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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_________________________________________________________
_________________________________________________________________
(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):_____________________________________________________
<PAGE>
(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:____________________________________________
____________________________________________________________
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
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 Rio Suite Hotel
& Casino, 3700 West Flamingo Road, Las Vegas, Nevada 89103, on
Thursday, May 22, 1997 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, Peter M. Thomas and
David P. Hanlon as directors of the Company; and
(2) to transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on
April 1, 1997 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 1996 Annual Report to Stockholders,
including financial statements for the 12 months ended December
31, 1996, is enclosed.
By order of the Board of Directors,
I. Scott Bogatz
Secretary
Dated: April 1, 1997
<PAGE>
RIO HOTEL & CASINO, INC.
PROXY STATEMENT
TABLE OF CONTENTS
PAGE
VOTING SECURITIES 3
ELECTION OF DIRECTORS 6
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS 6
DIRECTORS 7
NON-DIRECTOR EXECUTIVE OFFICERS 8
COMPENSATION OF NON-EMPLOYEE DIRECTORS 8
RIO HOTEL & CASINO, INC. 1991 DIRECTORS' STOCK OPTION PLAN 8
BOARD OF DIRECTORS MEETINGS 9
COMMITTEES OF THE BOARD OF DIRECTORS 9
COMPENSATION OF EXECUTIVE OFFICERS 10
EMPLOYMENT AGREEMENTS 12
REPORT ON REPRICING OF OPTIONS 13
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
REPORT ON EXECUTIVE COMPENSATION 14
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934 15
STOCK PERFORMANCE CHART 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
GENERAL 17
CONSULTING, CONSTRUCTION, AND ARCHITECTURAL SERVICES TO
AND BY AFFILIATES 17
SERVICES PROVIDED BY RELATED PARTIES 17
CERTAIN REAL ESTATE TRANSACTIONS WITH MARNELL CORRAO 18
INDEMNIFICATION OF DIRECTORS AND OFFICERS 19
TRANSACTION REVIEW 19
INDEPENDENT PUBLIC ACCOUNTANTS 19
VOTING PROCEDURES 20
1998 ANNUAL MEETING OF STOCKHOLDERS 20
OTHER BUSINESS 20
2
<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 Rio Suite Hotel &
Casino, 3700 West Flamingo Road, Las Vegas, Nevada on Thursday,
May 22, 1997 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 1, 1997. Any stockholder giving a proxy has the power
to revoke it prospectively by giving written notice to the
Company, addressed to I. Scott Bogatz, 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
create 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 1, 1997 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.
3
<PAGE>
The number of outstanding shares of Common Stock at the
close of business on February 28, 1997 was 21,204,141. The
number of shares outstanding may change between such date and
April 1, 1997 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 the beneficial stock ownership as
of February 28, 1997 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 11) and (4) all officers and
directors as a group at the close of business on February 28,
1997, 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, 1997,
which the Company solicited and received from each officer and
director:
<TABLE>
<CAPTION>
TITLE AMOUNT AND NATURE
OF OF BENEFICIAL PERCENT OF
CLASS BENEFICIAL OWNER OWNERSHIP<F1><F2> CLASS<F2>
<S> <C> <C> <C>
Common Anthony A. Marnell II 5,071,618<F3> 23.5%
4495 S. Polaris Avenue
Las Vegas, Nevada 89103
Common James A. Barrett, Jr. 1,994,833<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> 5.1%
2900 Las Vegas Blvd. South
Las Vegas, Nevada 89109
Common John A. Stuart 45,500<F7> *
Common Thomas Y. Hartley 21,000<F8> *
Common Peter M. Thomas 31,000<F9> *
Common David P. Hanlon 100,000<F10> *
Common The Capital Group Companies, Inc. 1,582,700<F11> 7.5%
333 South Hope Street
Los Angeles, California 90071
Common All executive officers and 5,429,206<F12> 24.8%
directors as a group (8 persons)
*Less than one percent.
