Chief 1993 238,377 100,000 300,000 -0-
Operating Officer 1992 -0- -0- -0- -0-
Edward M. Fasulo........ 1994 157,664 -0- 50,000 25,096(3)
Senior Vice President 1993 140,769 -0- 50,000 61,714
1992 120,000 -0- -0- 17,936
Richard A. LeVasseur.... 1994 142,338 -0- 75,000 47,056(4)
Senior Vice President 1993 120,000 -0- 50,000 56,487
1992 120,000 -0- -0- 18,028
James L. White(5)....... 1994 110,096 -0- 75,000 -0-
Senior Vice
President/Finance
</TABLE>
- - --------
(1) Mr. Burrell received compensation for matching contributions under the
Company's 401(k) Plan.
(2) Mr. Martin received compensation for matching contributions under the
Company's 401(k) Plan.
(3) Mr. Fasulo received $22,786, $13,659 and $1,709 in 1994, 1993 and 1992,
respectively, in conjunction with an agreement that assigned the rights to
the MULTIPLE ACTION blackjack patent to the Company. The remainder of the
other compensation received by Mr. Fasulo consists of matching
contributions under the Company's 401(k) Plan which totaled $2,310, $2,248
and $2,007 for 1994, 1993 and 1992, respectively.
(4) Mr. LeVasseur received $45,573, $27,318 and $3,419 in 1994, 1993, and
1992, respectively, in conjunction with an agreement that assigned the
rights to the MULTIPLE ACTION blackjack patent to the Company. The
remainder of the other compensation received by Mr. LeVasseur consists of
matching contributions under the Company's 401(k) Plan which totaled
$1,483, $1,477, and $1,874 for 1994, 1993 and 1992, respectively.
(5) Mr. White joined the Company as Senior Vice President--Finance in February
1994.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR TABLE
The table below sets forth certain information regarding options granted to
each of the named executive officers of the Company during 1994.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
POTENTIAL
PERCENTAGE OF REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM
OPTIONS IN FISCAL EXERCISE OR BASE EXPIRATION -------------------
NAME GRANTED(#)(1) YEAR PRICE($/SH) DATE 5%($) 10%($)
- - ---- ------------- ------------- ---------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank L. Burrell, Jr.... 100,000 12% 1.875 12/15/04 117,918 298,827
Thomas E. Martin........ 75,000 9% 4.375 3/21/04 206,356 522,947
125,000 15% 1.875 12/15/04 147,397 373,533
Edward M. Fasulo........ 25,000 3% 4.375 3/21/04 68,785 174,316
25,000 3% 1.875 12/15/04 29,479 74,707
Richard A. LeVasseur.... 25,000 3% 4.375 3/21/04 68,785 174,316
50,000 6% 1.875 12/15/04 58,959 149,413
James L. White.......... 20,000 2.4% 5.375 2/8/04 67,606 171,327
30,000 4% 4.500 3/4/04 84,901 215,155
25,000 3% 1.875 12/15/04 29,479 74,707
</TABLE>
- - --------
(1) The options granted have a 10-year term and vest on a schedule of one-third
of the options in each of the three successive years following the grant.
The exercise price is the fair market value on the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table shows the number of shares of Common Stock represented by
outstanding stock options held by each of the named executive officers as of
December 31, 1994. No stock appreciation rights have been granted by the
Company.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(1)
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank L. Burrell, Jr.... -0- -0- 50,000 200,000 -0- -0-
Thomas E. Martin........ -0- -0- 100,000 400,000 -0- -0-
Edward M. Fasulo........ -0- -0- 46,667 83,333 28,125 -0-
Richard A. LeVasseur.... -0- -0- 46,667 108,333 28,125 -0-
James L. White.......... -0- -0- -0- 75,000 -0- -0-
</TABLE>
- - --------
(1) Value of outstanding stock options equals the fair market value for the
underlying securities at year-end, minus the exercise price of "in-the-
money" options.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL
ARRANGEMENTS
In March 1993, the Company adopted an Amended and Restated Senior Executive
Severance Plan (the "Severance Plan") and, pursuant thereto, the Company has
entered into severance agreements with Messrs. Burrell, Fasulo, LeVasseur,
Martin and White. Under such agreements, all of such officers will receive an
amount equal to two times their respective annual base salaries, in each case,
thirty days after termination
7
<PAGE>
(subject to certain limitations) if such termination occurs within two years
after a change of control of the Company. The Severance Plan also provides that
a covered officer may "put" to the Company any stock options theretofore
granted to him under the Company's options plans in return for cash payments
equal to the difference (if greater than zero) between the "fair market value"
(as defined in the relevant option plan) and the exercise price per share of
such options.
