<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE SANDS REGENT
- --------------------------------------------------------------------------------
(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), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
----------------------------------------------------------------------
/ / 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> 2
[LOGO]
345 NORTH ARLINGTON AVENUE
RENO, NEVADA 89501
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 4, 1996
------------------------
To Our Shareholders:
The Annual Meeting of Shareholders of The Sands Regent will be held at
10:00 a.m., on November 4, 1996, at the Sands Regency Hotel/Casino, 345 North
Arlington Avenue, Reno, Nevada, for the following purposes:
1. To elect three (3) directors each to serve for a three-year term.
2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on September 25,
1996, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting and any adjournments thereof.
All shareholders are cordially invited to attend the meeting in person.
HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE PROMPTLY SIGN, DATE AND MAIL
THE ENCLOSED PROXY CARD IN THE ENCLOSED RETURN ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. Returning your proxy card does not
deprive you of your right to attend the meeting and vote your shares in person.
By Order of the Board of Directors
PETE CLADIANOS III, Secretary
September 27, 1996
<PAGE> 3
[LOGO]
345 NORTH ARLINGTON AVENUE
RENO, NEVADA 89501
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 4, 1996
The accompanying Proxy is solicited by the Board of Directors of The Sands
Regent (the "Company") for use at the Annual Meeting of Shareholders to be held
at the Sands Regency Hotel/Casino, 345 North Arlington Avenue, Reno, Nevada, on
November 4, 1996 at 10:00 a.m. and at any and all adjournments or postponements
thereof. All shares represented by proxies will be voted in the manner
designated. If no designation is made on a proxy, it will be voted FOR the
election of the three nominees for election to the Board of Directors listed in
the proxy. THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY ARE BEING
MAILED TO THE SHAREHOLDERS ON OR ABOUT OCTOBER 4, 1996.
Execution and delivery of the enclosed proxy will not affect the right of
any person to attend the meeting and vote in person. Any shareholder giving a
proxy has the power to revoke it at any time before it is voted by delivery of a
written instrument of revocation or a duly executed proxy bearing a later date
to the Secretary of The Sands Regent, 345 North Arlington Avenue, Reno, Nevada
89501. The presence of a shareholder at the meeting will not operate to revoke a
proxy, but the casting of a ballot by a shareholder who is present at the
meeting will revoke a proxy as to the matter on which the ballot is cast.
Votes cast by proxy or in person at the Annual Meeting will be counted by
persons appointed by the Company to act as election inspectors for the meeting.
The election inspectors will treat shares represented by proxies that reflect
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and for purposes of determining the outcome
of any matter submitted to the stockholders for a vote. Abstentions do not
constitute a vote "for" or "against" any matter.
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote and the broker
or nominee does not have discretionary voting power on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker or nominee has physically indicated on the proxy
that it does not have discretionary authority to vote, those shares will be
treated as not present and not entitled to vote with respect to that matter
(even though those shares are considered entitled to vote for quorum purposes
and may be entitled to vote on other matters).
<PAGE> 4
Notwithstanding the above, for purposes of determining the outcome of any
matter as to which the broker or nominee who does not have discretion to vote
has delivered a proxy but has failed to physically indicate on the proxy the
lack of authority to vote, the shares will be treated as present and will be
voted in accordance with the instructions on the proxy card (i.e., as a vote FOR
the director nominees named herein).
SOLICITATION EXPENSES
The cost of this solicitation will be borne by the Company. In addition to
the mails, the Company's officers, directors and other regular employees,
without additional compensation, may solicit Proxies personally or by other
appropriate means.
VOTING SECURITIES
Only shareholders of record at the close of business on September 25, 1996,
will be entitled to vote at the meeting. The outstanding voting securities of
the Company on that date were 4,498,722 shares of $0.05 par value Common Stock.
Each of the outstanding shares will be entitled to one vote.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of September 25, 1996, all persons, other
than the nominees for director and continuing directors as set forth under
"Directors and Executive Officers" herein, known by the Company to own
"beneficially," as such term is defined in the Rules of the Securities and
Exchange Commission, more than 5% of the Company's outstanding shares of Common
Stock. Except to the extent indicated in the footnotes to the following table,
the person or entity listed has sole voting or dispositive power with respect to
the shares which are deemed beneficially owned by such person or entity.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
Deborah Lundgren(1) 636,862 14.2%
c/o Andrew Pearl, Esquire
100 W. Liberty St.
Reno, Nevada 89505
Dimensional Fund Advisors, Inc. 266,366(2) 5.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
FMR Corp. 251,072(3) 5.6%
82 Devonshire St.
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Ms. Lundgren is the daughter of Katherene Latham, Chairman of the Board of
Directors, and niece of Pete Cladianos, Jr., President and Chief Executive
Officer.
