SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
RIO HOTEL & CASINO, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_________________________________________________________
(2) Aggregate number of securities to which transaction
applies:_________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined): ____________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________
(5) Total fee paid:
____________________________________________________________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:________________________________
(2) Form, Schedule or Registration Statement No.:__________
____________________________________________________________
(3) Filing Party:__________________________________________
(4) Date Filed:____________________________________________
RIO HOTEL & CASINO, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 16, 1995
To the Stockholders of Rio Hotel & Casino, Inc.:
The annual meeting of the stockholders of Rio Hotel &
Casino, Inc. (the "Company") will be held at the Grand Sugarloaf
Room, Rio Suite Hotel & Casino, 3700 West Flamingo Road, Las
Vegas, Nevada 89103, on Tuesday, May 16, 1995 at 10:00 a.m. local
time, for the following purposes:
(1) to elect Anthony A. Marnell II, James A. Barrett, Jr.,
John A. Stuart, Thomas Y. Hartley and Peter M. Thomas
as directors of the Company;
(2) to approve and ratify the adoption of the 1995 Long-
Term Incentive Plan;
(3) to approve and ratify an amendment to the 1991
Directors' Stock Option Plan; and
(4) to transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on
April 3, 1995 are entitled to notice of and to vote at the annual
meeting. The stock transfer books will not be closed.
Stockholders are cordially invited to attend the annual
meeting in person. STOCKHOLDERS DESIRING TO VOTE IN PERSON MUST
REGISTER AT THE ANNUAL MEETING WITH THE INSPECTORS OF ELECTION
PRIOR TO COMMENCEMENT OF THE ANNUAL MEETING. IF YOU WILL NOT BE
ABLE TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE REQUESTED TO
EXECUTE AND DATE THE ENCLOSED FORM OF PROXY AND TO FORWARD IT TO
THE SECRETARY OF THE COMPANY WITHOUT DELAY SO THAT YOUR SHARES
MAY BE REGULARLY VOTED AT THE ANNUAL MEETING.
A copy of the 1994 Annual Report to Stockholders, including
financial statements for the twelve months ended December 31,
1994, is enclosed.
By order of the Board of Directors,
/S/ SUSAN L. JOHNSON
Susan L. Johnson, Secretary
Dated: April 4, 1995
RIO HOTEL & CASINO, INC.
PROXY STATEMENT
TABLE OF CONTENTS
PAGE
VOTING SECURITIES............................................ 1
ELECTION OF DIRECTORS........................................ 3
Compensation to Non-Employee Directors.................. 6
Board of Directors Meetings............................. 6
Committees of the Board of Directors.................... 7
COMPENSATION OF EXECUTIVE OFFICERS........................... 8
Summary Compensation Table.............................. 8
Options/SAR Grants in Last Fiscal Year.................. 9
Aggregated Option/SAR Exercises in Last Fiscal
Year And Fiscal Year-End Option/SAR Values......... 9
Compensation Committee and Incentive Plan Committee
Report on Executive Compensation................... 10
Stock Performance Chart................................. 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............... 12
General .............................................. 12
Consulting, Construction, and Architectural
Services to and by Affiliates...................... 12
Services Provided by Related Parties.................... 13
Certain Real Estate Transactions with Focus 2000........ 13
Banking Relationships................................... 14
Indemnification of Directors and Officers............... 14
APPROVAL AND RATIFICATION OF
THE 1995 LONG-TERM INCENTIVE PLAN............................ 15
Introduction............................................ 15
Purpose .............................................. 15
Administration and Eligibility.......................... 16
Option Price............................................ 16
Option Term............................................. 16
Termination of Option................................... 16
Federal Tax Consequences................................ 17
Restricted Share Awards................................. 17
Change in Control of the Company........................ 18
Term and Amendment of Plan.............................. 18
RATIFICATION OF AMENDMENT TO 1991
DIRECTOR'S STOCK OPTION PLAN................................. 18
INTEREST IN CERTAIN MATTERS TO BE ACTED UPON................. 19
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934....................... 19
INDEPENDENT PUBLIC ACCOUNTANTS............................... 19
VOTING PROCEDURES............................................ 20
1996 ANNUAL MEETING OF STOCKHOLDERS.......................... 20
OTHER BUSINESS .............................................. 20
RIO HOTEL & CASINO, INC.
3700 West Flamingo Road
Las Vegas, Nevada
89103
___________________________
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Rio
Hotel & Casino, Inc. (the "Company") in connection with the
annual meeting of the Company to be held at the Grand Sugarloaf
Room, Rio Suite Hotel & Casino, 3700 West Flamingo Road, Las
Vegas, Nevada on Tuesday, May 16, 1995 at 10:00 a.m. local time,
and any adjournment thereof, for the purposes indicated in the
Notice of Annual Meeting.
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY. This Proxy Statement and the
accompanying form of proxy are being mailed to stockholders on or
about April 4, 1995. Any stockholder giving a proxy has the
power to revoke it prospectively by giving written notice to the
Company, addressed to Susan L. Johnson, Secretary, at the
Company's principal address before the annual meeting, by
delivering to the Company a duly executed proxy bearing a later
date, by notifying the Company at the annual meeting prior to the
commencement of the annual meeting, or by voting in person by
ballot at the annual meeting after notifying the inspectors of
election of the stockholder's intention to do so prior to the
commencement of the annual meeting. The shares represented by
the enclosed proxy will be voted if the proxy is properly
executed and received by the Company prior to the commencement of
the annual meeting, or any adjournment thereof.
None of the proposals to be voted on at the annual meeting
creates a right of appraisal under Nevada law. A vote "FOR" or
"AGAINST" any of the proposals set forth herein will only affect
the outcome of the proposal.
The expenses of making the solicitation will consist of the
costs of preparing, printing, and mailing the proxies and proxy
statements and the charges and expenses of brokerage houses,
custodians, nominees or fiduciaries for forwarding such documents
to security owners. These are the only contemplated expenses of
solicitation, and they will be paid by the Company.
VOTING SECURITIES
The close of business on April 3, 1995 has been fixed by the
Board of Directors as the record date for determination of
stockholders entitled to vote at the annual meeting. The
securities entitled to vote at the annual meeting consist of
shares of common stock, par value $.01 ("Common Stock"), of the
Company, with each share entitling its owner to one vote. Common
Stock is the only outstanding class of voting securities
authorized by the Company's Articles of Incorporation. The
Company's Articles of Incorporation grant to the Board of
Directors the discretion to issue Class II Preferred Stock, in
series, with various rights, preferences and privileges,
including, among others, voting rights. However, none of the
Class II Preferred Stock is presently outstanding. The 8%
Cumulative Convertible Preferred Stock, which is authorized by
the Company's Articles of Incorporation but not presently
outstanding, does not possess general voting rights.
The number of outstanding shares of Common Stock at the
close of business on February 28, 1995 was 21,265,746. The
number of shares outstanding may change between such date and
April 3, 1995 if any currently exercisable options to purchase
the Company's Common Stock are exercised, if the Company elects
to repurchase and cancel any shares in open market or privately
negotiated transactions, or if the Company otherwise authorizes
the issuance or repurchase of any shares. The stockholders do
not possess the right to cumulate their votes for the election of
directors.
