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PRELIMINARY COPY
THE CLARIDGE HOTEL AND CASINO CORPORATION
INDIANA AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 340-3400
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 10, 1997
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The regular annual meeting of the shareholders of The Claridge Hotel
and Casino Corporation will be held on Tuesday, June 10, 1997, at 10:00 a.m.,
local time, at the Claridge Hotel and Casino, Indiana Avenue and the Boardwalk,
Atlantic City, New Jersey, for the following purposes and to transact such other
business as may properly be brought before the meeting:
(A) To elect seven Directors to the Board of Directors.
(B) To approve the appointment by the Corporation's Board of
Directors of KPMG Peat Marwick LLP, independent certified public
accountants, as auditors for the year 1997.
(C) To approve an amendment to the Corporation's Certificate
of Incorporation for the purpose of instituting super majority
shareholder voting requirements to authorize certain actions of the
Corporation relating to a sale of the Corporation or a similar
transaction.
The Board of Directors has fixed the close of business on April 25,
1997, as the record date for the Annual Meeting to determine the shareholders
entitled to notice of and to vote at the meeting and any adjournments thereof.
PLEASE FILL IN, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors
Frank A. Bellis, Jr.
Secretary
April 25, 1997
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THE CLARIDGE HOTEL AND CASINO CORPORATION
INDIANA AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
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PROXY STATEMENT
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April 25, 1997
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of The Claridge Hotel and Casino Corporation (the
"Corporation") of proxies for use at the Corporation's annual meeting of
shareholders to be held on June 10, 1997.
Any shareholder giving a proxy will have the right to revoke it at any
time prior to the time it is voted. A proxy may be revoked by written notice to
the Corporation, execution of a subsequent proxy, or attendance at the annual
meeting and voting in person. Attendance at the meeting will not automatically
revoke the proxy. All shares represented by effective proxies will be voted at
the meeting or any adjournment thereof.
The cost of soliciting proxies will be borne by the Corporation. In
addition to solicitation by mail, officers and employees of the Corporation may
solicit proxies by telephone or in person.
The Corporation's Annual Report on Form 10-K was mailed to each
shareholder on or about April 10, 1997. This Proxy Statement and form of Proxy
were first mailed to shareholders on or about May 8, 1997.
ITEM A. ELECTION OF DIRECTORS
Seven Directors are to be elected at the annual meeting to serve terms
of one and two years respectively and until their respective successors have
been elected. Messrs. Brenner, Renneisen, Bybee, and Sayers are nominated to
serve for two-year terms commencing on the date of the annual meeting, while
Messrs. Crawley, Montgomery, and DeWitt are nominated to serve a one-year term.
The nominees for Director, all of whom are now serving as Directors of the
Corporation, are listed below, together with biographical information. All of
the Directors also serve as Directors of The Claridge at Park Place,
Incorporated ("New Claridge") and Claridge Gaming Incorporated, wholly-owned
subsidiaries of the Corporation. Claridge Gaming Incorporated was formed on
March 16, 1994, for the purpose of exploring and developing gaming opportunities
in other jurisdictions. Mr. Donald G. Drapkin, who served as a Director
commencing in November, 1995, resigned on September 17, 1996.
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David W. Brenner, age 61. Mr. Brenner has served as a member of the
Board of Directors of the Corporation since February, 1991, and became Chairman
of the Board of Directors in August, 1993. He served as President of the
Philadelphia Sports Congress from January, 1987, to June, 1994. Mr. Brenner
served as Chairman of the Hospital and Higher Education Facilities Authority of
Philadelphia from January, 1986, to June, 1992. He also served as Director of
Commerce of the City of Philadelphia from January, 1984, to September, 1986, and
as Director of Finance of the City of Philadelphia from April, 1991, to
December, 1991. He was with the accounting firm of Arthur Young & Company from
1957 to September, 1983. He was managing partner of the Philadelphia office of
Arthur Young from November, 1969, until March, 1980.
Robert M. Renneisen, age 50. Mr. Renneisen has served as President of
the Corporation since June, 1992, and as Chief Executive Officer of the
Corporation and New Claridge since July, 1993. From June, 1994, to present, Mr.
Renneisen has also served as Vice Chairman of New Claridge. Mr. Renneisen was
Executive Vice President of the Corporation from June, 1991, to June, 1992. He
served as President of New Claridge from January, 1991, to June, 1994. He was
Chief Operating Officer of New Claridge from January, 1991, to July, 1993. Mr.
Renneisen was Executive Vice President of New Claridge, responsible for
marketing and later casino operations from February, 1988, to January, 1991.