(2) Held without discretionary voting power as to 80,610 shares.
(3) Held without discretionary voting power.
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Articles of Incorporation allow for not less than three nor
more than nine directors. The number of directors is currently set at seven
members as provided by the Company's Bylaws. In accordance with the Articles of
Incorporation, members of the Board of Directors have been divided into three
classes with approximately the same number of directors in each class. Each year
one class of Directors shall be elected to hold office until their respective
successors have been duly elected and qualified. All Directors elected shall
serve until their successors shall have been duly elected and qualified. The
nominees securing the highest number of votes, up to the number of directors
elected, will be elected as directors. All Proxies received by the Board of
Directors will be voted for the election, as directors, of the nominees listed
below if no direction to the contrary is given. In the event that any nominee is
unable or declines to serve, an event that is not anticipated, the Proxies will
be voted for the election of any nominee who may be designated by the Board of
Directors.
2
<PAGE> 5
All of the Continuing Directors and the Director Nominees were elected by
the shareholders. Information regarding the nominees for election and the
Continuing Directors and executive officers, furnished in part by each such
person, appears below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NAMED NOMINEE.
DIRECTOR NOMINEES
<TABLE>
<CAPTION>
EXPIRATION SHARES PERCENT OF
DIRECTOR OF NEW TERM BENEFICIALLY COMMON
NAME(1) SINCE AS DIRECTOR OWNED(2) STOCK
- ------- -------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Pete Cladianos, Jr.(3)(4) 8/84 1999 1,075,084 23.5%
Pete Cladianos III(3) 11/85 1999 -- --
Katherene Latham(3) 8/84 1999 345,676 7.6%
</TABLE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
EXPIRATION SHARES PERCENT OF
DIRECTOR OF TERM BENEFICIALLY COMMON
NAME(1) SINCE AS DIRECTOR OWNED(2) STOCK
- ------- -------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Jon N. Bengtson 8/84 1997 2 *
Joseph G. Fanelli 11/89 1998 200 *
Weldon C. Upton 2/89 1998 424 *
David R. Wood(5) 7/85 1997 80,406 1.8%
All Officers and Directors
as a group (7 persons) 1,501,792 32.9%
</TABLE>
- ---------------
* Less than 1%
(1) The address of the Director Nominees and Continuing Directors is c/o The
Sands Regent, 345 North Arlington Avenue, Reno, Nevada 89501.
(2) Held directly and with sole voting and investment power unless otherwise
indicated.
(3) Pete Cladianos, Jr. and Katherene Latham are brother and sister. Pete
Cladianos III, Antonia Cladianos II and Leslie Cladianos are the son and
daughters of Pete Cladianos, Jr. and Allison Cladianos is the daughter of
Pete Cladianos III.
(4) Includes 351,742 shares in trusts for the benefit of Pete Cladianos III,
340,956 shares in trusts for the benefit of Antonia Cladianos II, 220,052
shares in trusts for the benefit of Leslie Cladianos and 6,293 shares in a
trust for the benefit of Allison Cladianos. Mr. Cladianos, as trustee for
such trusts, exercises sole voting and investment power.
(5) Includes 72,000 shares subject to options which are presently exercisable.
DIRECTOR BIOGRAPHIES
PETE CLADIANOS, JR. (age 66) has been President, Chief Executive Officer
and a Director of the Company since 1978. Mr. Cladianos has been involved in the
gaming and lodging industries in Reno for over 42 years.
PETE CLADIANOS III (age 37) became an Executive Vice President of the
Company in January 1996, Secretary in August 1984, and was elected as a Director
in November of 1985. From February 1987 to January 1996, Mr. Cladianos served as
Vice President of the Company and was Treasurer from 1983 to 1984. Mr. Cladianos
joined the Company in 1982 as an internal auditor, became outside property
manager in July 1983, and the cage and credit manager in September of 1984.
