<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
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 (S)240.14a-11(c) or (S)240.14a-12
MGM GRAND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
MGM GRAND, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $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:*
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
- --------
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
[_] 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:_____________________________________________________________
Notes:
<PAGE>
MGM GRAND, INC.
3799 LAS VEGAS BLVD. SOUTH, LAS VEGAS, NEVADA 89109
----------------
NOTICE OF ANNUAL MEETING TO BE HELD ON
MAY 10, 1994
----------------
To the Stockholders:
The Annual Meeting of Stockholders of MGM Grand, Inc., a Delaware
corporation (the "Company"), will be held at the MGM Grand Hotel, 3799 Las
Vegas Boulevard South, Las Vegas, Nevada, on May 10, 1994; at 10:00 a.m., for
the following purposes:
1. To elect a Board of Directors.
2. To consider and act upon the ratification of the selection of
independent auditors.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Stockholders of record at the close of business on March 17, 1994 are
entitled to notice of and to vote at the meeting. A list of such stockholders
will be available for examination by any stockholder, for any purpose germane
to the meeting, during ordinary business hours, at the Company's executive
offices, located at 3799 Las Vegas Blvd. South, Las Vegas, Nevada 89109, for a
period of 10 days prior to the meeting date.
By Order of the Board of Directors,
/s/ ROBERT R. MAXEY
Robert R. Maxey
President and Chief Executive Officer
March 30, 1994
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY.
USE THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE FOR MAILING IN THE UNITED
STATES.
- ------------------------------------------------------
MGM GRAND, INC. NOTE: PLEASE CLIP AND
STOCKHOLDER MEETING ADMISSION TICKET BRING THE STOCKHOLDER
==================================== MEETING ADMISSION
TICKET. NO ADMISSION
WILL BE ALLOWED WITHOUT
THIS TICKET.
TIME: 10:00 A.M.
DATE: May 10, 1994
LOCATION: MGM GRAND HOTEL & CASINO
3799 Las Vegas Blvd. South
Las Vegas, Nevada 89109
[_] WITH SPOUSE
STOCKHOLDER NAME:__________________[_] WITHOUT SPOUSE
STOCKHOLDER ADDRESS:_________________________
_________________________
- ------------------------------------------------------
<PAGE>
MGM GRAND, INC.
3799 LAS VEGAS BLVD. SOUTH
LAS VEGAS, NEVADA 89109
----------------
PROXY STATEMENT
MARCH 30, 1994
----------------
The form of proxy accompanying this Proxy Statement and the persons named
therein as proxies have been approved by the Board of Directors of the Company,
and this solicitation is made on behalf of the Board of Directors of the
Company. Any proxy given pursuant to this solicitation is revocable by the
communication of such revocation in writing to the Secretary of the Company at
any time prior to the exercise thereof, and any person executing a proxy, if in
attendance at the meeting, may vote in person instead of by proxy. All the
shares represented by properly executed proxies will, unless such proxies have
previously been revoked, be voted at the meeting in accordance with the
directions on the proxies. If no direction is indicated, the shares will be
voted in favor of the nominees for the Board of Directors listed in this Proxy
Statement and in favor of Proposal 2 as described herein.
Matters to be considered and acted upon at the meeting are set forth in the
Notice of Annual Meeting accompanying this Proxy Statement and are more fully
outlined herein. This Proxy Statement was first mailed to stockholders on or
about March 30, 1994.
The authorized capital stock of the Company presently consists of 75,000,000
shares of Common Stock, $.01 par value per share. At the close of business on
March 17, 1994, the record date for determining stockholders entitled to vote
at the meeting, 48,844,831 shares of Common Stock were outstanding and entitled
to vote at the meeting. Each stockholder is entitled to one vote for each share
held of record on that date on all matters which may come before the meeting.
Shown below is certain information as of March 22, 1994 with respect to
beneficial ownership (as that term is defined in the federal securities laws)
of shares of Common Stock by the only person or entity known to the Company to
be the beneficial owner of more than five percent of the outstanding shares of
Common Stock and by all directors and executive officers of the Company as a
group who held office as of the date of this Proxy Statement.
<TABLE>
<CAPTION>
AMOUNT NATURE OF
BENEFICIALLY BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNED OWNERSHIP(2) CLASS
---------------- ------------ ------------ ----------
<S> <C> <C> <C>
Kirk Kerkorian 35,621,265(1) Sole voting and investment power 73.3%
4045 S. Spencer,
#A-57
Las Vegas, Nevada
89119
All directors and 36,078,313(1)(3) Sole voting and investment power 73.6%
executive offi-
cers as a group
(15 persons)
</TABLE>
- --------
(1) Of these shares, 31,726,859 are held by Tracinda Corporation, a Nevada
corporation wholly owned by Mr. Kerkorian ("Tracinda").
(2) Subject to applicable community property and similar laws.
(3) Included in this amount are 302,000 shares of common stock subject to
vested options and 1,317 shares held in the accounts of such persons in the
MGM Grand Air 401K Savings Plan.
As indicated above, Kirk Kerkorian beneficially owns over 50% of the
currently outstanding shares of Common Stock. Mr. Kerkorian intends to vote his
shares of Common Stock in favor of the nominees for the Board of Directors
listed in the Proxy Statement. Since the holders of Common Stock do not have
cumulative voting rights and since Mr. Kerkorian's shares represent more than
50% of the shares
1
<PAGE>
to be voted at the meeting, Mr. Kerkorian will be able to elect the entire
Board of Directors. Mr. Kerkorian also intends to vote his shares in favor of
Proposal 2, and Mr. Kerkorian's vote will be sufficient to cause adoption of
Proposal 2.
