<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MIRAGE RESORTS, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
PRELIMINARY COPY
MIRAGE RESORTS, INCORPORATED
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 9, 1999
----------------
The Annual Meeting of Stockholders (the "Meeting") of Mirage Resorts,
Incorporated (the "Company") will be held at Bellagio, 3600 Las Vegas
Boulevard South, Las Vegas, Nevada on Wednesday, June 9, 1999, at 1:00 P.M.,
for the following purposes:
1. To elect two directors for the term set forth in the accompanying Proxy
Statement;
2. To approve the 1999 Cash Bonus Plan;
3. To approve a proposed amendment to the Company's Articles of
Incorporation in order to comply with the New Jersey Casino Control Act;
4. To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for 1999; and
5. To transact such other business as may properly come before the Meeting
and any adjournments thereof.
Pursuant to the Bylaws of the Company, the Board of Directors has fixed the
time and date for the determination of stockholders entitled to notice of and
to vote at the Meeting as the close of business on April 12, 1999.
Accordingly, only stockholders of record on such date and at such time will be
entitled to vote at the Meeting, notwithstanding any transfer of stock on the
books of the Company thereafter.
Whether or not you expect to attend the Meeting in person, please date and
sign the accompanying Proxy card and return it promptly to American Stock
Transfer & Trust Company in the envelope enclosed for that purpose.
Alternatively, you may vote via toll-free telephone call or the Internet by
following the instructions on the back of the Proxy card.
BRUCE A. LEVIN
Secretary
Las Vegas, Nevada
April , 1999
<PAGE>
PRELIMINARY COPY
MIRAGE RESORTS, INCORPORATED
3600 Las Vegas Boulevard South
Las Vegas, Nevada 89109
April , 1999
----------------
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Mirage Resorts, Incorporated (the "Company") for use only at the
Company's Annual Meeting of Stockholders (the "Meeting") to be held on June 9,
1999, and at any and all adjournments thereof. Unless the accompanying Proxy
has been previously revoked, the shares represented by the Proxy will, unless
otherwise directed, be voted at the Meeting for the nominees for election as
directors named below, for approval of the 1999 Cash Bonus Plan (the "1999
Bonus Plan"), for approval of the amendment to the Company's Articles of
Incorporation, for ratification of the appointment of Arthur Andersen LLP as
the Company's independent accountants for 1999 and, with discretion, on all
other matters that may properly come before the Meeting. A stockholder may
revoke the Proxy at will at any time prior to the voting of shares by voting
in person at the Meeting or by filing with the Secretary of the Company a duly
executed Proxy bearing a later date or an instrument revoking the Proxy. The
total cost of solicitation of Proxies will be paid by the Company.
In addition to soliciting Proxies by mail, the Company's officers, directors
and other regular employees, without additional compensation, may solicit
Proxies personally or by other appropriate means. It is anticipated that
banks, brokerage firms, fiduciaries and other custodians and nominees will
forward Proxy soliciting material to their principals and that the Company
will reimburse such persons' out-of-pocket expenses.
It is anticipated that this Proxy Statement and accompanying Proxy will
first be mailed to stockholders on or about April , 1999.
VOTING RIGHTS
Holders of the Company's common stock, $.004 par value (the "Common Stock"),
of record as of the close of business on April 12, 1999, will be entitled to
one vote for each share held on all matters presented to the Meeting. On April
12, 1999, there were outstanding shares of Common Stock, which
constituted all of the outstanding voting securities of the Company. A
majority of the outstanding shares of Common Stock represented in person or by
proxy will constitute a quorum for the transaction of business at the Meeting.
Abstentions and broker non-votes will be counted as shares that are present
for purposes of determining the presence of a quorum. There will be no
cumulative voting for members of the Board of Directors. The two nominees who
receive the greatest number of votes cast will be elected to the Board of
Directors. Approval of the 1999 Bonus Plan and ratification of the appointment
of the independent accountants each requires the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the Meeting
and actually voting on the matter (without giving effect to abstentions or
broker non-votes). Approval of the amendment to the Articles of Incorporation
requires the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock (thus, abstentions and broker non-votes will have the
effect of a vote against approval of the amendment). Under the rules of the
New York Stock Exchange (the "NYSE"), the election of directors, approval of
the 1999 Bonus Plan and ratification of the appointment of the independent
accountants are considered by the NYSE to be "routine" items upon which
brokerage firms may vote in their discretion on behalf of their customers if
such customers have not furnished voting instructions within a specified
period prior to the Meeting.
<PAGE>
STOCK OWNERSHIP OF MAJOR STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1999 with
respect to the "beneficial" ownership, as such term is defined in the Rules of
the Securities and Exchange Commission (the "Commission"), of the Common Stock
by (i) each person who, to the knowledge of the Company, beneficially owned
more than 5% of the outstanding Common Stock, (ii) each director of the
Company, (iii) the Company's Chief Executive Officer and the four other
highest compensated executive officers of the Company during 1998
(collectively, the "Named Officers") and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Approximate
Percentage of
Number of Outstanding
Name Shares Common Stock
---- ---------- -------------
<S> <C> <C>
Stephen A. Wynn
P.O. Box 7700
Las Vegas, NV 89177 23,511,531(1) 12.1%
J. P. Morgan & Co. Incorporated
60 Wall Street
New York, NY 10260 17,420,478(2) 9.6%
The TCW Group, Inc.
865 South Figueroa Street
Los Angeles, CA 90017 11,646,206(3) 6.4%
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071 10,740,000(4) 5.9%
State Street Research & Management Company
One Financial Center, 30th Floor
Boston, MA 02111 9,135,000(5) 5.0%
Melvin B. Wolzinger 3,166,314(6) 1.7%
Daniel B. Wayson 526,740(7) *
Elaine P. Wynn 252,990(8) *
George J. Mason 186,490(9) *
Richard D. Bronson 475,000(10) *
Ronald M. Popeil 75,331(11) *
Barry A. Shier 756,290(12) *
Bruce A. Levin 167,500(13) *
Daniel R. Lee 899,700(14) *
Frank P. Visconti 300,000(15) *
All directors and executive officers
as a group (14 persons) 30,538,214(16) 15.5%
</TABLE>
- ---------------------
* Less than 1%.
(1) Includes 12,849,367 shares subject to options which are currently
exercisable or become exercisable within 60 days of March 31, 1999. Does
not include shares beneficially owned by Elaine P. Wynn, Mr. Wynn's wife,
as separate property, as to which shares Mr. Wynn disclaims beneficial
ownership.
(2) Represents shares beneficially owned as of December 31, 1998, based on a
Schedule 13G filed with the Commission on February 23, 1999. Such
Schedule 13G states that J.P. Morgan & Co. Incorporated and certain
subsidiaries have sole dispositive power as to 17,412,208 of such shares,
shared dispositive power as to 4,170 of such shares, sole voting power as
to 13,808,128 of such shares and shared voting power as to 3,000 of such
shares.
(3) Represents shares beneficially owned as of December 31, 1998, based on a
Schedule 13G, dated February 12, 1999, filed with the Commission. Such
Schedule 13G states that certain subsidiaries and affiliates of The TCW
Group, Inc. share dispositive and voting power as to all of such shares.
2
<PAGE>
(4) Represents shares beneficially owned as of December 31, 1998, based on a
Schedule 13G, dated February 8, 1999, filed with the Commission. Such
Schedule 13G states that Capital Research and Management Company has sole
dispositive power and no voting power as to all of such shares.
(5) Represents shares beneficially owned as of December 31, 1998, based on a
Schedule 13G, dated February 11, 1999, filed with the Commission. Such
Schedule 13G states that State Street Research & Management Company has
sole dispositive power as to all of such shares and sole voting power as
to 8,787,800 of such shares.
(6) Includes 2,603,630 shares held by a family trust of which Mr. Wolzinger
and his wife serve as trustees and 476,664 shares held by limited
partnerships of which such trust is the general partner and a limited
partner. Mr. Wolzinger disclaims beneficial ownership of the shares held
by the limited partnerships except to the extent of his pecuniary
interest therein. Also includes 38,030 shares held by a trust of which
Mr. Wolzinger serves as a trustee but does not have any pecuniary
interest, as to which shares Mr. Wolzinger disclaims beneficial
ownership. Also includes 47,990 shares subject to options which are
currently exercisable or become exercisable within 60 days of March 31,
1999.