Prior to joining New Claridge, Mr. Renneisen served from January, 1987, to
December, 1987, as Vice President of Marketing of Treasure Island Hotel and
Casino in St. Maarten. From June, 1986, to May, 1987, he served as President of
Renneisen, Kincade & Associates, Incorporated, of Las Vegas, Nevada, a marketing
consulting firm. From February, 1985, to March, 1986, he was Senior Vice
President of Marketing at Caesars Palace, Las Vegas. He was Vice President of
Marketing of the Tropicana Hotel and Casino in Atlantic City from May, 1982, to
August, 1984.
Shannon L. Bybee, age 58. Mr. Bybee has served as a member of the Board
of Directors of the Corporation since July, 1988. He currently is Executive
Director and Associate Professor for Gaming Management, Law & Regulation, at
University of Nevada Las Vegas, where he occupies the Michael D. Rose
Distinguished Chair in Gaming, a position he has held since August, 1994. From
July, 1993, to August, 1994, he was President and Chief Operating Officer for
United Gaming, Incorporated. Mr. Bybee was the Corporation's Chairman of the
Board from November, 1988, to July, 1993, and from August, 1988, to October,
1988. In June, 1989, Mr. Bybee was appointed to serve as the Chief Executive
Officer of the Corporation and New Claridge, a position held through July, 1993.
From 1983 to 1987, he was Senior Vice President of Golden Nugget, Incorporated,
which operated the Golden Nugget Casino Hotel in Atlantic City. From 1981 to
1983, Mr. Bybee was President of GNAC Corporation, which operated the Golden
Nugget Casino Hotel in Atlantic City.
Mark H. Sayers, age 47. Mr. Sayers has served as a member of the Board
of Directors since February, 1990. Mr. Sayers has served as Vice President of
EMES Management Corporation, a real estate management and development company,
of New York, New York, since February, 1976.
A. Bruce Crawley, age 51. Mr. Crawley has served as a member of the
Board of Directors of the Corporation since March, 1995. He has served as
President and Chief Executive Officer of Crawley, Haskins & Rodgers,
Philadelphia, Pennsylvania, an independent public relations and advertising
firm, since 1989. Mr. Crawley held various management positions with First
Pennsylvania Bank Corporation from 1967 to 1989, including Senior Vice President
and Director of Public and Investor Relations from 1985 to 1989.
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James M. Montgomery, age 57. Mr. Montgomery has served as a member of
the Board of Directors of the Corporation since March, 1995. Since 1978, he has
served as President of Houze, Shourds, and Montgomery, Incorporated, a
management consulting firm located in Long Beach, California. Prior to 1978, Mr.
Montgomery held various managerial positions with Rohr Industries, Incorporated,
and Rockwell International.
Ned P. DeWitt, age 57. Mr. DeWitt has served as a member of the Board
of Directors of the Corporation since May, 1995. Mr. DeWitt served as President,
Chief Executive Officer, and a member of the Board of Directors of LBE
Technologies, Incorporated, in Saratoga, California, from November, 1994, to
January, 1997. From November, 1993, to August, 1994, he served as President of
SEGA Enterprises (USA) in Redwood City, California. Mr. DeWitt also served as
President of the Entertainment Group of Madison Square Garden from July, 1990,
to August, 1991, and as President of Source Service Group from December, 1986,
to April, 1989. He also served, from 1973 through 1982, as President and Chief
Executive Officer of Six Flags Corporation.
Additional Information Concerning Board of Directors
Compensation of Directors - Directors who are not employees of the
Corporation or New Claridge receive an annual retainer of $20,000 and a fee of
$1,200 for each meeting of the Board of Directors and for each Committee meeting
attended. David W. Brenner, Chairman of the Corporation's Board of Directors,
receives an annual retainer of $100,000.
Audit Committee - The Audit Committee consists of four Directors who
are not employees of the Corporation. It is the responsibility of the Audit
Committee to review with the Corporation's independent auditors the
Corporation's financial statements and the scope and results of the annual
audit, to monitor the internal accounting controls and practices of the
Corporation, to review the Annual Report to shareholders, and to recommend the
appointment, subject to shareholder approval, of independent auditors. The
Committee met four times in 1996. Members of the Committee are Shannon L. Bybee,
Chairman, A. Bruce Crawley, James M. Montgomery, and David W. Brenner as an
Ex-Officio member.
Human Resources and Compensation Committee - The Human Resources and
Compensation Committee consists of six Directors. It is the responsibility of
the Human Resources and Compensation Committee to evaluate the compensation of
executive officers of New Claridge. The Committee met four times in 1996.
Members of the Committee are James M. Montgomery, Chairman, Ned P. DeWitt,
Shannon L. Bybee, A. Bruce Crawley, Mark H. Sayers, and David W. Brenner as an
Ex-Officio member.
Attendance at Meetings - During 1996, there were six regular meetings
of the Board of Directors and two telephonic meetings. All of the Directors
attended 100% of the meetings of the Board of Directors and any Committee of
which he was a member occurring in 1996 with the exception of Mr. Bybee, who did
not attend the June 4, 1996, meeting of the Human Resources/Compensation
Committee and Mr. DeWitt, who did not attend the December 16, 1996, meeting of
the Human Resources/Compensation Committee.