3
<PAGE> 6
KATHERENE LATHAM (age 65) has been Chairman of the Board of Directors of
the Company since August 1984. Ms. Latham also served as Executive Vice
President until November of 1991 and was Vice President of the Company in 1982
and from January to August of 1984, and has been a Director since 1978. From
1978 to 1984, Ms. Latham was Secretary of the Company. Ms. Latham has been
involved in the gaming and lodging industries in Reno for over 40 years.
JON N. BENGTSON (age 52) was appointed Executive Vice President and Chief
Operating Officer of the Company in January 1996 and has served as a Director
since August 1984. Mr. Bengtson has also served, since January 1996, as Chairman
of the Board of Directors of Radica Games, Limited. From June 1995 to January
1996, Mr. Bengtson held the positions of Executive Vice President, Chief
Operating Officer and a Director of Radica Games Limited. Prior to that, from
January 1994 to June 1995, Mr. Bengtson was Executive Vice President, Chief
Financial Officer and a Director of Radica Games Limited and served as President
and Chief Executive Officer of Radica USA since December 1993. Mr. Bengtson also
previously served as Executive Vice President of the Company from November 1991
to December 1994 and, prior to that, was Senior Vice President of the Company
from November 1985. From May 1984 to July 1985, Mr. Bengtson served as Vice
President -- Finance and Administration and Treasurer of the Company and was a
Director from August 1984 to July 1985. From July 1985 to November 1985, Mr.
Bengtson served as Executive Vice President and a Director of Stride Micro, a
computer hardware development/sales company. Prior to May 1984, Mr. Bengtson
served, for almost four years, in various corporate officer capacities with
International Game Technology and was a Director from May 1981 to May 1984.
JOSEPH G. FANELLI (age 78) retired in January 1986 as Vice President of
Food and Beverage Operations of Harrah's Reno, Lake Tahoe and Atlantic City, a
position he held since 1971. From 1948 to 1971, Mr. Fanelli was the Corporate
Food and Beverage Director for Kahler Corporation of Rochester, Minnesota. In
such capacity, Mr. Fanelli managed the food and beverage operations for 13
hotel/resort properties located in three states.
WELDON C. UPTON (age 67) retired in May 1984 from the Nevada State Gaming
Control Board. Mr. Upton began his career with the Gaming Control Board in 1955
and held various positions in the Audit, Intelligence and Taxes and Licenses
Divisions, including Chief of the Audit Division.
DAVID R. WOOD (age 44) has been Executive Vice President, Treasurer and
Chief Financial Officer of the Company since January 1996 and a Director since
joining the Company in 1985. From July 1985 to January 1996, Mr. Wood served as
Vice President -- Finance and Administration, Chief Financial Officer, and
Treasurer of the Company. Prior to joining the Company, Mr. Wood, a certified
public accountant, was in public accounting for over 9 years and was a partner
in a local Nevada based public accounting firm. Mr. Wood specialized in
hotel/casino accounting and auditing while in public accounting and is an
enrolled agent before the Nevada Gaming Authorities.
4
<PAGE> 7
INFORMATION RELATING TO THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARD
MEETINGS AND ATTENDANCE
The Board of Directors of the Company held four meetings during the fiscal
year ended June 30, 1996. Each incumbent Director attended at least 75% of the
aggregate number of meetings of the Board of Directors and all committees on
which each served during fiscal 1996 or the portion of the year during which
each served as Director.
COMMITTEES
The Board of Directors of the Company has, in addition to its Executive
Committee (whose present members are Pete Cladianos, Jr. and Katherene Latham),
which may exercise all powers of the Board of Directors to the extent permitted
by law, an Audit Committee, an Executive Compensation Committee and a Special
Stock Grant Committee. The Board does not have a nominating committee. The
general functions of such Board Committees, the identity of each committee
member and the number of committee meetings held by each committee during the
last fiscal year are set forth below.
Audit Committee. The Audit Committee meets with the Company's independent
auditors and makes recommendations to the Board of Directors concerning
acceptance of the reports of such auditors and reviews and make recommendations
to the Board concerning the accounting policies and procedures of the Company.
The current members of the Audit Committee are Messrs. Fanelli and Upton, both
outside Directors. There were two meetings held during fiscal 1996.
Executive Compensation Committee. The Executive Compensation Committee
determines the compensation of all principal officers other than the Chairman of
the Board of Directors, the President and the Executive Vice Presidents. The
Committee also administers the Company's stock option plan and the deferred
compensation plan for the Company Directors. The current members of the
Executive Compensation Committee are Pete Cladianos, Jr. and Katherene Latham.
