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):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies: ______________________________________________________
________________________________________________________________
(2) Aggregate number of securities to which transaction
applies: ______________________________________________________
________________________________________________________________
<PAGE>
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined): ____________________________________________________
_________________________________________________________________
(4) Proposed maximum aggregate value of transaction: ______
_________________________________________________________________
(5) Total fee paid: _______________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _____________________________
(2) Form, Schedule or Registration Statement No.: _______
____________________________________________________________
(3) Filing Party: _______________________________________
(4) Date Filed: _________________________________________
2
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1996
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 Thursday, May 23, 1996 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 an amendment to the 1991
Directors' Stock Option Plan; and
(3) to transact such other business as may properly
come before the meeting.
Only stockholders of record at the close of business on
April 4, 1996 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 1995 Annual Report to Stockholders,
including financial statements for the twelve months ended
December 31, 1995, is enclosed.
By order of the Board of Directors,
/s/ Susan L. Johnson
Susan L. Johnson
Secretary
Dated: April 5, 1996
<PAGE>
RIO HOTEL & CASINO, INC.
PROXY STATEMENT
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
VOTING SECURITIES 1
ELECTION OF DIRECTORS 4
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND EXECUTIVE
OFFICERS 4
COMPENSATION OF NON-EMPLOYEE DIRECTORS 5
RIO HOTEL & CASINO, INC. 1991 DIRECTORS' STOCK OPTION PLAN 6
BOARD OF DIRECTORS MEETINGS 6
COMMITTEES OF THE BOARD OF DIRECTORS 6
COMPENSATION OF EXECUTIVE OFFICERS 8
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT
ON EXECUTIVE COMPENSATION 10
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934 11
STOCK PERFORMANCE CHART 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 13
GENERAL 13
CONSULTING, CONSTRUCTION, AND ARCHITECTURAL SERVICES TO
AND BY AFFILIATES 13
SERVICES PROVIDED BY RELATED PARTIES 13
CERTAIN REAL ESTATE TRANSACTIONS WITH MARNELL CORRAO 14
INDEMNIFICATION OF DIRECTORS AND OFFICERS 15
RATIFICATION OF AMENDMENT TO RIO HOTEL & CASINO, INC.
1991 DIRECTORS' STOCK OPTION PLAN 15
INTEREST IN CERTAIN MATTERS TO BE ACTED UPON 16
INDEPENDENT PUBLIC ACCOUNTANTS 16
VOTING PROCEDURES 16
1997 ANNUAL MEETING OF STOCKHOLDERS 16
OTHER BUSINESS 16
</TABLE>
<PAGE>
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 Thursday, May 23, 1996 at 10:00 a.m. local time,
and any adjournment thereof, for the purposes indicated in the
Notice of Annual Meeting of Stockholders.
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 5, 1996. 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 4, 1996 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 29, 1996 was 21,178,746. The
number of shares outstanding may change between such date and
April 4, 1996 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
1
<PAGE>
stockholders do not possess the right to cumulate their votes for
the election of directors.
The following is a list of the beneficial stock ownership as
of February 29, 1996, of (1) all persons who beneficially owned
more than 5% of the outstanding Common Stock of the Company,
(2) all directors, (3) all executive officers named in the
Summary Compensation Table (see page 8) and (4) all officers and
directors as a group at the close of business on February 29,
1996, 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 29, 1996,
which the Company solicited and received from each officer and
director:
<TABLE>
<CAPTION>
Title Amount and Percent
of Beneficial Owner Nature of of
Class Beneficial Class
Ownership <F2>
<F1>,<F2>
<S> <C> <C> <C>
Common Anthony A. Marnell II 5,263,570<F3> 24.5%
4495 S. Polaris Avenue
Las Vegas, Nevada 89103
Common James A. Barrett, Jr. 1,973,233<F4> 9.3%
3700 West Flamingo Road
Las Vegas, Nevada 89103
Common Lud J. Corrao 1,287,728<F5> 6.1%
P.O. Box 12907
Reno, Nevada 89510
Common Dean P. Petersen 1,091,410<F6> 5.2%
2900 Las Vegas Blvd. South
Las Vegas, Nevada 89109
Common John A. Stuart 34,000<F7> *
Common Thomas Y. Hartley 26,000<F8> *
Common Peter M. Thomas 26,000<F9> *
Common Susan L. Johnson 3,000<F10> *
Common Roger M. Szepelak 22,050<F11> *
Common Putnam Investments, Inc. 2,354,525<F12> 11.1%
One Post Office Square
Boston, Massachusetts 02109
Common The Capital Group Companies, Inc. 1,382,700<F13> 6.5%
333 South Hope Street
Los Angeles, California 90071
Common All executive officers and 5,519,608<F14> 25.5%
directors as a group (7 persons)
<FN>
*Less than one percent.