The following is a list of persons who beneficially owned
more than 5% of the outstanding Common Stock of the Company, and
the ownership of those executive officers named in the Summary
Compensation Table (see page 11) and all officers and directors
as a group at the close of business on February 28, 1995
according to record-ownership listings as of that date, according
to the Securities and Exchange Commission Forms 3 and 4 and
Schedules 13D and 13G of which the Company has received copies,
and according to verifications as of February 28, 1995:
<TABLE>
<CAPTION>
Amount and Percent
Title Name and Address Nature of of
of of Beneficial Owner Beneficial Class(2)
Class Ownership(1)(2)
<S> <C> <C> <C>
Common Anthony A. Marnell II 5,035,780(3) 23.3%
4495 S. Polaris Avenue
Las Vegas, Nevada
89103
Common Lud J. Corrao 1,287,728(4) 6.0%
P.O. Box 12907
Reno, Nevada 89510
Common Dean P. Petersen 1,110,910(5) 5.2%
2900 Las Vegas Blvd.
South
Las Vegas, Nevada
89109
Common James A. Barrett, Jr. 225,741(6) 1.1%
Common Harlan D. Braaten 62,050(7) *
Common Putnan Investments, 1,853,725(8) 8.7%
Inc.
One Post Office Square
Boston, Massachusetts
02109
Common Gilder, Gagnon, Howe & 1,800,088(9) 8.4%
Co.
1775 Broadway
New York, New York
10019
Common All executive officers 6,406,790(10) 29.4%
and directors as a
group
(7 persons)
<FN>
___________________
*Less than one percent.
(1)Unless otherwise noted, the persons identified in this
table have sole voting and sole investment power with regard to
the shares beneficially owned by them.
(2)Includes shares issuable upon exercise of options which
are exercisable within 60 days of the stated date.
(3)Includes options to purchase 196,000 shares issuable to
Mr. Marnell under the NSOP, as defined below, which are not
listed below. Mr. Marnell beneficially owns the following shares
which are held of record by the following entities:
Common Stock
A.A. Marnell II Family Revocable 68,167
Living Trust(a)
Certain trusts established for 900,000
the benefit of Mr. Marnell's
family(a)
Marnell Corrao, Inc. ("Marnell 1,052,851
Corrao")
MarCor Partnership ("MCP")(b) 2,818,762
_________
Total Shares 4,839,780
(a)Mr. Marnell holds sole voting and
investment power over the shares held by his
family trusts.
(b)Mr. Marnell and Marnell Corrao, which
is controlled by Mr. Marnell, together own
approximately 97% of MCP, a general
partnership. Messrs. Marnell and Barrett are
the managing partners of MCP.
(4)Of the shares currently held by Mr. Corrao, 25,000 are
held directly and 1,262,728 are held through the Lud Corrao
Family Trust.
(5)Includes options to purchase 20,000 shares issuable to
Mr. Petersen under the Directors' Plan, as defined below. Mr.
Petersen's shares are held of record by The Dean and Mary
Petersen Living Trust of 1975.
(6)Includes options to purchase 99,000 shares issuable to
Mr. Barrett under the NSOP. Of the shares currently held by Mr.
Barrett, 2,000 shares are held in his individual retirement
account; 3,000 shares are held in certain of his spouse's
accounts; 36,000 shares are held by the Barrett Family Revocable
Living Trust through a family corporation and 50 shares are held
directly by the trust; and 85,691 shares are held by MCP
reflecting Mr. Barrett's 3.04% ownership in MCP; because of Mr.
Marnell's dominant ownership control of MCP, the Company has not
included all of MCP's shares within Mr. Barrett's beneficial
ownership. A proposed reorganization of MCP is anticipated to
cause all of MCP's shares to also be included with Mr. Barrett's
beneficial ownership. Not included are 2,000 shares held in
certain trusts for which Mr. Barrett is sole trustee.
(7)Includes options to purchase 34,000 shares issuable to
Mr. Braaten under the NSOP.
(8)Putnam Investments, Inc. reported on a Schedule 13G,
dated January 30, 1995, that it has shared voting power with
respect to 92,400 of such shares and shared dispositive power
with respect to all of such shares.
(9)Gilder, Gagnon, Howe & Co. reported on an Amendment to
Schedule 13G, dated February 9, 1995, that it has shared voting
and dispositive power with respect to 69,650 of such shares and
sole dispositive power with respect to 1,730,438 of such shares.
(10)Includes options to purchase 329,000 shares under the
NSOP and options to purchase 64,000 shares under the Directors'
Plan.
[/FN]
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors presently consists of five persons.
The Bylaws of the Company provide for a Board of Directors
consisting of one to ten persons who are elected until the next
annual meeting. Directors are to serve until their successors
are elected and have qualified.
Director Dean P. Petersen has informed the Board of
Directors that he does not desire to be renominated to the Board.
The Board intends to appoint Peter M. Thomas as a director on
April 27, 1995.
If the enclosed proxy is duly executed and received in time
for the annual meeting and if no contrary specification is made
as provided therein, the proxy will be voted in favor of electing
the nominees Anthony A. Marnell II, James A. Barrett, Jr., John
A. Stuart, Thomas Y. Hartley and Peter M. Thomas for terms of
office expiring at the next annual meeting of stockholders. If
any such nominee shall decline or be unable to serve, the proxy
will be voted for such person as shall be designated by the Board
of Directors to replace any such nominee. The Board of Directors
presently has no knowledge or reason to believe that any of the
nominees will refuse or be unable to serve.
Any vacancies on the Board of Directors which occur during
the year will be filled, if at all, by the Board through an
appointment of an individual to serve only until the next annual
meeting of stockholders.
The Company, through a wholly owned subsidiary, Rio
Properties, Inc. ("Rio Properties"), owns and operates the Rio
Suite Hotel & Casino (the "Rio") in Las Vegas, Nevada. The
Company and each director who has been required by the Nevada
Gaming Authorities (as defined below) to be found suitable, and
each controlling person have been "found suitable" by the Nevada
State Gaming Control Board and Nevada Gaming Commission
(collectively, the "Nevada Gaming Authorities"). Future new
members of the Board of Directors, if any, may be required to be
found suitable in the discretion of the Nevada Gaming
Authorities. Should any such new director not be found suitable
or should any director later be found not to be suitable by the
Nevada Gaming Authorities, that person will not be eligible to
continue serving on the Board of Directors and a majority of the
remaining directors may appoint a qualified replacement to serve
as a director until the next annual meeting of stockholders.
The following stock ownership information is furnished with
respect to each member of the Board of Directors and the
biographical information is furnished with respect to each member
of the Board of Directors whose term is expected to continue
after the 1995 annual meeting, each of whom, unless otherwise
indicated, has served as a director continuously since the year
shown opposite his name. There are no family relationships
between or among any directors or executive officers of the
Company. The statements as to beneficial ownership of Common
Stock of the Company as to each such person are based upon
information furnished by him.
<TABLE>
<CAPTION>
Common Stock
Beneficially
Owned
on February 28,
1995
Beneficial
Director Ownership of Percent of
Since Common Stock(1) Class(2)
<S> <C> <C> <C>
Anthony A. Marnell 1986 5,035,780(3) 23.3%
II
James A. Barrett, 1986 225,741(4) 1.1%
Jr.
John A. Stuart 1989 33,000(5) *
Thomas Y. Hartley 1990 25,000(6) *
Dean P. Petersen 1994 1,110,910(7) 5.2%
Peter M. Thomas Nominee(5) 5,000(9) *
<FN>
________________
*Less than one percent.
(1)Unless otherwise noted, the persons identified in this
table have sole voting and investment power with regard to the
shares beneficially owned by them.
(2)Includes shares issuable upon exercise of options which
are exercisable within 60 days of the indicated date.
(3)Mr. Marnell is a control person; for further information
on Mr. Marnell's stockholdings, see "Voting Securities."