(7) Includes 47,990 shares subject to options which are currently exercisable
or become exercisable within 60 days of March 31, 1999.
(8) Includes 47,990 shares subject to options which are currently exercisable
or become exercisable within 60 days of March 31, 1999. Does not include
shares reported as beneficially owned by Stephen A. Wynn, Mrs. Wynn's
husband.
(9) Includes 71,000 shares held by a family trust of which Mr. Mason and his
wife serve as trustees and 47,990 shares subject to options which are
currently exercisable or become exercisable within 60 days of March 31,
1999.
(10) Represents shares subject to options which are currently exercisable or
become exercisable within 60 days of March 31, 1999.
(11) Includes 550 shares held by Mr. Popeil's wife as separate property and
4,791 shares held by Mr. Popeil as custodian for his minor daughter and
grandchildren who do not share his household. Mr. Popeil disclaims
beneficial ownership of the shares held by his wife and as custodian.
Also includes 17,990 shares subject to options which are currently
exercisable or become exercisable within 60 days of March 31, 1999.
(12) Includes 750,000 shares subject to options which are currently
exercisable or become exercisable within 60 days of March 31, 1999 and
240 shares held by Mr. Shier as custodian for his minor children.
(13) Includes 147,500 shares subject to options which are currently
exercisable or become exercisable within 60 days of March 31, 1999.
(14) Includes 889,200 shares subject to options which are currently
exercisable or become exercisable within 60 days of March 31, 1999 and
500 shares held by Mr. Lee as custodian for his minor niece who does not
share his household. Mr. Lee disclaims beneficial ownership of the shares
held as custodian.
(15) Represents shares subject to options which are currently exercisable or
become exercisable within 60 days of March 31, 1999.
(16) Includes 15,819,025 shares subject to options which are currently
exercisable or become exercisable within 60 days of March 31, 1999.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Articles of Incorporation and Bylaws provide for from three to
11 directors, the precise number to be determined from time to time by the
Board of Directors. Currently, the size of the Board is fixed at seven
members. All of the existing directors have been previously elected by the
stockholders. The two directors to be elected at the Meeting are to be elected
to hold office for three years each and until the election of their respective
successors. All Proxies received by the Board of Directors will be voted for
the election, as directors, of the nominees listed below if no direction to
the contrary is given. In the event that any nominee is unable or declines to
serve, an event that is not anticipated, the Proxies will be voted for the
election of any nominee who may be designated by the Board of Directors.
The information set forth below is submitted with respect to the nominees to
the Board for whom it is intended that Proxies will be voted, for directors
whose terms of office will continue after the Meeting and for executive
officers who are not directors.
Information Concerning Nominees for Election as Directors(1)
<TABLE>
<CAPTION>
Name Year First Elected
- ---- ------------------
<S> <C>
Elaine P. Wynn, 56(2) 1977
Director
Mrs. Wynn has been active in civic and philanthropic
affairs in Las Vegas for many years and has received
numerous honors for her charitable and community work. She
is Co-Chairperson of the Greater Las Vegas Inner-City Games
and a member of the National Board of the Inner-City Games
Foundation. Mrs. Wynn is also Secretary, Treasurer and a
Trustee of Golden Nugget Scholarship Fund, Inc.
Richard D. Bronson, 54 1993;
Director Appointed
Mr. Bronson has been President of New City Development, a August 3,
division of the Company which is responsible for certain 1992
corporate development activities of the Company outside of
Nevada, or its predecessor, New City Development, Inc.,
since February 1992.
</TABLE>
Information Concerning Directors Whose Terms of Office Will Continue After the
Annual Meeting(1)
<TABLE>
<CAPTION>
Expiration of
Term as
Name Year First Elected Director
- ---- ------------------ -------------
<S> <C> <C>
Stephen A. Wynn, 57(2) 1973 2001
Chairman of the Board of Directors, President
and Chief Executive Officer
Mr. Wynn has held his present positions for
more than five years. Mr. Wynn is a Trustee
of the University of Pennsylvania.
Ronald M. Popeil, 63 1980; 2001
Director and Member of Audit, Stock Option Appointed
and Bonus Committees September 19,
Mr. Popeil has been the President of RONCO, 1979
Inc., the principal business of which is
inventing, marketing and producing consumer
products, since he co-founded that company
in May 1984. He is recognized as a pioneer
in the field of direct response television
marketing.
Melvin B. Wolzinger, 78 1973 2000
Director and Member of Audit, Stock Option
and Bonus Committees
Mr. Wolzinger is, and has been for more than
five years, a general partner in
W.W. Investment Co., a real estate holding
company in Las Vegas, Nevada. He has been a
principal owner of various restaurants and
casino gaming establishments in Las Vegas for
many years and a stockholder of the Company
for approximately 40 years.
Daniel B. Wayson, 46 1988; 2000
Director Appointed
Mr. Wayson is, and has been for more than March 19,
five years, a principal of Wayson Properties, 1987
Inc., a real estate development and holding
company, and other real estate and business
ventures. He served as President and Chief
Executive Officer of the Company's former
New Jersey gaming subsidiary from December
1984 through February 1987.
</TABLE>
4
<PAGE>
Information Concerning Directors Whose Terms of Office Will Continue After the
Annual Meeting(1) (Continued)
<TABLE>
<CAPTION>
Expiration of
Term as
Name Year First Elected Director
- ---- ------------------ -------------
<S> <C> <C>
George J. Mason, 68 1973 2000
Director and Member of Audit, Stock Option
and Bonus Committees
Mr. Mason is a Senior Managing Director of
Bear, Stearns & Co. Inc., Los Angeles,
California, an investment banking firm which
has provided certain services to the Company,
and has been employed by such firm since
1973.
</TABLE>
Information Concerning Executive Officers Other than Directors Listed Above(3)
<TABLE>
<CAPTION>
Year Hired
Name by Company
- ---- ----------
<S> <C>
Barry A. Shier, 44, Executive Vice President-- Marketing and Hotel 1984
Operations
Mr. Shier joined the Company as Executive Vice President -- Hotel
Operations in September 1984 and was appointed to his present
position in August 1987. He is also the Chairman and Chief
Executive Officer of the Company's subsidiaries which own and
operate the Golden Nugget hotel-casino in Las Vegas and the Beau
Rivage hotel-casino in Biloxi, Mississippi.
Bruce A. Levin, 59, Vice President, General Counsel and Secretary 1979
Mr. Levin has been Vice President and General Counsel since
joining the Company in August 1979 and has also served as
Secretary or Assistant Secretary since that date.
Daniel R. Lee, 42, Senior Vice President -- Finance and 1992
Development, Chief Financial Officer and Treasurer
Mr. Lee joined the Company as Senior Vice President -- Finance and
Development in March 1992 and was appointed Chief Financial
Officer and Treasurer in September 1992.
Frank P. Visconti, 45, President -- Retail Division 1992
Mr. Visconti joined the Company as Senior Vice President -- Retail
Operations in September 1992 and was appointed to his present
position in September 1997.
Thomas L. Sheer, 61, Senior Vice President -- Government and 1996
External Affairs
Mr. Sheer was appointed to his present position in January 1996.
From November 1990 to December 1995, he was Assistant to the
President of W. R. Grace & Co., a diversified chemicals company,
and he also served as Director of Business Intelligence of that
company from July 1993 to December 1995. Prior thereto, Mr. Sheer
was employed by the Federal Bureau of Investigation for 25 years,
rising to the position of an Assistant Director.
James E. Pettis, 47, Vice President -- Risk Management 1980
Mr. Pettis was appointed to his present position in November 1984.
He has been employed by the Company since May 1980 with
responsibility for various corporate risk management, safety and
employee benefit matters.
James M. Powers, 70, Vice President -- Corporate Security 1980
Mr. Powers has held his present position since joining the Company
in January 1980.
</TABLE>
- ---------------------
(1) Only directorships of issuers with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), or subject to the requirements of Section 15(d) of the
1934 Act, or directorships of issuers registered as investment companies
under the Investment Company Act of 1940, as amended, are listed in the
table.
(2) Stephen A. Wynn and Elaine P. Wynn are husband and wife.