<F1>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.
<F2>Includes shares issuable upon exercise of options which are
exercisable within 60 days of the stated date.
<F3>Includes options to purchase 310,000 shares issuable to
Mr. Marnell under the Company's Non-Statutory Stock Option Plan
(the "NSOP") which are not listed below. Mr. Marnell
beneficially owns the following shares in the manner described:
2
<PAGE>
Common Stock
Anthony A. Marnell II, IRA 15,500
A. A. Marnell II Family Revocable Living Trust 73,667
(the "Marnell Trust")(a)
Certain trusts established for the benefit of 900,000
Mr. Marnell's family (the "Family Trusts")(a)
Marnell Corrao Associates, Inc. ("Marnell 98,800
Corrao")(b)
Austi International, Inc. ("Austi") (formerly 2,035,051
known as Marnell Corrao, Inc.)(c)
MarCor Limited Partnership ("MCLP") (a successor 1,828,245
in interest to MarCor Partnership)(d)
Shares held by Mr. Marnell's spouse and children 2,307
Total Shares 4,953,570
(a) Mr. Marnell holds sole voting and investment power over
the shares held by the Marnell Trust and the Family
Trusts.
(b) Mr. Marnell owns 70% of Marnell Corrao through the Family
Trusts.
(c) Mr. Marnell owns 100% of Austi through the Marnell Trust.
(d) Mr. Marnell owns 84.56% of MCLP, a limited partnership.
James A. Barrett, Jr. controls the remaining 15.44% of
MCLP including, through a family corporation, the 4.25%
general partner interest.
<F4>Includes options to purchase 122,000 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; 6,538 shares are held in certain of his spouse's
and children's accounts; 14,400 shares are held by the Barrett
Family Revocable Living Trust through a family corporation and 50
shares are held directly by the trust; and 1,828,245 shares are
held by MCLP. Mr. Barrett's ownership in MCLP is 15.44%; however,
all of the shares of the Company's Common Stock held by MCLP
are being reported herein as beneficially owned by Mr. Barrett as
a result of his family corporation's position as sole general
partner of MCLP. Control of MCLP remains with Mr. Marnell as a
result of Mr. Marnell's ability to remove the general partner.
Not included are 3,000 shares held in certain trusts for which
Mr. Barrett is sole trustee.
<F5>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.
<F6>Mr. Petersen's shares are held of record by The Dean and Mary
Petersen Living Trust of 1975.
<F7>Includes options to purchase 23,000 shares issuable to
Mr. Stuart under the Company's 1991 Directors' Stock Option Plan
(the "Directors' Plan").
<F8>Includes options to purchase 23,000 shares issuable to
Mr. Hartley under the Directors' Plan. The shares currently held
by Mr. Hartley are held in an individual retirement account.
<F9>Includes 1,000 shares held in a managed investment account in
which Mr. Thomas shares voting and investment power. Includes
20,000 shares issuable to Mr. Thomas under the Directors' Plan.
<F10>Includes options to purchase 3,000 shares issuable to Ms.
Johnson under the NSOP.
<F11>Includes options to purchase 15,400 shares issuable to
Mr. Szepelak under the NSOP. Of the shares currently held by
Mr. Szepelak, 100 shares are held in his individual retirement
account.
