INTERNATIONAL GAME TECHNOLOGY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 17, 1998
The Annual Meeting of the Stockholders of International Game
Technology will be held at the Mirage Hotel and Casino, Ballrooms G
and H at 3400 South Las Vegas Boulevard, Las Vegas, Nevada, on
Tuesday, February 17, 1998, at 1:30 p.m., local time, for the purpose
of considering and voting on:
1. Election of eight directors for the ensuing year;
2. Such other business as may properly come before the
meeting and any and all adjournments thereof.
The Board of Directors has fixed December 31, 1997 as the record
date for determining the stockholders of the Company entitled to
notice of and to vote at the meeting and any adjournment thereof, and
only holders of Common Stock of the Company of record at the close of
business on such date will be entitled to notice of and to vote at
said meeting or adjournment.
By Order of the Board of Directors
Brian McKay
Secretary
Reno, Nevada
January 15, 1998
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE
AND RETURN YOUR PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR
THIS PURPOSE. YOUR SIGNED PROXY IS THE ONLY WAY YOUR SHARES CAN BE
COUNTED IN THE VOTE UNLESS YOU PERSONALLY CAST A BALLOT AT THE
MEETING.
<PAGE>
TABLE OF CONTENTS
Notice of Annual Meeting Cover
Information Concerning Solicitation and Voting 3
Election of Directors
Nominees for Election of Directors 4
Certain Relationships and Related Transactions 6
Board of Directors and Committees of the Board 6
Compensation Committee Interlocks and Insider
Participation 7
Compensation of Directors 7
Other Information
Executive Officers 7
Equity Security Ownership of Management and Other
Beneficial Owners 10
Executive Compensation 11
Employment Contracts 13
Compliance with Section 16(a) of the Securities Act
of 1934 13
Relationship with Independent Public Accountants 13
Board Compensation Committee Report on Executive
Compensation 14
Performance Graph 16
General 17
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of International
Game Technology (together with its subsidiaries, as the context may
require, hereinafter called the "Company") to be voted at the Annual
Meeting of Stockholders on Tuesday, February 17, 1998, and at any and
all adjournments thereof.
Solicitation of proxies by mail is expected to commence on or
about January 16, 1998 and the cost thereof will be borne by the
Company. In addition to such solicitation by mail, some of the
officers and regular employees of the Company may solicit, without
extra compensation, proxies by telephone and personal interview.
Arrangements will be made with brokerage houses, custodians, nominees
and other fiduciaries to send proxy material to their principals, and
they will be reimbursed by the Company for postage and clerical
expense in doing so.
The executive offices of the Company are located at 9295
Prototype Drive, Reno, Nevada 89511.
Voting Securities
The securities of the Company entitled to be voted at the meeting
consist of shares of its Common Stock, $0.000625 par value, of which
113,798,119 shares were issued and outstanding at the close of
business on December 31, 1997. Only stockholders of record at the
close of business on December 31, 1997, the record date, will be
entitled to vote at the meeting.
The shares of Common Stock are entitled to one vote per share but
do not have cumulative voting rights and, therefore, a majority of the
outstanding shares entitled to vote has the power to elect all
directors. Directors of the Company who have been nominated for re-
election and the executive officers of the Company collectively have
the power to vote 3,695,460 shares as of the record date (3% of the
outstanding shares) and have indicated that they currently intend to
vote such shares in favor of each of the director nominees named
herein and the other proposals described herein.
Quorum, Abstentions and Broker Non-Votes
Votes cast by proxy or in person at the Annual Meeting will be
counted by persons appointed by the Company to act as election
inspectors for the meeting. The election inspectors will treat shares
represented by proxies that reflect abstentions or represent "broker
non-votes" as shares that are present and entitled to vote, for
purposes of determining the presence of a quorum and for purposes of
determining the outcome of any matter submitted to the stockholders
for a vote. Abstentions and broker non-votes, however, do not
constitute a vote "for" or "against" any matter and thus will be
disregarded in the calculation of a plurality or of "votes cast."
If a broker or nominee has indicated on the proxy that it does
not have discretionary authority to vote certain shares, those shares
will be treated as not present and not entitled to vote with respect
to that matter (even though those shares may be considered entitled to
vote for quorum purposes and entitled to vote on other matters).
Shares referred to as "broker non-votes" are shares held by brokers or
<PAGE>
nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote that the broker or
nominee does not have discretionary power to vote on a particular
matter.
Any unmarked proxies, including those submitted by brokers or
nominees, will be voted in favor of the proposal to elect the nominees
as directors. If a broker or nominee who does not have discretion to
vote has delivered a proxy but has failed to physically indicate on
the proxy card such person's lack of authority to vote, the shares
will be treated as present and will be voted in accordance with the
instructions on the proxy card (i.e., as a vote FOR the proposal
discussed herein).