(3) Officers serve at the pleasure of the Board of Directors.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------- ---------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary($) Bonus($) Compensation($)(1) Options/SARs(#) Compensation($)(2)
------------------ ---- ---------- ---------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Wynn 1998 $2,596,154 $1,250,000 $ 0 1,832,278(3) $ 4,160
Chairman of the Board, 1997 2,500,000 1,250,000 0 0 4,160
President and Chief 1996 2,502,507 1,250,000 0 0 4,110
Executive Officer
Barry A. Shier 1998 $1,038,462 $ 500,000 $0 1,832,278(3) $14,780
Executive Vice 1997 1,000,000 500,000 0 0 5,744
President -- Marketing 1996 1,000,000 500,000 0 0 4,110
and Hotel Operations
Bruce A. Levin 1998 $ 723,346 $ 350,000 $0 108,935(3) $ 4,160
Vice President, General 1997 656,000 200,000 0 0 4,160
Counsel and Secretary 1996 553,308 150,000 0 150,000 4,110
Daniel R. Lee 1998 $ 623,077 $ 300,000 $0 960,444(3) $ 3,968
Senior Vice President 1997 533,846 300,000 0 1,200,000 3,968
-- Finance and 1996 400,000 250,000 0 0 3,888
Development, Chief
Financial Officer and
Treasurer
Frank P. Visconti 1998 $ 415,385 $ 200,000 $0 98,630(3) $ 5,802
President -- Retail 1997 308,654 125,000 0 150,000 4,046
Division 1996 275,000 115,000 0 0 3,611
</TABLE>
- ---------------------
(1) The Company provides certain perquisites and other personal benefits to
some or all of the Named Officers, including (i) reimbursement for medical
expenses, including related travel expenses, (ii) personal use of Company
vehicles and aircraft, (iii) complimentary rooms, food, beverages and
entertainment (including such privileges at the Company's health spas and
golf course) and (iv) use of Company employees to furnish personal
services. The unreimbursed incremental cost to the Company of providing
perquisites and other personal benefits did not exceed, as to any Named
Officer for any year, the lesser of $50,000 or 10% of the total salary and
bonus paid to such Named Officer for such year and, accordingly, is
omitted from the table.
(2) Represents (i) Company-paid premiums for term life insurance on each of
the Named Officers, as follows: Stephen A. Wynn -- 1998: $960, 1997: $960,
1996: $1,110; Barry A. Shier -- 1998: $960, 1997: $960, 1996: $1,110;
Bruce A. Levin -- 1998: $960, 1997: $960, 1996: $1,110; Daniel R. Lee --
1998: $768, 1997: $768, 1996: $888; and Frank P. Visconti -- 1998: $768,
1997: $608, 1996: $611, (ii) matching contributions made by the Company
for the Named Officers in accordance with the Company's retirement savings
plan adopted pursuant to Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"), which amount to $3,200 for each of the
Named Officers for 1998 and 1997 and $3,000 for each of the Named Officers
for 1996 and (iii) above-market earnings (as defined in the Rules of the
Commission) on compensation deferred during 1998 and 1997 pursuant to the
Company's Non-Qualified Deferred Compensation Plan, as follows: Mr.
Shier -- 1998: $10,620, 1997: $1,584; and Mr. Visconti -- 1998: $1,834,
1997: $238.
(3) Represents stock options repriced during 1998. See "Repricing of Stock
Options."
6
<PAGE>
Option Grants in 1998
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Number of % of Total
Securities Options Grant-Date
Underlying Granted to Present
Options Employees Exercise Expiration Value
Name Granted(#)(1) in 1998 Price($/Sh)(2) Date(3) ($)(4)
---- ------------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Stephen A. Wynn 1,832,278 9.3% $14.375 8/16/05 $12,105,572
Barry A. Shier 1,832,278 9.3 14.375 8/16/05 12,105,572
Bruce A. Levin 108,935 0.6 14.375 8/22/06 777,181
Daniel R. Lee 799,562 4.1 14.375 4/28/07 5,974,548
160,882 0.8 14.375 7/16/07 1,219,558
Frank P. Visconti 98,630 0.5 14.375 8/13/07 751,264
</TABLE>
- ---------------------
(1) Represents options repriced during 1998. Other than the number of options
and the exercise price, the terms of the repriced options, including the
dates of exercisability, were not changed. See "Repricing of Stock
Options." Exercisability of the options may be accelerated upon the
occurrence of certain fundamental corporate changes or at the discretion
of the Stock Option Committee. Exercisability of the options granted to
Mr. Lee also accelerates ratably in the event of termination of his
employment due to death or Permanent Disability (as defined).
(2) Under the terms of the Company's Stock Option and Stock Appreciation
Rights Plans, the Stock Option Committee retains discretion, subject to
plan limitations, to modify the terms of outstanding options and to
reprice options. The exercise price of the options may be paid in cash, by
delivery of shares of Common Stock or by offset of the underlying shares,
subject to certain conditions.
(3) The options are subject to early termination in the event of termination
of employment.
(4) Determined using a variation of the Black-Scholes option pricing model.
The assumed expected volatility of the Common Stock, risk-free rate of
return and Common Stock dividend yield are 36.66% per annum, 4.47% to
4.72% per annum and 0, respectively. The assumed time of exercise is the
last day of the option's contractual life.
Aggregated Option Exercises in 1998 and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at Fiscal in-the-Money Options
Acquired on Value Year-End(#) at Fiscal Year-End($)
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Stephen A. Wynn 0 $-- 12,849,367/732,911 $107,734,019/412,262
Barry A. Shier 0 -- 750,000/2,582,278 6,740,625/8,858,781
Bruce A. Levin 0 -- 147,500/108,935 1,506,344/61,276
Daniel R. Lee 0 -- 889,200/960,444 8,969,805/540,250
Frank P. Visconti 0 -- 320,000/98,630 3,268,000/55,479
</TABLE>
- ---------------------
(1) Represents the difference between the closing sale price of the Common
Stock on the NYSE Composite Tape on December 31, 1998 and the exercise
price of the options.
Employment Agreements
On December 16, 1992, the Company entered into a 10-year Employment
Agreement with Stephen A. Wynn pursuant to which Mr. Wynn serves as President
and Chief Executive Officer of the Company at an annual salary of $2,500,000.
Mr. Wynn shall be entitled to such bonuses, stock options and other
compensation as may be determined from time to time by the Board of Directors.
Pursuant to the Employment Agreement, the Company also provides Mr. Wynn with
the personal use of an automobile for which the Company pays all insurance,
gasoline and maintenance expenses, and provides Mr. Wynn and his dependents
with reimbursement for medical expenses and coverage under the Company's life
insurance program.
7
<PAGE>
Effective July 16, 1997, the Company entered into an Employment Agreement
with Mr. Lee, which terminates on February 24, 2005, pursuant to which Mr. Lee
serves as Chief Financial Officer of the Company at an annual salary of
$600,000. Mr. Lee shall be entitled to such raises or bonuses as may be
determined in the discretion of the Board of Directors or the Bonus Committee.
The Company also provides Mr. Lee and his dependents with reimbursement for
medical expenses, coverage under the Company's life insurance program and such
other benefits as the Company from time to time makes available to its senior
executives of similar status. Mr. Lee has the right to terminate the
Employment Agreement following a Change of Control of the Company (as defined
in the Employment Agreement).
Effective September 6, 1997, the Company amended Mr. Visconti's Employment
Agreement and extended its term for five years, terminating on September 6,
2002. Pursuant to the amended Employment Agreement, Mr. Visconti serves as
President-Retail Division of the Company at an annual salary of $400,000. Mr.
Visconti shall continue to be entitled to such annual bonuses as may be
determined in the discretion of the Board of Directors, reimbursement for
medical expenses and coverage under the Company's life insurance program for
himself and his dependents.
Compensation of Directors
Directors who are not employees of the Company or its subsidiaries (Messrs.
Popeil, Mason, Wolzinger and Wayson and Mrs. Wynn) were paid a monthly
retainer during 1998 of $4,000 for services as a director and continue to
receive such retainer in 1999. Messrs. Popeil, Mason and Wolzinger received an
additional monthly fee of $1,000 for services as members of the Company's
Audit and Stock Option Committees during 1998 and continue to receive such fee
in 1999. Directors also receive reimbursement for medical expenses and
coverage under the Company's life insurance program. Directors who are
employees of the Company or its subsidiaries do not receive compensation for
their services as directors.