There were no meetings held during fiscal 1996.
Special Stock Grant Committee. A Special Stock Grant Committee, whose sole
duty shall be to consider and grant stock options to executives and key
employees, has been appointed in order to comply with the requirements of Rule
16b-3 of the Security Exchange Act of 1934, as amended. The members of such
Committee shall be disinterested persons within the meaning of the
aforementioned Rule 16b-3 and are presently Joseph G. Fanelli and Weldon C.
Upton. There were no formal meetings held during fiscal 1996.
COMPENSATION OF OUTSIDE DIRECTORS
The two outside Directors, who are not employees of the Company, earned
$8,300 each for the fiscal year ended June 30, 1996. Jon N. Bengtson, who served
as an outside Director from November 1994 to January 1996, earned $4,000 as a
Director in the fiscal year ended June 30, 1996. The outside Directors are to
receive as compensation for services: (i) a $6,000 annual retainer; (ii) $500
for each Board of Directors meeting attended; (iii) $300 for each Board
committee meeting attended on the same date as a Board meeting; and (iv) $500
for each Board committee meeting attended on a date when there is no Board
meeting. Under the Company's Deferred Compensation Plan for Directors, the
outside Directors may elect to defer the payment of the amounts due them as
compensation for services. The deferred amounts bear interest at 9% per annum
and are payable, at the Director's election, in a lump sum or in level monthly,
semi-annual or annual installments at the end of the deferral period. Directors
who are officers or employees of the Company do not receive compensation for
their services as Directors.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION OF NAMED OFFICERS
The following table sets forth information concerning the compensation for
services in all capacities to the Company, for the fiscal years ended June 30,
1996, 1995, and 1994, of those persons who were, respectively, at June 30, 1996
(i) the Company's Chief Executive Officer and (ii) the other four most highly
compensated executive officers of the Company whose annual salary and bonus for
the fiscal year ended June 30, 1996 exceeded $100,000 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND ----------------------------- OPTIONS GRANTED
PRINCIPAL POSITION YEAR SALARY BONUS (SHARES)(1)
------------------ ----- -------- ------- ---------------
<S> <C> <C> <C> <C>
Katherene Latham(2) 1996 $100,000 -- --
Chairman of the Board of Directors 1995 100,000 $57,716 --
1994 100,000 87,536 --
Pete Cladianos, Jr.(3) 1996 364,110 -- --
President and Chief Executive Officer 1995 364,110 57,716 --
1994 364,110 87,536 --
David R. Wood 1996 157,000 8,197 60,000
Executive Vice President, 1995 155,729 21,233 --
Treasurer and Chief Financial Officer 1994 141,922 67,476 --
Pete Cladianos III 1996 125,600 8,197 60,000
Executive Vice President and Secretary 1995 124,582 21,233 --
1994 113,516 30,476 --
</TABLE>
- ---------------
(1) The Company has not issued stock appreciation rights or restricted stock
awards.
(2) Ms. Latham receives an annual salary of $100,000, plus a bonus equal to 1%
of the Company's income from operations. In the event income from operations
is less than $4.5 million there shall be no bonus. Such arrangement
coincides with, and is unchanged from, a written employment agreement that
had previously expired.
(3) Mr. Cladianos receives an annual salary of $364,110, plus a bonus equal to
1% of the Company's income from operations. In the event income from
operations is less than $4.5 million there shall be no bonus. Such
arrangement coincides with, and is unchanged from, a written employment
agreement that had previously expired.
STOCK OPTION PLAN
The Company's Amended and Restated Stock Option Plan for Executive and Key
Employees (the "Stock Option Plan") provides for the grant of "incentive stock
options" (i.e., options qualifying under Section 422 of the Internal Revenue
Code of 1986, as amended) as well as non-qualified stock options. The Stock
Option Plan provides for the granting of options to officers and key employees
designated from time to time by a committee of directors (or a special committee
of disinterested directors, in the case of grants to officers). The Executive
Compensation Committee (the "Committee") of the Board administers the Stock
Option Plan. There are 500,000 shares of the Company's Common Stock currently
reserved for issuance pursuant to the Stock Option Plan, of which 154,136 shares
have been issued under options which have been exercised. The per share exercise
price of an option will not be less than 100% of the fair market value of the
shares on the date of grant, or 110% of the fair market value in the case of
incentive stock options granted to an individual then owning more than 10% of
the total combined voting power of all classes of stock of the Company, any
subsidiary or any parent corporation. Options become exercisable at such times
and in such installments as the Committee determines at the time of such grant.