Revocability
Proxies may be revoked at any time prior to the exercise thereof
by giving written notice to the Company or by a later dated proxy
executed by the person executing the prior proxy and filed with the
Company or otherwise presented at the meeting. Stockholders attending
the Annual Meeting may vote their shares in person whether or not a
proxy has been previously executed and returned. If the accompanying
proxy card is signed and returned to the Company, and not revoked, it
will be voted in accordance with instructions contained therein.
Unless contrary instructions are given, the persons designated as
proxy holders on the proxy card will vote FOR the proposal to elect
the nominees as directors.
Stockholder Proposals for the 1999 Annual Meeting
Proposals of stockholders intended to be presented at the next
Annual Meeting must be received by the Company by September 20, 1998
to be considered for inclusion in the Company's proxy statement
relating to that meeting.
ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual Meeting, each to
hold office until the next annual meeting of stockholders and until a
successor is elected. It is the intention of the persons named in the
enclosed form of proxy to vote, if authorized, the proxies for the
election as directors of the eight persons named below as nominees.
All of the nominees are at present directors of the Company. If any
nominee declines or is unable to serve as a director (which is not
anticipated), the persons named as proxies reserve full discretion to
vote for any other person who may be nominated.
Nominees for Election of Directors
The following table sets forth for each nominee for election as a
director his or her name, all positions with the Company held by him
or her and his or her principal occupation:
Charles N. Mathewson, 69, was appointed to the Company's Board of
Directors in 1985 and was named Chairman in February 1986. In
December 1986, Mr. Mathewson was appointed President and Chief
Executive Officer and resigned as Chairman of the Board.
Mr. Mathewson resumed the position as Chairman of the Board and
resigned as President in February 1988, and Chief Executive
Officer in June 1993. In February 1996, he resumed the position
of Chief Executive Officer. He received his Bachelor of Finance
degree from the University of Southern California in 1953 and
graduated from the University of California Management Program in
1960. He served as Senior Executive Vice President and a
Director of Jefferies and Co. from 1968 to 1971, Chairman of the
Board of Arden Mayfair, Inc. from 1971 to 1974, and Chairman of
the Board of Wagenseller & Durst from 1978 to 1979. From 1980
until February 1986, Mr. Mathewson was a general partner of
<PAGE>
Management Advisors Associates, a partnership engaged in
investment and business consulting. Mr. Mathewson is a member of
the Board of Directors of Baron Asset Fund, and a member of the
Board of Directors of Fel Cor Suite Hotels. He is also Chairman
of the American Gaming Association.
Albert J. Crosson, 67, was elected to the Company's Board of Directors
in May 1988. In July 1996, he became Vice Chairman of the Board
and an employee of the Company. Mr. Crosson was employed for 34
years by ConAgra, Inc. and its predecessor companies. He was
President of ConAgra Grocery Products Companies from 1993 until
July 1996, when he retired. From 1986 until January 1993, he was
President of Hunt-Wesson Foods, Inc., a ConAgra company. Prior
to 1986, he was Executive Vice President for Hunt-Wesson, Inc.,
and President of Arden Mayfair. Mr. Crosson currently serves on
the Board of Acres Gaming.
Wilbur K. Keating, 66, was elected a Director in May 1987. He
received his degree in Business Management from the University of
Colorado in 1956. He is currently the Administrative Officer for
the National Association of State Retirement Administrators and
was previously the Chief Executive Officer of the Nevada Public
Employees Retirement System, a position he held from 1974 through
1994.
Warren L. Nelson, 85, joined the Company as a Director in February
1983. Since coming to Nevada in 1936, Mr. Nelson has been
actively involved in the gaming industry, holding various
management positions in several gaming establishments in the
State. Since its inception in November 1961, Mr. Nelson has been
an owner and was previously involved in the management of the
Club Cal Neva, a casino located in Reno, Nevada. Additionally,
he is on the Board of Directors of Boyd Gaming Group. He has
previously served under three Nevada governors on the Nevada
Gaming Policy Committee.
Frederick B. Rentschler, 58, was appointed to the Board of Directors
in May 1992. Prior to his retirement in 1991, Mr. Rentschler
served as President and Chief Executive Officer of Northwest
Airlines from 1990 to 1991. Mr. Rentschler served as President
and Chief Executive Officer of Beatrice Company from 1988 to
1990, as President and Chief Executive Officer of Beatrice U.S.
Foods from 1985 to 1988, as President and Chief Executive Officer
of Hunt-Wesson, Inc. from 1980 to 1984 and President of Armour-
Dial from 1977 to 1980. Mr. Rentschler is the Chairman of the
Board of Trustees of the Salk Institute, La Jolla, California.
Additionally, Mr. Rentschler serves on the Boards of Bionutrics,
SIBIA and the Scottsdale Memorial Hospital Systems.
John J. Russell, 68, was appointed to the Board in January 1990.