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ITEM B. APPROVAL OF AUDITORS
Subject to the approval of the shareholders, the Board of Directors of
the Corporation has appointed KPMG Peat Marwick LLP, independent certified
public accountants, to audit the annual consolidated financial statements of the
Corporation and its subsidiaries, New Claridge, and Claridge Gaming Incorporated
for 1997. The shareholders will be asked at the meeting to approve the
appointment. The firm of KPMG Peat Marwick LLP has audited the accounts of the
Corporation since 1983. A representative of KPMG Peat Marwick LLP will be
present at the meeting to make a statement, if such representative so desires,
and to respond to shareholders' questions.
ITEM C. AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board of Directors of the Corporation has unanimously approved an
amendment (the "Amendment") to the Corporation's Certificate of Incorporation,
which increases the vote of shareholders required in order for the Corporation
to engage in certain transactions under certain circumstances. The form of the
proposed Amendment is attached to this proxy statement as Exhibit A. The Board
of Directors of the Corporation recommends that you vote FOR the Amendment.
The Corporation was organized under New York law, and under New York
law and the Corporation's Certificate of Incorporation as currently in effect,
the merger of the Corporation with or into another entity requires the approval
of the holders of at least two-thirds of all the outstanding shares of the
Corporation. Also, the dissolution of the Corporation or the sale, lease,
exchange, or the disposition of all or substantially all the assets of the
Corporation requires a similar vote. Under the proposed Amendment, the vote
required to take these actions would be increased to 80% of all outstanding
shares unless the action had been approved by 70% of the directors of the
Corporation.
The purpose of the Amendment is to provide the directors of the
Corporation with a greater ability to control the process by which the
Corporation might be acquired by a third party such as a hostile takeover. The
Board of Directors believes that this may permit the Board to enhance
shareholder value. For this reason, the Board of Directors believes that
adoption of the Amendment is in the best interests of the shareholders of the
Corporation and recommends that shareholders vote FOR the Amendment.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the cash
compensation paid by New Claridge, the wholly-owned subsidiary of the
Corporation, for services rendered during the last three calendar years to the
Chief Executive Officer and the four most highly compensated executive officers
of New Claridge during 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
OTHER ANNUAL AWARDS (1) OTHER
ANNUAL COMPENSATION COMPENSATION RESTRICTED COMPENSATION
NAME AND POSITION YEAR SALARY BONUS (2) STOCK (3)
- ----------------- ---- ------ ----- --- ----- ---
<S> <C> <C> <C> <C> <C> <C>
Robert M. Renneisen 1996 $326,540 $ - $3,750 $ - $ 48,606
Vice Chairman/Chief 1995 300,000 150,000 3,750 - 45,215
Executive Officer of 1994 302,404 - 3,954 13,696 42,061
New Claridge
Albert T. Britton 1996 201,146 - 3,255 - 18,848
President/Chief Operating 1995 170,838 67,935 3,750 - 17,533
Officer of New Claridge 1994 166,154 - 3,750 3,653 16,309
Raymond A. Spera 1996 180,731 - 2,938 - 18,848
Executive Vice President 1995 165,662 66,261 3,750 - 17,533
of Finance/Corporate 1994 161,731 6,500 3,750 3,653 16,309
Development of
New Claridge
Peter F. Tiano 1996 159,181 - 2,835 - 150,388
Former Executive Vice 1995 164,508 50,000 3,750 3,750 38,151
President/General 1994 147,692 - 3,668 3,668 35,490
Manager of New Claridge
Jean I. Abbott 1996 161,865 - 2,638 - 24,952
Executive Vice President 1995 120,146 9,400 2,852 - -
of Operations of New 1994 75,000 6,250 1,875 - -
Claridge
</TABLE>
- ----------------
(1) Number of shares awarded under the Long-Term Management Incentive Plan
described under "Management - Compensation Plans." The shares are
subject to vesting provisions under the Plan. 25% of the shares awarded
under the Plan have vested. The Corporation does not believe the shares
have any value.
(2) Amounts reported in this column were paid pursuant to the Retirement
Savings Plan of New Claridge described under "Compensation Plans -
Retirement Savings Plan."
(3) Amounts reported in this column represent amounts accrued with respect
to the Corporation's future liability pursuant to the Corporation's
Supplemental Executive Retirement Plan. The amount included in this
column for Mr. Tiano with respect to 1996 includes $109,375 paid to Mr.
Tiano upon termination in accordance with his Employment Agreement.
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New Claridge is a party to employment agreements with Robert M.
Renneisen, Albert T. Britton, and Raymond A. Spera effective January 1, 1997.
The agreements are for a term of two years and may be renewed and extended for
consecutive one-year renewal terms upon specific action by the Board. The annual
base salaries under the agreements are currently as follows: Mr. Renneisen,
$330,000; Mr. Britton, $205,000; and Mr. Spera, $182,600.