6
<PAGE> 9
No incentive stock option may be exercised after ten years from the date
the option was granted (or five years in the case of an individual owning more
than 10% of the total combined voting power of stock of the Company, any
subsidiary or any parent corporation) or one year from the date of the
employee's termination of employment, except that if the option is exercised
after three months from the date of the termination by reason other than death
or permanent disability, the option will not be considered an incentive stock
option but rather will be taxed as a non-qualified option. No non-qualified
option may be exercised after ten years and one day from the date the option was
granted. Options may be exercised by delivery to the Secretary of the Company of
full payment in cash or by check.
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information concerning options granted to
the Named Officers pursuant to the Company's Amended and Restated Stock Option
Plan for Executives and Key Employees during the fiscal year ended June 30,
1996.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM(1)
OPTIONS TO EMPLOYEES IN PER SHARE EXPIRATION -------------------
NAME GRANTED(1) FISCAL YEAR 1996 EXERCISE PRICE DATE 5% 10%
---- ---------- ---------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David R. Wood.......... 60,000 24% $3.50 4/23/06 $132,000 $334,800
Pete Cladianos III..... 60,000 24% 3.85 4/23/06 111,000 313,800
</TABLE>
- ---------------
(1) The options have a ten year term and are generally exercisable commencing 12
months after the grant date, with 20% of the shares covered thereby becoming
exercisable at that time and with an additional 20% of the option shares
becoming exercisable on each successive anniversary date, with full vesting
occurring on the fifth anniversary date.
STOCK OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during fiscal 1996 and, based upon
the fair market value of the Common Stock as of June 30, 1996, stock options
held as of the end of fiscal 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS FOR FISCAL YEAR END: AT JUNE 30, 1996(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David R. Wood............. -- -- 60,000 84,000 $ -- $90,000
Pete Cladianos III........ -- -- -- 60,000 -- 69,000
</TABLE>
- ---------------
(1) Market value of the underlying securities at exercise date or year-end, as
the case may be, minus the exercise price of "in-the-money" options.
SEVERANCE ARRANGEMENT
The Company has entered into an agreement with Mr. Wood which provides that
if Mr. Wood's employment with the Company is terminated by the Company for any
reason other than for cause, disability or retirement (each, as defined) or by
Mr. Wood for good reason (as defined) within three years after a change in
control (as defined) of the Company, Mr. Wood shall be entitled to receive (a) a
lump sum payment equal to three times (x) the greater of (1) Mr. Wood's annual
base compensation for the 12-month period prior to the change in control or (2)
Mr. Wood's annual base compensation at the time of the termination and (y) any
bonus paid during the 12-month period immediately preceding the termination, and
(b) life, disability, accident and health insurance coverage substantially the
same as Mr. Wood received
7
<PAGE> 10
immediately prior to the change in control but increased to the extent the such
benefits were increased following the change in control for 36 months (or such
lesser number of months up to the date of Mr. Wood's retirement or the date on
which Mr. Wood obtains a new job of similar status). In addition, upon such a
termination, all options held by Mr. Wood shall be immediately exercisable and
all restrictions on transfer, if any, on securities then held by Mr. Wood shall
lapse. In the event that any payment or benefit received pursuant to the
agreement with Mr. Wood would not be deductible (in whole or part) by the
Company as a result of the operation of Section 280G of the Internal Revenue
Code, the amount of any such payments or benefit shall be reduced until no
portion of the payment or benefit is not deductible as a result of Section 280G.
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 Executive
Compensation Report and the Stock Price Performance Graph on Page 10 shall not
be incorporated by reference into any such filings.
EXECUTIVE COMPENSATION REPORT
The Executive Compensation Committee of the Board of Directors (the
"Committee"), whose present members are Pete Cladianos, Jr. and Katherene
Latham, is empowered, pursuant to the Company's By-laws, to determine the
compensation of all executive officers other than the Chairman of the Board, the
President and the Executive Vice Presidents. Such committee shall also
administer the Company's Amended and Restated Stock Option Plan for Executive
and Key Employees and the Company's Deferred Compensation Plan for Directors.
The Executive Compensation Committee may not grant stock options.