Mr. Russell joined the Company as Senior Vice President in
February 1986, was named Executive Vice President in June 1987
and served as President from February 1988 until December 1994.
He served as Chief Executive Officer of the Company from June
1993 until December 31, 1995. On December 31, 1995, Mr. Russell
resigned as Chief Executive Officer and became a consultant to
the Company. Mr. Russell served as President of Gabler, Russell
& Company, Inc., a firm of business consultants, from 1959 to
1986. Mr. Russell began his business career in 1948 in the
wholesale distribution and brokerage business.
Rockwell A. Schnabel, 60, was elected a Director in September 1994.
Mr. Schnabel is founder and Chairman of Trident Capital, Inc., a
private equity investment firm. He also served as President of
the Board of Commissioners for the Los Angeles Fire and Police
Pension Board, which oversees investments of more than $7 billion
<PAGE>
in pension funds from 1993 to 1996. He is the former Deputy
Secretary of the U.S. Department of Commerce in Washington, D.C.,
and also served as the department's Acting Secretary. Mr.
Schnabel previously served as the U.S. Ambassador to Finland and
as President of Bateman Eichler Hill Richards (member NYSE)
(Everen Securities). He is presently serving on the Boards of
Directors of CSG Systems, Inc., Cyprus Amax Minerals Company,
Digital Evolution, Inc., Pegasus Systems, Inc. and Rezsolutions,
Inc.
Claudine B. Williams, 76, was elected a Director in May 1988. In
1965, she began operating the Silver Slipper Casino in Las Vegas,
and opened the Holiday Casino in 1973. Ms. Williams currently
serves as the Chairman of the Board of Harrah's Las Vegas
(formerly the Holiday Casino). Additionally, she serves on the
Board of First Security Bank and Columbia Sunrise Hospital. Ms.
Williams is Past President of the University of Nevada, Las Vegas
Foundation where she currently serves on the Board of Trustees.
She received an Honorary Doctorate of Humane Letters from
University of Nevada, Las Vegas in May 1994. Ms. Williams is a
board member of the Nevada Gaming Foundation for Educational
Excellence and the National Judicial College. She served as
Chairman of the Board of Trustees for St. Jude's Ranch for
Children and she supports numerous local and national charitable
organizations. Ms. Williams was the first woman inducted into
the Gaming Hall of Fame.
Certain Relationships and Related Transactions
Mr. Nelson, a member of the Company's Board of Directors, has an
equity interest in a Nevada gaming business from which the Company
recognized revenues of $956,000 for the fiscal year ended September
30, 1997. The Company had contracts and accounts receivable balances
from this customer of $243,000 at September 30, 1997. During the
fiscal year ended September 30, 1997, the largest amount of the
Company's contract receivable balance from such customer was $415,000.
Mr. Nelson is also a Director of the parent company of additional
gaming businesses. The Company recognized revenues from these
businesses of $21.5 million for the fiscal year ended September 30,
1997. The Company had contracts and accounts receivable balances from
these businesses of $1.3 million as of September 30, 1997. During the
fiscal year ended September 30, 1997, the largest amount of the
Company's contract receivable balances from these customers was $10.6
million.
Board of Directors and Committees of the Board
The Board of Directors held four regular meetings during fiscal
1997. During fiscal 1997, each director attended at least 75% of the
aggregate number of meetings of the Board and respective Committees on
which he or she served while a member thereof. The Board of Directors
has three standing committees: the Audit Committee, the Compensation
Committee and the Executive Committee.
The Executive Committee, comprised of Messrs. Crosson and
Mathewson, did not hold any meetings during fiscal 1997. Except for
certain powers which under Nevada law may only be exercised by the
full Board of Directors, the Executive Committee has and exercises the
powers of the Board in monitoring the management of the business of
the Company between meetings of the Board of Directors.
The Audit Committee consists of Messrs. Keating, Rentschler, and
Schnabel. The Audit Committee held two meetings during fiscal 1997.
The Audit Committee has responsibility for consulting with the
Company's officers regarding the appointment of independent public
<PAGE>
accountants as auditors, discussing the scope of the auditors'
examination and reviewing annual financial statements, related party
transactions, potential conflict situations and corporate accounting
policies.
Compensation Committee Interlocks and Insider Participation
During fiscal 1997, Ms. Williams and Messrs. Nelson and
Rentschler served as members of the Compensation Committee. 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. The Compensation Committee held four meetings in fiscal 1997
and acted by unanimous written consent six times in fiscal 1997. See
"Certain Relationships and Related Transactions" for a discussion of
certain relationships between the Company and certain businesses
affiliated with Mr. Nelson.
Compensation of Directors
Each outside director receives a $12,500 annual fee and a fee of
$750 for each committee meeting attended. Directors who are employees
of the Company are not paid fees or additional remuneration for
service as members of the Board or its Committees.