(4)For further information on Mr. Barrett's stockholdings,
see "Voting Securities".
(5)Includes options to purchase 22,000 shares exercisable
(but not 1,000 shares not yet exercisable) to Mr. Stuart under
the Directors' Plan.
(6)Includes options to purchase 22,000 shares exercisable
(but not 1,000 shares not yet exercisable) to Mr. Hartley under
the Directors' Plan. Three thousand of Mr. Hartley's shares are
held in an individual retirement account.
(7)See "Voting Securities."
(8)The Board of Directors intends to appoint Mr. Thomas to
the Board of Directors on April 27, 1995.
(9)Mr. Thomas' shares are held in a managed investment
account in which he shares voting and investment power.
</FN>
</TABLE>
ANTHONY A. MARNELL II, age 46, has been Chairman of the
Board of the Company and its subsidiaries since 1986, and Chief
Executive Officer since 1990. He has been controlling
stockholder of Marnell Corrao and of Marnell Corrao's wholly
owned subsidiary, Marnell Corrao Associates, Inc. ("Marnell
Corrao Associates"), a leading hotel-casino general contractor,
since 1982; and President and controlling stockholder of Anthony
A. Marnell II, Chtd. ("Marnell Chartered"), an architectural firm,
since 1982, each of which is based in Las Vegas, Nevada. Mr.
Marnell is a licensed architect.
JAMES A. BARRETT, JR., age 43, is President and Chief
Operating Officer of the Company, President of Rio Properties,
and a director of the Company and each of its subsidiaries. Mr.
Barrett has been President and a director of the Company since
July 1986 and Chief Operating Officer since October 1990. Since
August 1986, Mr. Barrett has been the Treasurer, and since August
1989, a director of Marnell Corrao. Mr. Barrett has been a
certified public accountant since 1975.
JOHN A. STUART, age 43, has been a member of the Board of
Directors of the Company since 1989. Since February 1991, he has
been President of John Stuart & Company, Inc., a firm
specializing in employee benefits, consulting and insurance
brokerage. Prior thereto, he was the President of Insurance
Services Corporation of Nevada, Inc., a full service insurance
brokerage firm also located in Las Vegas.
THOMAS Y. HARTLEY, age 61, has been a member of the Board of
Directors since 1990. Since April 1991, Mr. Hartley has served
as President and Chief Operating Officer of Colbert Golf Design
and Development, a Las Vegas-based golf course design and
development company. From September 1988 to April 1991, Mr.
Hartley served as President and Chief Operating Officer of Jim
Colbert Golf, Inc., a Las Vegas-based golf course development and
management company. Prior to 1988, Mr. Hartley was area managing
partner for the Las Vegas, Phoenix, Tucson, and Reno offices of
Deloitte, Haskins & Sells, now known as Deloitte & Touche, an
international certified public accounting firm. Mr. Hartley has
been a member of the Boards of Directors of Southwest Gas
Corporation and its subsidiary Primerit Bank, both in Las Vegas,
since March 1991 and of Sierra Health Services, Inc., Las Vegas,
Nevada, since June 1992.
PETER M. THOMAS, age 45, is expected to be appointed to the
Board of Directors of the Company on April 27, 1995. Mr. Thomas
has served as President, Chief Operating Officer and a Director
of Bank of America, Nevada since March 1992. Mr. Thomas recently
announced his intention to resign from his position with Bank of
America, Nevada and assume a position as Managing Director of the
Thomas and Mack Company, a family owned commercial real estate
management and development company. It is anticipated this move
will be finalized in the second quarter of 1995. From 1982 to
1992, Mr. Thomas was President, Chief Operating Officer and a
Director of Valley Bank of Nevada, prior to its acquisition by
BankAmerica Corporation in 1992. Mr. Thomas received his law
degree in 1975 and is currently a member of the Nevada, Utah and
District of Columbia Bar Associations.
All directors hold office until the next annual meeting of
stockholders or until their successors are elected and qualified.
Executive officers serve at the pleasure of the Board of
Directors.
COMPENSATION TO NON-EMPLOYEE DIRECTORS
Directors' fees were $2,500 per month for 1994 and are
$3,000 per month for 1995, and are paid to directors who are not
employees of the Company. Certain non-employee directors have
been granted options to purchase Common Stock under the Company's
1991 Directors' Stock Option Plan.
RIO HOTEL & CASINO, INC. 1991 DIRECTORS' STOCK OPTION PLAN.
The Directors' Plan authorizes in the aggregate options to
purchase up to 100,000 shares of Common Stock to be granted to
members of the Company's Board of Directors who are not employed
as regular salaried officers or employees of the Company (i.e.,
non-employee directors). If ratified by the stockholders,
aggregate authorized options under the Directors' Plan will be
increased to 200,000 shares. See "Ratification of Amendment to
1991 Directors' Stock Option Plan."
The purpose of the Directors' Plan is to encourage non-
employee directors to take a long-term view of the affairs of the
Company; to attract and retain non-employee directors; and to aid
in rewarding non-employee directors for their services to the
Company.
The Directors' Plan is administered by a committee
("Directors' Plan Committee") of not less than two directors of
the Company selected by, and serving at the pleasure of, the
Board of Directors. Anthony A. Marnell II and James A. Barrett,
Jr. currently serve on the Directors' Plan Committee. Neither
Messrs. Marnell nor Barrett are eligible to participate in the
Directors' Plan due to their status as employees of the Company.
The Directors' Plan Committee, unless permitted by holders of the
majority of outstanding Common Stock, does not have any
discretion to determine or vary any matters which are fixed under
the terms of the Directors' Plan, including, without limitation,
which individuals will receive option awards, the number of
shares of the Company's Common Stock subject to each such option
award, the exercise price of Common Stock covered by an option,
or the means of payment which may be used in connection with the
exercise of an option.
Upon election to the Board by the stockholders, an eligible
director will receive an initial option grant to purchase 20,000
shares of Common Stock. Thereafter, on the first business day
after January 1 of each year, each eligible director will receive
an annual option grant to purchase 1,000 shares of Common Stock.
The option price will be 100% of the fair market value of
the Common Stock granted under the option on the date of grant.
The options may not be exercised until six months and one day
after the date of the grant. All options to be granted under the
Directors' Plan will be non-qualified options, the tax treatment
of which is determined under Section 422 of the Internal Revenue
Code of 1986, as amended.
In 1994, options were granted for directors Hartley, Stuart
and Petersen to purchase 1,000, 1,000 and 20,000 shares,
respectively, of Common Stock. On January 3, 1995, options to
purchase 1,000 shares were automatically granted to the same
persons. As of February 28, 1995, options representing 67,000
shares are currently outstanding of which options representing
64,000 shares are exercisable. The remaining 3,000 options may
not be exercised until July 3, 1995.
BOARD OF DIRECTORS MEETINGS
The Board of Directors generally meets monthly, and in the
twelve months ended December 31, 1994, the Board of Directors
held 13 meetings. All directors attended at least 75% of the
meetings held.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four standing committees: the
Audit Committee, the Compensation Committee, the Directors' Plan
Committee and the Incentive Plan Committee (the "Incentive Plan
Committee"), formerly known as the NSOP Committee.
The Audit Committee met eight times during the twelve months
ended December 31, 1994. The Audit Committee's function is to
review reports of certified public accountants to the Company; to
review Company financial practices, internal controls and
policies with officers and key employees; to review such matters
with the Company's auditors to determine scope of compliance with
any deficiencies; to consider selection of independent public
accountants; to review related party transactions; and to make
periodic reports on such matters to the Board of Directors. The
members of the Audit Committee are Thomas Y. Hartley, John A.