In order to comply with the requirements of Rule 16b-3 of the Security
Exchange Act of 1934, as amended, a Special Stock Grant Committee (the "Special
Committee") has been appointed whose sole duty shall be to consider and to grant
stock options to executives and key employees. Such Special Committee, whose
present members are Joseph G. Fanelli and Weldon C. Upton, shall be composed of
disinterested persons within the meaning of the aforementioned Rule 16b-3. Stock
options of the Company are not to be granted to any member of the Special
Committee during the term of such membership.
Compensation for the Chairman of the Board, the President and the Executive
Vice Presidents is reviewed and established, from time to time, by the Board of
Directors. It is a policy of the Board that such Executive Officers shall not
participate in any Board decision relative to such respective person's
compensation.
The Company's executive compensation policy and philosophy is multifaceted.
Such compensation program seeks to provide salaries that are competitive in the
marketplace and designed to attract and retain highly-qualified executives. In
addition, the program is designed to closely link certain compensation received
by individuals to the performance of the Company and, in certain instances, the
achievement of individual goals. Recognition is also given to an executive's
individual performance. The Company's executive compensation program
additionally establishes motivational incentives by providing the executive with
a financial interest in the success of the Company similar to the interests of
the Company's shareholders.
Consistent with the aforementioned policy and philosophy, the Company's
current compensation plan involves a combination of salary and bonuses to reward
short-term performance and grants of stock options to encourage and reward
longer-term performance. The key performance criterion in determining bonus
payments is the levels of income from operations attained by the Company.
Appropriate adjustments are considered, from time to time, to take into account
market conditions and other factors impacting the Company's performance. The
levels of supervisory or management responsibilities of the Company's executives
and individual performances are also given significant consideration.
The Company's primary long-term incentive program consists of stock options
that are intended to encourage achievement of long-term goals and objectives
consistent with results that benefit stockholders. These objectives include, but
are not limited to, operating profitability, earnings per share growth, return
on
8
<PAGE> 11
invested capital and return on shareholders' equity. It has been Company policy
that such awards of stock options are granted to only certain executives and key
employees who are not otherwise Principal Shareholders or family members of
Principal Shareholders. Such stock option grants are intended to provide
executives with increased motivation and incentive to exert their best efforts
on behalf of the Company by enlarging their personal stake in its success
through the opportunity to acquire an increased stock ownership in the Company
and to benefit from appreciation in the value of the Company's stock. In making
such awards, the Special Committee takes into account such other factors as it
deems appropriate to a determination of the individual optionee's value to the
Company and his potential contribution to its long-term success. The practice of
the Special Committee has been to issue all stock options at exercise prices of
not less than the market value of the Company's Common Stock on the date of
grant, thus insuring that any value derived from such options will depend on
subsequent increases in share value realized by shareholders generally.
The Revenue Reconciliation Act of 1993, enacted August 10, 1993, amended
the Internal Revenue Code of 1986 and included a provision which denies a
deduction to any publicly held corporation for compensation paid to any "covered
employee" (which are defined as the Chief Executive Officer and the Company's
other four most highly compensated officers, as of the end of a taxable year) to
the extent that the compensation exceeds $1 million in any taxable year of the
corporation beginning after 1993. Compensation which is payable pursuant to
written binding agreements entered into before February 18, 1993 and
compensation which constitutes "performance based compensation" is excludable in
applying the $1 million limit. Although the present compensation paid to any
"covered employee" by the Company is presently less than the $1 million limit,
it is the Company's policy to qualify future compensation paid to its top
executives for deductibility under the new law in order to maximize the
Company's income tax deductions to the extent that so qualifying the
compensation is not inconsistent with the Company's fundamental compensation
policies.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During the fiscal year ended June 30, 1996, the compensation of the
Company's Chief Executive Officer, Pete Cladianos, Jr., was pursuant to an
arrangement by which Mr. Cladianos received a base salary of $364,110. The
compensation package for Mr. Cladianos has not changed in six years.
<TABLE>
<CAPTION>
EXECUTIVE
COMPENSATION SPECIAL STOCK
COMMITTEE GRANT COMMITTEE BOARD OF DIRECTORS
- ------------------- ---------------- ------------------
<S> <C> <C>
Katherene Latham Joseph G. Fanelli Katherene Latham
Pete Cladianos, Jr. Weldon C. Upton Pete Cladianos, Jr.