Each non-employee director receives non-qualified stock options
to purchase 10,000 shares of Common Stock upon his or her initial
election to the Board of Directors. Additionally, every year
thereafter, each non-employee director receives non-qualified stock
options to purchase 6,000 shares of Common Stock upon his or her re-
election to the Board. Each non-employee director received non-
qualified stock options to purchase 6,000 shares of Common Stock in
fiscal 1997 at an exercise price of $18.25 per share. Mr. Crosson was
granted non-qualified stock options to purchase 400,000 shares of
Common Stock in fiscal 1997 at an exercise price of $19.50. Mr.
Crosson's options vest in equal installments over four years.
Effective January 1, 1996, the Company entered into a
Consultation Agreement with John J. Russell. The agreement provides
for Mr. Russell to be retained for advisory and consulting services
related to the Company's current or potential activities in gaming
related businesses. The one year agreement is automatically renewable
for one year increments. The agreement provides for a fee of $250 per
hour, with a maximum of $2,000 per day. During fiscal 1997, Mr.
Russell received $10,390 under this agreement.
OTHER INFORMATION
Executive Officers
The following table sets forth the names and ages of the
executive officers of the Company, all positions held with the Company
by each individual, and a description of the business experience of
each individual for at least the past five years.
<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
Charles N. Mathewson 69 Chief Executive Officer
G. Thomas Baker 55 President, Chief Operating Officer,
and Chief Financial Officer
<PAGE>
Robert A. Bittman 43 Executive Vice President,
Product Development
Robert M. McMonigle 53 Executive Vice President,
Corporate Relations
and North American Sales
Raymond D. Pike 50 Executive Vice President,
Corporate Development
Brian McKay 53 Vice President, General Counsel,
Secretary and Treasurer
Anthony Ciorciari 50 Vice President, Operations
Maureen T. Imus 38 Vice President, Finance
Randy Kirner 51 Vice President, Human Resources
</TABLE>
For a description of Mr. Mathewson's background, see "Election of
Directors."
Mr. Baker rejoined the Company in March 1996 as its President,
Chief Operating Officer and Chief Financial Officer. Mr. Baker was
Senior Vice President and Chief Financial Officer of Boomtown Hotels &
Casinos from August 1995 to March 1996. Mr. Baker first joined IGT in
September 1988 as its Vice President of Finance and Administration and
Chief Financial Officer. In October 1991, Mr. Baker was named Vice
President of Finance, Chief Financial Officer and Treasurer of the
Company. He was named Executive Vice President, Corporate Finance;
Chief Financial Officer and Treasurer in September 1993. From August
1985 to September 1988, he was Chief Financial Officer for Evans
Rents, an upscale furniture rental company in Los Angeles, California.
From April 1979 until August 1985, Mr. Baker was the Chief Financial
Officer at Aurora Productions, an independent motion picture
production company in Los Angeles, California. Mr. Baker has a
Bachelor of Science degree in Business Administration and Liberal Arts
from Upper Iowa University.
Mr. Bittman rejoined the Company in March 1996 as Executive Vice
President, Product Development. He originally joined the Company in
1985 as Marketing Research Analyst and was subsequently named Director
of Marketing. He was promoted to Vice President of Marketing in 1988
and held this position until December 1995. From 1980 to 1985, Mr.
Bittman worked for Caesar's Tahoe in all phases of slot management,
including two years as Director of Slot Operations. Mr. Bittman
majored in systems analysis at New York University, and psychology at
Queens College and the University of Nevada, Reno.
Mr. McMonigle joined the Company as a Sales Manager in March of
1986. From April 1987 until October 1989, Mr. McMonigle was the
Director of Sales for the Company and from October 1989 until
September 1991 he was Vice President, Sales for the Company. From
September 1991 to September 1993 he served as Executive Vice President
of Sales for the Company. In September 1993, Mr. McMonigle was
promoted to Executive Vice President, Corporate Relations and North
American Sales for the Company. Prior to joining the Company, from
September 1984 through March 1986, Mr. McMonigle served as Regional
Sales Manager at American Protective Services located in Oakland,
California. From March 1979 through July 1984, Mr. McMonigle was
<PAGE>
employed by ARA Services, Inc. as Regional Vice President in Los
Angeles, and prior to that was employed from 1975 to 1979 as Director
of Circulation for Straight Arrow Publishing in New York, publishers
of "Rolling Stone" and "Outside" magazines. Prior to that, Mr.
McMonigle was with Readers Digest in Pleasantville, New York. Mr.
McMonigle is a graduate of Southeast Missouri State University with a
Bachelor's Degree in Business Administration.