Pursuant to the Company's 1992 Non-Employee Director Stock Option Plan (the
"Director Plan"), each director who is not an employee of the Company or its
subsidiaries was granted 10,000 stock options in January 1998 with an
exercise price of $23.00 per share. In connection with the repricing of
options in December 1998, these options were cancelled and each of such
directors received 7,510 replacement options with an exercise price of $14.375
per share. See "Repricing of Stock Options." Options granted under the
Director Plan have an exercise price equal to the market value of the Common
Stock on each date of grant and become exercisable three years thereafter. An
aggregate of up to 500,000 options may be granted under the Director Plan, of
which 250,000 remain available to be granted. In February 1998, each non-
employee director was granted 5,000 additional options under the Company's
1995 Stock Option and Stock Appreciation Rights Plan with an exercise price of
$23.25 per share, the market value of the Common Stock on the date of grant,
which become exercisable three years from the date of grant. In connection
with the repricing in December 1998, these options were cancelled and replaced
with 3,736 options under the Company's 1993 Stock Option and Stock
Appreciation Rights Plan with an exercise price of $14.375 per share. In
January 1999 each non-employee director was, and in January of each succeeding
year each non-employee director will be, granted 15,000 options (10,000 under
the Director Plan and 5,000 under one of the Company's Stock Option and Stock
Appreciation Rights Plans). The options will have an exercise price equal to
the market value of the Common Stock on the date of grant and become
exercisable three years thereafter.
Non-employee directors of the Company are eligible to participate in the
Company's Directors' Deferred Fee Plan (the "Deferred Fee Plan"), a non-
qualified unfunded deferred compensation plan. In 1998, Messrs. Popeil and
Wolzinger each deferred 20% of their Board of Directors' and committee fees
under the Deferred Fee Plan and will be credited with earnings on such
deferred fees at the rate of 7% per annum, compounded monthly, until such
amounts are distributed to them from the Deferred Fee Plan.
REPRICING OF STOCK OPTIONS
During 1998, stock prices of most publicly traded gaming companies,
including the Company, declined substantially. As a result, by December 1998
almost half of the Company's outstanding stock options were "out-of-the-money"
(i.e., the exercise prices of the options were higher than the current market
price of the Common
8
<PAGE>
Stock), in many cases by a large amount. At the same time, due to the rapid
expansion of gaming in Las Vegas and elsewhere, competition for management and
other key employees in the gaming industry has intensified.
In light of these factors, in order to continue to adequately encourage and
motivate the Company's key employees, on December 11, 1998 the Stock Option
Committee authorized the Company to offer each optionee the right to cancel
his or her out-of-the-money options in exchange for replacement options to
purchase a smaller number of shares with an exercise price of $14.375, the
closing sale price of the Common Stock on that date. The replacement options
were intended to have the same theoretical value as the cancelled options,
determined using a variation of the Black-Scholes option pricing model and
taking into account the exercise price and remaining contractual life of the
cancelled options. Other than the number of shares subject to the options and
the exercise price, the terms of the replacement options, including the
respective dates of exercisability and termination, were not changed.
Holders of approximately 99% of the shares subject to outstanding out-of-
the-money options, including all of the executive officers and all directors
with out-of-the-money options, elected to participate in the repricing. As a
result of the repricing, which was effective December 13, 1998, the total
number of shares subject to outstanding options was reduced by 2,642,967.
BY THE STOCK OPTION COMMITTEE
Ronald M. Popeil
Melvin B. Wolzinger
George J. Mason
The following table sets forth certain information concerning the effect of
the December 13, 1998 repricing on options held by executive officers. This
was the only repricing of options or stock appreciation rights by the Company
during the last 10 years.
Ten-Year Option/SAR Repricings
<TABLE>
<CAPTION>
Number of Length of
Securities Market Price Original Option
Underlying of Stock at Exercise Price New Term Remaining
Options/SARs Time of at Time of Exercise at Date of
Repriced or Repricing or Repricing or Price Repricing or
Name Date Amended (#) Amendment ($) Amendment ($) ($) Amendment (Years)
---- ---- ------------ ------------- -------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Wynn 12/13/98 1,832,278(1) $ 14.375 $ 16.1875 $ 14.375 6.7
Barry A. Shier 12/13/98 1,832,278(1) 14.375 16.1875 14.375 6.7
Bruce A. Levin 12/13/98 108,935(2) 14.375 22.375 14.375 7.7
Daniel R. Lee 12/13/98 799,562(3) 14.375 20.375 14.375 8.4
12/13/98 160,882(4) 14.375 20.375 14.375 8.6
Frank P. Visconti 12/13/98 98,630(5) 14.375 26.6875 14.375 8.7
Thomas L. Sheer 12/13/98 82,453(6) 14.375 18.6875 14.375 7.1
James E. Pettis 12/13/98 91,614(7) 14.375 16.1875 14.375 6.7
12/13/98 41,002(8) 14.375 20.50 14.375 9.5
James M. Powers 12/13/98 10,587(9) 14.375 22.625 14.375 7.3
</TABLE>
- --------
(1) In exchange for the cancellation of options to purchase 2,000,000 shares.
(2) In exchange for the cancellation of options to purchase 150,000 shares.
(3) In exchange for the cancellation of options to purchase 1,000,000 shares.
(4) In exchange for the cancellation of options to purchase 200,000 shares.
(5) In exchange for the cancellation of options to purchase 150,000 shares.
(6) In exchange for the cancellation of options to purchase 100,000 shares.
(7) In exchange for the cancellation of options to purchase 100,000 shares.
(8) In exchange for the cancellation of options to purchase 50,000 shares.
(9) In exchange for the cancellation of options to purchase 15,000 shares.
9
<PAGE>
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return from
December 31, 1993 to December 31, 1998, assuming reinvestment of dividends, of
the Common Stock, the Standard & Poor's 500 Stock Index (the "S&P 500 Index")
and the Media General Industry Group 711 -- Resorts and Casinos (the "MG
Index"). The graph assumes an investment of $100 on December 31, 1993 in each
of the Common Stock and the stocks comprising the S&P 500 Index and the MG
Index.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period MIRAGE RESORTS, S&P 500
(Fiscal Year Covered) INCORPORATED(1) INDEX(1) MG INDEX(1)
------------------- --------------- -------- -----------
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $ 85.86 $101.32 $ 66.64
1995 $144.50 $139.40 $ 77.73
1996 $181.15 $171.41 $ 75.40
1997 $190.58 $228.59 $ 87.07
1998 $125.13 $293.92 $ 65.64
</TABLE>
(1) The data points in this graph were calculated by Media General Financial
Services, Inc., Richmond, Virginia.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions concerning executive officer compensation for 1998 were made by
the full Board of Directors and by the Stock Option Committee and the Bonus
Committee. Directors Stephen A. Wynn, Richard D. Bronson and Daniel B. Wayson
are officers or former officers of the Company or its subsidiaries. Director
Elaine P. Wynn is the wife of Stephen A. Wynn.
On January 14, 1998, a wholly owned subsidiary of the Company sold four
works of fine art to Mr. Wynn for $25,562,812, the amount paid by the
subsidiary when it purchased the works from unaffiliated parties in October
through December 1997 and the fair market value of the works as determined by
David Nash, an independent expert in fine art valuation. On August 17, 1998,
Mr. Wynn sold one work of fine art to the subsidiary for $725,000, the amount
paid by Mr. Wynn when he purchased the work from an unaffiliated party in July
1998. On January 7, 1999, Mr. Wynn sold one work of fine art to the subsidiary
for $4,562,812, the amount paid by Mr. Wynn when he purchased the work from
the subsidiary in January 1998 as discussed above.
10
<PAGE>
During 1998 and 1999, the subsidiary rented various works of fine art from
Mr. Wynn for public display at Bellagio or any of the Company's other hotel-
casinos. The rental agreement provides for the payment of monthly rent by the
subsidiary to Mr. Wynn and that either party has the right to terminate the
rental of one or more of the works on 30 days' notice. The subsidiary is
responsible for insuring and maintaining the security of the rented works and
for sales, use and personal property taxes applicable to the rental. The total
rent paid to Mr. Wynn in 1998 (exclusive of sales tax) was $4,356,862. The
total monthly rent in effect at March 31, 1999 is $330,203.