ELECTION OF DIRECTORS
PROPOSAL NO. 1
INFORMATION CONCERNING THE NOMINEES
One of the purposes of the meeting is to elect 13 directors, each of whom
will serve until the next annual meeting of stockholders or until his or her
respective successor shall have been elected and qualified or until his earlier
resignation or removal.
The shares represented by the proxies solicited hereunder will be voted in
favor of the election of the persons named below unless authorization to do so
is withheld in the proxy. In the event any of said nominees should be
unavailable to serve as director, which contingency is not presently
anticipated, it is the intention of the persons named in the proxies to select
and cast their votes for the election of such other person or persons as the
Board of Directors may designate.
The table set forth below names each nominee for director and gives
information concerning his principal occupation for at least the past five
years, beneficial ownership of Common Stock and age as of March 14, 1994 and
certain other matters.
<TABLE>
<CAPTION>
SHARES OF
COMMON
FIRST STOCK
PRINCIPAL OCCUPATION BECAME BENEFICIALLY
NAME (AGE) AND OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
---------- ----------------------- ---------- ------------
<S> <C> <C> <C>
James D. Executive of Tracinda since October 1988 10,400(2)
Aljian (61) 1987. Prior thereto, Executive Vice
President of Southwest Leasing
Corporation. Director of Southwest
Leasing Corporation.
Fred Chairman of the Board of the Company 1986 154,866(2)(3)
Benninger since August 1987. President of the
(77) Company from August 1987 to March
1990. Chairman of the Executive Com-
mittee of the Board of Directors of
MGM/UA Communications Co. ("MGM/UA")
from July 1988 until January 1990.
Presi-dent of Tracinda from March
1982 to July 1987. Chairman of the
Executive Committee of the Board of
Directors of MGM Grand Hotels, Inc.
from 1971 to April 1986. Director
and Chairman of the Executive
Committee of MGM/UA Entertainment
Co. from June 1980 to March 1986.
Terry Partner, Christensen, White, Miller, 1987 2,000(2)
Christensen Fink & Jacobs, attorneys, Los Ange-
(53) les, California since May 1988. Con-
sultant to Tracinda from February
1988 to April 1988. President of
Tracinda from July 1987 to February
1988.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
FIRST STOCK
NAME PRINCIPAL OCCUPATION BECAME BENEFICIALLY
(AGE) AND OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
- ----- ----------------------- ---------- ------------
<S> <C> <C> <C>
Glenn A. Director of Transamerica Corporation 1992 5,033(2)
Cramer since 1968, and Chairman of the
(72) Executive Committee of Transamerica
Airlines since 1983. Chairman of
Transamerica Airlines from 1969 to
1981.
Willie D. President and Director of All-Pro 1989 --
Davis Broadcasting, Inc. an AM and FM radio
(59) broadcasting company. Director of
Sara Lee Corporation, K-Mart Corpora-
tion, Johnson Controls, Inc., Alli-
ance Bank, WICOR, Dow Chemical Compa-
ny, and LA Gear, Inc.
Alexander Chairman of Worldwide Associates, 1990 --
M. Haig, Inc. an international business advi-
Jr. (69) sory firm. Director of Commodore In-
ternational, Ltd., America Online,
Inc. and Interneuron Pharmaceuticals,
Inc. Consultant to the Company since
May, 1990.
Lee A. Chairman of Iacocca Capital Group, a 1993 --
Iacocca privately held merchant banking firm.
(69) From November 1978 to September 1993,
Director of Chrysler Corporation
("Chrysler"). Served as Chairman of
the Board of Chrysler from September
1979 until his retirement on December
31, 1992. President of Chrysler from
November 1978 to September 1979. Mr.
Iacocca is Chairman Emeritus of the
Statue of Liberty/Ellis Island Foun-
dation, Inc., Chairman of the Commit-
tee for Corporate Support for the
Joslin Diabetes Foundation, Founder
and Chairman of the Advisory Board to
the Iacocca Institute at Lehigh Uni-
versity, Chairman of the Iacocca
Foundation, a member of the Advisory
Board of Reading is Fundamental, Hon-
orary Chairman of the National PTA
since 1991, and an honorary trustee
of Lehigh University.
Kirk Chief Executive Officer, President 1987 35,621,265(4)
Kerkorian and sole director and stockholder of
(76) Tracinda.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON
FIRST STOCK
PRINCIPAL OCCUPATION BECAME BENEFICIALLY
NAME (AGE) AND OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
---------- ----------------------- ---------- ------------
<S> <C> <C> <C>
Robert R. President and Chief Executive Officer 1991 73,660(2)(3)
Maxey (56) since January 1991. Chairman of the
Executive Committee of the Company
since June 1992. President and Chief
Executive Officer of MarCor Resort
Properties, Inc., hotel/casino opera-
tor from May 1989 to January 1991.
Consultant to Golden Nugget,
hotel/casino operator from October
1985 until May 1989. Director of Las
Vegas Events and United Way.
Walter M. President of Walter M. Sharp Company 1986 29,482(2)
Sharp (77) (financial consultants) and a consul-
tant to Tracinda.
K. Eugene Executive Vice President and General 1991 24,650(2)(3)
Shutler Counsel of the Company since February
(55) 1991. Prior thereto, a member of the
law firm of Troy & Gould Professional
Corporation.
E. Parry Since March 15, 1992, consultant to 1993 2,000(2)
Thomas (72) Bank of America of Nevada. From 1955
until March 15, 1992, Chairman and
Chief Executive Officer of Valley
Capital Corporation, the parent com-
pany of Valley Bank of Nevada. Direc-
tor of the University of Nevada Las
Vegas Foundation and Nevada Gaming
Foundation for Education.