For purposes of the Severance Plan and related agreements, the term "change
in control" means the occurrence of any of the following events: (1) any person
becomes the beneficial owner of 20% or more of the combined voting power of the
Company's outstanding securities entitled to vote in an election of directors,
(2) a merger or other business combination with, or sale of substantially all
of the assets of the Company to, another entity or (3) persons who are
disinterested directors of the Company cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company.
"Disinterested director" means any director who served as a director for the
24-month period preceding a change in control and is not affiliated with any
person who causes or participates in causing a change in control, and any
director prior to the change in control who was initially appointed or elected
upon the recommendation of a majority of the disinterested directors then on
the Board and is designated a disinterested director by the Board.
On December 5, 1994 the Company entered into an employment agreement with
Rodolfo E. Prieto which provides for a base salary at the annual rate of
$225,000 plus a discretionary bonus under the Company's Incentive Plan for
Senior Executives. The term of the agreement is for five years.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The duties of the Compensation Committee are to establish the salaries of the
Company's executive officers; to exercise the authority of the Board of
Directors concerning the Company's benefit plans; to administer the Company's
stock option plans; to make recommendations to the Board of Directors
concerning salary increases and bonus awards for the Company's executives,
including the Chairman and CEO and the President/Chief Operating Officer; and
to advise the Board of Directors on other compensation and benefit matters. The
members of the Compensation Committee are Messrs. Carlson (Chairman), Levi and
McKerroll.
The Company's fundamental philosophy and policy is to provide a total
compensation program which will enable the Company to attract, retain and
motivate the high-calibre management team needed to achieve the Company's
longer-term objectives. Accordingly, each executive's compensation package is
comprised of four elements: (i) base salary, which represents competitive pay
within the gaming and hospitality industry for a comparable level of
responsibility and reflects individual performance; (ii) annual variable
performance awards payable in cash, which are tied to the Company's achievement
of financial performance goals and individual performance; (iii) stock-based
incentive awards which strengthen the mutual interests of the executive
officers and the shareholders; and (iv) a cost effective and tax efficient
benefits package to provide security for officers and their families. It is the
Company's objective to pay "market rate" base salaries (i.e. at the 50th
percentile) and to pay above the market rate through variable compensation
vehicles (incentives and stock), contingent upon the Company's performance and
results attained.
In the belief that the compensation of the executives may have fallen behind
that paid by comparable gaming companies, in 1993, the Compensation Committee
retained the services of an external consulting firm to survey current
competitive practices. In conducting the compensation study, a select group of
similarly-sized companies within the gaming and hospitality industry was
identified as the industry peer group. The Company's executive officers were
matched to comparable survey positions and their compensation levels were
compared to market levels to determine competitive base salary, target
incentive and target total cash compensation. Practices of the survey companies
in areas of stock awards, long term incentives and benefits were also reviewed.
The study showed that the Company's executive officers were paid below market
and certain adjustments described below were made accordingly.
8
<PAGE>
BASE SALARY. The base salary of each officer is set on the basis of the
salary level in effect for comparable positions within the Company's peer group
(i.e. market or 50% percentile) and personal performance. The factors
considered when measuring personal performance of an executive officer include,
but are not limited to, the Company's performance, the executive's departments
and personal performance. The executive's departments are evaluated by
reviewing performance to budget and goals, including such factors as profit.
Other factors may include development and retention of staff as well as the
review of all audit reports.
The findings of the survey conducted by the external consultants indicated
that the base salaries of some of the officers were substantially below those
paid for similar positions within the industry peer group. 1994 base salaries
were increased to adjust the salaries to market level pursuant to the
compensation survey. However, due to the Company's financial performance, base
salaries were reduced by 5% and a one-year salary freeze was instituted
effective October 5, 1994.
ANNUAL INCENTIVE COMPENSATION. The executive officers are eligible to receive
an annual cash bonus under the Incentive Plan for Senior Executives. Receipt of
a bonus depends upon the Company's attainment of budgeted net income targets.