Stuart and Dean P. Petersen.
The Compensation Committee met five times during the twelve
months ended December 31, 1994. The Compensation Committee's
function is to review and make recommendations to the Board of
Directors with respect to the salaries and bonuses of the
Company's executive officers.
The members of the Compensation Committee are Thomas Y.
Hartley and Dean P. Petersen.
The Directors' Plan Committee did not meet during the twelve
months ended December 31, 1994. The Directors' Plan Committee
administers the Directors' Plan. The members of the Directors
Plan Committee are Anthony A. Marnell II and James A. Barrett,
Jr.
The NSOP Committee met five times during the twelve months
ended December 31, 1994. The Committee was reconstituted as the
Incentive Plan Committee on January 26, 1995 in connection with
the Board's adoption of the Incentive Plan. The Incentive Plan
Committee is comprised of Thomas Y. Hartley and Dean P. Petersen,
and its function is to administer the Incentive Plan and the
NSOP, including determining such matters as the persons to whom
awards shall be granted, the number of shares to be awarded, when
the awards shall be granted, when the awards shall vest, and the
terms and provisions of the instruments evidencing the awards
under both plans. The Incentive Plan Committee reports to the
Company's Board of Directors regarding all decisions concerning
awards granted to Incentive Plan participants.
Each member of the Audit, Compensation, NSOP, and Directors'
Plan Committees of the Board of Directors attended 100% of the
committee meetings held.
The Company anticipates that Peter M. Thomas will also
assume positions as a member of the Audit, Compensation, and
Incentive Plan Committees.
COMPENSATION OF EXECUTIVE OFFICERS
The following tables set forth compensation received by
Anthony A. Marnell II, the Company's Chief Executive Officer, and
other executive officers of the Company whose total compensation
for the year ended December 31, 1994, exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
___________________________________________________________________________________
Awards Payouts
__________________________________
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs(#)(1) Payouts sation
Position Year $ $ $ $ $ $ $
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell II, 1994 $388,465 $ -0- $-0- $-0- -0- $-0- $-0-
Chief Executive 1993 200,000 150,000 -0- -0- 510,000 -0- -0-
Officer of the 1992 150,000 -0- -0- -0- 60,000 -0- -0-
Company
James A. Barrett, 1994 $197,692 $ -0- $-0- $-0- -0- $-0- $ 750(2)
President of 1993 160,000 40,000 -0- -0- 85,000 -0- 2,283(2)
the Company 1992 135,000 -0- -0- -0- 30,000 -0- 675(2)
Harlan D. Braaten, 1994 $142,991 $ 10,000 $-0- $-0- 4,000 $-0- $2,165(2)
Treasurer, and 1993 128,235 30,000 -0- -0- 16,000 -0- 1,596(2)
Chief Financial 1992 109,237 25,000 -0- -0- 15,000 -0- 761(2)
Officer of the
Company
_____________________________________________________________________________________________________________________
<FN>
__________________________
(1)These numbers represent only options granted pursuant to the NSOP; there are no stock appreciation rights.
(2)These amounts represent the Company's contribution to Mr. Barrett's and Mr. Braaten's 401(K) Plan account.
</FN>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential realizable value
at assumed annual rates of
stock price appreciation
Individual Grants for option term(1)
____________________________________________________________________________________________________
Percent
Options/ of total
SARS options/ Exercise or
Granted SARS granted base price Expiration
(No.)(2) to employees ($/Sh) date 0%($) 5%($) 10%($)
Name in fiscal yr.
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell, -0- -0-% $-0- N/A $-0- $ -0- $ -0-
II
James A. Barrett, -0- -0-% -0- N/A -0- -0- -0-
Jr.
Harlan D. Braaten 4,000 1.4% 12.00 12/15/04 -0- 30,187 76,500
___________________________________________________________________________________________________________________________
<FN>
________________________
(1)The amounts shown represent assumed rates of appreciation in the Company's Common Stock. The actual value,
if any, on stock option exercises will depend on the future performance of the Company's Common Stock, as well
as the optionholders' continued employment through the five-year vesting period. There can be no assurance
that the value, if any, ultimately realized by the executive will be at or near the values shown above.
(2)These numbers represent only options granted pursuant to the NSOP; there are no stock appreciation rights.
</FN>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of unexercised Value of unexercised
options/SARS at fiscal in-the-money options/
year-end (No.)(1) SARS at fiscal year-
end ($)(1)
Shares ______________________________________________________________
acquired on Value
Name exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell II 50,000 625,000 196,000 444,000 $787,250 $226,500
James A. Barrett, Jr. 15,000 188,438 99,000 86,000 $663,000 $113,250
Harlan D. Braaten -0- -0- 28,000 37,000 $201,375 $166,625
_____________________________________________________________________________________________________________________
<FN>
________________________
(1) These numbers represent only options granted pursuant to NSOP; there are no stock appreciation rights.
</FN>
</TABLE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF
THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION
COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT AND THE STOCK
PERFORMANCE CHART WHICH BEGINS ON PAGE 17 SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation and Incentive Plan Committees' philosophy
regarding executive compensation incorporates the following
themes:
Compensation should be competitive within the industry.
Compensation should provide incentives to management to
increase stockholder value.
The level of compensation should be directly linked to
the level of performance by the Company.
The level of compensation should be reflective of the
contribution made by the executive officer toward the
achievement of the Company's goals.
Executive compensation is evaluated at least annually.
Similar methodology is followed by both the Compensation and
Incentive Plan Committees in arriving at recommendations for
executive compensation. Existing compensation levels are
reviewed annually and compared with compensation levels of
executives in similar capacities with other publicly-held gaming
companies. The Company's current financial position and
performance for the past year is reviewed, including growth in
revenues, operating cash flow generated, and earnings per share.
In addition, plans for performance for the upcoming year and
future periods are reviewed as to revenue growth and earnings.
An evaluation is made as to the degree that the executive,
including the Chief Executive Officer, contributes to the
achievement of the Company's results and other Company goals.
Based on these factors, the Committees make recommendations to
the Board of Directors regarding executive compensation,
specifically through the three vehicles of annual salary, annual
bonus and participation in the Company's Incentive Plan.
Annual salary recommendations are made to insure that the
salaries paid to the Company's executive officers are competitive
within the gaming industry. Annual bonus recommendations are
made to provide a financial reward for individual achievement
above Company-wide goals. Long-term incentives are provided
through participation in the Company's NSOP, and in the future,
through the new Incentive Plan. This allows the executive
officer to have the opportunity to receive compensation, the
amount of which is directly linked to the appreciation of the
Company's Common Stock. This component of the executive
compensation package is designed to promote a commitment to the
Company beyond the short-term.
For 1994 and 1995 the Compensation Committee established the
Chief Executive Officer's annual salary at $400,000 and $450,000,
respectively. The Chief Executive Officer did not receive any
NSOP grants during 1994. Also, the Compensation Committee did
not approve any bonus to be paid to the Chief Executive Officer
during 1994.
COMPENSATION COMMITTEE And INCENTIVE PLAN COMMITTEE
March 28, 1995 Thomas Y. Hartley
Dean P. Petersen
STOCK PERFORMANCE CHART
In January 1990, the Company entered the gaming industry
with the opening of the Rio. Until December 30, 1991, the
Company's business also included commercial real estate
operations. Therefore, in order to provide a representative
comparison of the Company's stock performance, the following
chart compares the cumulative stockholder return on the Company's
Common Stock for the last five years with the cumulative return
on the Standard & Poors 500 Composite Stock Index and since 1990,
an industry peer group index (based upon companies which are
traded on a listed exchange with the same four-digit standard
industrial code ("SIC") as the Company (SIC 7990 - Miscellaneous
Amusement & Recreation Services)(1) and for 1989 to 1991, a
commercial real estate industry peer group index of companies
which are traded on a listed exchange.(2) The following chart
assumes $100 invested December 31, 1989 in each of the above
groups. The total return assumes the reinvestment of dividends.