In each case, these transactions were approved by the Board of Directors of
the Company. It is anticipated that additional transactions involving the sale
and rental of fine art between the Company and Mr. Wynn may occur in 1999,
although the amount of such transactions is not currently known.
REPORT ON EXECUTIVE COMPENSATION
Compensation Policies and Base Salaries
Decisions concerning executive officers' base salaries and the award of
certain cash bonuses for 1998 were made by the full Board of Directors, based
upon the recommendations of the Company's Chief Executive Officer. Decisions
concerning the grant of stock options and the award of cash bonuses pursuant
to the Company's Amended and Restated 1994 Cash Bonus Plan (the "1994 Bonus
Plan") to executive officers were made by the Stock Option Committee and the
Bonus Committee, respectively, and were similarly based upon the
recommendations of the Chief Executive Officer. The Company otherwise has no
formal compensation policies applicable to executive officers. The Chief
Executive Officer's recommendations in each case were based on his subjective
evaluation of each officer's (including his own) contribution to the Company
and the level of compensation necessary to adequately motivate and reward the
officer. The composition and amount of each item of executive compensation for
1998 (except for compensation pursuant to the 1994 Bonus Plan discussed below)
did not bear a specific relationship to any particular measure of the
Company's performance.
In addition to the Chief Executive Officer's Employment Agreement discussed
below, during 1998 four other executive officers were parties to employment
agreements with the Company, including Messrs. Lee and Visconti. See
"Executive Compensation--Employment Agreements." Compensation paid to such
executive officers for 1998 was consistent with the terms of such employment
agreements.
Stock Options
The Company's Stock Option and Stock Appreciation Rights Plans (the "Stock
Option Plans") are an important component of the Company's compensation
program for executive officers and other employees. The Stock Option Plans are
intended to advance the interests of the Company and its stockholders by
encouraging and enabling executive officers and other employees, upon whose
judgment, initiative and effort the Company is largely dependent for the
successful conduct of its business, to acquire and retain a proprietary
interest in the Company by ownership of its stock. Through stock option
grants, the long-range interests of management and employees are aligned with
those of stockholders as the stock option recipients accumulate (through the
vesting of stock options) meaningful stakes in the Company. The Stock Option
Plans are administered by the Stock Option Committee, which is composed of
three non-employee members of the Board of Directors who also serve as the
members of the Audit and Bonus Committees. Decisions concerning the grant of
stock options, including the individuals to whom options were granted and the
respective exercise prices and vesting periods, were made by the Stock Option
Committee based upon the recommendations of the Chief Executive Officer,
taking into consideration the recommendations of other members of senior
management. Such recommendations and decisions were made on a subjective basis
and did not bear a specific relationship to any particular measure of the
Company's performance. In 1998, stock options were granted to one executive
officer, Mr. Pettis, in addition to replacement options granted to each of the
executive officers in connection with the repricing of options in December
1998. See "Repricing of Stock Options."
11
<PAGE>
Cash Bonuses
In addition to base salary and stock options, the other principal part of
the Company's executive compensation program in 1998 consisted of cash bonuses
awarded pursuant to the 1994 Bonus Plan, which was approved by the Company's
stockholders in May 1994. The 1994 Bonus Plan terminated in March 1999 and was
replaced by the 1999 Bonus Plan, subject to stockholder approval at the
Meeting. The 1994 Bonus Plan provided for an annual bonus pool equal to 5% of
the Company's consolidated earnings before depreciation, interest and taxes in
excess of $250,000,000. Out of the bonus pool, each executive officer was
eligible to receive a bonus of up to 50% of his annual base salary in effect
on March 31, 1994, the effective date of the 1994 Bonus Plan. The 1994 Bonus
Plan was administered by the Bonus Committee, which is composed of three non-
employee members of the Board of Directors. Decisions concerning the award of
bonuses pursuant to the 1994 Bonus Plan (within the above-described
limitations) were made by the Bonus Committee based upon the recommendations
of the Chief Executive Officer. Such recommendations and decisions were made
on a subjective basis and, except as noted above, did not bear a specific
relationship to any particular measure of the Company's performance. The Board
of Directors, in its discretion, may award cash bonuses in addition to those
awarded by the Bonus Committee under the 1994 Bonus Plan. Cash bonuses so
awarded by the Board of Directors to executive officers for 1998 were based
upon the recommendations of the Chief Executive Officer, which recommendations
were made on a subjective basis and did not bear a specific relationship to
any particular measure of the Company's performance. For 1998, aggregate
bonuses were awarded to each executive officer in amounts ranging from
approximately 34% to 50% of current base salary. See "Executive
Compensation -- Summary Compensation Table" for information concerning bonuses
awarded to the Named Officers.
Other Compensation
The Company also provides certain perquisites and other personal benefits to
executive officers, which constitute a small percentage of their total
compensation. See footnote (1) to "Executive Compensation --Summary
Compensation Table."
Internal Revenue Code Section 162(m)
Section 162(m) of the Code eliminates the federal income tax deductibility
of most compensation exceeding $1,000,000 paid to the chief executive officer
or any of the four highest compensated executive officers (other than the
chief executive officer) of publicly held corporations. Certain types of
compensation are not affected by the deduction limitation, including
compensation paid pursuant to a binding agreement entered into on or before
February 17, 1993 and compensation paid pursuant to a qualifying performance-
based plan such as the 1994 Bonus Plan and the Stock Option Plans. The 1994
Bonus Plan was adopted in 1994 in response to the enactment of Section 162(m)
in order to permit the Company to continue deducting bonuses paid to the Chief
Executive Officer and other executive officers whose annual compensation
exceeds $1,000,000. In making compensation decisions, the Board of Directors
takes into account the effect of Section 162(m), although in appropriate
circumstances it may determine to award compensation to covered executive
officers which is not fully deductible by the Company by virtue of Section
162(m). The $125,000 bonus awarded by the Board of Directors to Mr. Shier for
1998 outside the Bonus Plan was not deductible by the Company as a result of
such limitation.
Compensation of Chief Executive Officer
In 1998, the Chief Executive Officer received a salary of $2,500,000
pursuant to a 10-year Employment Agreement approved by the Board of Directors
in December 1992. See "Executive Compensation -- Employment Agreements." The
amount of such salary was determined by the Board of Directors. Such
determination was made on a subjective basis and did not bear a specific
relationship to any particular measure of the Company's performance during
1998 or any prior period. In approving the Employment Agreement in 1992, the
Board of Directors considered a large number of factors, including (1) the
record of leadership and service provided by the Chief Executive Officer since
joining the Company in 1973, (2) the identification of the Company with the
Chief Executive Officer by the financial community and the general public, and
the
12
<PAGE>
recognition by the Board of Directors and others in the gaming industry of the
importance of his leadership, creativity and other personal attributes to the
Company's continued success, (3) the total stockholder return obtained by the
Company during the prior five years, which significantly surpassed that of
both the broad market and the Company's principal industry competitors as a
group, (4) the achievements recorded by the Company since the Chief Executive
Officer's annual salary was last increased in March 1990, including the
successful financial performance of The Mirage, the Company's flagship hotel-
casino, since opening in November 1989, the restructuring of a significant
portion of the Company's long-term debt and the successful completion of
equity offerings in 1991 and 1992, resulting in a reduction of the Company's
average cost of capital, the development and construction of Treasure Island
at The Mirage, the Company's hotel-casino which opened on schedule in October
1993, and the purchase of the former Dunes Hotel, Casino and Country Club site
on the Las Vegas Strip, on which the Company constructed its most spectacular
hotel-casino resort, Bellagio, which opened in October 1998, (5) the fact that
the Chief Executive Officer was (and remains) the Company's principal
stockholder and thereby holds a significant stake in the Company's future and
(6) the fact that the Chief Executive Officer's annual salary had not been
increased in almost three years, and he had not been awarded a cash bonus in
1991 or 1992. No specific weight was assigned to any particular factor.