Mr. Pike joined the Company as its General Counsel in December
1980 and served as its Chief Counsel and Secretary from June 1981
until January 1994, was named Vice President in 1983, Senior Vice
President in February 1988, Senior Vice President, Corporate
Development for the Company in September 1993 and Executive Vice
President, Corporate Development in April 1995. He is currently a
Trustee and Legal Counsel for the International Association of Gaming
Attorneys and serves as Vice Chairman of the Gaming Law Committee of
the American Bar Association. He received his law degree from Boalt
Hall, the University of California, Berkeley, in 1973. From September
1974 to December 1977, Mr. Pike was an Assistant United States
Attorney for the District of Nevada. He then spent one year in the
private practice of law as an associate with Lionel Sawyer & Collins
before becoming the Deputy Attorney General for the State of
Nevada/Chief of the Gaming Division. He held the latter position from
December 1978 until joining the Company in December 1980.
Mr. McKay joined the Company in January 1994 as General Counsel
and Corporate Secretary. In June 1994, he was promoted to Vice
President, General Counsel and Corporate Secretary. From 1982 to
1990, Mr. McKay served two terms as Nevada's Attorney General, during
which time he also served as Chairman of the Conference of Western
Attorneys General. From 1990 to 1993, Mr. McKay was a partner in the
administrative law and litigation departments of the law firm of
Lionel Sawyer & Collins in Reno, Nevada. Mr. McKay serves as a member
of the Board of Directors for the National Center for Responsible
Gaming. Mr. McKay serves as Chairman of the Commission on Nuclear
Projects for the State of Nevada, and is a member of the Board of
Trustees of the International Association of Gaming Attorneys. From
1992 to 1995 he served as Chairman of the Nevada Republican Party.
Mr. McKay was a Deputy Attorney General for the State of Nevada from
1975 to 1979. Mr. McKay received his law degree in 1974 from Albany
Law School of Union University.
Mr. Ciorciari joined the Company as Vice President of Operations
in January 1994, with responsibility for worldwide manufacturing,
procurement, corporate facilities and services. He has more than 26
years experience in U.S. and international manufacturing at Digital
Equipment Company. From June 1987 through December 1993, Mr.
Ciorciari was General Manager of the Digital manufacturing operations
in Albuquerque, New Mexico and Chihuahua, Mexico. In this position,
he was responsible for approximately 1,600 people and the
manufacturing and supply of Digital's workstation and systems product
lines.
Ms. Imus was named Vice President of Finance of the Company in
May 1996. Ms. Imus holds the senior financial position in the Company
and directs investor relations, corporate finance, accounting,
treasury management, tax, and information system functions. Ms. Imus
joined the Company in January 1989 as Senior Financial Analyst. In
December 1991, she was promoted to Manager of Finance and then to
Director of Finance in October 1993. Ms. Imus has a Bachelor of
Science degree from the University of Texas and a Masters of Business
Administration from the University of Nevada, Reno.
Mr. Kirner joined the Company in October 1997 as its Vice
President, Human Resources. From September 1993 through September
1997, Mr. Kirner served as the Vice President, Human Resources for
Wyle Electronics, an international distributor of semiconductors,
<PAGE>
computer systems and related value-added services. From 1986 to 1992,
he was employed by Allergan, Inc. of Irvine, California in various
capacities including Regional Sales Manager and earlier as Vice
President, Human Resources for Medical Optics, a subsidiary. Prior to
that, Mr. Kirner was with American Hospital Supply Corporation from
1972 to 1986. He is a Vietnam veteran having served as an officer in
the U.S. Army from 1967 to 1972. Mr. Kirner received a Masters of
Science from West Coast University in 1975, a Masters of Business
Administration degree from Georgia State University in 1968 and his
Bachelors degree in Business Administration from North Georgia College
and State University in 1967.
Equity Security Ownership of Management and Other Beneficial Owners
The following table sets forth information as of December 31,
1997 with respect to the beneficial ownership of the Company's Common
Stock by principal shareholders owning more than 5%, all directors,
the officers named in the Summary Compensation Table, and all
executive officers and directors of the Company as a group. The
Company has no other class of equity securities outstanding.
<TABLE>
<CAPTION>
Shares of the Company's Common Stock
Options
Exercisable Beneficially Percent of
Name of Beneficial Owner Owned within 60 days Owned1 Class2
<S> <C> <C> <C> <C>
G. Thomas Baker 98,316 207,494 305,810 .27
Robert A. Bittman 246,500 3 901 247,401 .22
Albert J. Crosson 243,500 420,667 664,167 .58
Wilbur K. Keating 4,718 20,000 24,718 .02
Charles N. Mathewson 2,557,520 1,009,489 3,567,009 3.11
Brian McKay 50,000 3 27,074 77,074 .07
Robert M. McMonigle 84,400 3 152,124 236,524 .21
Warren L. Nelson 204,048 23,333 227,381 .20
Frederick B. Rentschler - 23,333 23,333 .02
John J. Russell 45,487 5,333 50,820 .04
Rockwell A. Schnabel 30,002 19,333 49,335 .04
Claudine B. Williams 9,733 20,000 29,733 .03
All executive officers and
directors as a group
(16 persons) 3,695,460 1,982,598 5,678,058 4.90
J.P. Morgan Investment
Management, Inc.