Once the threshold target is met, the bonuses are as follows:
<TABLE>
<CAPTION>
AMOUNT OF BONUS NET INCOME TARGET
--------------- -------------------
<S> <C>
25% of base salary net income target
30% of base salary target + $ 750,000
35% of base salary target + $1,500,000
</TABLE>
Because the net income target for 1994 was not attained, no bonuses were
awarded to executives under this plan.
In addition to the bonus plan, the Compensation Committee may, at its
discretion, award cash bonus awards to executive officers based on individual
performance, considering such factors as extraordinary efforts or results. No
discretionary bonuses were awarded during 1994.
LONG-TERM INCENTIVE COMPENSATION. The 1993 Long-Term Stock Incentive Plan
provides for grants of Company securities to executives and other key
individuals in the form of stock options, SARs, stock units or restricted
shares. The Compensation Committee grants stock options to attract new
executives to the Company and to retain current officers. The grants are
designed to align the interests of the executive officers with those of
shareholders and ensure long-term commitment to the Company. Each stock option
grant allows the executive to acquire the Company's common stock at a fixed
price per share (the market price on the date of the grant) over a specified
period of time (up to 10 years). Accordingly, the option will provide a return
to the executive officer only if the market price of the Company's common stock
appreciates over the option term. The number of options historically awarded
was compared to the option grants of the Company's industry. The Company's
practices with regard to stock option awards and holdings were found to be
below market when compared with practices within the industry peer group.
Competitive grant guidelines were used to determine the size of combined
regular and retention grants. Individual grants were targeted slightly below
the 50th percentile of competitive practices. Grants are not based on the past
performance of the Company. No SARs, stock units, restricted stock or long term
incentive plan payouts were made during 1994.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Burrell's salary was increased from its 1993 level in response to a
compensation survey. During 1994, Mr. Burrell was originally paid a base salary
of $240,000, which was subsequently reduced by 5% in October 1994 due to the
financial performance of the Company. In setting Mr. Burrell's salary, the
Compensation Committee considered the market survey and personal performance.
The Committee believes that Mr. Burrell's salary is fair and appropriate in
light of the obligations and responsibilities of the Chief Executive Officer.
9
<PAGE>
Mr. Burrell was not awarded any cash bonuses during 1994 due to the financial
performance of the Company. Mr. Burrell received a grant of 100,000 options on
December 15, 1994, at an exercise price equal to the fair market value of the
Company's shares on the date of grant.
We conclude our report with the acknowledgement that no member of the
Compensation Committee is a former or current officer or employee of the
Company or its subsidiaries.
COMPENSATION COMMITTEE
Howard R. Carlson, Chairman
Julian H. Levi
Robert A. McKerroll
PERFORMANCE GRAPH
The following graph shows how an initial investment of $100 in the Company's
Common Stock would compare to an equal investment in the Dow Jones Equity
Market Index or in the Entertainment & Leisure Index over a five-year period
beginning December 31, 1989 and ending December 31, 1994. The measurement
points show the total return as of the end of each year. For the purposes of
the graph, total return assumes reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR ELSINORE CORPORATION, THE DOW JONES EQUITY MARKET INDEX AND THE
ENTERTAINMENT AND LEISURE INDEX.
10
<PAGE>
APPROVAL OF AMENDMENT NO. 2 TO THE 1993 LONG-TERM STOCK INCENTIVE PLAN
(PROPOSAL 2 ON THE PROXY CARD)
On December 16 , 1994, the Board of Directors approved, subject to
stockholder approval, Amendment No. 2 to the 1993 Long-Term Stock Incentive
Plan (the "Plan") to increase the number of shares available under the Plan to
1,980,000 from 1,200,000. The following description of the Plan is a summary
only and is qualified in its entirety by reference to the full text of the
Plan.
PROPOSED AMENDMENT
The Board of Directors proposes to amend the Plan to increase the number of
shares available to 1,980,000 from 1,200,000. Following is a description of the
Plan. Except for the proposed increase in the number of available shares, there
are no other changes to the Plan proposed.
OVERVIEW OF THE PLAN
The purpose of the Plan is to promote the long-term success of the Company
and the creation of stockholder value by attracting and retaining eligible
individuals with exceptional qualifications, by encouraging such individuals to
focus on long-range objectives, and by linking participants directly to
stockholder interests through increased stock ownership. The Plan became
effective on March 15, 1993, and was approved by the stockholders of the
Company on May 25, 1993.
The Plan provides for awards in the form of restricted shares, stock units,
options or stock appreciation rights, or any combination thereof. No payment is
required upon receipt of an award, except that of a recipient of newly issued
restricted shares must pay at least the par value of such restricted shares to
the Company.