Alex Executive Vice President of the Com- 1990 65,000(2)(3)
Yemenidjian pany since June 1992. Chairman of the
(38) Executive Committee of the Company
from January 1991 to June 1992. Pres-
ident and Chief Operating Officer of
the Company from March 1990 to Janu-
ary 1991. Executive of Tracinda since
January 1990. Chairman of the Execu-
tive Committee and Director of MGM/UA
from January to November 1990. For
more than five years prior thereto,
Managing Partner of Parks, Palmer,
Turner and Yemenidjian, a public ac-
counting firm.
</TABLE>
- --------
(1) Except as otherwise indicated and subject to applicable community property
and similar laws, the persons listed as beneficial owners of the shares
have sole voting and investment power with respect to such shares.
(2) The number of shares shown as beneficially owned represents less than 1%
of the outstanding shares.
(3) Included in this amount are 150,000 shares subject to vested stock options
for Mr. Benninger, 32,000 shares subject to vested stock options for Mr.
Maxey and 410 shares in Mr. Maxey's account under the MGM Grand Air 401K
Savings Plan, 20,000 shares subject to vested stock options for Mr.
Shutler, and 25,000 shares subject to vested stock options for Mr.
Yemenidjian.
(4) Of this amount, 31,726,859 shares are owned by Tracinda.
4
<PAGE>
INFORMATION REGARDING
BOARD AND COMMITTEES
CERTAIN COMMITTEES: FUNCTIONS, MEMBERSHIPS AND MEETINGS. The following is a
brief description of the functions of certain committees of the Board of
Directors and the identity of their members.
The Executive Committee--During intervals between the meetings of the Board
of Directors, the Executive Committee exercises all the powers of the Board
(except those powers specifically reserved by Delaware law to the full Board of
Directors) in the management and direction of the Company's business and
conduct of the Company's affairs in all cases in which specific directions have
not been given by the Board. This Committee's current members are Robert R.
Maxey (Chairman), Fred Benninger, Kirk Kerkorian, Walter M. Sharp, K. Eugene
Shutler, and Alex Yemenidjian. The Executive Committee held seven meetings
during fiscal 1993.
The Audit Committee--The functions of the Audit Committee are to recommend an
accounting firm to conduct an annual audit of the Company's consolidated
financial statements and to review with such firm the plan, scope and results
of such audit, and the fees for the services performed. The Audit Committee
also reviews with the independent and internal auditors the adequacy of
internal control systems, receives internal audit reports and reports its
findings to the full Board of Directors. The Audit Committee is composed
exclusively of directors who are not salaried employees of the Company and who
are, in the opinion of the Board of Directors, free from any relationship which
would interfere with the exercise of independent judgment as a Committee
member. The current members of the Audit Committee are Walter M. Sharp
(Chairman), Willie D. Davis, and Glenn A. Cramer. The Audit Committee held two
meetings during fiscal 1993.
The Compensation and Stock Option Committee--The functions of the
Compensation and Stock Option Committee are to ensure that the compensation
program for executives of the Company (1) is effective in attracting and
retaining key officers, (2) links pay to business strategy and performance, and
(3) is administered in a fair and equitable fashion in the shareholders'
interests. The Committee recommends executive compensation policy to the Board,
determines compensation of senior executives of the Company, and administers
and approves granting of Company stock options. The Committee's authority and
oversight extends to total compensation, including base salaries, stock
options, and other forms of compensation. The Compensation and Stock Option
Committee is comprised exclusively of directors who are not salaried employees
of the Company and who are, in the opinion of the Board of Directors, free from
any relationship which would interfere with the exercise of independent
judgment as a Committee member. The current members of the Committee are James
D. Aljian (Chairman), Walter M. Sharp, and E. Parry Thomas. The Committee,
which until December 16, 1992, was constituted solely as the Stock Option
Committee, held six meetings during fiscal 1993.
BOARD MEETINGS. The Board of Directors held four meetings and acted by
unanimous written consent once during 1993. The work of the Company's directors
is performed not only at meetings of the Board of Directors and its committees,
but also in consideration of Company matters and documents, and in numerous
communications among Board members and others wholly apart from meetings.
During 1993, all directors attended at least 95% of the aggregate of all
meetings of the Board of Directors and committees on which they served (held
during the period for which they served).
FEES FOR BOARD AND COMMITTEE SERVICE. Directors who are compensated as full-
time employees of the Company receive no additional compensation for service on
the Board of Directors or its committees. Each director who is not a full time
employee of the Company is paid $26,000 per annum, plus $750 per meeting of
each Executive Committee attended, if such Director is a member of the
5
<PAGE>
Executive Committee of the Board of Directors. Each member of the Audit
Committee receives $1,500 for each meeting attended (subject to a $6,000
maximum), and each member of the Compensation and Stock Option Committee
receives $750 per quarter. Directors are also reimbursed expenses for
attendance at Board and Committee meetings.