In 1998, the Chief Executive Officer was awarded a cash bonus of $1,250,000
(50% of his base salary) pursuant to the 1994 Bonus Plan. The amount of such
bonus was determined by the Bonus Committee. Such determination was made on a
subjective basis, taking into account the Chief Executive Officer's
contributions to the Company and the amount necessary to adequately reward the
Chief Executive Officer, and did not bear a specific relationship to any
particular measure of the Company's performance during 1998.
BY THE BOARD OF DIRECTORS
Stephen A. Wynn, Chairman
Melvin B. Wolzinger
George J. Mason
Ronald M. Popeil
Elaine P. Wynn
Daniel B. Wayson
Richard D. Bronson
BY THE STOCK OPTION COMMITTEE
Ronald M. Popeil
Melvin B. Wolzinger
George J. Mason
BY THE BONUS COMMITTEE
Ronald M. Popeil
Melvin B. Wolzinger
George J. Mason
13
<PAGE>
THE 1999 CASH BONUS PLAN PROPOSAL
Summary of the 1999 Bonus Plan
On February 17, 1999, the Company's Board of Directors adopted the 1999 Cash
Bonus Plan (the "1999 Bonus Plan"), subject to stockholder approval at the
Meeting. The 1999 Bonus Plan replaced the 1994 Bonus Plan, which terminated on
March 31, 1999. A copy of the 1999 Bonus Plan is attached to this Proxy
Statement as Appendix A. The following is a summary of the 1999 Bonus Plan,
which is qualified in its entirety by reference to Appendix A.
Purpose of the 1999 Bonus Plan
The purpose of the 1999 Bonus Plan is to provide additional compensation as
an incentive to executive officers of the Company to attain certain specified
performance objectives of the Company and to ensure the continued availability
of their full-time or part-time services. The 1999 Bonus Plan is intended to
qualify as a "performance-based" plan as described in Section 162(m)(4)(C) of
the Code and thereby secure the full deductibility for federal income tax
purposes of bonus compensation paid to the Company's executive officers and
other persons who are "covered employees" of the Company or its subsidiaries
or affiliated corporations under Section 162(m)(3) of the Code.
Administration of the 1999 Bonus Plan
The Board of Directors has appointed the Bonus Committee to administer the
1999 Bonus Plan. Subject to the provisions of the 1999 Bonus Plan, the Bonus
Committee has full and final discretion and authority to award bonuses
pursuant to the 1999 Bonus Plan, to construe and interpret the 1999 Bonus Plan
and to make all other determinations and take all other actions deemed
necessary or appropriate for the proper administration of the 1999 Bonus Plan.
Participants
For each fiscal year, the participants entitled to receive awards under the
1999 Bonus Plan are the executive officers of the Company and any other person
who is a "covered employee" of the Company or its subsidiaries or affiliated
corporations under Section 162(m)(3) of the Code for such fiscal year.
Currently, there are eight participants.
Maximum Amount of Bonuses
The maximum aggregate amount of bonuses to be awarded for each fiscal year
under the 1999 Bonus Plan shall be five percent (5%) of the excess of the
Company's EBDIT (as defined below) for such fiscal year over an amount (the
"Floor Amount"), which shall be $450,000,000 for the fiscal year ending
December 31, 1999 and for each later fiscal year unless the Bonus Committee,
in its discretion, sets a different amount before the beginning of a later
fiscal year or within the first 90 days of a later fiscal year, in which case
such amount shall be the Floor Amount for such later fiscal year and shall
remain the Floor Amount for each later fiscal year unless the Bonus Committee,
in its discretion, resets the Floor Amount for a later fiscal year. As used in
the 1999 Bonus Plan, the term "EBDIT" means (i) operating income, plus (ii)
depreciation, amortization and all other non-cash expenses plus (iii)
preopening and related promotional expenses, in each case determined on a
consolidated basis in accordance with generally accepted accounting
principles.
The maximum award under the 1999 Bonus Plan for each fiscal year to any
participant shall not exceed the lesser of (i) 50% of such participant's
annual base salary in effect on the first day of such fiscal year (or, if such
participant becomes eligible to participate in the 1999 Bonus Plan after the
first day of the fiscal year, 50% of his or her annual base salary at the time
he or she becomes eligible) (the "Applicable Salary") or (ii) $1,500,000.
14
<PAGE>
Amount of Individual Awards
For each fiscal year, each participant will receive an award equal to the
maximum aggregate amount of bonuses determined under "Maximum Amount of
Bonuses," above, multiplied by a fraction, the numerator of which shall be the
Applicable Salary of such participant, and the denominator of which shall be
the aggregate amount of the Applicable Salaries of all participants. The Bonus
Committee shall have the discretion to decrease, but not increase, any award
determined in accordance with the 1999 Bonus Plan. The reduction in any
participant's award for any fiscal year as a result of the Committee's
exercise of such discretion will not increase the amount of an award to any
other participant with respect to such fiscal year.
Payment of Bonuses
No bonus awarded pursuant to the 1999 Bonus Plan may be paid until the Bonus
Committee certifies in a written resolution, as soon as practicable following
the end of the fiscal year, that the performance goal for the award has been
attained and that the amount of the award is no greater than that dictated by
the computation set forth under "Amount of Individual Awards," above and
within the limits set forth in the second paragraph under "Maximum Amount of
Bonuses," above.
Termination of Participant's Employment
An award that would otherwise be payable to a participant who is not
employed by the Company on the last day of the fiscal year will be prorated
based on the participant's active service during the fiscal year if the
termination was due to disability, death or retirement in accordance with the
Company's policies. If the participant's employment terminated voluntarily or
involuntarily other than as specified above, no payment will be made.
Amendment and Termination of the 1999 Bonus Plan
The Board of Directors may at any time suspend or terminate the 1999 Bonus
Plan or may amend it from time to time in such respects as the Board of
Directors may deem advisable, including in order to reflect amendments to or
regulations promulgated under Section 162(m) of the Code. However, no such
action will adversely affect the right of any participant to any award of
which he or she may have become entitled to payment under the 1999 Bonus Plan
prior to the effective date of such suspension, termination or amendment. In
the event that any amendment to the 1999 Bonus Plan expands the class of
persons eligible to participate, raises the limits set forth in the second
paragraph under "Maximum Amount of Bonuses," above, or requires stockholder
approval in order to continue the compliance of the 1999 Bonus Plan as a
"performance-based plan" under Section 162(m) of the Code, such amendment
shall be contingent on the receipt of stockholder approval.
Participation in Other Plans
The 1999 Bonus Plan does not preclude a participant from participating in
any other compensatory plan or arrangement of the Company or from receiving a
bonus from the Company outside of the 1999 Bonus Plan.
Effective Date and Term of the 1999 Bonus Plan
The 1999 Bonus Plan has a five-year term commencing on February 17, 1999,
the date of its adoption by the Board of Directors. If the 1999 Bonus Plan is
not approved by stockholders at the Meeting, no bonuses will be paid under the
1999 Bonus Plan, and the 1999 Bonus Plan will terminate.
Determination of Benefits Payable Pursuant to the 1999 Bonus Plan
It is not possible to determine the amount of bonuses which may be payable
pursuant to the 1999 Bonus Plan to any participant for 1999, as such amounts
will be dependent on whether and to what extent the Company's EBDIT for 1999
exceeds $450,000,000.
15
<PAGE>
Board of Directors' Recommendation
The Board of Directors recommends that stockholders vote FOR approval of the
1999 Bonus Plan.
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
On February 17, 1999, the Company's Board of Directors adopted an amendment
to the Company's Articles of Incorporation (the "Proposed Amendment") which
would add a new ARTICLE SIXTEENTH, subject to stockholder approval at the
Meeting. ARTICLE SIXTEENTH reads in its entirety as follows:
"SIXTEENTH: Except as is otherwise expressly provided in instruments
containing the terms of this corporation's securities, which instruments
have been approved by the New Jersey Casino Control Commission (the "New
Jersey Commission"), so long as the corporation is a "publicly traded
holding company" as defined in the New Jersey Casino Control Act (the "New
Jersey Act"), all securities of the corporation shall be held subject to
the condition that if a holder thereof is found to be disqualified pursuant
to the New Jersey Act by the New Jersey Commission, such holder shall
dispose of his interest in the corporation within 120 days following the
corporation's receipt of notice (the "Notice Date") of the holder's
disqualification. Promptly following the Notice Date, the corporation shall
either deliver such written notice personally to the disqualified holder or
shall mail it to such holder at the address shown on the corporation's
records, or use any other reasonable means to provide notice. Failure of
the corporation to provide notice to a disqualified holder after making
reasonable efforts to do so shall not preclude the corporation from
exercising its rights. If any disqualified holder fails to dispose his
securities within 120 days following the Notice Date, the corporation, by
action of the Board of Directors, may redeem such securities at the lesser
of (i) the lowest closing sale price of such securities between the Notice
Date and the date 120 days after the Notice Date or (ii) such holder's
original purchase price for such securities.