________________________
(1)The companies are as follows: Alliance Gaming Corporation
(formerly United Gaming Inc.), Argosy Gaming Corporation, Aztar
Corporation, Bally Entertainment Corporation (formerly Bally
Manufacturing Corporation), Black Hawk Gaming & Development
Company Inc., Boomtown Inc., Caesars World Inc., Capital Gaming
International Inc., Casino America Inc., Casino Magic
Corporation, Circus Circus Enterprises Inc., Full House Resorts
Inc., Gaming Corporation of America, Grand Casinos Inc.,
Hollywood Casino Corp., International Gaming Management Inc.,
Jackpot Enterprises Inc., Lady Luck Gaming Corporation, Lone Star
Casino Corporation, Mirage Resorts Inc., Monarch Casino & Resort,
Inc., President Casinos Inc. (formerly President Riverboat
Casinos), Promus Companies Inc., Resorts International, Sahara
Gaming Corporation, Sands Regent, Showboat Inc., Station Casinos
Inc., and Winners Entertainment Inc.
(2)The companies are as follows: American Real Estate Partners
L.P., Angeles Corporation, Arbor Property Trust (formerly EQK
Green Acres L.P.), Capital Properties Incorporated, Catellus
Development Corporation, C.F. Income Partners L.P., Forest City
Enterprises, Inc., Gould Investors, L.P., Grubb and Ellis
Company, Hallwood Realty Partners L.P., Intergroup Corporation,
Kimco Realty Corporation, Koger Properties Inc., L.T.C.
Properties Inc., MHI Group Inc., Midwest Real Estate Shopping
Center L.P. (formerly Equitable Real Estate Shopping Center),
Milestone Properties Inc., New Mexico and Arizona Land Company,
Omega Health Care Investors Inc., Omnidentix Systems Corporation,
Pacesetter Homes Inc., Pacific Gateway Properties Inc., Pope
Resources/Delaware L.P., Roberts Pharmaceutical Corp., Shopco
Laurel Centre L.P., South West Property Trust Inc. (formerly
Southwestern Property Trust Inc.), United Capital Corporation,
U.S. Restaurant Properties (formerly Burger King Investors),
Vornado Realty Trust.
<TABLE>
<CAPTION>
(OMITTED PERFORMANCE GRAPH)
Base
Period Return Return Return Return Return
Company/Index Name 1989 1990 1991 1992 1993 1994
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Rio Hotel & Casino, Inc. 100 24.05 27.85 102.53 162.03 122.78
S&P 500 Index 100 96.89 128.42 136.05 149.76 151.74
Gaming Peer Group 100 66.72 102.75 160.94 241.94 170.58
Real Estate Peer Group 100 51.52 59.19
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GENERAL
Anthony A. Marnell II, Chairman of the Board, Chief
Executive Officer, and largest stockholder of the Company, is the
controlling stockholder and Chief Executive Officer of Marnell
Chartered and Marnell Corrao, parent corporation of Marnell
Corrao Associates. Marnell Corrao holds a majority ownership
interest in MCP, a general partnership engaged in real estate
development, and Mr. Marnell is sole stockholder of Focus 2000,
Inc. ("Focus 2000"). Mr. Barrett, President, Chief Operating
Officer, and a director of the Company, is a general partner of
MCP and is the Secretary, Treasurer, and a director of Marnell
Corrao and its subsidiaries.
CONSULTING, CONSTRUCTION, AND ARCHITECTURAL SERVICE TO AND BY
AFFILIATES
Marnell Corrao and Marnell Chartered provided design and
construction services for various Rio expansion projects. The
Marnell Corrao construction contract for the second Rio tower,
completed in October 1993, was for an amount not to exceed
$33,327,093, the contract for the public area expansion completed
in November 1994 was for an amount not to exceed $22,000,000, and
the contract for the third Rio tower scheduled for completion in
March 1995 is for an amount not to exceed $60,500,000. In the
year ended December 31, 1994, the Company paid a total of
$48,499,873 in connection with these contracts. Design contracts
with Marnell Chartered for these same projects were in amounts
not to exceed $1,350,000, $880,000, and $2,469,836, respectively.
In the year ended December 31, 1994, Marnell Chartered was paid a
total of $1,916,475 in connection with these projects.
The original 1989 Rio construction loan ("Original Loan")
required that the Company, Marnell Corrao, Marnell Corrao
Associates, MCP, Anthony A. Marnell II and his personal family
trust, James A. Barrett, Jr. and Maureen M. Barrett and their
family trust and Focus 2000 (collectively, the "Loan Guarantors")
enter into certain guarantees ("Guarantees") of payment of all
obligations under the Original Loan.
In February 1989, in consideration of the Guarantees, the
Company agreed to pay the Loan Guarantors (excluding Focus 2000)
$250,000 per year, commencing with the fiscal year ending
December 31, 1990 and continuing through the fiscal year ending
December 31, 1994, for each year in which the Company's share of
net earnings before taxes from the Rio equals or exceeds
$900,000.
The agreement provided for up to a two year extension if the
Loan Guarantors did not receive the full $1,250,000 by December
31, 1994. No amounts were paid thereunder for the years ended
December 31, 1990 and 1991, and the Loan Guarantors received
payments of $250,000 in December 1992, December 1993 and December
1994, respectively. The agreement will be extended through
December 31, 1996. In the event there is a change in control of
the Company, or the Company sells its interest in the Rio, the
full remaining unpaid amount will be immediately due and payable
to the Loan Guarantors. In 1993, the personal guarantees under
the former bank loan were replaced with provisions that will
trigger events of default should Anthony A. Marnell II
voluntarily allow his stockholdings in the Company to fall below
10% or fall below the stockholdings of another holder, or if
Messrs. Marnell or Barrett cease for a period of 30 consecutive
days to hold their respective executive officer positions.
Therefore, the agreement with the Loan Guarantors was amended to
terminate the Loan Guarantor payments in the event that said
events of default are triggered by voluntary act of the
respective Loan Guarantors.
SERVICES PROVIDED BY RELATED PARTIES
Entities in which John A. Stuart is a principal stockholder
and executive officer earned commissions totaling $124,912 for
the year ended December 31, 1994, arising out of the acquisition
and administration of various insurance coverages by the Company.
The Company reimbursed Focus 2000 for certain travel and
other expenses advanced on behalf of or supplied to the Company
during the year ended December 31, 1994 of approximately
$142,900.