<F12>Putnam Investments, Inc. reported on an amendment to
Schedule 13G, dated January 15, 1996, that it has shared voting
power with respect to 141,000 of such shares and shared
dispositive power with respect to all of such shares.
<F13>The Capital Group Companies, Inc. reported on Schedule 13G,
dated February 9, 1996, that it had sole dispositive power with
respect to 1,382,700 shares, through an operating subsidiary,
Capital Research and Management Company. Sole voting power with
respect to the same 1,382,700 shares is held by SMALLCAP World
Fund, Inc. which is advised by Capital Research and Management
Company.
<F14>Includes options to purchase 450,400 shares under the NSOP
and options to purchase 66,000 shares under the Directors' Plan.
</FN>
</TABLE>
3
<PAGE>
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 of stockholders. Directors are to serve until
their successors are elected and have qualified.
If the enclosed proxy is duly executed and received in time
for the annual meeting of stockholders 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 of
Directors 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
State Gaming Control Board and the Nevada Gaming Commission
(collectively the "Nevada Gaming Authorities") to be "found
suitable," and each controlling person have been "found suitable"
by 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 BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF MESSRS. MARNELL, BARRETT, STUART, HARTLEY AND THOMAS
TO THE BOARD OF DIRECTORS
INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND EXECUTIVE OFFICERS
The following information is furnished with respect to each
member of the Board of Directors and the Company's executive
officers who are not directors. There are no family relationships
between or among any directors or executive officers of the
Company.
DIRECTORS
ANTHONY A. MARNELL II, age 47, 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 Austi and Marnell Corrao, a leading hotel-casino
general contractor, and President and controlling stockholder of
Anthony A. Marnell II, Chtd. ("Marnell Chartered"), an
architectural firm, for more than five years, each of which is
based in Las Vegas, Nevada. Mr. Marnell is a licensed architect.
JAMES A. BARRETT, JR., age 44, has been President and a
director of the Company since July 1986, Chief Operating Officer
of the Company since October 1990 and President of Rio Properties
since February 1992. Since August 1986, Mr. Barrett has been
Treasurer, and since August 1989, a director of Austi.
Mr. Barrett has been a certified public accountant since 1975.
4
<PAGE>
JOHN A. STUART, age 44, 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 Las-Vegas based
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 62, 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 46, has been a member of the Board of
Directors of the Company since 1995. Mr. Thomas served as
President, Chief Operating Officer and a Director of Bank of
America, Nevada from March 1992 until May 1995. Since May 1995
Mr. Thomas has been Managing Director of the Thomas and Mack
Company, a family owned commercial real estate management and
development company in Las Vegas, Nevada. 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 has been a director of Bank of
America, Nevada since March 1992 and of Vegan Development
Corporation, a subsidiary of Loews Corporation, since
September 1995. Mr. Thomas received his law degree in 1975
and is currently a member of the Nevada, Utah and District of
Columbia Bar Associations.
NON-DIRECTOR EXECUTIVE OFFICERS
SUSAN L. JOHNSON, age 45, has been Secretary of the Company
since December 1994, Vice President of the Company since
September 1994 and General Counsel of the Company since July
1994. From 1986 to 1989, Ms. Johnson was Associate General
Counsel of Harrah's Hotels & Casinos. From 1984 to 1986, Ms.
Johnson was Chief Deputy Attorney General for the State of
Nevada. From 1980 to 1984, Ms. Johnson was a Deputy District
Attorney for Clark County, Nevada. Ms. Johnson has been a
licensed attorney in Nevada since 1979 and is currently a member
of the Nevada Bar Association.
ROGER M. SZEPELAK, age 31, has been Treasurer and Chief
Financial Officer of the Company since September 1995 and
Director of Finance of Rio Properties since December 1994.
Mr. Szepelak joined the Company in 1988 and has since served in a
variety of financial positions including Casino Controller and
Corporate Controller. Prior to joining the Company, Mr. Szepelak
held positions with the Ribeiro Corporation, a commercial real
estate company in Las Vegas, Nevada, and Manufacturers National
Bank in Detroit, Michigan.