So long as the corporation is a "publicly traded holding company" as
defined in the New Jersey Act, commencing on the Notice Date, it shall be
unlawful for the disqualified holder to: (i) receive any dividends or
interest upon any securities of the corporation held by such holder; (ii)
exercise, directly or through any trustee or nominee, any right conferred
by such securities; or (iii) receive any remuneration in any form, for
services rendered or otherwise, from the corporation or any subsidiary of
the corporation that holds a casino license."
The Company is in the early stages of designing and developing a new hotel-
casino resort in Atlantic City, New Jersey. The Company's wholly owned
subsidiary which will own and operate the hotel-casino will be required to
apply for and obtain a casino license from the New Jersey Commission. The New
Jersey Act requires the Company, as the publicly traded holding company of a
casino license applicant, to provide in its Articles of Incorporation that any
securities of the Company are held subject to the condition that if a holder
thereof is found to be disqualified by the New Jersey Commission pursuant to
the provisions of the New Jersey Act, such holder shall dispose of his
interest in the Company. The Proposed Amendment sets forth the mechanism for
complying with this requirement.
The Board of Directors recommends that stockholders vote FOR approval of the
Proposed Amendment.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company's independent accountants for 1998 were Arthur Andersen LLP
("AA"), which firm has been appointed to serve in such capacity for the
current year. A representative of AA is expected to be present at the Meeting
with the opportunity to make a statement if he or she so desires and to
respond to appropriate questions.
The Board of Directors recommends that stockholders vote FOR ratification of
the appointment of AA as independent accountants for 1999. If the appointment
of AA is not ratified, the Board of Directors will take this into account when
it considers the appointment of independent accountants for 2000.
16
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND ITS COMMITTEES
The standing committees of the Board of Directors are the Audit Committee,
the Stock Option Committee and the Bonus Committee. The Board of Directors has
not designated a nominating committee or a compensation committee.
The Audit Committee held seven meetings during 1998. The functions of the
Audit Committee include reviewing and making recommendations to the Board of
Directors with respect to: the engagement or re-engagement of an independent
accounting firm to audit the Company's financial statements for the then
current fiscal year, and the terms of the engagement; the policies and
procedures of the Company with respect to maintaining the Company's books and
records and furnishing any necessary information to the independent auditors;
the procedures to encourage access to the Audit Committee and to facilitate
the timely reporting during the year by authorized representatives of the
Company's independent auditors to the Audit Committee of their recommendations
and advice; the implementation by the Company's management of such
recommendations and advice; the implementation by management of the
recommendations made by the independent auditors in their management letters,
the adequacy and implementation of the Company's internal audit controls and
the adequacy and competency of the related personnel; and such other matters
relating to the Company's financial affairs and accounts as the Audit
Committee may in its discretion deem desirable. The Audit Committee also has
certain other responsibilities, including the responsibility to oversee the
employment and marketing practices of the Company and its gaming subsidiaries
and their compliance with gaming regulations.
The Stock Option Committee took action by written consent on 32 occasions
during 1998. The Stock Option Committee administers the Stock Option Plans.
Subject to the conditions set forth in the Stock Option Plans, the Stock
Option Committee has full and final authority to determine the number of stock
options or stock appreciation rights to be granted, the individuals to whom
and the time or times at which such options or stock appreciation rights shall
be granted or be exercisable, their exercise prices and the terms and
provisions of the respective agreements to be entered into at the time of
grant, which may vary.
The Bonus Committee took action by written consent on one occasion during
1998. The Bonus Committee administered the 1994 Bonus Plan (which terminated
in March 1999) and currently administers the 1999 Bonus Plan, which is subject
to stockholder approval at the Meeting. Subject to such stockholder approval
and to the conditions set forth in the 1999 Bonus Plan, the Bonus Committee
has full and final authority to award bonuses pursuant to the 1999 Bonus Plan,
to construe and interpret the 1999 Bonus Plan and to make all other
determinations and take all other action deemed necessary or appropriate for
the proper administration of the 1999 Bonus Plan.
The Board of Directors held seven meetings and took action by written
consent on three occasions during 1998. Each director attended at least 75% of
the aggregate number of meetings of the Board of Directors and the committees
on which he or she served.
FUTURE PROPOSALS OF STOCKHOLDERS
Any stockholder intending to submit to the Company a proposal for inclusion
in the Company's Proxy Statement and form of Proxy for the 2000 Annual Meeting
of Stockholders (the "2000 Meeting") must submit such proposal sufficiently
far in advance so that it is received by the Company not later than
December , 1999. Pursuant to the Company's Bylaws, if the Company does not
receive notice of a stockholder proposal or nomination for director by that
date, the proposal or nomination will not be considered at the 2000 Meeting.
17
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DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Stockholders calls for the transaction
of such other business as may properly come before the Meeting, the Board of
Directors has no knowledge of any matters to be presented for action by the
stockholders at the Meeting, other than as set forth above. The enclosed Proxy
gives discretionary voting authority, however, in the event that any
additional matters should be presented.
STOCKHOLDERS ARE URGED IMMEDIATELY TO MARK, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES. ALTERNATIVELY, STOCKHOLDERS MAY VOTE
VIA TOLL-FREE TELEPHONE CALL OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON
THE BACK OF THE PROXY CARD.
By the Board of Directors
BRUCE A. LEVIN
Secretary
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APPENDIX A
MIRAGE RESORTS, INCORPORATED
1999 CASH BONUS PLAN
1. Adoption, Name and Effective Date. Mirage Resorts, Incorporated, a Nevada
corporation (the "Company"), hereby adopts the Mirage Resorts, Incorporated
1999 Cash Bonus Plan (the "Plan") effective as of February 17, 1999, and first
applying with respect to the fiscal year ending December 31, 1999, subject to
stockholder approval at the 1999 Annual Meeting of Stockholders as described
below.
2. Purpose. The purpose of the Plan is to provide additional compensation as
an incentive to executive officers to attain certain specified performance
objectives of the Company and to ensure the continued availability of their
full-time or part-time services to the Company and its subsidiary and
affiliated corporations. The Plan is also intended to qualify as a
"performance-based" plan as described in Section 162(m)(4)(C) of the Internal
Revenue Code of 1986, as amended (including proposed, temporary and final
regulations promulgated thereunder from time to time, the "Code"), and thereby
secure the full deductibility for federal income tax purposes of bonus
compensation paid to persons who are "executive officers" of the Company, or
who are "covered employees" of the Company or its subsidiary or affiliated
corporations under Section 162(m)(3) of the Code.
3. Administrative Committee. The Plan will be administered by a committee
(the "Committee") of the Company's Board of Directors (the "Board"),
consisting entirely of two or more persons who are "outside directors" within
the meaning of Section 162(m) of the Code. The Committee is hereby vested with
full powers of administration, subject only to the provisions set forth
herein.
The Committee shall hold its meetings at such times and places as it may
determine, shall keep minutes of its meetings and shall adopt, amend or revoke
such rules and procedures as it deems proper for the administration of this
Plan; provided, however, that it shall take action only upon the agreement of
a majority of the whole Committee. Any action that the Committee takes through
a written instrument signed by a majority of its members shall be effective as
though it had been taken at a meeting duly called and held. The Committee
shall report all actions taken by it to the Board.
The Committee shall have the full and final discretion and authority,
subject to the provisions of the Plan, to grant awards pursuant to the Plan,
to construe and interpret the Plan and to make all other determinations and
take all other actions which it deems necessary or appropriate for the proper
administration of the Plan. All such interpretations, actions and
determinations shall be conclusively binding for all purposes and upon all
persons.