During 1991, 1992 and 1993, Alexander M. Haig, Jr., a member of the Board of
Directors of the Company, rendered consulting services to the Company, for
which he received fees at the rate of $50,000 per annum.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to the Company for the years
ended December 31, 1993, 1992, and 1991, of those persons who were, at
December 31, 1993, (1) the Chief Executive Officer and (2) the other four most
highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
---------------------- ------------
SHARES
NAME AND OTHER UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(A) ANNUAL(B) OPTION (C) COMPENSATION(D)
------------------ ---- --------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert R. Maxey 1993 $525,000
President and 1992 443,355 -- 65,000 $ --
Chief Executive Officer 1991 350,000(E) -- -- --
-- 160,000 --
Fred Benninger 1993 610,000 -- 50,000 --
Chairman of the Board 1992 610,000 -- -- 11,040
1991 610,000 -- 150,000 --
Alex Yemenidjian 1993 275,000 -- 25,000 67,862
Executive Vice 1992 275,000 -- -- 17,138
President 1991 275,000(F) -- 125,000 --
K. Eugene Shutler 1993 325,000 -- -- 41,645
Executive Vice 1992 222,881 -- -- 17,874
President 1991 187,179(G) -- 100,000 --
Joseph T. Murphy 1993 215,000 6,734 -- 19,191
Vice President and 1992 201,271 6,734 15,000 51,711
Chief Financial Officer 1991 199,771 6,734 -- --
</TABLE>
- --------
(A) No bonuses were paid in any of the years presented.
(B) The amounts in this column represent annual premiums of $1,934 for a life
insurance policy purchased by the Company in the name of Mr. Murphy, with
a benefit value of $500,000.00, and annual auto allowance payments of
$4,800.
(C) During the years indicated, the only long term compensation was pursuant
to the Company Nonqualified Employee Stock Option Plan. No grants have
been made under the Company Incentive Stock Option Plan.
(D) The amounts in this column represent a moving allowance and reimbursement
of moving costs incurred by the employee in 1992 and 1993 related to the
relocation of Company offices to Las Vegas, Nevada, in 1992.
(E) Mr. Maxey commenced his employment with the Company on January 7, 1991.
(F) Mr. Yemenidjian commenced his employment with the Company on January 1,
1991.
(G) Mr. Shutler commenced his employment with the Company on February 1, 1991.
6
<PAGE>
STOCK OPTIONS
The Company has adopted a Nonqualified Stock Option Plan (the "Nonqualified
Plan"), which provides for the granting of nonqualified stock options, and an
Incentive Stock Option Plan (the "Incentive Plan"), which provides for the
granting of incentive stock options, pursuant to applicable provisions of the
Internal Revenue Code of 1986, as amended.
The stock option plans cover up to an aggregate of 2,500,000 shares of Common
Stock, and each has a ten-year duration. The plans are administered by the
Compensation and Stock Option Committee (the "Committee"), whose members are
appointed by the Board of Directors. All employees of the Company and its
subsidiaries (other than an employee owning more than 10% of the combined
voting power or value of all classes of stock of the Company and its
subsidiaries) are eligible to receive options. The exercise price in each
instance is 100% of the fair market value of Common Stock on the date of grant
and is payable in cash or shares of previously acquired common stock having a
fair market value equal to the option exercise price. All outstanding options
have a ten-year term and are exercisable in four annual installments of varying
amounts. The Company has agreed that certain options granted to Messrs. Maxey,
Shutler and Yemenidjian (i.e., options for 160,000 shares for Mr. Maxey,
100,000 shares for Mr. Shutler and 125,000 shares for Mr. Yemenidjian) will, to
the extent not already vested, become fully vested upon a change in control of
the Company as a result of a sale or exchange of outstanding common stock.
The table below sets forth certain information regarding options granted to
the most highly compensated executive officers of the Company during fiscal
1993. No options were granted to any other such executive officers during
fiscal 1993.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS GRANTED
----------------------------------------
PERCENT
OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED ANNUAL RATES OF STOCK
TO EXERCISE PRICE APPRECIATION
EMPLOYEES PRICE FOR OPTION TERM(B)
OPTIONS IN FISCAL PER EXPIRATION ---------------------
NAME GRANTED(A) YEAR SHARE DATE 5% 10%
---- ---------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Fred Benninger.......... 50,000 10.2% $26.25 2/5/03 $ 825,424 $4,232,725
Robert R. Maxey......... 65,000 13.2% 26.25 2/5/03 1,073,051 5,502,542
Alex Yemenidjian........ 25,000 5.1% 26.25 2/5/03 412,712 2,116,362
</TABLE>
- --------
(A) The options were granted on February 5, 1993, have a ten year term, and are
exercisable commencing on the third anniversary date of the grant date,
with 20% of the options then becoming exercisable, with an additional 20%
of the shares becoming exercisable on each of the two successive
anniversary dates, and with full vesting occurring on the sixth anniversary
date.
(B) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and common stock holdings are
dependent on the future performance of the common stock and overall stock
market conditions.
7
<PAGE>
The following table sets forth option exercises and year end value tables for
the Chief Executive Officer and the other four most highly compensated
executive officers of the Company.
AGGREGATED OPTION EXERCISES IN FISCAL 1993 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1993 DECEMBER 31, 1993(A)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Maxey -- -- 32,000 193,000 $ 908,000 $4,468,875
Fred Benninger -- -- 150,000 50,000 4,256,250 643,750
Alex Yemenidjian -- -- 25,000 125,000 709,375 3,159,375
K. Eugene Shutler -- -- 20,000 80,000 577,500 2,310,000
Joseph T. Murphy -- -- 50,000 15,000 1,381,250 311,250
</TABLE>
- --------
(A) Based upon the market value of the underlying securities at December 31,
1993 of $39.125, minus the exercise price of "in-the-money" options.
LONG TERM INCENTIVE AGREEMENTS
As part of its overall compensation packages for certain of its senior
executives, in February 1993 the Company entered into long term incentive
agreements, on a case by case basis, with Messrs. Maxey, Benninger, Yemenidjian
and Shutler. Such agreements are keyed to demonstrable enhancements to
stockholder values, i.e. market price of the Company's Common Stock. Because
such agreements were entered into in connection with prior services to the
Company, or in the case of Mr. Shutler, to induce him to terminate a consultant
agreement with Tracinda in order to provide full-time services to the Company,
the Company does not intend to take such agreements into account when it
determines such executives' salary, performance bonuses and grants of stock
options.