Restricted shares are shares of Common Stock that are subject to forfeiture
in the event that the applicable vesting conditions are not satisfied.
Restricted shares are nontransferable prior to vesting (except for certain
transfers to a trustee) and have the same voting and dividend rights as other
shares of Common Stock.
A stock unit represents the equivalent of one share of Common Stock, and is
nontransferable prior to the holder's death (except for certain transfers to a
trustee). A holder of stock units has no voting rights or other privileges as a
stockholder but may be entitled to receive dividend equivalents on his or her
units equal to the amount of dividends paid on the same number of shares of
Common Stock. Dividend equivalents may be converted into additional stock units
or settled in the form of cash, Common Stock or a combination thereof.
Settlement of vested stock units may be made in the form of cash, Common Stock
or a combination thereof. If the time of settlement is deferred, interest or
additional dividend equivalents may be credited on the deferred payment. The
recipient of restricted shares or stock units may pay all projected withholding
taxes relating to the award with Common Stock rather than cash.
ADMINISTRATION AND ELIGIBILITY
The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee selects the individuals who will receive
awards, determines the size of any award and establishes any vesting or other
conditions. All employees of the Company (or any subsidiary of the Company) are
eligible to participate in the Plan. Approximately 1,200 employees are
currently eligible to participate in the Plan, and they would continue to be
eligible under the amended Plan.
11
<PAGE>
SHARES SUBJECT TO THE PLAN
The total number of restricted shares, stock units, stock appreciation rights
("SARs") and options available for grant under the Plan, as amended by
Amendment No. 2 thereto, is 1,980,000. If any stock units, SARs or options
granted under the Plan are forfeited, or if options or SARs granted under the
Plan terminate for any other reason prior to exercise (other than exercise of
an SAR), then they again become available for awards under the Plan. If SARs
are exercised, then only the number of shares of Common Stock actually issued
in settlement shall reduce the number of shares available under the Plan and
the balance shall again become available for awards under the Plan. If
restricted shares are forfeited before any dividends have been paid with
respect to such restricted shares, then such restricted shares shall again
become available for awards under the Plan.
BENEFIT RECEIVED UNDER AMENDMENT NO. 2 TO THE PLAN
The following table sets forth information concerning the benefits that would
have been received under Amendment No. 2 to the 1993 Long Term Stock Incentive
Plan had it been in effect in 1994, by the Company's Chairman and Chief
Executive Officer and other most highly compensated executive officers, of
whom, Messrs. Burrell, Martin and Fasulo are nominees for election to the Board
of Directors, all current executive officers as a group, all current directors
who are not executive officers as a group, and all employees, including all
current officers who are not executive officers, as a group. Such amounts are
the same as the actual amounts received by these officers and groups in 1994.
1993 LONG-TERM STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS*
NAME AND POSITION ---------
<S> <C>
Frank L. Burrell................................................ 100,000
Chairman and Chief Executive Officer
Thomas E. Martin................................................ 125,000
President and Chief Operating Officer
Richard A. LeVasseur............................................ 50,000
Senior Vice President
Edward M. Fasulo................................................ 25,000
Senior Vice President
James L. White.................................................. 25,000
Senior Vice President-Finance & Treasurer
Executive Group................................................. 325,000
Non-Executive Director Group.................................... -0-
Non-Executive Officer Employee Group............................ -0-
</TABLE>
- - --------
*None of the options are in-the-money.
TERMS OF AWARDS
Options may include non-statutory stock options ("NSOs") as well as incentive
stock options ("ISOs") intended to qualify for special tax treatment. The
exercise price of an option under the Plan must be equal to or greater than the
fair market value of the Common Stock in the case of ISOs and the par value of
the Common Stock in the case of NSOs. Both NSOs and ISOs may be granted in
combination with SARs, or SARs may be added to outstanding NSOs at any time
after the grant, but not later than six months before the expiration of such
NSO. An SAR permits the participant to elect to receive any appreciation in the
value of the optioned stock directly from the Company, in shares of Common
Stock or cash or a combination thereof, in lieu of exercising the option. The
Compensation Committee has the discretion to determine the form in which such
payment will be made. The amount payable upon exercise of an SAR is measured by
the
12
<PAGE>
difference between the market value of the optioned stock at exercise and the
option exercise price. Generally, SARs may be exercised at any time after the
underlying NSO or ISO vests. Upon exercise of an SAR, the corresponding portion
of the related option must be surrendered and cannot thereafter be exercised.