4
<PAGE>
<FN>
<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 424,000 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:
COMMON STOCK
Anthony A. Marnell II, IRA 15,500
A. A. Marnell II Family Revocable Living 5,500
Trust (the "Marnell Trust")(a)
Certain trusts established for the benefit 820,448
of Mr. Marnell's family (the "Family
Trusts")(a)
Marnell Corrao Associates, Inc. ("Marnell 82,567
Corrao")(b)
Austi International, Inc. ("Austi")(c) 1,893,051
MarCor Limited Partnership ("MCLP")(d) 1,828,245
Shares held by Mr. Marnell's spouse and 2,307
children
-----------
Total Shares 4,647,618
(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 145,000 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; 13,000 shares are held by
the Barrett Family Revocable Living Trust through a family
corporation and 50 shares are held directly by the trust;
and 1,828,245 shares are held by MCLP. The MCLP shares
beneficially owned by Mr. Barrett are the same MCLP shares
beneficially owned by Mr. Marnell. 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 28,000 shares issuable to
Mr. Stuart under the Company's 1991 Directors' Stock Option
Plan (the "Directors' Plan").
<F8> Includes options to purchase 18,000 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 25,000 shares issuable to Mr. Thomas under the
Directors' Plan.
<F10>Although Mr. Hanlon currently holds no shares of Common
Stock, he holds options to purchase 100,000 shares which are
currently exercisable.
<F11>The Capital Group Companies, Inc. reported on Schedule 13G,
dated February 12, 1997, 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.
<F12>Includes options to purchase 569,400 shares under the NSOP,
options to purchase 100,000 shares under the Company's 1995
Long-Term Incentive Plan ("Incentive Plan") and options to
purchase 71,000 shares under the Directors' Plan.
</FN>
</TABLE>
5
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors presently consists of six persons.
The Bylaws of the Company provide for a Board of Directors
consisting of one to ten persons who are elected generally for a
term of two years. Directors are to serve until their successors
are elected and have qualified.
The Company's Bylaws were amended by the Board of Directors
on March 20, 1997 to provide for a staggered Board of Directors.
Directors are divided into two classes, with each class elected
in separate years for two year terms. A staggered Board of
Directors may have the effect of delaying or preventing a change
of control of the Company. The Bylaws were also amended to
increase the number of directors on the Board to six from five.
The Board of Directors originally expanded the Board to six
members in October 1996 when David P. Hanlon was appointed to the
Board of Directors.
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,
Thomas Y. Hartley and David P. Hanlon for terms of office
expiring in 1999, and James A. Barrett, Jr., Peter M. Thomas and
John A. Stuart for terms of office expiring in 1998. 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, THOMAS AND HANLON
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.
6
<PAGE>
Directors
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION
<S> <C> <C> <C>
Anthony A. Marnell, II 47 1986 Chairman of the Board
(Nominee for term and Chief Executive
expiring in 1999) Officer
James A. Barrett, Jr. 45 1986 President and Director
(Nominee for term
expiring in 1998)
John A. Stuart 46 1989 Director
(Nominee for term
expiring in 1998)
Thomas Y. Hartley 63 1990 Director
(Nominee for term
expiring in 1999)
Peter M. Thomas 47 1995 Director
(Nominee for term
expiring in 1998)
David P. Hanlon 52 1996 Executive Vice
(Nominee for term President, Chief
expiring in 1999) Operating Officer and
Director
</TABLE>
ANTHONY A. MARNELL II has been Chairman of the Board of the
Company and its subsidiaries since 1986, and Chief Executive
Officer since 1990. Since 1982, 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, each of which is based in Las Vegas, Nevada.
Mr. Marnell is a licensed architect.
JAMES A. BARRETT, JR. is President of the Company and a
director of the Company and each of its subsidiaries.
Mr. Barrett has been President of the Company since July 1986.
From October 1990 to October 1996, Mr. Barrett was Chief
Operating Officer of the Company. Since August 1989, Mr. Barrett
has been a director of Austi and Marnell Corrao. Mr. Barrett has
been a certified public accountant since 1975.
JOHN A. STUART 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, Nevada.
THOMAS Y. HARTLEY 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, Las Vegas, since March 1991; Sierra
Health Services, Inc., Las Vegas, Nevada, since June 1992; and of
AmeriTrade Holding Corporation, Omaha, Nebraska, since November
1996.
7
<PAGE>
PETER M. THOMAS has been a member of the Board of Directors
of the Company since 1995. Mr. Thomas served as President, Chief
Operating Officer 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. 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 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.