The Company has agreed to pay to Messrs. Maxey, Benninger and Yemenidjian, on
each of February 1, 1996, 1997 and 1998, cash amounts equal to 13,000, 10,000
and 5,000, respectively, and on February 1, 1999, cash amounts equal to 26,000,
20,000 and 10,000, respectively, multiplied by the excess, if any (the
"Spread"), between the closing price of the Company's Common Stock on the New
York Stock Exchange (the "NYSE") (or if the Common Stock is not then traded on
the NYSE, the principal stock exchange or securities market on which the Common
Stock is then traded) on such date (the "Measuring Price") and $16.50, provided
that for purposes of such determination, the Spread shall not exceed $9.75. As
of the date of such agreements, the measuring price was approximately $9.75
below the market price of the Company's Common Stock. Such amounts, if any,
would be paid only if the executive were employed by the Company on the
applicable date, subject to proration in the event such employment terminated
after February 1, 1996.
The Company has agreed to pay to Mr. Shutler on each of February 1, 1994,
1995 and 1996, cash amounts equal to 10,000, and on February 1, 1997 and 1998,
cash amounts equal to 20,000, multiplied by the Spread between the Measuring
Price and $10.25, which was the price used in Mr. Shutler's agreement with
Tracinda, which was replaced by the agreement with the Company. There is no
limitation on the amount of the Spread. Such amounts would be payable only if
Mr. Shutler were employed by the Company on the applicable date, subject to
proration in the event of a termination of his employment. Mr. Shutler was paid
$231,250 in February 1994 pursuant to this agreement. In the event of a change
of control of the Company, as defined, the payments described above would be
determined and made on the date of such change of control, subject to certain
limitations.
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
Prior to December 16, 1992, policies governing the compensation of the
Company's executives were established and monitored by the Board of Directors.
All decisions relating to the compensation of the Company's executives were
made by the Board of Directors, provided that any member of the Board of
Directors who was also employed by the Company did not participate in the
decision with respect to such person's compensation. In order to satisfy the
requirements of Rule 16b-3 of the Securities Exchange Act of 1934, as amended,
all decisions relating to the administration of the Company's Non-Qualified and
Incentive Stock Option Plans (the "Option Plans") were made solely by the Stock
Option Committee of the Board of Directors.
On December 16, 1992, the Executive Committee of the Board of Directors
expanded the duties of the Stock Option Committee and the Committee was renamed
the Compensation and Stock Option Committee of the Board of Directors (the
"Committee"). The Committee is comprised of the three independent directors
whose names appear at the bottom of this report.
The Committee is now responsible for establishing, monitoring and
implementing the policies which govern all components of compensation awarded
to the Company's executives.
The Committee has determined to continue the compensation policies
established by the Board of Directors prior to the time the Committee's
functions were expanded. These policies may be summarized as follows:
1. The Company's compensation programs should be effective in attracting,
motivating and retaining key executives;
2. There should be a correlation between the compensation awarded to an
executive, the performance of the Company as a whole, and the executive's
individual performance; and
3. The Company's compensation programs should provide the executives a
financial interest in the Company similar to the interests of the Company's
shareholders.
The Company's executives are compensated through a combination of salary,
performance bonuses and long term incentive arrangements (where appropriate),
and grants of stock options under the Option Plans. The annual salaries of the
executives are reviewed from time to time and adjustments are made where
necessary in order for the salaries of the Company's executives to be
competitive with the salaries paid by companies included in the Dow Jones
Entertainment and Leisure--Casinos Industry Group (the "Casinos Group").
Performance bonuses, where appropriate, are usually determined after the end of
the Company's fiscal year based on an assessment of the Company's results and
the level of an individual's particular performance for that year. No salary
adjustments were made, and no performance bonuses were made in 1993 for the
reasons set forth below. Long term incentive arrangements, on a case by case
basis, may be determined as part of an overall compensation package in
conjunction with demonstrable enhancements to shareholder values. Stock option
grants are considered by the Committee from time to time.
The Committee believes that the Company's performance in relation to the
performance of other companies engaged in the hotel and casino business (which
is the Company's dominant business since completion of the MGM Grand Hotel and
Theme Park) should be an important factor in determining compensation of its
executives. However, the completion, promotion and opening of the MGM Grand
Hotel and Theme Park was the principal focus of the Company and its executives
during 1993. Consequently, the Committee determined that it would be difficult
and inappropriate to compare the Company's performance to the performance of
other companies engaged in the hotel and casino business. Thus, the Committee
concluded that no bonuses based on the Company's performance would be paid and
no salary adjustments would be made at this time, and accordingly no
performance bonuses were paid to the Company's executive officers and no salary
adjustments were made for
9
<PAGE>
the year ended December 31, 1993. In the future, the Committee expects that the
Company's performance, including profitability, return on equity and cash flow,
both independently and in comparison to other public companies in the hotel and
casino business, will have a significant impact on the decisions with respect
to performance bonuses awarded to the Company's executives.
The Committee believes that the Company's annual executive compensation
levels are below the median of the compensation levels at the companies
included in the Casinos Group.