522 Fifth Avenue,
7th Floor
New York, NY 10036 7,984,443 - 7,984,443 7.02
____________
<FN>
1 Includes shares which may be purchased upon exercise of options
exercisable within 60 days of December 31, 1997.
2 Any securities not outstanding which are subject to options or
conversion privileges which are exercisable within 60 days of December
31, 1997 are deemed outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by any person
holding such securities but are not deemed outstanding for the purpose
of computing the percentage of the class owned by any other person.
3 Includes certain shares granted pursuant to a restricted stock
award. See "Executive Compensation."
</FN>
</TABLE>
<PAGE>
Executive Compensation
Summary Compensation Table
The following table summarizes all compensation paid for the
years ended September 30, 1997, 1996 and 1995, to the persons who held
the position of Chief Executive Officer and the other four most highly
compensated executive officers (collectively, the "Named Officers")
during fiscal 1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Securities
Restricted Underlying All
Stock Options Other
Name of Principal Position Year Salary1 Bonus3 Awards Granted2 Compensation3
<S> <C> <C> <C> <C> <C> <C>
Charles N. Mathewson 1997 $ 1 $ - $ - - $ 3,229
Chairman of the 1996 100,001 - - 1,002,906 27,216
Board of Directors 1995 60,000 165,000 - 2,600 19,042
and Chief Executive
Officer
G. Thomas Baker 1997 418,269 522,000 - 7,233 57,335
President, Chief 1996 230,769 381,000 - 500,000 4,062
Operating Officer, 1995 147,927 7,000 - 33,416 28,765
and Chief Financial
Officer
Robert A. Bittman 1997 263,461 300,000 - 4,506 41,697
Executive Vice President, 1996 203,846 390,000 3,119,625 5 - 17,493
Product Development 1995 177,644 150,000 - 62,915 50,152
Robert M. McMonigle 1997 207,478 185,000 912,000 6 3,964 41,002
Executive Vice President, 1996 185,494 185,000 - 3,240 36,256
Corporate Relations and 1995 182,000 125,000 - 15,746 45,150
North American Sales
Brian McKay 1997 190,585 170,000 912,000 6 3,455 38,197
Vice President, General 1996 163,750 160,000 - 2,854 27,637
Counsel, Secretary and 1995 155,625 113,500 - 63,103 34,085
Treasurer
<PAGE>
___________
<FN>
1 Amounts shown include base compensation earned and received by
executive officers. No non-cash compensation was paid as salary or as
a bonus during fiscal 1997.
2 Amounts represent options to purchase the number of shares of
Common Stock shown.
3 Amounts shown include contributions by the Company to the
accounts of the identified executive officers under the Company's
qualified profit sharing plan and payment under the Company's cash
sharing plan. See "Employee Incentive Plans" for a description of
these plans.
4 During the period from October 1995 to February 1996, Mr. Mathewson
had an annual base salary of $260,000. Commencing with his
appointment to Chief Executive Officer, he does not receive a base
salary.
5 A restricted stock award was made to Mr. Bittman on March 18, 1996.
A total of 225,000 shares was awarded for a price of $.01 per share.
The award vests in three equal installments upon the second, third and
fifth anniversaries of the award. Dividends on the shares issued are
paid to Mr. Bittman. The unvested shares issued to Mr. Bittman are
subject to repurchase by the Company at $.01 per share if Mr.
Bittman's employment terminates for certain reasons prior to the
vesting of such shares. The dollar value of the shares issued, as
presented, is based on the fair market value of the stock at the date
of grant and does not take into account any diminution in value
attributable to restrictions applicable to these shares. The dollar
value of the shares issued was $5,229,000 at September 30, 1997.
6 Restricted stock awards of 50,000 shares were made to both Mr.
McKay and Mr. McMonigle on February 18, 1997. The shares were awarded
for a price of $.01 per share. 40% of these awards will vest in
August 1999 and the remainder will vest in August 2001. Dividends on
the shares are paid to Mr. McKay and Mr. McMonigle. The unvested
shares issued are subject to repurchase by the Company at $.01 per
share if employment terminates for certain reasons prior to the
vesting of such shares. The dollar value of the shares issued, as
presented, is based on the fair market value of the stock at the date
of grant and does not take into account any diminution in value
attributable to restrictions applicable to these shares. The dollar
value of each of the awards was $1,162,000 at September 30, 1997.