Conversely, upon exercise of an option to which an SAR is attached, the SAR may
no longer be exercised to the extent that the corresponding option has been
exercised. The term of an ISO cannot exceed ten years, and all options and SARs
are non-transferable prior to the optionee's death.
In addition, awards under the Plan may be granted in the form of restricted
shares, in the form of stock units, or in any combination of both. Restricted
shares or stock units may also be awarded in combination with NSOs or SARs, and
such awards may provide that the restricted shares or stock units will be
forfeited in the event that the related NSOs or SARs are exercised.
The exercise price of an option may be paid in any lawful form permitted by
the Compensation Committee in the case of NSOs or by the stock option agreement
in the case of ISOs, including (without limitation) the surrender of shares of
Common Stock already owned by the optionee for more than six months. The Plan
also allows the optionee to pay the exercise price of any option by giving
"exercise/sale" or "exercise/pledge" directions. If exercise/sale directions
are given, a number of option shares sufficient to pay the exercise price and
any withholding taxes is issued directly to a securities broker selected by the
Company who, in turn, sells these shares in the open market. The broker remits
to the Company the proceeds from the sale of these shares. If exercise/pledge
directions are given, the option shares are issued directly to a securities
broker or other lender approved by the Company. The broker or other lender will
hold the shares as security for a loan. The loan proceeds will be paid to the
Company to the extent necessary to pay the exercise price and any withholding
taxes. Payment for all or any part of the exercise price may also be made with
a full recourse promissory note; provided that the par value of newly issued
Common Stock must be paid in cash.
As noted above, the Compensation Committee determines the number of
restricted shares, stock units, SARs or options to be included in the award as
well as the vesting and other conditions. The vesting conditions may be based
on the recipient's service, his or her individual performance, the Company's
performance or other appropriate criteria. In general, the vesting conditions
will be based on the recipient's service. Vesting may be accelerated in the
event of the recipient's death, disability or retirement or in the event of a
change in control of the Company. Moreover, the Committee may determine that
outstanding options and any related SARs will become fully vested if it has
concluded that there is a reasonable possibility of a change in control within
six months thereafter.
For purposes of the Plan, the term "change in control" means the occurrence
of any of the following events: (1) any person becomes the beneficial owner of
20% or more of the combined voting power of the Company's outstanding
securities entitled to vote in an election of directors, (2) a merger or other
business combination with, or sale of substantially all of the assets of the
Company, to another entity or (3) persons who are disinterested directors of
the Company cease to constitute a majority of the Board of Directors of the
Company or any successor to the Company. "Disinterested director" means any
director who served as a director for the 24-month period preceding a change in
control and is not affiliated with any person who causes or participates in
causing a change in control, and any director prior to the change in control
who was initially appointed or elected upon the recommendation of a majority of
disinterested directors then on the Board and is designated a disinterested
director by the Board.
FEDERAL INCOME TAX CONSEQUENCES
Neither the optionee nor the Company will incur any federal tax consequences
as a result of the grant of an option. The optionee will have no taxable income
upon exercising an ISO (except that the alternative minimum tax may apply), and
the Company will receive no deduction when an ISO is exercised. Upon exercising
an NSO, the optionee generally must recognize ordinary income equal to the
"spread" between the exercise price and the fair market value of Common Stock
on the date of exercise; the Company will be entitled to a deduction for the
same amount. In the case of an employee, the option spread at the time an
13
<PAGE>
NSO is exercised is subject to income tax withholding, but the optionee
generally may elect to satisfy the withholding tax obligation by having shares
of Common Stock withheld from those purchased under the NSO. The tax treatment
of a disposition of option shares acquired under the 1993 Plan depends on how
long the shares have been held and on whether such shares were acquired by
exercising an ISO or by exercising an NSO. The Company will not be entitled to
a deduction in connection with a disposition of option shares, except in the
case of a disposition of shares acquired under an ISO before the applicable ISO
holding period has been satisfied. Awards under the 1993 Plan may provide that
if any payment (or transfer) by the Company to a recipient would be
nondeductible by the Company for federal income tax purposes, then the
aggregate present value of all such payments (or transfers) will be reduced to
an amount which maximizes such value without causing any such payment (or
transfer) to be nondeductible.