The Committee believes that a significant component of the compensation paid
to the Company's executives over the long term should be derived from stock
options. The Committee strongly believes that stock ownership in the Company is
a valuable incentive to executives and that the grant of stock options to them
serves to align their interests with the interests of the shareholders as a
whole and encourages them to manage the Company for the long term. The
Committee determines whether to grant stock options, as well as the amount of
the grants, by taking into account, in the following order of importance, the
individual's past and prospective value to the Company, the performance of the
proposed recipient (based upon evaluations by the executive's superior or the
Board of Directors) and the amount of stock options previously granted. Each of
the Company's senior executives has received grants of stock options under the
Company's Non-Qualified Stock Option Plan, and the Committee anticipates that
it will grant additional options to the Company's senior executive officers in
the future. In addition, in 1993 the Company entered into additional long term
compensation arrangements with Messrs. Maxey, Benninger, Yemenidjian and
Shutler which seek to link the Company's long term performance, based upon the
market value of the Common Stock, and enhancement of shareholder values to
compensation of certain executives. The amounts that Messrs. Maxey, Benninger,
Yemenidjian and Shutler will receive pursuant to their long term compensation
arrangements will be determined by the market price of the Company's common
stock on the applicable measuring dates.
The salaries of Messrs. Benninger and Yemenidjian have not changed in the
last three years because the Company was in the development stage and the
Committee (and before the Committee's formation, the Board of Directors)
believes that the grant of options and entering into long term compensation
agreements have provided Messrs. Benninger and Yemenidjian with more incentive
to remain with the Company and enhance its performance than annual salary
increases would provide. On the other hand, the Committee determined, based on
the number of options granted in the past to Messrs. Murphy and Shutler, that
these executives had adequate stock incentives at this time. The Compensation
Committee intends to review such matters on a regular basis to ascertain the
appropriateness of such compensation packages in light of their current
conditions.
COMPENSATION AWARDED TO THE CHIEF EXECUTIVE OFFICER
Robert R. Maxey, the President and Chief Executive Officer of the Company, is
eligible to participate in the same executive compensation plans available to
the Company's other senior executives. In determining Mr. Maxey's compensation
for 1992 the Board of Directors applied the policies described above. As of
January 1, 1992, Mr. Maxey's base compensation rate was $350,000 per annum,
which was increased, effective June 1, 1992 to a rate of $525,000 per annum, in
recognition of Mr. Maxey's substantial role in completing the debt and equity
financing necessary for the MGM Grand Hotel and Theme Park and the substantial
progress achieved in construction of the project.
In 1993, the Committee granted Mr. Maxey options pursuant to the Stock Option
Plan to purchase 65,000 shares of Common Stock, based upon the Committee's
review of: Mr. Maxey's past and prospective value to the Company; Mr. Maxey's
performance, including Mr. Maxey's role in (i) negotiating and effectuating the
debt and Common Stock offerings which completed the financing of the MGM Grand
Hotel and Theme Park and (ii) assembling the executive operational personnel
needed for the MGM Grand Hotel and Theme Park; and the amount of stock options
previously granted to
10
<PAGE>
Mr. Maxey. This grant increased the total number of his options to 225,000, and
furthers the Committee's policy of aligning the Chief Executive Officer's
incentives to long term growth of shareholder values.
In addition, in 1993, in recognition of Mr. Maxey's past services to the
Company, the Committee approved a long term incentive compensation agreement
with Mr. Maxey which provides that, conditioned upon his continued employment
by the Company, Mr. Maxey may receive, over a four year period commencing on
February 1, 1996, additional cash compensation, not to exceed a maximum of
$633,750 in the aggregate, based on the closing price for the Company's common
stock onFebruary 1 of the applicable year. The Committee approved this
arrangement because it provides due recognition to Mr. Maxey's past services to
the Company while concurrently linking his compensation directly to the long
term maintenance and enhancement of shareholder values.
The Committee did not adjust Mr. Maxey's salary in 1993 because the Committee
believes the grant of options to, and entering into a long term compensation
agreement with, Mr. Maxey in 1993, when considered together with his salary,
which was increased in mid-1992, have provided him incentive to remain with the
Company and enhance its performance. The amounts that Mr. Maxey will receive
pursuant to his long term compensation arrangement will be determined by the
market price of the Company's common stock on the applicable measuring date. In
determining the maximum Spread ($9.75) to be used in determining any long term
incentive awards payable to Mr. Maxey, the Committee considered: historical
prices of the Common Stock; Mr. Maxey's past and prospective value to the
Company; Mr. Maxey's performance, including Mr. Maxey's role in (i) negotiating
and effectuating the debt and Common Stock offerings which completed the
financing of the MGM Grand Hotel and Theme Park and (ii) assembling the
executive operational personnel needed for the MGM Grand Hotel and Theme Park;
and the amount of stock options previously granted to Mr. Maxey. Because of Mr.
Maxey's senior executive position and because of the Committee's desire to link
Mr. Maxey's compensation to long term shareholder values, the Committee
considered the nature and extent of Mr. Maxey's long term compensation
arrangement when coupled with his stock option to provide him with adequate
incentives to seek to enhance such values.
11
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Company's common stock against the
cumulative total return of the Dow Jones Equity Market Index and the Dow Jones
Casinos Group for the period of five years commencing January 1, 1989 and ended
December 31, 1993.
The Company does not believe that comparison to any of the Dow Jones indices
or any other company for prior periods presented is meaningful, since the
Company, through its wholly-owned subsidiary, MGM Grand Hotel, Inc., did not
commence operations until completion of construction of the MGM Grand Hotel and
Theme Park, a hotel/casino and entertainment complex located in Las Vegas,
Nevada, which opened on December 18, 1993. However, the Company believes that
the selected index provides meaningful comparison for subsequent periods.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG THE COMPANY, DOW JONES
EQUITY MARKET INDEX, AND THE DOW JONES CASINOS GROUP
<TABLE>
<CAPTION> DOW JONES
Measurement Period MGM EQUITY DOW JONES
(Fiscal Year Covered) GRAND, INC.** MARKET INDEX CASINOS GROUP
- --------------------- ------------ ------------ -------------
<S> <C> <C> <C>
Measurement Pt- 12/31/1988 $100 $100 $100
FYE 12/31/1989 $152 $131 $137
FYE 12/31/1990 $95 $126 $91
FYE 12/31/1991 $111 $167 $140
FYE 12/31/1992 $187 $181 $216
FYE 12/31/1993 $382 $199 $330
</TABLE>
- --------
* Assumes $100 invested on December 31, 1988 in each of Company stock, the Dow
Jones Equity Market Index, and the Dow Jones Industry Index.