</FN>
</TABLE>
Options
The tables below set forth certain information regarding options
granted to the Named Officers during fiscal 1997.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Percent of
Total Potential Realizable
Number of Options Exercise Value at Assumed Annual
Securities Granted to or Base Rates of Stock Price
Underlying Employees Price Appreciation
Options in Per Expiration for Option Term1
Name Granted1 Fiscal Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Charles N. Mathewson - - - - - -
G. Thomas Baker 7,233 .39% $18.25 12/31/06 $83,016 $210,378
Robert A. Bittman 4,506 .25 18.25 12/31/06 51,717 131,061
Robert M. McMonigle 3,964 .22 18.25 12/31/06 45,496 115,296
Brian McKay 3,455 .19 18.25 12/31/06 39,654 100,491
____________
<FN>
1 The options have a ten year term and are generally exercisable
commencing 12 months after the grant date, with 20% of the shares
covered thereby becoming exercisable at that time and with an
additional 20% of the option shares becoming exercisable on each
successive anniversary date, with full vesting occurring on the fifth
anniversary date.
</FN>
</TABLE>
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End
Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Options Exercised Underlying Unexercised In-The-Money Options
Shares Value Options at 09/30/97 at 09/30/97 1
Name Acquired Realized1 Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Charles N. Mathewson 8,196 $ 54,734 1,005,038 9,085 $9,934,250 $ 45,443
G. Thomas Baker 23,320 320,400 106,048 427,281 1,067,164 4,246,669
Robert A. Bittman - - - 4,506 - 22,530
Robert M. McMonigle 704 12,254 150,684 16,002 2,848,445 151,403
Brian McKay - - 25,812 43,600 272,166 443,366
___________
<FN>
1 Market value of the underlying securities at the exercise date or
year-end, as the case may be, less the exercise price of "in-the-
money" options.
</FN>
</TABLE>
<PAGE>
Employee Incentive Plans
Under a discretionary program effective January 1, 1986 and
reviewable annually by the Company's Board of Directors, in fiscal
1997 the Company contributed, in the aggregate, 11% of consolidated
operating profits before incentive plan compensation expenses
(excluding IGT-Australia) equally to three employee incentive plans:
the profit sharing and 401(k) plan; the cash sharing plan; and the
management bonus plan. The total annual contribution under all three
plans was $22.7 million in fiscal 1997.
The profit sharing plan was originally adopted in 1980 for the
Company's employees working in the United States. Benefits vest over a
seven year period of employment. Effective January 1, 1993, the
Company began distributing a portion of the profit sharing plan
contribution under a 401(k) retirement plan matching program. Per the
plan agreement, the Company matches 100% of employee contributions up
to $500 and an additional 50% of the next $500 contributed by the
employee. This allows for maximum annual Company contributions of
$750 to each employee's 401(k) account. These contributions vest
immediately. The Company's foreign subsidiaries have similar
retirement plans.
The cash sharing plan calls for semi-annual distributions to all
non IGT-Australia employees. IGT-Australia has a similar plan. The
management bonuses under the management bonus plan are paid out
annually to key employees throughout the Company.
Employment Contracts
G. Thomas Baker was named President, Chief Operating Officer and
Chief Financial Officer on February 19, 1996. Pursuant to a one-year
employment agreement renewed on March 12, 1997, he receives a base
salary of $450,000. Mr. Baker is eligible to participate in the
Company's profit sharing, cash sharing, and management bonus plans
(see "Employee Incentive Plans").
Robert A. Bittman was appointed Executive Vice President, Product
Development of the Company effective March 18, 1996. The Company
entered into a five year employment agreement with Mr. Bittman in
March 1996 providing for an annual base salary of $250,000 and a one-
time cash payment of $150,000, paid upon the commencement of his
employment. Mr. Bittman is also eligible to participate in the
Company's profit sharing, cash sharing and management bonus plans (see
"Employee Incentive Plans"). Additionally, Mr. Bittman was granted a
restricted stock award for 225,000 shares at a price of $.01 per share.
The award vests in three equal installments upon the second, third and
fifth anniversaries of the award (see "Summary Compensation Table").
The unvested shares issued to Mr. Bittman are subject to repurchase by
the Company at $.01 per share if Mr. Bittman's employment terminates
for certain reasons prior to the vesting of such shares.
Compliance with Section 16(a) of the Securities Act of 1934
Section 16(a) of the Securities and Exchange Act of 1934, and
regulations of the Securities and Exchange Commission ("SEC")
thereunder, require the Company's executive officers and directors and
persons who beneficially own more than 10% of the Company's Common
Stock, as well as certain affiliates of such persons, to file initial
reports of ownership and monthly transaction reports covering any
changes in ownership with the SEC and the New York Stock Exchange.
Executive officers, directors and persons owning more than 10% of the
Company's Common Stock are required by SEC regulations to furnish the
Company with all such reports they file. Based solely on a review of
the copies of such reports received by it, the Company believes that,
during fiscal 1997, all filing requirements applicable to executive
officers and directors were complied with.