New Claridge is also a party to employment agreements with Jean I.
Abbott, Howard Klein, and Frank A. Bellis effective November 1, 1996. The
agreements are for the term commencing November 1, 1996, and terminating
December 31, 1998. Thereafter, the agreements may be renewed and extended for
consecutive one-year renewal terms upon specific action by the Board. The annual
base salaries under the agreements are currently as follows: Ms. Abbott,
$165,000; Mr. Klein, $160,500; and Mr. Bellis, $131,000.
New Claridge's Board may, from time to time in their sole discretion,
increase the base salaries. In the event any of the above executives are
terminated without cause (as defined), the executive is entitled to receive a
termination payment in an amount equal to 125% of his or her current base annual
salary.
Effective February 1, 1997, the Board further amended the employment
agreements of Mr. Renneisen, Mr. Britton, Mr. Spera, Ms. Abbott, and Mr. Bellis
to provide for certain severance payments in the event of a change of control
(as defined) of the Corporation and subsequent termination of the executive's
employment consistent with the terms of the amended employment agreement. The
severance amounts payable to these executives in these circumstances is as
follows: Mr. Renneisen, $1,000,000; Mr. Britton, $500,000; Mr. Spera, $500,000;
Ms. Abbott, $400,000; and Mr. Bellis, $325,000.
Effective February 1, 1997, New Claridge also entered employment
agreements with John Ceresani, Vice President of Human Resources; Glenn Lillie,
Vice President of Marketing Communications; Arthur Lucchesi, Vice President of
MIS; Laura Palazzo, Vice President and Corporate Controller; and Thomas Weller,
Vice President of Facilities and Support Services. These agreements are for the
term commencing February 1, 1997, and terminating December 31, 1998. Thereafter,
the agreements may be renewed and extended for consecutive one (1) year renewal
terms upon specific action by the Board. The annual base salaries under the
agreements are currently as follows: Mr. Ceresani, $95,400; Mr. Lillie,
$120,000; Mr. Lucchesi, $120,000; Ms. Palazzo, $95,400; and Mr. Weller, $95,400.
New Claridge's Board may, from time to time, in their sole discretion increase
the base salaries. In the event any of the above executives are terminated
without cause (as defined), the executive is entitled to receive a termination
payment in an amount equal to 100% of his or her current base annual salary.
Mr. Tiano terminated his employment with New Claridge on September 1,
1996. In consideration for an Agreement and General Release, New Claridge agreed
to pay Mr. Tiano a salary for fifteen months in four lump sum payments on
September 30, 1996, October 31, 1996, November 30, 1996, and January 2, 1997. In
addition to recognizing Mr. Tiano's standard accrued benefits, New Claridge also
recognized Mr. Tiano's three years of accrued Benefit Service under the terms of
the SERP, thereby, permitting Mr. Tiano to receive his Unit Value of 6,000
multiplied by three years of Benefit Services totaling $18,000 payable each year
for a period of fifteen years commencing on the first day of the month following
his Early Retirement Date of age 63.
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COMPENSATION PLANS
The following plans are available to officers of New Claridge.
a. Senior Officer Medical Plan. New Claridge maintains a senior officer
medical plan under which eligibility is limited to officers and certain
employees of New Claridge. The plan covers medical expenses of the participant
(up to a maximum of $7,500 per year) not paid by New Claridge's medical
reimbursement plan, which is available to all employees not covered by
collective bargaining agreements.
b. Retirement Savings Plan. New Claridge employees participate in a
profit-sharing plan named the "Retirement Savings Plan." This plan is intended
to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as
amended. Under the Retirement Savings Plan, for up to the first 5% of an
employee's salary, which is contributed at the direction of the employee from
amounts he or she would otherwise have received as current compensation, New
Claridge contributed an amount equal to 50% of the employees' contribution from
January 1, 1996, through August 31, 1996. Effective September 1, 1996, New
Claridge reduced its contribution and contributed an amount equal to 20% of the
employees' contribution and will continue to contribute an amount equal to 20%
during 1997. Also effective September 1, 1996, officers of New Claridge were no
longer eligible to receive the employer contribution. Employees could contribute
a maximum of 15% of their base salary but not in excess of $9,500 for 1996 and
may contribute up to $9,500 in 1997. An employee's account may be paid out, at
the employee's election, in one cash payment or in installment payments over a
ten-year period.
c. Incentive Compensation Plan. Under New Claridge's 1996 Incentive
Compensation Plan, key management personnel were eligible to receive bonuses
expressed as a percentage of base salary, depending upon the achievement of
specific financial objectives which were established at the beginning of the
plan year. New Claridge reserves the right to not pay bonuses to participants if
operating earnings do not meet minimum requirements. For the year ended December
31, 1996, no bonuses were awarded under this plan because New Claridge did not
achieve its financial objectives for 1996.