DAVID P. HANLON has been Executive Vice President, Chief
Operating Officer and a director of the Company, and President
and Chief Operating Officer of Rio Properties, since October
1996. From December 1994 until February 1996, Mr. Hanlon was
President, Chief Executive Officer and a director of
International Game Technology, Reno, Nevada. From October 1993
until December 1994, Mr. Hanlon was a consultant to Hospitality
Franchise Systems, Inc., Parsipany, New Jersey. From November
1988 until October 1993, Mr. Hanlon was President and Chief
Executive Officer of Resorts International, Inc., Atlantic City,
New Jersey.
Non-Director Executive Officers
RONALD J. RADCLIFFE, age 53, has been Vice President,
Treasurer and Chief Financial Officer of the Company and Rio
Properties since June 1996. From August 1995 to May 1996,
Mr. Radcliffe was self-employed as an independent accounting
consultant. Mr. Radcliffe served as Vice President, Treasurer
and Chief Financial Officer of Mikohn Gaming Corporation from
October 1993 to August 1995. Mr. Radcliffe served as Executive
Vice President, Chief Financial Officer, Secretary/Treasurer and
member of the Board of Directors of several predecessor companies
to Sahara Gaming Corporation from 1977 to September 1993. He is
a certified public accountant licensed in Nevada and California.
I. SCOTT BOGATZ, age 33, has been Vice President, Secretary
and General Counsel of the Company and Rio Properties since
August 1996. From August 1990 until August 1996, Mr. Bogatz was
initially an associate attorney and later a shareholder with the
law firm of Hale, Lane, Peek, Dennison, Howard, Anderson & Pearl,
Las Vegas, Nevada. Mr. Bogatz has been licensed as an attorney
by the Nevada State Bar since September 1988.
The Company's Bylaws, as amended, currently provide for a
staggered board of directors divided into two classes: Class A
consisting of three directors and Class B consisting of three
directors. Each director serves two-year terms. Executive
officers serve at the pleasure of the Board of Directors.
Compensation of Non-Employee Directors
Directors' fees were $3,000 per month for 1996 and are
$3,000 per month for 1997, 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.
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
8
<PAGE>
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 5,000 shares of Common Stock.
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 1996, options were granted for directors Hartley, Stuart
and Thomas to each purchase 5,000 shares of Common Stock. On
January 2, 1997, options to purchase 5,000 shares were
automatically granted to each of the same persons. As of
February 28, 1997, options representing 86,000 shares were
outstanding, of which options representing 71,000 shares were
exercisable. Options for the remaining 15,000 shares may not be
exercised until July 2, 1997.
Board of Directors Meetings
The Board of Directors generally meets monthly, and in the
twelve months ended December 31, 1996, the Board of Directors
held 14 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 (the
"Incentive Plan Committee").
The Audit Committee met 12 times during the 12 months ended
December 31, 1996. 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.
9
<PAGE>
The Compensation Committee met four times during the 12
months ended December 31, 1996. 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 one time during the 12
months ended December 31, 1996. 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 10 times during the 12
months ended December 31, 1996. The Incentive Plan Committee is
comprised of Thomas Y. Hartley and Peter M. Thomas, and its
function is to administer the Company's 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.
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, 1996, exceeded $100,000.
10
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Securities
Other Under-
Annual Restricted lying
Compen- Stock Options/ LTIP All Other
Name and Principal Year Salary Bonus sation Award(s) SARs Payouts Compensation
Position ($) ($) ($) ($) (#)<F1> ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell II, 1996 587,116 250,000 -0- -0- -0- -0- -0-
Chairman of the Board 1995 464,522 112,500 -0- -0- -0- -0- -0-
and Chief Executive 1994 388,465 -0- -0- -0- -0- -0- -0-
Officer
James A. Barrett, Jr., 1996 311,298 150,000 -0- -0- -0- -0- 2,375<F2>
President 1995 256,845 62,500 -0- -0- -0- -0- 2,310<F2>
1994 197,692 -0- -0- -0- -0- -0- 750<F2>
David P. Hanlon,<F3> 1996 118,447 -0- -0- -0- 500,000 -0- -0-
Executive Vice 1995 -0- -0- -0- -0- -0- -0- -0-
President and Chief 1994 -0- -0- -0- -0- -0- -0- -0-
Operating Officer
Ronald J. Radcliffe<F4> 1996 108,490 20,000 -0- -0- 25,000 -0- 27,000<F5>
Vice President, 1995 -0- -0- -0- -0- -0- -0- -0-
Treasurer and Chief 1994 -0- -0- -0- -0- -0- -0- -0-
Financial Officer
<FN>
<F1> These numbers represent only options granted pursuant to the
Incentive Plan; there are no stock appreciation rights.