CERTAIN REAL ESTATE TRANSACTIONS WITH FOCUS 2000
On December 30, 1991, the Company sold to Focus 2000 certain
non-Rio real estate assets. Focus 2000 granted a right of first
refusal to the Company to operate gaming on one of the properties
sold (the "Old Vegas Site") for the lesser of the purchaser's
ownership or 120 months. Focus 2000 also agreed for a period up
to 120 months to return 100% of sale proceeds from any subsequent
sale of the Old Vegas Site in excess of $7,000,000, less Focus
2000's defined holding costs. Focus 2000 agreed (the "Focus
Participation Agreement") for a period of up to 48 months to
return, on a declining basis, sale proceeds less defined holding
costs on certain of the other assets sold which included the
general partnership interest in MarCor Green Valley Partnership
(as defined below) and the Warehouse Site (as defined below). In
order to preserve the ability to develop a casino on the Old
Vegas Site without the requirement of building a hotel, as
required by certain Nevada legislation, Focus 2000 advised the
Company in June 1992 that Focus 2000 intended to proceed with
development of the Old Vegas Site. Focus 2000 requested that the
Company determine whether it would exercise its right of first
refusal. At the time, the Board of Directors determined that the
Company did not want to divert its efforts and resources away
from the Rio. Therefore, the Company assigned the right of first
refusal to Messrs. Barrett and Marnell with a reserved right to
assume the assigned interest for reimbursement of expenses
incurred in filing the gaming applications and otherwise in
connection with this project, plus interest equal to two percent
above the prime rate of First Interstate Bank of Nevada, N.A.
Messrs. Barrett and Marnell were directed to enter into an
agreement with Focus 2000 and thereafter filed gaming
applications with the Nevada State Gaming Control Board and
Nevada Gaming Commission. Focus 2000 is currently exploring
development options or a sale of the Old Vegas Site. On April 1,
1994, Focus 2000, through a limited partnership ("MarCor Green
Valley Partnership"), sold a parcel of unimproved real property
("Green Valley Site") located in Henderson, Nevada. Pursuant to
the Focus Participation Agreement, the sale of the Green Valley
Site resulted in a $975,936 profit participation paid to the
Company. Various issues involving the events prior to and during
the sale of the Green Valley Site are the subject of a pending
lawsuit between MarCor Green Valley Partnership, Focus 2000, the
Company and the limited partners of MarCor Green Valley Limited
Partnership. A favorable outcome in that litigation may produce
additional profit participation to the Company pursuant to the
Focus Participation Agreement. Since the Company and one of its
subsidiaries, as well as Messrs. Marnell and Barrett, are named
as parties to the lawsuit, an adverse ruling could produce a
damage cost to the Company.
On January 25, 1995, the Company agreed to repurchase from
Focus 2000 improved real property ("Warehouse Site") adjacent to
the Rio. The $3,203,191 purchase price is based upon an
independent appraisal valuation, less credit for net rental
proceeds during the term of the escrow and profit participation
pursuant to the Focus Participation Agreement (of $496,809). The
Warehouse Site purchase was finalized in March 1995.
BANKING RELATIONSHIPS
Peter M. Thomas, who is expected to be appointed to the
Board of Directors on April 27, 1995, is President, Chief
Operating Officer and a Director of Bank of America, Nevada, a
subsidiary of BankAmerica Corporation. Bank of America and Bank
of America, Nevada are participant banks in the Company's primary
credit facility in an amount up to $125,000,000, which is
described in more detail in the Company's Annual Report on Form
10-K for the Year Ended December 31, 1994, and Bank of America,
Nevada provides regular commercial banking services to the
Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of Chapter 78 of the Nevada Revised Statutes,
Article XII of the Company's Articles of Incorporation and
Article XIII of the Company's Bylaws contain provisions for
indemnification of officers, directors, employees and agents of
the Company. The Articles of Incorporation provision requires
the Company to indemnify such persons to the full extent
permitted by Nevada Law. Each person will be indemnified in any
proceeding if he acted in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best
interest of the Company. Indemnification would cover expenses,
including attorneys' fees, judgments, fines and amounts paid in
settlement.
The Company's Articles of Incorporation also provide that
the Company's Board of Directors may cause the Company to
purchase and maintain insurance on behalf of any present or past
director or officer insuring against any liability asserted
against such person incurred in the capacity of director or
officer or arising out of such status, whether or not the
corporation would have the power to indemnify such person. The
Company presently has directors' and officers' liability
insurance in effect.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is therefore unenforceable.
* * * *
The Company believes that the transactions described above
are on terms at least as favorable as would have been obtainable
from non-related parties. The Company requires that the Audit
Committee of the Board of Directors review related party
transactions.
APPROVAL AND RATIFICATION OF
THE 1995 LONG-TERM INCENTIVE PLAN
INTRODUCTION
The Board of Directors of the Company adopted the 1995 Long-
Term Incentive Plan ("Incentive Plan") on January 26, 1995. The
Incentive Plan must also be approved by a majority of the
Company's stockholders present, or represented, and entitled to
vote at the annual meeting.
PURPOSE
The Incentive Plan is intended to promote the interests of
the Company and its subsidiaries by offering those executive
officers, key employees, and outside consultants of the Company
who are primarily responsible for the management, growth, and
success of the business of the Company, the opportunity to
participate in a long-term incentive plan designed to reward them
for their services and to encourage them to continue in the
employ of, or to provide services to, the Company.
Options and restricted stock are intended to be granted
primarily to those persons who possess the capacity to contribute
significantly to the successful performance of the Company.
Because persons to whom grants of options and restricted stock
awards are to be made are to be determined from time to time by
the Incentive Plan Committee (which was formerly known as the
NSOP Committee), in its discretion, it is impossible at this time
to indicate the precise number, names, or positions of persons
who will receive options or restricted stock awards or the number
of shares for which options or restricted stock awards will be
granted to any such employee or consultant. Based upon the
experience of the Company's NSOP over the past three years, the
Company anticipates that approximately 100 employees and five
consultants will participate in the Incentive Plan over the next
three fiscal years; however, no assurance can be given as to the
exact number of participants.
Subject to adjustment by reason of stock splits or other
capital adjustments, an aggregate of 2,000,000 shares of Common
Stock is reserved for issuance in connection with the Incentive
Plan. Participants may each be granted options to purchase up to
a maximum of 500,000 shares in any one year. Unless the context
clearly indicates to the contrary, the term "Option" used herein
shall mean either an incentive stock option or a non-statutory
stock option, and the term "Optionee" shall mean any person
holding an Option granted under the Incentive Plan. The
following summary of the principal features of the Incentive Plan
is not intended to be complete and is qualified in its entirety
by reference to the Incentive Plan. A copy of the Incentive Plan
may be obtained from the Company upon the written request of any
stockholder received by the Company before the upcoming annual
meeting of stockholders.
Approval of the Incentive Plan by the Company's stockholders
is one of the conditions of Rule 16b-3, a rule promulgated by the
Securities and Exchange Commission (the "Commission") that
provides an exemption from the operation of the "Short-swing
profit" recovery provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), with respect
to the acquisition of options, the use of already owned Common
Stock as payment of the exercise price for options granted under
the Incentive Plan, and certain transactions by officers and
directors of the Company. As of February 28, 1995, no Options
have been granted under the Incentive Plan. The Common Stock
underlying Options granted pursuant to the Incentive Plan traded
at a closing price of $12 3/8 share on February 28, 1995 as
reported by the Nasdaq National Market.
ADMINISTRATION AND ELIGIBILITY
The Incentive Plan is administered by the Company's
Incentive Plan Committee (formerly known as the NSOP Committee),
consisting of not less than two non-employee directors of the
Company selected by, and serving at, the pleasure of the
Company's Board of Directors. Directors who are also employees
of the Company or any of its subsidiaries, or who have been such
employees within one year, may not serve on the Incentive Plan
Committee. Based upon the recommendations from the Company and
its operating subsidiaries, the Incentive Plan Committee
determines the persons to whom awards shall be granted
("Participants"), the number of shares to be awarded, when the
awards shall be granted, when the awards shall vest, and the
terms and provisions of the instruments evidencing the awards.
The Incentive Plan Committee also interprets the Incentive Plan
and makes recommendations for its administration. Only employees
who serve as executives and other key employees of the Company or
its operating subsidiaries, the Company's employee-directors, and
certain outside consultants are eligible for selection as
Participants in the Incentive Plan.