Mr. Renneisen was eligible for an incentive bonus up to 50% of his 1996
salary. The incentive bonus is based on performance and is issued at the sole
discretion of the outside members of the Board of Directors of the Corporation
and New Claridge. For 1996, Mr. Renneisen was not awarded a bonus.
d. Long-Term Management Incentive Plan. In February, 1992, the
Corporation's Board of Directors adopted a Long-Term Management Incentive Plan
(the "Plan") in which certain key employees of the Corporation and/or New
Claridge participate. The Plan provides for the grant of the 273,938 shares of
the Corporation's Class A Stock, which were held as treasury shares of the
Corporation ("Treasury Shares"), and for the issuance of 100 Equity Units. The
aggregate value of the 100 Equity Units is equal to 5.41 percent of certain
amounts, generally equal to the equity of the Claridge entities, as further
defined in the Plan. Specified portions of the awarded Treasury Shares and
Equity Units held by participants vest upon the attainment of specific goals as
described in the Plan. The Treasury Shares and Equity Units fully vest upon a
further restructuring or a change in control as defined in the Plan. Payment
with respect to the Equity Units will only be made (a) upon the occurrence of a
transaction in which substantially all of the assets and business operations of
the Claridge entities are transferred to one or more entities in a merger, sale
of assets, or other acquisition-type transaction, (b) upon
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termination of employment of any participant in the Plan within one year after
any change of control of the Corporation occurs, as defined in the Plan, or (c)
if the Corporation pays dividends to its stockholders, if the Partnership makes
distributions to its partners, or if the Corporation or the Partnership makes
certain distributions under the Restructuring Agreement. A participant is
entitled to vote all awarded Treasury Shares whether or not such shares are
vested.
On June 5, 1995, the Corporation's Board of Directors amended the Plan
by creating 100 Additional Equity Units to be issued to certain key employees
and 100 Director Equity Units to be issued to the individual members of the
Board of Directors (the "Directors"). The aggregate value of the Additional
Equity Units is 5.59 percent and the aggregate value of the Director Equity
Units is 4 percent of certain amounts as further defined in the Plan. Vesting of
the Additional Equity Units occurs if a Transaction results in the Claimholders
of the Claridge receiving cash or marketable securities having a certain value
all as further defined and described in the Plan. Vesting of the Director Equity
Units occurs according to a vesting schedule stated in the Plan and also is tied
to the occurrence of a Transaction having a certain value.
e. Supplemental Executive Retirement Plan. In February, 1995, New
Claridge adopted a Supplemental Executive Retirement Plan (the "SERP") to
provide extra and additional retirement income security benefits to certain key
management employees as an inducement for outstanding future services. The SERP
is an unfunded supplemental retirement plan. Participants under the SERP are
entitled to annual payments for a period of fifteen years commencing on the
later of the Participant's termination from service with New Claridge or his or
her early retirement date (as defined in the SERP) in an amount equal to the
unit value assigned to that Participant times the number of full years of
service of the Participant after January 1, 1994. The SERP provides for
commencement of payments on an earlier date in the event of the disability of
Participant or death of the Participant (in which case payments would be made to
a survivor). In addition, the SERP provides for forfeiture of benefits if a
Participant fails to comply with the noncompetition or nondisclosure provisions
set forth in his or her employment agreement with the Company or assumes a
position within the gaming industry in Atlantic City, New Jersey, voluntarily
terminates his or her employment before the completion of five years of service
or is terminated for cause (as defined in the SERP). The SERP also provides for
immediate payment of benefits in the event of a change of control (as defined in
the SERP) of New Claridge. Jean Abbott was added as a participant to the SERP
effective January 1, 1996. The Participants in the SERP and the value of their
units and their designated early retirement ages are set forth below:
<TABLE>
<CAPTION>
Age Name of Participant Unit Value Early Retirement
--- ------------------- ---------- ----------------
<S> <C> <C> <C>
50 Robert Renneisen $10,000 55
40 Albert Britton $ 6,000 55
40 Raymond Spera $ 6,000 55
61 Peter Tiano $ 6,000 63
41 Jean Abbott $ 6,000 55
</TABLE>
8
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REPORT ON EXECUTIVE COMPENSATION
This report is presented to describe the compensation policies applied
by the Human Resources and Compensation Committee (the "Committee") of the Board
of Directors with regard to the Corporation's executive officers, and the basis
for the compensation of the Chief Executive Officer of the Corporation, for the
year 1996. Robert M. Renneisen was Chief Executive Officer for 1996. While the
Committee is continuing to evaluate a modified approach to executive
compensation for future years, the description below applies to the approach
taken with respect to executive compensation for 1996.
In the first several months of each year, the Committee reviews the
compensation of each executive officer of the Corporation or its subsidiary.