Joseph G. Fanelli
Weldon C. Upton
Pete Cladianos III
Jon N. Bengtson
David R. Wood
</TABLE>
9
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors is responsible for the compensation policies of the
Company with respect to its current executive officers. All of the members of
the Board, except Messrs. Fanelli and Upton, are employees of the Company. No
member of the Board participates in the determination of his or her own
compensation.
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
shareholder return of the Company's Common Stock during the previous five years
in comparison to the cumulative total return on the NASDAQ Stock Market-U.S.
Index and the Dow Jones Entertainment & Leisure Casino index. The comparisons
are required by the Securities and Exchange Commission and are not intended to
forecast or be indicative of possible future performance of the Company's Common
Stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG THE SANDS REGENT, THE NASDAQ STOCK MARKET -- US INDEX
AND THE DOW JONES ENTERTAINMENT & LEISURE -- CASINOS INDEX
<TABLE>
<CAPTION>
DOW JONES
ENTERTAINMENT
MEASUREMENT PERIOD THE SANDS NASDAQ STOCK & LEISURE -
(FISCAL YEAR COVERED) REGENT MARKET - US CASINOS
--------------------- --------- ------------ --------------
<S> <C> <C> <C>
6/91 100 100 100
6/92 121 120 115
6/93 266 151 217
6/94 195 153 170
6/95 86 204 284
6/96 84 261 370
</TABLE>
- ---------------
* $100 invested on June 30, 1991 in stock or index including reinvestment of
dividends. Fiscal year ending June 30.
COMPLIANCE WITH SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten (10)
percent of a registered class of the Company's equity securities (collectively,
"Insiders"), to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "Commission") and the
Nasdaq Stock Market. Insiders are required by regulation of the Commission to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it with
respect to fiscal 1996, or written representations from certain reporting
persons, the Company believes that its Insiders complied with all Section 16(a)
filing requirements.
10
<PAGE> 13
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as auditors of the Company for the year ended
June 30, 1996. The auditors will have a representative at the meeting who will
have an opportunity to make a statement and will be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Shareholder proposals intended to be presented at the next Annual Meeting
must be received by June 6, 1997. Proposals should be addressed to the attention
of Pete Cladianos III, Secretary of The Sands Regent, 345 North Arlington
Avenue, Reno, Nevada, 89501, and should be sent Certified Mail -- Return Receipt
Requested.
OTHER MATTERS
The management knows of no other matters other than those described above
which will be presented for action at the meeting. If any other matters properly
come before the meeting, or any adjournments, the people voting the management
proxies will vote them in accordance with their best judgment.
By Order of the Board of Directors
PETE CLADIANOS III, Secretary
11
<PAGE> 14
REVOCABLE PROXY
THE SANDS REGENT
ANNUAL MEETING OF SHAREHOLDERS -- NOVEMBER 4, 1996
THIS PROXY IS SOLICITATED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Pete Cladianos, Jr. and Katherene Latham, or
either of them, with full power of substitution, proxies of the undersigned to
vote all of the shares of capital stock of The Sands Regent that the
undersigned is entitled to vote at the Annual Meeting of Shareholders of The
Sands Regent, and at any adjournment thereof, upon the matters described in the
Proxy Statement, for the meeting to be held on November 4, 1996, as follows:
(Continued on the other side.)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 15
Please mark
your vote as /X/
indicated in
this example
1. ELECTION OF DIRECTORS:
Nominees: Katherene Latham, Pete Cladianos, Jr. and
Pete Cladianos III, each for a three (3) year term.
/ / VOTE FOR all nominees listed above. / / VOTE WITHHELD
except vote withheld from the following from all nominees
nominees (if any):
2. IN THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
I DO / / DO NOT / / PLAN TO ATTEND THE ANNUAL MEETING
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS GIVEN, WILL BE
VOTED FOR THE DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND FOR
ITEM (2).
Please check your mailing address as shown on this Revocable Proxy. If it is
inaccurate, please correct your address in the space provided below.
PLEASE MARK, SIGN, DATE, AND RETURN
-------- THIS REVOCABLE PROXY PROMPTLY
| USING THE ENCLOSED ENVELOPE.
|
|
Signature(s)_______________________________________ Dated:_______________, 1996
Please date this Revocable Proxy and sign exactly as your name appears on your
stock certificate. If signing as a fiduciary, please give your full title.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