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 of Non-Employee Directors
Directors' fees were $3,000 per month for 1995 and are
$3,000 per month for 1996, 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
Directors' Plan.
5
<PAGE>
Rio Hotel & Casino, Inc. 1991 Directors' Stock Option Plan
The Directors' Plan authorizes in the aggregate options to
purchase up to 200,000 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). 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. Messrs.
Marnell and Barrett are not 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 of Directors by the stockholders,
an eligible director receives 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 receives
an annual option grant to purchase 1,000 shares of Common Stock.
If ratified by the stockholders, the annual option grant will
increase from 1,000 shares to 5,000 shares of Common Stock,
effective January 1, 1996. See "Ratification of Amendment to
Rio Hotel & Casino, Inc. 1991 Directors' Stock Option Plan."
The exercise price of options granted under the Directors'
Plan is 100% of the fair market value of the Common Stock 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 granted
under the Directors' Plan are non-qualified options, the tax
treatment of which is determined under Section 422 of the
Internal Revenue Code of 1986, as amended.
In 1995, options were granted for directors Hartley, Stuart
and Thomas to purchase 1,000, 1,000 and 20,000 shares,
respectively, of Common Stock. On January 2, 1996, options to
purchase 5,000 shares were automatically granted to each of the
same persons, 4,000 shares of which are subject to stockholder
ratification of an amendment to the Directors' Plan, as described
more fully herein. As of February 29, 1996, options representing
81,000 shares were currently outstanding, of which options
representing 66,000 shares were exercisable. Options for the
remaining 15,000 shares may not be exercised until July 2, 1996.
Board of Directors Meetings
The Board of Directors generally meets monthly, and in the
twelve months ended December 31, 1995, the Board of Directors
held 12 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 1995 Long-Term Incentive Plan Committee,
formerly known as the NSOP Committee (the "Incentive Plan
Committee").
6
<PAGE>
The Audit Committee met eleven times during the twelve
months ended December 31, 1995. 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 and Peter M. Thomas. John A. Stuart, a member
of the Audit Committee for most of 1995, resigned from the Audit
Committee in December 1995.
The Compensation Committee met nine times during the twelve
months ended December 31, 1995. 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 Peter M. Thomas.
The Directors' Plan Committee met four times during the
twelve months ended December 31, 1995. 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 Incentive Plan Committee met five times during the
twelve months ended December 31, 1995. The Incentive Plan
Committee is comprised of Thomas Y. Hartley and Peter M. Thomas,
and its function is to administer the Company's 1995 Long-Term
Incentive Plan (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 and NSOP participants.
7
<PAGE>
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 or former executive officers of the
Company whose total compensation for the year ended December 31,
1995, exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Other
Annual
Name and Principal Year Salary Bonus Compensation
Position ($) ($)
<S> <C> <C> <C> <C>
Anthony A. Marnell II, 1995 464,522 112,500 -0-
Chairman of the 1994 388,465 -0- -0-
Board and Chief 1993 200,000 150,000 -0-
Executive Officer
James A. Barrett, Jr., 1995 256,845 62,500 -0-
President and 1994 197,692 -0- -0-
Chief Operating 1993 160,000 40,000 -0-
Officer
Susan L. Johnson<F3>, 1995 136,849 36,250 -0-
Vice President, 1994 44,423 5,000 -0-
General Counsel 1993 -0- -0- -0-
and Secretary
Roger M. Szepelak<F4>, 1995 93,077 15,000 -0-