This review includes salary for the prior two years and the management
recommendation as to salary for the following year. It is the objective of the
Committee in setting the base salary for the officers to attract and retain
experienced, competent personnel. The Committee places particular emphasis on
this objective because of the intense competition within the gaming industry for
managerial employees. With this objective in mind, through 1992 the Committee
had recommended increases in the base salaries of the executive officers of the
Corporation and its subsidiary so that their base salaries were at least within
the lower range of base compensation paid by other casino companies in Atlantic
City. The primary reason for targeting the lower range of other casino companies
was to recognize the relatively smaller size of the Corporation in relation to
its competitors. However, it is essential that the Corporation's officers be as
competent as those of its competitors. Having previously set the base salaries
of the executive officers at that level, the Committee anticipates that future
adjustments in the base salary for those persons will generally be made only to
reflect increases in the consumer price index and changes in industry
compensation levels, and adjustments were made in base salaries in 1996 on this
basis.
Having established what the Committee believes to be the appropriate
level for the base salary of the officers of the Corporation and its subsidiary,
the Committee believes that any significant adjustment to the compensation of
the officers should be in the form of bonuses, and the bonuses should be based
largely upon the performance of the Corporation. For this purpose, the officers
are entitled to bonuses on the basis of a bonus plan that compares the
performance of the Corporation during the bonus year to a business plan
established by the management of the Corporation for that year. The business
plan upon which the bonus is based is developed by the management of the
Corporation with the oversight of the Board of Directors and the Committee,
which typically approves the business plan in December of each year. As
previously indicated, bonuses are determined largely on the basis of performance
as compared to the business plan so that in years, such as 1991, when the
Corporation fails to achieve its profit plan, no bonuses are paid even if the
reason for the failure to achieve the plan was largely beyond the control of the
Corporation's management (such as occurred in 1991 with the Gulf War and the
beginning of the economic downturn). Similarly, no bonuses were paid under the
incentive plan for 1994, because the Corporation failed to achieve the business
plan (which in part may have been attributed to bad weather during the winter of
1993-1994). No bonuses were paid under the 1996 incentive plan because the
Corporation failed to achieve its business plan. In addition, given the
Corporation's financial results for 1996, the Committee determined that the 1996
base salaries for executive officers of the Corporation and its subsidiary would
remain in effect for 1997.
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In addition to bonuses under the bonus plan, the Committee retains the
discretion to pay the Corporation's senior officers bonuses that are different
than what would otherwise be dictated by the bonus plan. For this purpose, the
Committee, in addition to considering the performance of the Corporation against
the business plan, also considers various qualitative factors including the
success in retaining competent personnel, favorable relationships with the New
Jersey Casino Control Commission, efforts and accomplishments in achieving the
Corporation's long-term restructuring objectives, success in dealing with the
various regulatory requirements and the New Jersey Casino Control Act, and
efforts in exploring expansion opportunities, none of which was considered
determinative by the Committee.
The Committee made its decision regarding the 1996 compensation of the
Chief Executive Officer of the Corporation on the basis of the policies and
objectives set forth above. Based on a review of the base salaries of chief
executive officers of other casinos in Atlantic City, the Committee determined
that at a base salary of $330,000, Mr. Renneisen would receive a base salary
that could be considered comparable to the base salaries of chief executives of
other Atlantic City casinos, but that was clearly at the low end of the range of
such salaries. Mr. Renneisen did not receive a bonus for 1996.
During 1996, the Committee did not award any additional Equity Units
under the Corporation's Long-Term Management Incentive Plan (the "Plan") as
amended. Key management employees of the Corporation previously received awards
under the Plan in 1992, 1994, and 1995. As described elsewhere in this Proxy
Statement, the Plan provides for the vesting of units granted to key management
employees upon the achievement of certain long-term restructuring objectives of
the Corporation and bases the timing and amount of payment with respect of those
units upon the value received upon achievement of those objectives. The
Committee does not consider the grants made to the key management employees
under the Plan in determining the base salary and bonus amounts for those
employees because the Committee does not consider the Plan to provide current
compensation to those employees. Instead, the Committee considers the Plan to be
key to the Committee's objective of retaining its top managerial employees while
providing them with an added incentive to achieve the Corporation's long-term
restructuring objectives by holding out the possibility of significant
compensation if those objectives are achieved. The Committee believes that this
Plan ties the long-term interests of these key management employee participants
directly to the long-term interests of the Corporation's shareholders.
As described above, certain key management employees of New Claridge
were awarded units under the SERP. The SERP is designed to provide an inducement
for those employees to provide outstanding future service.
The Corporation does not have a stock option plan.