** Commencing on March 1, 1987, the Company's common stock was listed in the
pink sheets published by the National Quotation Bureau. Beginning in May
1988, the Company's common stock began trading in the over-the-counter
market on the NASDAQ Market System, and in December 1989, trading commenced
on the New York Stock Exchange.
12
<PAGE>
BENEFIT PLANS
MGM Grand Air, Inc. ("MGM Grand Air"), a wholly-owned subsidiary of the
Company, has separately adopted a Section 401(k) employee savings plan (the
"MGM Grand Air Savings Plan") for employees not a part of a collective
bargaining unit. The MGM Grand Air Savings Plan allows participants to defer,
on a pretax basis, a portion of their salary and accumulate tax deferred
earnings as a retirement fund. All deferred amounts vest immediately and are
invested in either an equity, fixed income, money market, balanced fund or MGM
Grand, Inc. Common Stock as directed by the participant. The full amount vested
in a participant's account will be distributed to a participant following
termination of employment, normal retirement or in the event of disability or
death. A participant may also make a request for withdrawal of his vested
account balance under the MGM Grand Air Savings Plan based on financial
hardship. A participant is entitled to borrow up to 50% of the vested portion
of his account, but no more than $50,000. The Company's employees' eligibility
to contribute to the MGM Grand Air Savings Plan terminated as of December 31,
1992.
Effective January 1993, MGM Grand Hotel, Inc. ("MGM Grand Hotel"), a wholly-
owned subsidiary of the Company, separately adopted a Section 401(k) employee
savings plan (the "Hotel Savings Plan") for employees not a part of a
collective bargaining unit. The Hotel Savings Plan allows participants to
defer, on a pretax basis, a portion of their salary and accumulate tax deferred
earnings as a retirement fund. All deferred amounts vest immediately and are
invested in either an equity, balanced income, money market, or short term bond
fund as directed by the participant. After commencement of hotel/casino
operations, to the extent of a participant's contributions up to an annual
limit of 4% of a participant's salary, MGM Grand Hotel will make matching
contributions of 25% of the participant's contribution, and annual bonus
contributions up to a maximum of $500 based on years of participant
employment.The full amount vested in a participant's account will be
distributed to a participant following termination of employment, normal
retirement or in the event of disability or death. A participant may also make
a request for withdrawal of his vested account balance under the Hotel Savings
Plan based on financial hardship. A participant is entitled to borrow up to 50%
of the vested portion of his account, but no more than $50,000. The Company's
employees are eligible to participate under the Hotel Savings Plan.
The Company's Board of Directors may adopt other benefit plans, including an
employee stock ownership plan and an employee retirement plan. The terms and
benefit levels of any such plans have not yet been determined. In addition, the
Company's Board of Directors may adopt a profit-sharing plan which will provide
for a percentage of the Company's annual pre-tax operating profits to be
available for distribution on a discretionary basis.
CERTAIN TRANSACTIONS
Christensen, White, Miller, Fink & Jacobs, a law firm of which Terry
Christensen, a director, is a partner (see "Election of Directors"), has
performed extensive legal services for the Company. Such services relate to
litigation, sales of securities, acquisitions and dispositions of certain
assets and operations, tax matters and other business transactions, contracts
and agreements.
During 1991, 1992 and 1993, Alexander M. Haig, Jr., a member of the Board of
Directors of the Company, rendered consulting services to the Company, for
which he received fees at the rate of $50,000 per annum.
During the period from October 10, 1992 through January 20, 1993, MGM Grand
Air, Inc. leased a Boeing 757 aircraft from Tracinda. The lease and related
payments were $479,000. The Company makes available the services of certain of
its executives and other employees to The Stars' Desert Inn Hotel and Casino,
which it sold to Tracinda in December 1991. The Company is reimbursed by The
13
<PAGE>
Stars' Desert Inn Hotel and Casino for such services on a cost allocation
basis. The amount of services thus utilized and reimbursed during 1992 was
approximately $282,000, and is expected to diminish as the opening date for the
new hotel and casino approaches. Also during 1992 and 1993, payments by The
Stars' Desert Inn Hotel and Casino to MGM Grand Air for the charter of aircraft
amounted to $221,000 and $67,000, respectively.
In May 1992, the Company completed an underwritten public offering of $473
million of First Mortgage Notes, of which Tracinda purchased $30 million.
During February 1994, Tracinda's First Mortgage Notes were sold. In addition,
Tracinda provided an irrevocable letter of credit to secure the Company's
obligation under the First Mortgage Notes to obtain an additional $100 million
in equity. The letter of credit was outstanding from May to October 1992, when
a common stock rights offering was completed. Fees to the bank issuer of the
letter of credit of approximately $253,000 were paid by the Company. Pursuant
to such rights offering, Tracinda purchased 5,482,336 shares of Common Stock
from the Company for an aggregate purchase price of $96,940,880.