OPTION PRICE
Options granted under the Incentive Plan will have an
exercise price equal to the last reported sale price of the
Common Stock on the Nasdaq National Market, or such other stock
exchange on which the Common Stock may be listed from time to
time, on the date of grant.
Options may be exercised by payment of the option price in
full (i) in cash, (ii) in Common Stock, including Common Stock
underlying the Option being exercised, having a fair market value
equal to such Option price, or (iii) a combination of cash and
Common Stock, including the Common Stock underlying the Option
being exercised.
OPTION TERM
An Option may be exercised no earlier than six months and
one day from the date of grant. An Option may not be transferred
or assigned other than by will or the laws of descent and
distribution.
Except in special circumstances, each Option shall expire on
the tenth anniversary of the date of its grant and shall be
exercisable according to a vesting schedule to be determined by
the Incentive Plan Committee. The Incentive Plan Committee may
include in any Option instrument, initially or by amendment at
any time, a provision making any installment exercisable at such
earlier date, if the Incentive Plan Committee deems such
provision to be in the interest of the Company or its
subsidiaries, or necessary to realize the reasonable expectation
of the Optionee.
TERMINATION OF OPTION
If an Optionee ceases to be employed by the Company or a
subsidiary, except by reason of death or retirement, the Optionee
must exercise an option within the earlier of either the tenth
anniversary after the date of grant, or three months after the
date such Optionee's employment ends. In the event of
termination of employment due to retirement, all options granted
to such Optionee and exercisable on the date of the Optionee's
retirement shall expire on the earlier of the tenth anniversary
after the date of grant or the date of the second anniversary of
such Optionee's retirement. Any installment not exercisable on
the date of such termination or retirement shall expire and
thenceforth be unexercisable. In the event of termination of
employment due to the death of the Optionee, the Option may be
exercised, to the extent of the number of shares that the
Optionee could have exercised on the date of the Optionee's
death, by the Optionee's estate, personal representative, or
beneficiary who acquires the Option by will or by the laws of
descent and distribution. Such exercise must be made at any time
prior to the earlier of the tenth anniversary after the date of
grant or the first anniversary of such Optionee's death. On the
earlier of such dates, the Option shall terminate.
FEDERAL TAX CONSEQUENCES
Optionees of incentive stock options will not recognize
taxable income as a result of the grant or exercise of such
options. If the Optionee does not dispose of the stock
transferred to the Optionee within two years from the date of the
grant and within one year after the stock is transferred to the
Optionee, then any gain or loss recognized on the disposition of
the stock will be a long-term capital gain or loss equal to the
difference between the amount realized by the Optionee and the
option price. However, the difference between the option
exercise price and the fair market value of the shares on the
option exercise date will be treated as a tax preference item
subject to alternative minimum tax. The Company will not be
entitled to any tax deduction in connection with the grant or
exercise of any incentive stock option. However, if stock
acquired pursuant to an incentive stock option is disposed of
before the holding periods described above expire, then the
excess of fair market value (but not in excess of the sales
proceeds) of such stock on the option exercise date over the
option price will be treated as compensation income to the
Optionee in the year in which such disposition occurs and the
Company will be entitled to a commensurate income tax deduction.
Any difference between the sales proceeds and the fair market
value of the stock on the option exercise date will be treated as
a long-term capital gain or loss if the shares were held more
than one year after the option exercise date.
Except as provided in the next paragraph below, the Optionee
of a non-statutory stock option, upon exercise, must include in
ordinary income subject to federal taxation an amount equal to
the excess of the fair market value of the stock acquired at date
of exercise over the aggregate price paid pursuant to the Option
for such stock. Accordingly, the Company may, as a condition to
the exercise of a non-statutory stock option, deduct from
payments otherwise due to the Optionee the amount of taxes to be
withheld by virtue of such exercise or require that the Optionee
pay such withholding to the Company or make other arrangements
satisfactory to the Company regarding the payment of such taxes.
When an officer or director who is subject to Section 16(b)
of the Exchange Act exercises a non-statutory stock option, no
income is recognized for federal income tax purposes at the time
of exercise unless the Optionee makes an appropriate election
within thirty days after the date of exercise, in which case the
rules described in the preceding paragraph would apply. If such
an election is not made, the Optionee will recognize ordinary
income on the date that is six months after the date of the
exercise (generally, the first day that the sale of such shares
would not create liability under Section 16(b) of the Exchange
Act). The ordinary income recognized will be the excess, if any,
of the fair market value of the shares on such later date over
the option exercise price, and the Company's tax deduction will
also be deferred until such later date.
The effect of the alternative minimum tax may not be delayed
for six months after exercise of incentive stock options by an
officer or director subject to Section 16 of the Exchange Act.
Optionees should consult their own tax counsel as to the
consequences under federal, state and local tax laws upon the
grant and exercise of the Options on the subsequent sale of the
stock.
RESTRICTED SHARE AWARDS
Under the Incentive Plan, the Incentive Plan Committee may
also award Participants restricted shares of Common Stock. Under
the Incentive Plan, all restricted shares will be forfeited to
the Company or the applicable operating subsidiary if a
Participant fails to be continuously employed with the Company or
any of its subsidiaries during the restriction period.
The restricted shares may not be sold, assigned, bequeathed,
transferred, pledged, hypothecated, or otherwise disposed of by a
Participant during the longer of the restriction period relating
to a restricted share award as determined by the Incentive Plan
Committee, or six months and one day from the date of the
restricted share award.
The Incentive Plan Committee may require a Participant to
enter into an escrow agreement in which the restricted shares are
to remain in the physical custody of the Company. Each
restricted share certificate shall bear a legend referring to
such restrictions.
Notwithstanding the restrictions, a recipient of a
restricted share award will have all the rights of a stockholder
of the Company including the right to vote the restricted shares
and the right to receive all dividends or other distributions
made with respect to the restricted shares.
The Incentive Plan Committee may, in its discretion, remove
the share restrictions in the event a Participant terminates
employment due to death, total and permanent disability,
retirement, or discharge other than discharge for cause.
Moreover, the Incentive Plan Committee may shorten the
restriction period or remove any or all share restrictions if, in
the exercise of its absolute discretion, the Incentive Plan
Committee determines that such action is in the best interest of
the Company and equitable to the Participant.
A Participant may, with the consent of the Incentive Plan
Committee, designate a person or persons to receive, in the event
of death of the Participant, any vested restricted shares to
which the Participant would then be entitled.
CHANGE IN CONTROL OF THE COMPANY
In the event of a change in control, as defined under the
Incentive Plan, all restrictions on restricted shares will lapse
and vesting on all stock options which have not yet vested will
accelerate to the change of control date.
TERM AND AMENDMENT OF PLAN
The Incentive Plan shall expire on January 30, 2005, except
with respect to Options and restricted shares outstanding on that
date. The Board of Directors may terminate or amend the
Incentive Plan in any respect, at any time; provided, however,
without the approval of the holders of a majority of the
outstanding Common Stock; the total number of shares that may be
sold, issued, or transferred under the Incentive Plan may not be
increased (except for proportional adjustment for stock dividend
or split, recapitalization, merger, consolidation, spin-off, or
other similar corporate changes); the eligibility requirements
for participation may not be modified; the exercise price of an
Option cannot be reduced; and the termination date of the
Incentive Plan may not be extended.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF APPROVAL AND
RATIFICATION OF THE 1995 LONG-TERM INCENTIVE PLAN
RATIFICATION OF AMENDMENT TO
1991 DIRECTORS' STOCK OPTION PLAN
On March 28, 1995, the Board of Directors amended the
Directors' Plan to permit the granting of options thereunder for
up to a total of 200,000 shares of the Company's Common Stock,
including reserving such shares for issuance pursuant to future
exercises of options granted thereunder. Currently, only 100,000
shares of the Company's Common Stock are reserved for issuance
under the Directors' Plan. Of these shares, 20,000 shares have
been issued to a former director pursuant to his exercise of
options granted under the Directors' Plan and options
representing 67,000 shares are currently outstanding. Therefore,
only 13,000 shares remain available for issuance under the
Directors' Plan.