Treasurer and 1994 59,329 8,000 -0-
Chief Financial 1993 42,405 5,100 -0-
Officer
Harlan D. Braaten<F5>, 1995 150,644 -0- -0-
Sr. Vice President, 1994 142,991 10,000 -0-
Treasurer and Chief 1993 128,235 30,000 -0-
Financial Officer
</TABLE>
<TABLE>
<CAPTION>
Summary Compensation Table (continued)
Long-Term Compensation
Awards Payouts
Restricted
Stock Options/ LTIP All Other
Name and Principal Year Award(s) SARs Payouts Compensation
Position ($) (#)<F1> ($) ($)
<S> <C> <C> <C> <C> <C>
Anthony A. Marnell II, 1995 -0- -0- -0- -0-
Chairman of the Board 1994 -0- -0- -0- -0-
and Chief Executive 1993 -0- 510,000 -0- -0-
Officer
James A. Barrett, Jr., 1995 -0- -0- -0- 2,310<F2>
President and Chief 1994 -0- -0- -0- 750<F2>
Operating Officer 1993 -0- 85,000 -0- 2,283<F2>
Susan L. Johnson<F3>, 1995 -0- 5,000 -0- 1,321<F2>
Vice President, General 1994 -0- 15,000 -0- -0-
Counsel and Secretary 1993 -0- -0- -0- -0-
Roger M. Szepelak<F4>, 1995 -0- 5,000 -0- 1,621<F2>
Treasurer and Chief 1994 -0- 3,000 -0- 890<F2>
Financial Officer 1993 -0- 5,000 -0- 528<F2>
Harlan D. Braaten<F5>, 1995 -0- -0- -0- 2,215<F2>
Sr. Vice President, 1994 -0- 4,000 -0- 2,165<F2>
Treasurer and Chief 1993 -0- 16,000 -0- 1,596<F2>
Financial Officer
<FN>
<F1>These numbers represent only options granted pursuant to the
NSOP; there are no stock appreciation rights.
<F2>These amounts represent the Company's contribution to
Mr. Barrett's, Ms. Johnson's, Mr. Szepelak's and Mr. Braaten's
respective 401(k) plan account.
<F3>Ms. Johnson was appointed Secretary of the Company on
December 21, 1994.
<F4>Mr. Szepelak was appointed Treasurer and Chief Financial
Officer of the Company on September 21, 1995.
<F5>Mr. Braaten resigned from his position as Senior Vice
President, Treasurer and Chief Financial Officer on September 6,
1995.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Options/SAR Grants in Last Fiscal Year
Potential Realizable
Individual Grants Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term<F1>
Percent of
Options/ Total Options/
SARs SARs Granted Exercise or 0% 5% 10%
Granted to Employees Base Price Expiration
Name (#)<F2> in Fiscal Year ($/Sh) Date ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell II -0- -0- -0- N/A -0- -0- -0-
James A. Barrett, Jr. -0- -0- -0- N/A -0- -0- -0-
Susan L. Johnson 5,000 1.9 12.75 11/21/05 -0- 40,092 101,601
Roger M. Szepelak 5,000 1.9 12.75 11/21/05 -0- 40,092 101,601
Harlan D. Braaten -0- -0- -0- N/A -0- -0- -0-
<FN>
<F1>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 option holders' 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.
<F2>These numbers represent only options granted pursuant to the
NSOP; there are no stock appreciation rights.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
Shares Number of Unexercised Value of Unexercised
Acquired Options/SARs at Fiscal In-the-Money Options/SARs at
on Value Year-End(#)<F1> Fiscal Year-End ($)<F1>,<F2>
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell II -0- -0- 310,000 330,000 832,750 141,000
James A. Barrett, Jr. -0- -0- 122,000 63,000 677,000 70,500
Susan L. Johnson -0- -0- 3,000 17,000 -0- -0-
Roger M. Szepelak -0- -0- 15,400 11,600 99,325 7,050
Harlan D. Braaten -0- -0- 40,000 25,000 265,875 88,500
<FN>
<F1>These numbers represent only options granted pursuant to the
NSOP; there are no stock appreciation rights.
<F2>Based on a closing bid price of $11.875 on December 29, 1995,
the last trading day in 1995, minus the option exercise price.
</FN>
</TABLE>
9
<PAGE>
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 ON EXECUTIVE
COMPENSATION AND THE STOCK PERFORMANCE CHART ON PAGE 14 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.
- Certain long-term incentives should be included in a
compensation package to encourage executive officers to
remain with the Company.
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.
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 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.