MODIFICATION AND ADJUSTMENT
The Compensation Committee is authorized, within the provisions of the Plan,
to modify, extend or assume outstanding options or SARs or to exchange new
options for outstanding options, including outstanding options with a higher
exercise price than the new options. The Plan provides for appropriate
adjustments in the number of shares available for future awards as well as the
exercise price and the number of shares covered by outstanding options in the
event of a reclassification, stock split, combination of shares, stock
dividend, extraordinary cash dividend or other recapitalization of the Company.
In the event of a merger, awards will be subject to the agreement of merger or
reorganization.
AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may amend or terminate the Plan at any time, subject
to stockholder approval if required by law. The Plan will remain in effect
until terminated by the Board, except that no ISO may be granted after March
15, 2003.
REQUIRED VOTE
In order to be adopted, a majority of the shares entitled to vote must vote
on this proposal and it must receive the affirmative vote of a majority of the
shares voting.
The Board of Directors unanimously recommends a vote FOR this proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 3 ON THE PROXY CARD)
The Board of Directors has re-appointed KPMG Peat Marwick as the Company's
independent auditors for the year ending December 31, 1995, subject to
ratification by the stockholders. KPMG Peat Marwick has served as the
independent auditors of the Company for the past three years and is familiar
with the affairs and financial condition of the Company. If the stockholders do
not ratify this appointment, the Board of Directors will consider the
appointment of other independent auditors. A representative of KPMG Peat
Marwick is expected to be present at the meeting and will have the opportunity
to make a statement if such representative so desires, and will be available to
respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR this proposal.
14
<PAGE>
1996 ANNUAL MEETING OF STOCKHOLDERS
The 1996 Annual Meeting of Stockholders is presently scheduled to be held on
May 16, 1996. Any proposals of stockholders intended to be presented at such
meeting must be received by the Secretary of the Company for inclusion in the
Company's proxy statement and form of proxy no later than December 8, 1995.
OTHER MATTERS
SEC regulations require the Company to identify the names of persons who
failed to file or filed a late report required under Section 16 of the
Securities Exchange Act of 1934, as amended. Generally, the reporting
regulations under Section 16 require directors and officers to report changes
in ownership in the Company's securities. Messrs. John G. Cook and Ernest E.
East inadvertently failed to file an initial Form 3 stating their beneficial
ownership of Company securities as of the date each was hired. There has been
no reportable activity with respect to Mr. Cook's or Mr. East's security
ownership since they were hired in July 1994 and November 1994, respectively.
These statements have since been reported on the Forms 3 and 5, respectively,
for 1994 for each of Messrs. Cook and East.
The Board of Directors does not know of any other business which will be
presented for consideration at the annual meeting. If any other business does
properly come before the meeting or any adjournment thereof, the proxy holders
will vote on such matters according to their discretion insofar as such proxies
are not limited to the contrary.
15
<PAGE>
LOGO
ELSINORE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
FRANK L. BURRELL, JR. and THOMAS E. MARTIN, each with power to act alone, are
hereby constituted and appointed the lawful attorneys and proxies of the
undersigned, with full power of substitution, to vote and act as proxy with
respect to all shares of common stock, $.001 par value of ELSINORE CORPORATION
(the "Company") standing in the name of the undersigned on the books of the
Company at the close of business on March 15, 1995, at the Annual Meeting of
Stockholders to be held at the principal executive offices of the Company, 202
Fremont Street, Las Vegas, Nevada 89101, at 9:30 a.m., on May 11, 1995, and at
any postponements or adjournments thereof, as follows.
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all
nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below)
Frank L. Burrell, Jr., Howard R. Carlson, Edward M. Fasulo, Julian H. Levi,
Thomas E. Martin, Robert A. McKerroll
(2) To approve the adoption of Amendment No. 2 to the Company's 1993 Long-Term
Stock Incentive Plan and authorize the reservation of an additional 780,000
shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To ratify the designation of KPMG Peat Marwick as independent accountants
for the year ending December 31, 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) The proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting or any postponements or
adjournments thereof (unless this sentence is stricken).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE APPROVAL OF AMENDMENT NO. 2 TO THE 1993 LONG-TERM STOCK
INCENTIVE PLAN AND FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK
AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE PERIOD ENDING DECEMBER 31, 1995.
Signed:_______________________
______________________________
Dated:__________________, 1995
(Please sign proxy as name
appears thereon. Joint owners
should each sign personally.
Trustees and others signing
in a representative capacity
should indicate the capacity
in which they sign.)