In August 1992, the Company's hotel subsidiary installed and commenced
testing of a property management computer software system at The Stars' Desert
Inn, which was then owned by Tracinda. The hotel subsidiary agreed to pay
certain of the costs incurred in connection therewith. The system was used at
The Stars' Desert Inn until September 1993. The Company's hotel subsidiary also
agreed to use The Stars' Desert Inn casino to test market certain gaming
equipment from July to September 1993. The Company's subsidiary has agreed to
reimburse the Stars' Desert Inn for it's estimated costs, which are
approximately $1,000,000. The Stars' Desert Inn did not exercise an option to
retain the computer software system. The Stars' Desert Inn retained all
revenues generated by the gaming equipment.
Also during 1993, Tracinda purchased fuel and aircraft parts from MGM Grand
Air, at its cost, in amounts that are not material. A Tracinda employee also
arranged third party fuel purchases by MGM Grand Air, without any charge being
imposed by Tracinda for this service.
In November 1993, the Company's hotel subsidiary agreed to sell to Tracinda
two unused parcels of land (approximately .56 acres total) for $272,950. The
Company, based upon appraisals it received, believes that this sale was on
terms comparable to what it could have obtained for the land on an arms length
basis in an equivalent transaction with a third party. The acquisition has not
yet been completed.
During 1993, the Company and its subsidiaries leased aircraft from Tracinda
for various business purposes. The aggregate amount of rentals was $47,900, and
the rentals were at rates generally comparable to those offered by third
parties.
SELECTION OF AUDITORS
PROPOSAL NO. 2
The Board of Directors, acting upon the recommendation of the Audit
Committee, has appointed, subject to ratification by the stockholders, the firm
of Arthur Andersen & Co., independent certified public accountants, to audit
the consolidated financial statements of the Company and its subsidiaries for
the year ending December 31, 1994. This firm acted as auditors for the Company
during the year ended December 31, 1993.
Representatives of Arthur Andersen & Co. will be present at the stockholders'
meeting with the opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
The Board of Directors recommends a vote FOR adoption of this proposal.
14
<PAGE>
OTHER BUSINESS
Management knows of no other business to be transacted, but if any other
matters do come before the meeting, the persons named as proxies or their
substitutes will vote or act with respect to such other matters in accordance
with their best judgment.
NOTICE CONCERNING STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1995 Annual Meeting
of Stockholders must be received by the Company on or before November 30, 1994
in order to be included in the form of proxy and proxy statement to be issued
by the Board of Directors for that meeting.
OTHER INFORMATION
The Company will bear all costs in connection with the management
solicitation of proxies. The Company intends to reimburse brokerage houses,
custodians, nominees and others for their out-of-pocket expenses and reasonable
clerical expenses related thereto. Officers and regular employees of the
Company and its subsidiaries may request the return of proxies by telephone,
telegraph or in person, for which no additional compensation will be paid them.
The Company's Annual Report to Stockholders for the year ended December 31,
1993 accompanies this Proxy Statement.
By Order of the Board of Directors,
/s/ ROBERT R. MAXEY
ROBERT R. MAXEY
President and Chief Executive Officer
15
<PAGE>
- --------------------------------------------------------------------------------
MGM GRAND, INC.
Proxy for Annual Meeting of Stockholders
May 10, 1994
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints ALEX YEMENIDJIAN, JOSEPH T. MURPHY AND
WALTER M. SHARP, and each of them, Proxies, with full power of substitution, to
represent and vote all shares of common stock which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
MGM Grand, Inc. (the "Company") to be held at the MGM Grand Hotel, 3799 Las
Vegas Boulevard, Las Vegas, Nevada on May 10, 1994, at 10:00 a.m., and at any
adjournments thereof, upon any and all matters which may properly be brought
before said meeting or any adjournments thereof. The undersigned hereby revokes
any and all proxies heretofore given with respect to such meeting.
The Board of Directors recommends a vote FOR Items 1 and 2.
(Continued and to be SIGNED on the other side)
- --------------------------------------------------------------------------------
MGM GRAND, INC.
Annual Meeting of Stockholders
Tuesday May 10, 1994
10:00 a.m.
MGM Grand Hotel
3799 Las Vegas Blvd. South
Las Vegas, Nevada
ADMISSION TICKET
This ticket must be presented at the door for entrance to the meeting.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
This Proxy will be voted as specified herein; if no specification is made, this
Proxy will be voted for Items 1 and 2.
PLEASE MARK VOTES A OR B
I plan to attend
the meeting.
[_]
<TABLE>
<C> <C> <S>
1. ELECTION OF DIRECTORS Names of Nominees: James D. Allen, Fred Berringer, Glenn A. Cramer,
Terry Christensen, Willie D. Davis, Alexander M. Haig, Jr., Lee A. Iacocca,
FOR all nominees WITHHOLD Kirk Kirkorian, Robert R. , Walter M. Sharp, K. Eugene , E. Perry Thomas,
named (except AUTHORITY Alex Yemenidjian.
as marked to the for all nominees
contrary) named (INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
nominee's name on the following line)
[_] [_]
-----------------------------------------------------------------------------------
</TABLE>
2. Ratification of the appointment
of independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated:_______________________, 1994
___________________________________
(Signature)
___________________________________
(Signature if held jointly)
Please sign your name exactly as it
appears hereon, in the case of
joint owners, each should sign. If
signing as executor, trustee,
guardian or in any other
representative capacity or as an
officer of a corporation, please
indicate your full title as such.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES*
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
Admission Ticket
Annual Meeting
of
MGM GRAND, INC.
Tuesday May 10, 1994
10:00 a.m.
MGM GRAND HOTEL, CASINO
3799 LAS VEGAS BLVD. SOUTH
LAS VEGAS, NEVADA
Agenda
1. To elect a Board of Directors.
2. To consider and act upon the ratification of the selection of independent
auditors.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
- --------------------------------------------------------------------------------