Peter M. Thomas has been nominated for election to the Board
of Directors and upon his election will be eligible to receive an
initial option grant to purchase 20,000 shares of Common Stock
under the Directors' Plan. Therefore, the number of shares
authorized under the Plan must be increased in order to
accommodate the election of Mr. Thomas to the Board and satisfy
the Company's continuing obligations to the Directors under the
Plan. The Board of Directors believes it is in the best
interests of the Company to have additional shares available
under the Directors' Plan to accommodate future needs.
For a description of the Directors' Plan, see "Compensation
to Non-Employee Directors-Rio Hotel & Casino, Inc. 1991
Directors' Stock Option Plan."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
RATIFICATION OF THE AMENDMENT TO THE RIO HOTEL & CASINO, INC.
1991 DIRECTORS' STOCK OPTION PLAN.
INTEREST IN CERTAIN MATTERS TO BE ACTED UPON
Non-Employee Directors of the Company who will be
participants in the Directors' Plan will benefit from the
ratification of the Amendment increasing the number of shares
authorized under the Plan. Moreover, the Company's executive
officers and employee-directors who are eligible to participate
in the Incentive Plan will directly benefit from its
ratification.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's
directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the
Company. Officers, directors and stockholders holding more than
10% of the class of stock are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 1994, all reports required under
Section 16(a) were filed as required by its officers, directors
and greater than ten-percent beneficial owners by the date such
reports were due.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent accountants are Arthur Andersen &
Co. Arthur Andersen & Co. has audited the Company's books since
the audit of the year ended February 29, 1988, and is expected to
have a representative present at the stockholders' meeting who
will have the opportunity to make a statement if he desires to do
so and is expected to be available to respond to appropriate
questions.
The Company has not yet formally engaged an accountant to
audit the Company's financial statements for the year ended
December 31, 1995.
VOTING PROCEDURES
A majority of a quorum of stockholders present in person or
represented by proxy voting "FOR" the election of the nominees to
the Board of Directors is sufficient to approve the matters being
voted on at the meeting.
A quorum of stockholders exists when a majority of the stock
issued and outstanding and entitled to vote at a meeting is
present, in person or represented by proxy, at the meeting.
Abstentions are effectively treated as votes "AGAINST" the
election of the nominees to the Board of Directors, the approval
and ratification of the adoption of the Incentive Plan and the
ratification of amendment to the Directors' Plan. Neither the
Company's Articles, Bylaws, nor Nevada corporate statutes address
the treatment and effect of abstentions and broker non-votes.
The Company will appoint three inspectors of election to:
determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of a proxy;
receive votes, ballots, or consents; hear and determine all
challenges and questions in any way arising in connection with
the right to vote; count and tabulate all votes or consents;
determine when the polls shall close; determine the results; and
do any other act which may be proper to conduct the election or
vote with fairness to all stockholders.
1996 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about May 21, 1996. Stockholders desiring to present proper
proposals at that meeting and to have their proposals included in
the Company's Proxy Statement and form of proxy for that meeting
must meet the eligibility and other criteria under Rule 14a-8 of
the Securities Exchange Act of 1934 and must submit the proposal
to the Company and such proposal must be received no later than
December 8, 1995.
OTHER BUSINESS
The Board of Directors does not know of any other business
which will be presented for action by the stockholders at this
annual meeting. However, if any business other than that set
forth in the Notice should be presented at the annual meeting,
the proxy committee named in the enclosed proxy intends to take
such action as will be in harmony with the policies of the Board
of Directors of the Company, and in that connection will use
their discretion and vote all proxies in accordance with their
judgment.
The Company's 1994 Annual Report to Stockholders, including
financial statements for the twelve months ended December 31,
1994, accompanies these proxy materials, which are being mailed
to all stockholders of the Company as of April 3, 1995.
By order of the Board of Directors,
/S/ SUSAN L. JOHNSON
Susan L. Johnson, Secretary
DATED: April 4, 1995
THE COMPANY'S ANNUAL REPORT ON SEC FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FOR THE TWELVE
MONTHS ENDED DECEMBER 31, 1994, WILL BE FURNISHED WITHOUT CHARGE
TO ANY BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE AT THIS
ANNUAL MEETING. TO OBTAIN A COPY OF THE FORM 10-K, WRITTEN
REQUEST MUST BE MADE TO THE COMPANY AND THE REQUESTING PERSON
MUST REPRESENT IN WRITING THAT HE WAS A BENEFICIAL OWNER OF THE
COMPANY'S SECURITIES AS OF APRIL 3, 1995.
REQUESTS SHOULD BE ADDRESSED TO:
Rio Hotel & Casino, Inc.
Attention: Susan L. Johnson, Secretary
3700 West Flamingo Road
Las Vegas, Nevada 89103
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RIO HOTEL & CASINO, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 16, 1995
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Rio Hotel & Casino, Inc. (the "Company") hereby
acknowledges receipt of the Notice of Meeting of Stockholders, Proxy Statement, and Annual
Report to Stockholders in connection with the Annual Meeting of Stockholders of the
Company to be held at the Grand Sugarloaf Room, Rio Suite Hotel & Casino, Las Vegas,
Nevada, on Tuesday, May 16, 1995, at 10:00 o'clock in the morning, local time, and hereby
appoints Anthony A. Marnell II and James A. Barrett, Jr., and each or any of them,
proxies, with power of substitution, to attend and to vote all shares the undersigned
would be entitled to vote if personally present at said annual meeting and at any
adjournment thereof. The proxies are instructed to vote as follows:
<S> <C> <C>
(1) Election of Directors: FOR WITHHELD
NOMINEES: Anthony A. Marnell II, James A. Barrett, Jr.,
John A. Stuart, Thomas Y. Hartley and Peter M. Thomas
(INSTRUCTION: to withhold authority to vote
for any individual nominee, write that nominee's name
on the space provided below):
_____________________________________________________
(2) Approve and ratify the 1995 Long-Term Incentive Plan.
For Against Abstain
(3) Approve and ratify an amendment to the 1991 Directors' Stock Option Plan.
For Against Abstain
(4) In their discretion, upon such other matters as may properly come before the annual
meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF ALL NOMINEES LISTED,
IN FAVOR OF APPROVAL AND RATIFICATION OF THE 1995 LONG-TERM INCENTIVE PLAN, IN FAVOR OF
APPROVAL AND RATIFICATION OF AN AMENDMENT TO THE 1991 DIRECTORS' STOCK OPTION PLAN AND IN
THE DISCRETION OF THE PROXIES ON OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
Date:___________________________, 1995
Signature(s) ______________________________
______________________________
______________________________
______________________________
NOTE: PLEASE SIGN PROXY EXACTLY AS YOUR NAME APPEARS.
Date the Proxy in the space provided. If shares are held in the
name of two or more persons, all must sign. When signing as
attorney, executor, administrator, trustee, or guardian, give
full title as such. If signer is a corporation, sign full
corporate name by duly authorized officer.
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