4. Eligibility. For each fiscal year of the Company, the participants
entitled to share in the benefits of the Plan are persons who are "executive
officers" of the Company, as such term is defined in Rule 3b-7 under the
Securities Exchange Act of 1934, as amended (or any successor rule or
regulation), or who are "covered employees" of the Company or its subsidiary
or affiliated corporations under Section 162(m)(3) of the Code (collectively,
"executives" or "participants"). An executive whose employment or service
relationship with the Company is terminated for any reason prior to the end of
any fiscal year of the Company will not be entitled to participate in the Plan
or receive any benefits with respect to any later fiscal year, unless he or
she again becomes eligible to participate in the Plan under the first sentence
of this Section 4.
5. Determination of Awards; Limitations on Amounts of Awards.
5.1 Limitations on Amount of Awards. The maximum aggregate amount of bonuses
to be awarded for each fiscal year of the Company under the Plan shall be 5%
of the excess of the Company's EBDIT for such fiscal year over an amount (the
"Floor Amount"), which shall be $450,000,000 for the fiscal year ending
December 31, 1999, and for each later fiscal year unless the Committee, in its
discretion, sets a different amount before the beginning of a later fiscal
year or within the first 90 days of a later fiscal year, in which case such
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<PAGE>
amount shall be the Floor Amount for such later fiscal year and shall remain
the Floor Amount for following fiscal years unless and until the Committee, in
its discretion, sets a different amount before the beginning of a later fiscal
year or within the first 90 days of a later fiscal year. As used in the Plan,
the term "EBDIT" means (a) operating income, plus (b) depreciation,
amortization and all other non-cash expenses, plus (c) preopening and related
promotional expenses, in each case determined on a consolidated basis in
accordance with generally accepted accounting principles. The maximum award
under the Plan for each fiscal year of the Company to any participant shall
not exceed the lesser of (i) 50% of such participant's annual base salary in
effect on the first day of such fiscal year, or, if such participant becomes
eligible to participate in this Plan during such fiscal year, 50% of such
participant's annual base salary in effect on the date such participant
becomes eligible (the "Applicable Salary"), or (ii) $1,500,000.
5.2 Determination of Amount of Individual Awards. For each fiscal year of
the Company, each participant shall receive an award equal to the maximum
aggregate amount of bonuses determined under Section 5.1, multiplied by a
fraction, the numerator of which shall be the Applicable Salary of such
participant, and the denominator of which shall be the aggregate amount of the
Applicable Salaries of all participants. The Committee shall not have the
discretion to increase, but shall have the discretion to decrease, any award
determined in accordance with the Plan. The reduction in any participant's
award for any fiscal year as a result of the Committee's exercise of such
discretion shall not increase the amount of an award to any other participant
(through reallocation of unutilized awards or otherwise) with respect to such
fiscal year.
6. Award Periods; Payment of Awards.
6.1 Award Periods. All awards shall be made on the basis of the fiscal year
of the Company.
6.2 Committee Certifications. As a condition precedent to the payment of any
award, the Committee shall certify, as soon as practicable following the end
of the fiscal year of the Company, that the objective performance goal for the
award has been satisfied and that the amount of the award is no greater than
that dictated by the computation set forth in Section 5.2, and within the
limitations set forth in the last sentence of Section 5.1. The Committee shall
make such determination by means of a written resolution of the Committee that
is maintained in the minute book of the Company.
6.3 Payment of Awards. Awards under the Plan will be paid in cash reasonably
promptly following the conclusion of each fiscal year of the Company and the
certification of the Committee as set forth in Section 6.2. All awards under
the Plan will be subject to withholding for applicable employment and income
taxes.
6.4 Termination of Employment. An award that would otherwise be payable to a
participant who is not employed by the Company on the last day of a fiscal
year shall be prorated based on active service during the fiscal year, or not
paid, as follows:
Termination due to disability-prorated
Retirement in accordance with the Company's policies-prorated
Death-prorated
Voluntary or involuntary termination other than as specified above-no payment
7. Nonassignment. The interest of any participant in the Plan is not
assignable either by voluntary or involuntary assignment or operation of law
(except that, in the event of death, earned and unpaid amounts shall be
payable to the legal successor of a participant).
8. Indemnification. No employee, member of the Committee or director of the
Company will have any liability for any decision or action if made or done in
good faith, nor for any error or miscalculation unless such error or
miscalculation is the result of his or her fraud or deliberate disregard of
any provisions of the Plan. The
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<PAGE>
Company will indemnify each director, member of the Committee and any employee
acting in good faith pursuant to this Plan against any loss or expense arising
therefrom.
9. Amendment, Suspension or Termination. The Board may from time to time
amend, suspend or terminate, in whole or in part, any or all the provisions of
this Plan; provided, however, that no such action shall adversely affect the
right of any participant with respect to any award of which he or she may have
become entitled to payment hereunder prior to the effective date of such
amendment, suspension or termination. In particular, but without limitation,
the Board shall have the authority to amend or modify the Plan from time to
time in order to reflect amendments to or regulations promulgated under
Section 162(m) of the Code. Notwithstanding the foregoing, in the event that
any amendment or other modification of or to the Plan expands the class of
persons eligible to participate as set forth in Section 4, raises the limits
set forth in the last sentence of Section 5.1 or requires stockholder approval
in order to continue the compliance of the Plan as a "performance-based" plan
under Section 162(m) of the Code, such amendment or modification shall be
contingent on the receipt of stockholder approval.
10. Limitations; Participation in Other Plans. This Plan is not to be
construed as constituting a contract of employment or for services. Nothing
contained herein will affect or impair the Company's right to terminate the
employment or other contract for services of a participant hereunder, or
entitle a participant to receive any particular level of compensation. The
Company's obligation hereunder to make awards merely constitutes the unsecured
promise of the Company to make such awards from its general assets, and no
participant hereunder will have any interest in, or a lien or prior claim
upon, any property of the Company. Nothing herein nor the participation by any
participant shall limit the ability of such participant to participate in any
other compensatory plan or arrangement of the Company, or to receive a bonus
from the Company other than under this Plan.
11. Governing Law. The terms of this Plan will be governed by and construed
in accordance with the laws of the State of Nevada, without regard to
principles of conflict of laws.
12. Term. This Plan shall continue in place until the fifth anniversary of
the effective date, unless earlier terminated by the Board as provided in
Section 9. No awards shall be paid under the Plan unless and until the
material terms (within the meaning of Section 162(m)(4)(C) of the Code) of the
Plan are disclosed to the Company's stockholders and are approved by the
stockholders by a majority of votes cast in person or by proxy.
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<PAGE>
PRELIMINARY COPY
----------------
MIRAGE RESORTS, INCORPORATED
Proxy Solicited on Behalf of the Board of Directors
P
The undersigned appoints George J. Mason and Melvin B. Wolzinger, and
R each of them, as Proxies, each with the power to appoint his substitute,
and authorizes each of them to represent and to vote, as designated on
O the reverse, all the shares of Common Stock of Mirage Resorts,
Incorporated held of record by the undersigned on April 12, 1999, at the
X Annual Meeting of Stockholders to be held on June 9, 1999 or any
adjournment thereof.
Y
(Change of Address/Comments)
------------------------------------------------------
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You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any box if you wish to
vote in accordance with the Board of Directors' recommendations.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
of
MIRAGE RESORTS, INCORPORATED
June 9, 1999
------------------------------
PROXY VOTING INSTRUCTIONS
------------------------------
TO VOTE BY MAIL
- ---------------
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- -------------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
- -------------------
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
-----------------------
YOUR CONTROL NUMBER IS ---------------------->
-----------------------
Please Detach and Mail in the Envelope Provided
<TABLE>
<S> <C>
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A [X] Please mark your
votes as in this
example using
dark ink only.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [_] [_] Nominees: Elaine P. Wynn 2. Proposal to approve the 1999 Cash [_] [_] [_]
Directors Richard D. Bronson Bonus Plan.
For, except vote withheld from 3. Proposal to approve an amendment to [_] [_] [_]
the following nominee(s): the Articles of Incorporation.
4. Proposal to ratify the appointment of [_] [_] [_]
Arthur Andersen LLP as independent
accountants for 1999.
5. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment thereof.
SIGNATURE(S)____________________________________________________________________________ DATE: _____________________________________
Note: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, partnership or other entity, please sign in full entity
name by authorized person.
</TABLE>