Based on a subjective application of the compensation
philosophy discussed above, the Compensation Committee
established the Chief Executive Officer's 1995 annual salary at
$450,000. The Chief Executive Officer did not receive any option
grants during 1995 as the Incentive Plan Committee believed that
the Chief Executive Officer's existing options and stock
ownership were already adequate to encourage Mr. Marnell to
increase stockholder value and to remain with the Company. The
Compensation Committee recommended a bonus of $112,500 to be paid
to the Chief Executive Officer during 1995, which was 25% of his
annual salary. The Committee had established a formula in early
1995 that prescribed potential bonuses to be earned by several
senior executives, including the Chief Executive Officer, based
on the Company's achievement of certain earnings before interest,
taxes, depreciation and amortization (EBITDA) targets during
1995. Pursuant to that formula, the Chief Executive Officer could
have earned a bonus of up to 60% of his base salary.
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
March 28, 1996 By: Thomas Y. Hartley
By: Peter M. Thomas
10
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934 (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 (the "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, 1995, all reports required under
Section 16(a) were filed as required, except: one report of a
change in ownership for one transaction, covering the annual
issuance of options for 1,000 shares under the Directors' Plan,
was inadvertently filed late by each of John A. Stuart and Thomas
Y. Hartley; one report of a change in ownership for one
transaction, covering the initial grant of an option for 20,000
shares under the Directors' Plan, was inadvertently filed late by
Peter M. Thomas; and one report of a change in ownership for one
transaction, covering the sale of 400 shares held in a 401(k)
plan account, was inadvertently filed late by Roger Szepelak.
11
<PAGE>
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, 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)<F1> and for 1991, a commercial real estate
industry peer group index of companies which are traded on a
listed exchange.<F2> The following chart assumes $100 invested
December 31, 1990 in each of the above groups. The total return
assumes the reinvestment of dividends.
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC.
Total Return
December 1990 - December 1995
Dec90 Dec91 Dec92 Dec93 Dec94 Dec 95
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index 100 130.47 140.41 154.56 156.60 215.45
Rio Hotel & Casino, Inc. 100 115.79 426.32 673.68 510.53 500.00
Gaming Peer Group 100 154.00 241.21 362.63 255.67 318.80
Real Estate Peer Group 100 114.89 114.78 161.55 154.75 162.65
</TABLE>
<F1>The companies are as follows: Alliance Gaming Corporation,
Argosy Gaming Corporation, Aztar Corporation, Bally Entertainment
Corporation, Black Hawk Gaming & Development Company Inc.,
Boomtown Inc., Caesars World Inc. (until acquired in April 1995),
Capital Gaming International Inc., Casino America Inc., Casino
Magic Corporation, Circus Circus Enterprises Inc., Full House
Resorts Inc., Gaming Corporation of America (until acquired in
December 1995), Grand Casinos Inc., Griffin Gaming &
Entertainment, Harrah's Entertainment, Inc., Hollywood Casino
Corp., International Gaming Management Inc. (until pricing
stopped in September 1994), Jackpot Enterprises Inc., Lady Luck
Gaming Corporation, Lone Star Casino Corporation, Mirage Resorts
Inc., Monarch Casino & Resort, Inc., President Casinos Inc.,
Santa Fe Gaming Corporation, Sands Regent, Showboat Inc., Station
Casinos Inc., and Winners Entertainment Inc.
<F2>The companies are as follows: American Real Estate Partners
L.P., Angeles Corporation, Arbor Property Trust, 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., Milestone Properties
Inc., New Mexico and Arizona Land Company, Omega Health Care
Investors Inc., Pacific Gateway Properties Inc., Pope
Resources/Delaware L.P., Roberts Pharmaceutical Corp., Shopco
Laurel Centre L.P., South West Property Trust Inc., United
Capital Corporation, U.S. Restaurant Properties, Vornado Realty
Trust.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General
Anthony A. Marnell II, Chairman of the Board, Chief
Executive Officer, and the largest stockholder of the Company, is
the controlling stockholder of Marnell Chartered, Austi (formerly
Marnell Corrao, Inc.) and Marnell Corrao (formerly Focus 2000,
Inc.), and Mr. Marnell holds a majority ownership interest in
MCLP, a limited partnership engaged in real estate development.