<F2> These amounts represent the Company's contribution to
Mr. Barrett's 401(k) plan account.
<F3> Mr. Hanlon was appointed Executive Vice President and Chief
Operating Officer of the Company and President and Chief
Operating Officer of Rio Properties on October 8, 1996.
<F4> Mr. Radcliffe was appointed Vice President, Treasurer and
Chief Financial Officer of the Company on June 25, 1996.
<F5> This amount represents consulting fees paid to Mr. Radcliffe
prior to the date he was hired.
</FN>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
Individual Grants at Assumed Annual Rates of
Stock Price Appreciation for
Option Term <F1>
Percent of
Options/ Total Options/
SARs SARs Granted Exercise or 5% 10%
Granted to Employees Base Price Expiration
Name (#)<F2> in Fiscal Year ($/Sh) Date ($) ($)
<S> <C> <C> <C> <C> <C> <C>
David P. Hanlon 500,000 60.4 15.50 10/07/06 4,874,055 12,351,504
Ronald J. Radcliffe 25,000 3.0 15.50 10/07/06 243,703 617,575
<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
Incentive Plan; 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
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at Fiscal at Fiscal Year-End
Shares Value Year-End(#)<F1> ($)<F1>,<F2>
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Anthony A. Marnell II -0- -0- 424,000 216,000 698,250 288,000
James A. Barrett, Jr. -0- -0- 145,000 40,000 1,066,625 101,500
David P. Hanlon -0- -0- 100,000 400,000 -0- -0-
Ronald J. Radcliffe -0- -0- -0- 25,000 -0- -0-
<FN>
<F1> These numbers represent only options granted pursuant to the
NSOP and/or the Incentive Plan; there are no stock
appreciation rights.
<F2> Based on a closing bid price of $14 7/8 on December 31,
1996, the last trading day in 1996, minus the option
exercise price.
</FN>
</TABLE>
Employment Agreements
The Company has entered into employment agreements (the
"Agreements") with David P. Hanlon and Ronald J. Radcliffe, along
with an additional executive officer (collectively, the
"Employees"). Mr. Hanlon's Agreement is for a five-year term
commencing on October 8, 1996 and the other Agreements are for
three-year terms commencing on January 1, 1997. The Agreements
are thereafter renewed, unless
12
<PAGE>
terminated, on an annual basis. The Agreements provide for
severance benefits if the Employee is terminated by the Company,
other than for Cause (as defined in the Agreements), or upon the
occurrence of a Change of Control (as defined in the Agreements).
Under the Agreements, the Employees are paid Base Salary (as
defined in the Agreements) and a performance bonus calculated
according to the terms of a management incentive compensation
plan to be approved by the Compensation Committee of the
Company's Board of Directors and ratified by the Board of
Directors.
Mr. Hanlon's Agreement provides that, in the event he is
terminated by the Company other than for Cause, he will receive
200% of his Base Salary for the remaining term of the Agreement;
provided that the actual amount received by Mr. Hanlon will be no
less than $1 million and no more than $2 million. The Agreements
for Mr. Radcliffe and the other Employee provide that, in the
event they are terminated by the Company other than for Cause,
they will receive an amount equal to one year of Base Salary. In
the event of a Change of Control, Mr. Hanlon's Agreement provides
that he will be entitled to a lump sum payment equal to 200% of
the Base Salary due him over the remaining term of the Agreement;
provided that the amount payable will be no less than an amount
equal to 200% of Base Salary payments for a period of 12 months.
The Agreements for Mr. Radcliffe and the other Employee provide
that, in the event of a Change of Control, they will be entitled
to a lump sum payment equal to Base Salary for the remaining term
of the Agreement; provided that the actual amount received shall
be no less than $200,000.
Certain provisions of the Agreements could have the effect
of delaying or preventing a Change of Control of the Company.
Based upon the compensation levels as of February 28, 1997,
assuming a Change in Control of the Company, each of Messrs.
Hanlon and Radcliffe would be entitled to receive a maximum lump
sum payment of $7,366,667 and $637,500, respectively, under the
Agreements.