James M. Montgomery, Chairman
David W. Brenner
Shannon L. Bybee
A. Bruce Crawley
Ned P. DeWitt
Mark H. Sayers
10
<PAGE>
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are James M. Montgomery,
Chairman, Shannon L. Bybee, A. Bruce Crawley, Ned P. DeWitt, Mark H. Sayers, and
David W. Brenner. There is no insider participation on the Compensation
Committee, except that David W. Brenner is the Chairman of the Board of
Directors of the Company, and there is no interlock between any Compensation
Committee member or executive officer of the Corporation, on the one hand, and
the compensation committees of other companies on the other hand.
Unavailability of Comparative Information
The Corporation has not included in this Proxy Statement a chart
comparing the performance of the price of its shares to the performance of the
Standard & Poor's 500 Stock Index and an index of gaming industry stocks because
there has not been, to the knowledge of the Corporation, any trading in the
Corporation's shares since the private placement of the shares in 1983. In
addition, the Corporation believes that the Corporation's shares do not have any
value. Under the terms of the Restructuring Agreement entered into by the
Corporation in October, 1988, the Corporation is not permitted to make any
payment to the shareholders of the Corporation, as such, until payment in full
is made on the "Webb Payment" (which amounts to $20 million plus 15% interest
per annum), with corresponding payments made to Releasing Investors as provided
under the terms of the Restructuring Agreement. As a result of the requirement
to make these payments, the Corporation believes, based on its estimate of the
current value of the Claridge, that it is unlikely that any amounts will be
available for distribution on its shares of common stock.
VOTING
Shareholders of record on the books of the Corporation at 4:00 P.M.
E.D.T., April 25, 1997, will be entitled to vote at the meeting. The Corporation
had outstanding on April 25, 1997, 5,006,342 shares of Common Stock, par value
$.001 per share. Each share entitles the holder to one vote on each matter
submitted to a vote at the meeting, and to cast one vote for or against each
Director.
The shares represented by proxies will be voted as directed in the
proxies. In the absence of specific direction, the shares represented by the
proxies will be voted FOR the election as Directors of the nominees named in
this Proxy Statement, FOR approval of the appointment of KPMG Peat Marwick LLP
as Auditors, and FOR approval of the amendment to the Corporation's Certificate
of Incorporation. In the event any nominee for Director is unable to serve,
which is not now contemplated, the proxies may or may not be voted for a
substitute nominee.
Assuming the presence of a quorum, the affirmative vote of a majority
of the shares of stock represented at the meeting is required for the election
of Directors and approval of the appointment of Auditors. The affirmative vote
of a majority of the shares outstanding is required for the approval of the
amendment to the Corporation's Certificate of Incorporation.
11
<PAGE>
Set forth in the table below is information regarding the ownership of
shares of the Corporation's common stock by directors and certain executive
officers of the Corporation and/or New Claridge, and the directors and executive
officers of the Corporation and/or New Claridge as a group:
<TABLE>
<CAPTION>
No. of Percent of
Name Title Shares Owned Class
---- ----- ------------ ----------
<S> <C> <C> <C>
Robert M. Renneisen .. Vice Chairman/Chief Executive Officer of New Claridge 73,962 1.47%
Albert T. Britton .... President/Chief Operating Officer of New Claridge 36,526 .72%
Raymond A. Spera ..... Executive Vice President of Finance and Corporate
Development of New Claridge 36,526 .72%
Directors and Officers as a Group ...................................................... 204,540 4.04%
</TABLE>
All of the shares shown in this table are owned by directors or
executive officers of the Corporation and/or New Claridge under the Long-Term
Incentive Plan described above. Shares of the common stock were granted under
the Plan subject to certain vesting provisions, and as of the date hereof, 25%
of such shares have vested. Recipients of such awards are permitted, however, to
vote all shares granted to the recipients whether or not vesting has occurred.
--------------------------------
Shareholder Proposals
Any shareholder proposal intended to be presented at the 1998 annual
meeting of the Corporation's shareholders must be received at the principal
executive offices of the Corporation, Indiana Avenue and the Boardwalk, Atlantic
City, New Jersey 08401, by December 26, 1997, in order to be considered for
inclusion in the Corporation's proxy materials relating to that meeting.
--------------------------------
As of the date of this Proxy Statement, management knows of no matters
to be brought before the meeting other than the matters referred to in this
Proxy Statement. If, however, further business is presented, the proxy holders
will act in accordance with their best judgment.
By order of the Board of Directors
Frank A. Bellis, Jr.
Secretary
April 25, 1997
12
<PAGE>
EXHIBIT "A"
CERTIFICATE OF AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION
OF
THE CLARIDGE HOTEL AND CASINO CORPORATION
under Section 805 of the Business Corporate Law
THE CLARIDGE HOTEL AND CASINO CORPORATION (the "Corporation"), a
corporation organized and existing under New York law
DOES HEREBY CERTIFY
FIRST: The Corporation's name is "The Claridge Hotel and Casino
Corporation."
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of New York on August 26, 1983.
THIRD (A): The Certificate of Incorporation is amended for the purpose
of instituting super majority shareholder voting requirements to authorize
certain actions of the Corporation.