A family corporation controlled by James A. Barrett, Jr.,
President, Chief Operating Officer, and a director of the
Company, is the general partner of MCLP, and Mr. Barrett is
Secretary, Treasurer and a director of Austi.
Consulting, Construction, and Architectural Services to and by
Affiliates
Marnell Chartered, Austi and Marnell Corrao have provided
construction and design services for various Rio expansion
projects. The construction contract for the third Rio tower,
completed in March 1995, was for an amount not to exceed
$60,511,775; the contract for an addition to the second Rio
tower, completed in December 1995, was for an amount not to
exceed $18,117,258; and the contract for the fourth Rio tower,
scheduled for completion in Spring 1997, is for an amount not to
exceed $170,479,805. In the year ended December 31, 1995, the
Company paid a total of $47,128,588 in connection with these
and other construction contracts. Design contracts for these
same projects were in amounts not to exceed $2,496,836,
$731,000, and $6,630,000, respectively. In the year ended
December 31, 1995, the Company paid a total of $3,889,842 in
connection with these and other design contracts.
The original 1989 Rio construction loan ("Original Loan")
required that the Company, Austi, Marnell Corrao Associates,
MarCor Partnership, Anthony A. Marnell II and his personal family
trust, James A. Barrett, Jr. and Maureen M. Barrett and their
family trust, and Marnell Corrao (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 Marnell Corrao) $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, December
1994 and December 1995, respectively. The agreement has been
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.
Services Provided by Related Parties
Entities in which John A. Stuart is a principal stockholder
and executive officer earned commissions totaling $158,789 for
the year ended December 31, 1995, arising out of the acquisition
and administration of various insurance coverages by the Company.
The Company reimbursed Marnell Corrao for certain travel and
other expenses advanced on behalf of or supplied to the Company
during the year ended December 31, 1995 of approximately
$122,393. The Company also retained the real estate
brokerage and administration services of Marnell Corrao in
connection with the acquisition of various parcels of land. For
the year ended December 31, 1995, the Company paid Marnell Corrao
$756,035 in brokerage commissions.
13
<PAGE>
Certain Real Estate Transactions with Marnell Corrao
On December 30, 1991, the Company sold to Marnell Corrao
certain non-Rio real estate assets. Marnell Corrao 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. Marnell Corrao 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 Marnell Corrao's defined holding costs. Marnell
Corrao agreed (the "Marnell Corrao 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, Marnell Corrao advised the Company in June 1992 that
Marnell Corrao intended to proceed with development of the Old
Vegas Site. Marnell Corrao 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 Marnell
Corrao and thereafter filed gaming applications with the Nevada
Gaming Authorities.
In April 1994, Marnell Corrao, 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 Marnell Corrao Participation Agreement, the sale
of the Green Valley Site resulted in a $966,510 profit
participation, net of expenses, 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, Marnell Corrao, 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 Marnell
Corrao 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. However, the agreements under which
the Company sold the Green Valley Site to Marnell Corrao contain
certain indemnities in favor of a subsidiary of the Company,
which may reduce or eliminate such potential cost.
In May 1995, the Company repurchased from Marnell Corrao
approximately one-half of the 125 acre Old Vegas Site for
$5,321,925. The purchase price equaled Marnell Corrao's cost
plus defined holding costs and was significantly below the
independent appraisal valuation. The Company retained a right of
first refusal to purchase the other half of the Old Vegas Site
from Marnell Corrao and amended the Marnell Corrao Participation
Agreement to provide for a 50% participation in the event of a
subsequent sale by Marnell Corrao of the remaining half of the
site.
In March 1995, the Company repurchased from Marnell Corrao
improved real property adjacent to the Rio (the "Warehouse Site").
The $3,203,191 purchase price was based upon an independent
appraisal valuation, less credit for net rental proceeds during
the term of the escrow, and profit participation pursuant to the
Marnell Corrao Participation Agreement of $496,809.
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.
14
<PAGE>
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 such person acted in good faith and in a manner
which such person 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 SEC such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore
unenforceable.