Report on Repricing of Options
On October 8, 1996, the Company's Board of Directors
accepted the recommendation of the Incentive Plan Committee to
cancel options granted from May through October 1996 under the
Incentive Plan and to reissue such options as of October 8, 1996,
the effect of which was to change the exercise price of the
options from $16.75 per share to $15.50 per share. The exercise
price of $15.50 per share was the closing price of the Common
Stock on that date. As a result of the Incentive Plan
Committee's and Board's action, options to purchase a total of
785,000 shares to 81 individuals were canceled and reissued.
Included within this amount were options to two executives
officers totaling 40,000 shares. The reason for this action was
to place all Incentive Plan option grants made in 1996 (through
October 8, 1996) at the identical exercise price.
INCENTIVE PLAN COMMITTEE
March 28, 1997 By: Thomas Y. Hartley
By: Peter M. Thomas
13
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR OPTION/SAR REPRICINGS
Securities Market price
underlying of stock at Length of original
number of time of Exercise price option term
options/SARS repricing or at time of New remaining at date
repriced or amendment repricing or exercise of repricing or
Name Date amended (#) ($) amendment ($) price ($) amendment
<S> <C> <C> <C> <C> <C> <C>
Ronald J. Radcliffe
Vice President, 10/08/96 25,000 15.50 16.75 15.50 9 years, 7 months
Treasurer and
Chief Financial Officer
I. Scott Bogatz
Vice President, 10/08/96 15,000 15.50 16.75 15.50 9 years, 10 months
Secretary and General
Counsel
</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 ON EXECUTIVE
COMPENSATION AND THE STOCK PERFORMANCE CHART ON PAGE 16 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
14
<PAGE>
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 1996 annual salary at
$587,116. The Compensation Committee recommended a bonus of
$250,000 to be paid to the Chief Executive Officer during 1996,
which was 42.6% of his annual salary.
The Compensation Committee has retained an independent
consultant to review and evaluate the appropriateness of
compensation paid by the Company to its executive officers in
1996 and to provide recommendations concerning both the form and
amount of compensation to be paid in 1997.
After reviewing compensation paid in 1996 and comparing it
to that paid by other companies in the gaming industry, the
Compensation Committee believes that compensation received by the
Company's executive officers in 1996 was appropriate. The
independent consultant is currently assisting the Compensation
Committee with formulating both a bonus structure based on the
Company's achievement of certain target levels of earnings before
interest, taxes, depreciation and amortization, and compensation
policies for the Company's executive officers which are
appropriate within the gaming industry.
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
March 28, 1997 By: Thomas Y. Hartley
By: Peter M. Thomas
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
15
<PAGE>
December 31, 1996, all reports required under Section 16(a) were
filed as required, except that one report of ownership for one
transaction, reporting a purchase of 6,500 shares, was
inadvertently filed late by John A. Stuart.
Stock Performance Chart
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 &
Poor's 500 Composite Stock Index and 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) The following chart assumes $100 invested December
31, 1991 in each of the above groups. The total return assumes
the reinvestment of dividends.
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURNS
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
Company Name/Index Dec. 92 Dec. 93 Dec. 94 Dec. 95 Dec. 96
<S> <C> <C> <C> <C> <C>
Rio Hotel & Casino Inc. 268.18 58.02 -24.22 -2.06 25.26
S&P 500 Index 7.62 10.08 1.32 37.58 22.96
Peer Group 56.63 50.34 -29.49 24.69 -1.29
</TABLE>
<TABLE>
<CAPTION>
INDEXED RETURNS
Years Ending
Base
Period
Company Name/Index Dec. 91 Dec. 92 Dec. 93 Dec. 94 Dec. 95 Dec. 96
<S> <C> <C> <C> <C> <C> <C>
Rio Hotel & Casino Inc. 100 368.18 581.82 440.91 431.82 540.91
S&P 500 Index 100 107.62 118.46 120.03 165.13 203.05
Peer Group 100 156.63 235.48 166.04 207.03 204.35
</TABLE>
__________________
(1) The companies are as follows: Alliance Gaming Corporation,
Argosy Gaming Corporation, Aztar Corporation, Bally Entertainment
Corporation, Black Hawk Gaming & Development Company Inc.,
Boomtown Inc., Capital Gaming International Inc., Casino America
Inc., Casino Magic Corporation, Circus Circus Enterprises Inc.,
Full House Resorts Inc., Grand Casinos Inc., Griffin Gaming &
Entertainment, Harrah's Entertainment, Inc., Hollywood Casino
Corp., ITT Corporation, Jackpot Enterprises Inc., Lady Luck
Gaming Corporation, LS Capital Corporation, Mirage Resorts Inc.,
Monarch Casino & Resort, Inc., MTR Gaming Group, Inc., President
Casinos Inc., Santa Fe Gaming Corporation, Sands Regent, Showboat
Inc., and Station Casinos Inc.