<PAGE>
Relationship with Independent Public Accountants
The Company has selected Deloitte & Touche llp as its independent
accountants for the year ending September 30, 1998. A
representative of Deloitte & Touche llp will be present at the Annual
Meeting of Stockholders and will have an opportunity to make a
statement and will respond to appropriate questions.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED
TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 OR INCORPORATED BY REFERENCE IN ANY DOCUMENT SO
FILED.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, consisting
entirely of non-employee directors, is responsible for oversight of
executive compensation, review of the Company's overall compensation
programs, and administration of certain of the Company's incentive
compensation programs.
Compensation Philosophy
Generally, the Company's compensation programs 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. The overall compensation
philosophy followed by the Committee is to pay competitively while
emphasizing qualitative indicators of corporate and individual
performance. The incentive cash bonuses received by the Named
Officers in the Summary Compensation Table under the Company's
management bonus plan comprised on average approximately 52% of their
total salary and bonus compensation for fiscal 1997.
Executive Compensation
The Company's management bonus plan is a cash-based incentive
program, and for fiscal year 1997, was based on the Company's income
from operations. Individual cash bonus awards were made to the
executive officers because the Committee believes such awards provide
appropriate performance incentives. Individual cash bonus awards for
executive officers other than the Chief Executive Officer and the
President and Chief Operating Officer were determined for fiscal 1997,
jointly by the Chief Executive Officer, Mr. Mathewson, and President
and Chief Operating Officer, Mr. Baker, based on their qualitative
evaluation of each officer's individual performance.
Executive officers also participate in benefit plans available to
employees as described under "Employee Incentive Plans."
The Committee also uses stock option awards made under the Stock
Option Plan for Key Employees of International Game Technology and the
International Game Technology 1993 Stock Option Plan (amended and
restated effective as of August 27, 1996) (the "Stock Option Plans")
to provide various incentives for key personnel, including executive
<PAGE>
officers. Stock options are priced at the fair market value of the
Common Stock of the Company on the date of the grant, and typically
vest at the rate of 20% per year over five years with exercisability
dependent on continued employment.
All executive officers, except Mr. Mathewson, received a stock
option award under the Stock Option Plans in fiscal 1997. The
Committee also periodically approves additional stock option awards
for eligible individuals, including executive officers, based on
individual current performance, assumption of significant
responsibilities, anticipated future contributions, and/or ability to
impact overall corporate and/or business unit financial results.
To the extent readily determinable, and as one of the factors in
its consideration of compensation matters, the Compensation Committee
also considers the anticipated tax treatment to the Company and to the
executives of various payments and benefits, specifically in
consideration of Section 162(m) of the Internal Revenue Code. The
Committee will not, however, necessarily limit executive compensation
to that which is deductible.
Chief Executive Compensation
Mr. Mathewson became Chief Executive Officer of the Company on
February 12, 1996. As Chief Executive Officer, he receives no base
salary. The Committee, based on its subjective evaluation of Mr.
Mathewson's performance, granted Mr. Mathewson stock options in
February 1996 to acquire 1,000,000 shares of the Company's Common
Stock. All of such options were fully vested in December 1996.
COMPENSATION COMMITTEE
Frederick B. Rentschler, Chairman
Warren L. Nelson
Claudine B. Williams
<PAGE>
PERFORMANCE GRAPH
The following graph reflects the cumulative total return (change
in stock price plus reinvested dividends) of a $100 investment in the
Company's Common Stock for the five-year period from September 30,
1992 through September 30, 1997 in comparison to the Standard and
Poor's 500 Composite Index and a Peer Group. The comparisons are not
intended to forecast or be indicative of possible future performance
of the Company's Stock.
<TABLE>
<CAPTION>
September 30, 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
International Game Technology 100 196 102 67 103 118
Former Peer Group 100 136 83 110 127 139
New Peer Group 100 150 96 125 163 186
S & P 500 100 113 117 152 183 257
</TABLE>
The former peer group consisted of Casino Data Systems, GTECH,
WMS Industries, Inc. and Video Lottery Technologies, Inc. The current
peer group includes the companies in the former peer group as well as
Alliance Gaming Corp., previously Bally Gaming, and Anchor Games and
Silicon Gaming, Inc., that were added due to their increased presence
in the industry.
<PAGE>
GENERAL
The Company's Annual Report to Stockholders, containing audited
financial statements, accompanies this Proxy Statement. As of the
date of this Proxy Statement, the Board of Directors knows of no
business which will be presented for consideration at the meeting
other than the matters stated in the notice and described in the Proxy
Statement. If, however, any matter incident to the conduct of the
meeting or other business shall properly come before the meeting, it
is intended that the proxies will be voted in respect of any such
matters or other business in accordance with the best judgment of the
persons acting under the proxies, and discretionary authority to do so
is included in the proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Brian McKay
Secretary
Reno, Nevada
January 15, 1998
<PAGE>