RATIFICATION OF AMENDMENT TO
RIO HOTEL & CASINO, INC. 1991 DIRECTORS' STOCK OPTION PLAN
On January 25, 1996, the Board of Directors amended the
Directors' Plan to increase the annual grant of options to non-
employee directors from 1,000 shares to 5,000 shares, effective
January 1, 1996. Annual option grants under the Directors' Plan
are made to non-employee directors on January 1 of each year.
After reviewing compensation levels for non-employee directors of
comparable gaming companies, the Directors' Plan Committee
recommended this change, in lieu of an increase in fees, to
further encourage non-employee directors to take a long-term view
of the affairs of the Company and to further reward non-employee
directors for their services to the Company. The non-employee
directors abstained from voting on the approval of the amendment
to the Directors' Plan.
Presently, only three directors, Messrs. Stuart, Hartley and
Thomas, are non-employee directors, eligible to receive grants
under the Directors' Plan. On January 2, 1996, options to
purchase 5,000 shares of Common Stock at an exercise price of
$11.875 were granted to each of the non-employee directors,
subject to stockholder approval of the Directors' Plan amendment
with respect to 4,000 shares. Based on the closing price of the
Company's Common Stock on the New York Stock Exchange on
February 29, 1996 ($13.75), the aggregate potential immediate
benefit to the non-employee directors resulting from stockholder
ratification of the amendment to the Director's Plan would be
$22,500 ($1.875 x 12,000 shares). If the amendment to the
Directors' Plan is ratified, the aggregate annual option grants
under the Directors' Plan to those non-employee directors will
be 15,000 shares, rather than 3,000 shares as provided under the
Directors' Plan prior to the amendment.
For a description of the Directors' Plan, see "Information
Concerning the Board of Directors and Executive Officers -- 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.
15
<PAGE>
INTEREST IN CERTAIN MATTERS TO BE ACTED UPON
The non-employee directors of the Company who are
participants in the Directors' Plan, presently Messrs. Stuart,
Hartley and Thomas, will benefit from the ratification of the
amendment to the Directors' Plan increasing the number of shares
automatically granted annually each January 1 to non-employee
directors.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent accountants are Arthur Andersen
LLP. Arthur Andersen LLP has audited the Company's books since
1988, and is expected to have a representative present at the
stockholders' meeting who will have the opportunity to make a
statement if such representative 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, 1996.
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 and voting "FOR" the amendment to the
Directors' Plan 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
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.
1997 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about May 21, 1997. 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 Exchange Act and must submit the proposal to the Company and
such proposal must be received no later than December 6, 1996.
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 of Annual Meeting of Stockholders 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.
16
<PAGE>
The Company's 1995 Annual Report to Stockholders, including
financial statements for the twelve months ended December 31,
1995, accompanies these proxy materials, which are being mailed
to all stockholders of the Company as of April 4, 1996.
By order of the Board of Directors,
/s/ Susan L. Johnson
Susan L. Johnson
Secretary
Dated: April 5, 1996
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, 1995, 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 SUCH PERSON WAS A BENEFICIAL OWNER
OF THE COMPANY'S SECURITIES AS OF APRIL 4, 1996.
REQUESTS SHOULD BE ADDRESSED TO:
Rio Hotel & Casino, Inc.
Attention: Susan L. Johnson, Secretary
3700 West Flamingo Road
Las Vegas, Nevada 89103
17
<PAGE>
RIO HOTEL & CASINO, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 23, 1996
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Rio Hotel & Casino, Inc. (the
"Company") hereby acknowledges receipt of the Notice of Annual
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 Thursday,
May 23, 1996, 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:
(To be signed on Reverse Side)
<PAGE>
(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 an amendment to the Company's 1991
Directors' Stock Option Plan.
For [ ] Against [ ] Abstain [ ]
(3) In their discretion, upon such other matters as may properly
come before the annual meeting.
For [ ] Against [ ] Abstain [ ]
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 an amendment to the Company's 1991
Directors' Stock Option Plan and in the discretion of the
proxies, on other matters that may properly come before the
annual meeting.
SIGNATURE(s) ____________________________ DATE _________________
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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