16
<PAGE>
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, Austi and Marnell Corrao, and Mr. Marnell holds a
majority ownership interest in MarCor Limited Partnership
("MCLP"), a limited partnership engaged in real estate
development. A family corporation controlled by James A.
Barrett, Jr., President and a director of the Company, is the
general partner of MCLP, and Mr. Barrett is a director of Austi
and Marnell Corrao.
Consulting, Construction, and Architectural Services to and by
Affiliates
Marnell Chartered, Austi and Marnell Corrao have provided
design and construction 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 to be completed in the second quarter of 1997, was for
an amount not to exceed $180,609,117. In the year ended
December 31, 1996, the Company paid a total of $143.1 million 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 $7,051,558, respectively. In the year
ended December 31, 1996, the Company paid a total of $4,445,029
million in connection with these and other design projects.
The original 1989 Rio construction loan ("Original Loan")
required that the Company, Austi, Marnell Corrao, MarCor
Partnership, Anthony A. Marnell II and his personal family trust,
James A. Barrett, Jr. and Maureen M. Barrett and their family
trust (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, December 1995, and December 1996,
respectively. The payment in December 1996 was the final payment
due to the Loan Guarantors and the Company has no further payment
obligations to the Loan Guarantors under the Guarantee.
Services Provided by Related Parties
Entities in which John A. Stuart, a director of the Company,
is a principal stockholder and executive officer earned
commissions totaling $121,737 for the year ended December 31,
1996, 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, 1996 of approximately $53,500.
17
<PAGE>
The Company made an unsecured loan to David P. Hanlon,
Executive Vice President, Chief Operating Officer and a director
of the Company, and President, Chief Operating Officer and a
director of Rio Properties, in the principal amount of $500,000
for purposes of acquiring a residence. The loan bore interest at
the rate of 9.7% per annum and was repaid in full on December 18,
1996.
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) and the Warehouse
Site (as defined). 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 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 retained Marnell Corrao to provide real
estate brokerage and administration services in connection with
the acquisition of properties adjacent to the Rio, 31 acres of
which have been purchased as of December 31, 1996 with an
additional seven acres subject to purchase options. Fees paid to
Marnell Corrao, including reimbursement of expenses and real
estate brokerage commissions, were $878,428 and $999,910 in the
years ended
18
<PAGE>
December 31, 1995 and 1996, respectively. Expenses were
reimbursed at cost and management believes the brokerage
commissions were below those charged by independent realty firms.
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 costs
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.
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 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 and is therefore unenforceable.
Transaction Review
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.
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, 1997.
19
<PAGE>
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.
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.
1998 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or
about May 20, 1998. 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 2, 1997.
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.
The Company's 1996 Annual Report to Stockholders, including
financial statements for the 12 months ended December 31, 1996,
accompanies these proxy materials, which are being mailed to all
stockholders of the Company as of April 1, 1997.
By order of the Board of Directors,
I. Scott Bogatz
Secretary
Dated: April 1, 1997
20
<PAGE>
THE COMPANY'S ANNUAL REPORT ON SEC FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FOR THE 12 MONTHS
ENDED DECEMBER 31, 1996, 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 1, 1997.
REQUESTS SHOULD BE ADDRESSED TO:
Rio Hotel & Casino, Inc.
Attention: I. Scott Bogatz, Secretary
3700 West Flamingo Road
Las Vegas, Nevada 89103
21
<PAGE>
RIO HOTEL & CASINO, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 22, 1997
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 Rio Suite Hotel &
Casino, Las Vegas, Nevada, on Thursday, May 22, 1997, 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:
(1) Election of Directors: FOR WITHHELD
[ ] [ ]
NOMINEES: Anthony A. Marnell II, James A. Barrett, Jr.,
David P. Hanlon, 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) 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 AND, IN THE
DISCRETION OF THE PROXIES, ON OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
Date: ___________________________, 1997
Signature(s) ____________________________
____________________________
____________________________
____________________________
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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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