THIRD (B): To effect the foregoing amendment, the Corporation's
Certificate of Incorporation is hereby amended to redesignate Articles TENTH and
ELEVENTH thereof as Articles ELEVENTH and TWELFTH respectively and to add a new
Article TENTH as follows:
TENTH:
(1) Except as otherwise provided in subsection 2 of this
Article TENTH, the affirmative vote of at least four-fifths of the
shares of capital stock of the Corporation outstanding and entitled to
vote thereupon voting together as a single class shall be necessary to
authorize any of the following actions:
(a) The merger or consolidation of the Corporation
with or into any other company (including, without limitation,
a partnership, corporation, joint venture, business trust,
common law trust, or any other business organization) or share
exchange in which the Corporation is not the successor
corporation;
A-1
<PAGE>
(b) The dissolution or liquidation of the
Corporation notwithstanding any other provision in this
Certificate of Incorporation;
(c) Any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition (in one or a series of
transactions) of all or substantially all of the assets of the
Corporation other than in the ordinary course of the
Corporation's business; or
(d) The issuance or transfer by the Corporation (in
one transaction or a series of transactions) of any securities
of the Corporation to any other person in exchange for cash,
securities, or other property having an aggregate fair market
value of $1,000,000 or more excluding (i) sales of any
securities of the Corporation in connection with a public
offering thereof, (ii) issuances of any securities of the
Corporation pursuant to a dividend reinvestment plan adopted
by the Corporation or pursuant to a stock dividend, and (iii)
issuances of any securities of the Corporation upon the
exercise of any stock subscription rights distributed by the
Corporation.
(2) If the Board of Directors approves, by a vote of at least
seventy percent of the entire Board of directors, any action listed in
subsection (1) of this Article TENTH other than the action described in
clause (1d), the affirmative vote of two-thirds of the shares of
capital stock of the Corporation outstanding and entitled to vote
thereupon voting together as a single class shall be necessary to
authorize such action. If the Board of Directors approves, by a vote of
at least seventy percent of the entire Board of Directors, an action
described in clause (1d) of this Article TENTH, no shareholder vote
shall be required to authorize such action.
(3) The provisions of this Article TENTH may not be amended,
altered, or repealed except by the approval of at least four-fifths of
the shares of capital stock of the Corporation outstanding and entitled
to vote thereupon voting together as a single class.
FOURTH: This amendment to the Certificate of Incorporation of the
Corporation was duly authorized by the Board of Directors followed by a vote of
a majority of all outstanding shares entitled to vote thereon at a meeting of
holders of Class A stock.
IN WITNESS WHEREOF, we have signed this certificate on the ______ day
of ___________, 1997, and we affirm the statements contained herein as true
under penalties of perjury.
THE CLARIDGE HOTEL AND CASINO CORPORATION
By: ____________________________________________
President
By: ____________________________________________
Secretary
A-2
<PAGE>
PROXY PROXY
The Claridge Hotel and Casino Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders on June 10, 1997
The undersigned hereby appoints David W. Brenner and Robert M.
Renneisen, and each of them, the proxies of the undersigned with full power of
substitution of each of them, to vote all shares of The Claridge Hotel and
Casino Corporation (the "Corporation") which the undersigned is entitled to vote
at the Annual Meeting of the Shareholders of the Corporation to be held at the
Claridge Casino Hotel, Indiana Avenue and the Boardwalk, Atlantic City, New
Jersey, on June 10, 1997 at 10:00AM and any adjournment thereof.
Unless otherwise specified in the squares provided, the undersigned's
vote will be FOR each candidate for Board of Directors, FOR item 2 and FOR item
3 and in the discretion of the proxies, on such other matters as may properly
be brought before the meeting.
1. To elect the following seven (7) candidates to the Board of Directors:
FOR WITHHELD
David W. Brenner |_| |_|
Shannon L. Bybee |_| |_|
A. Bruce Crawley |_| |_|
Ned P. DeWitt |_| |_|
James M. Montgomery |_| |_|
Robert M. Renneisen |_| |_|
Mark H. Sayers |_| |_|
<PAGE>
2. To approve the appointment by the Corporation's Board of Directors of KPMG
Peat Marwick, independent certified public accountants, as auditors for the year
1997.
FOR |_| AGAINST |_| ABSTAIN |_|
3. To approve an amendment to the Corporation's Certificate of Incorporation for
the purpose of instituting super majority shareholder voting requirements to
authorize certain actions of the Corporation relating to a sale of the
Corporation or similar transaction.
FOR |_| AGAINST |_| ABSTAIN |_|
------------------------------------
(Signature of shareholder)
------------------------------------
(Signature of joint owner, if any)
Date __________, 1997 Please sign
exactly as your name appears on the
label. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title
as such.
PLEASE SIGN AND RETURN AS SOON AS POSSIBLE IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
