<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 9, 1995
----------------
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 9, 1995; 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 16, 1995 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, 1995
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 9, 1995
LOCATION: MGM GRAND HOTEL & CASINO
3799 Las Vegas Blvd. South
Las Vegas, Nevada 89109
(PLEASE PRINT) [_] 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, 1995
----------------
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, 1995.
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 16, 1995, the record date for determining stockholders entitled to vote
at the meeting, 47,941,010 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 16, 1995 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 73.8%
4835 Koval Lane
Las Vegas, Nevada
89109
All directors and 36,094,563(1)(2) Sole voting and investment power 74.8%
executive offi-
cers as a group
(14 persons)
</TABLE>
- --------
(1) Of these shares, 31,726,859 are held by Tracinda Corporation, a Nevada
corporation wholly owned by Mr. Kerkorian ("Tracinda").
(2) Included in this amount are 329,000 shares of common stock subject to
vested options and 1,317 shares held in the accounts of such persons in a
401K Savings Plan formerly maintained by MGM Grand Air, Inc.
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
1
<PAGE>
have cumulative voting rights and since Mr. Kerkorian's shares represent more
than 50% of the shares 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 16, 1995 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 (62) 1987. Prior thereto, Executive Vice
President of Southwest Leasing
Corporation.
Fred Chairman of the Board of the Company 1986 154,866(2)(3)
Benninger since August 1987. President of the
(78) 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.
President 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-
(54) les, California since May 1988. Con-
sultant to Tracinda from February
1988 to April 1988. President of
Tracinda from July 1987 to February
1988. Director of GIANT GROUP, Ltd.
</TABLE>
2
<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>
Glenn A. Director of Transamerica Corporation 1992 5,033(2)
Cramer (73) from 1968 to April 1994, and Chairman
of the Executive Committee of Trans-
america Airlines from 1983 to April
1994. Chairman of Transamerica Air-
lines from 1969 to 1981.
Willie D. President and Director of All-Pro 1989 --
Davis (60) Broadcasting, Inc. an AM and FM radio
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 M. Chairman of Worldwide Associates, 1990 --
Haig, Jr. Inc. an international business advi-
(70) sory firm. Director of America On-
line, Inc. and Interneuron Pharmaceu-
ticals, Inc. Consultant to the Com-
pany since May, 1990.
Lee A. Iacocca Chairman of Iacocca Capital Group, a 1993 --
(70) privately held merchant banking firm.
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. Director of New
World Communications Group, Inc. and
New World Television, Inc.
Kirk Kerkorian Chief Executive Officer, President 1987 35,621,265(4)
(77) and sole director and stockholder of
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 105,660(2)(3)
Maxey (57) since January 1991. Chairman of the
Executive Committee of the Company
since June 1992. Prior thereto, Pres-
ident and Chief Executive Officer of
MarCor Resort Properties, Inc.,
hotel/casino operator. Director of
Las Vegas Events and Nevada Partners.
Walter M. President of Walter M. Sharp Company 1986 29,482(2)
Sharp (78) (financial consultants) and a consul-
tant to Tracinda.
K. Eugene Executive Vice President and General 1991 44,650(2)(3)
Shutler (56) Counsel of the Company since February
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 (73) 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 90,000(2)(3)
Yemenidjian pany since June 1992 and Chief Finan-
(39) cial Officer of the Company since May
1994. Chairman of the Executive Com-
mittee of the Company from January
1991 to June 1992. President and
Chief Operating Officer of the Com-
pany from March 1990 to January 1991.
Executive of Tracinda since January
1990. Chairman of the Executive Com-
mittee 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, 64,000 shares subject to vested stock options for Mr.
Maxey and 410 shares in Mr. Maxey's account under the a 401K Savings Plan
formerly maintained by MGM Grand Air, Inc., 40,000 shares subject to
vested stock options for Mr. Shutler, and 50,000 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 fifteen meetings
during fiscal 1994.
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), James D. Aljian, Willie D. Davis, and Glenn A. Cramer. The Audit
Committee held three meetings during fiscal 1994.
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 stockholders'
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 held
five meetings during fiscal 1994.
BOARD MEETINGS. The Board of Directors held four meetings 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 1994, all directors attended at least 92% 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 1992, 1993 and 1994, 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, 1994, 1993, and 1992, of those persons who were, at December
31, 1994, (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 BONUS ANNUAL(A) OPTION(B) COMPENSATION(C)
------------------ ---- -------- -------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Maxey 1994
President and 1993 $525,000 $250,000 $ -- -- $ --
Chief Executive 1992 525,000 -- -- 65,000 --
Officer 443,355 -- -- -- --
Fred Benninger 1994 610,000 165,000 -- -- --
Chairman of the Board 1993 610,000 -- -- 50,000 --
1992 610,000 -- -- -- 11,040
Alex Yemenidjian 1994 275,000 100,000 -- -- --
Executive Vice 1993 275,000 -- -- 25,000 67,862
President and 1992 275,000 -- -- -- 17,138
Chief Financial
Officer
K. Eugene Shutler 1994 325,000 50,000 231,250 -- 25,480
Executive Vice 1993 325,000 -- -- -- 41,645
President and General 1992 222,881 -- -- -- 17,874
Counsel
Scott Langsner 1994 149,583 25,000 -- 15,000 9,990
Secretary/Treasurer 1993 135,000 -- -- -- 43,776
1992 127,716 -- -- 10,000 31,233
</TABLE>
- --------
(A) Represents payments pursuant to long term incentive agreements as detailed
herein--see page 8.
(B) 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.
(C) The amounts in this column represent a moving allowance and reimbursement
of moving costs incurred by the employee related to the relocation of
Company offices to Las Vegas, Nevada, in 1992.
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
1994. No options were granted to any other such executive officers during
fiscal 1994.
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>
Scott Langsner.. 15,000 5.5% $25.00 3/7/04 $ 235,800 $ 597,600
</TABLE>
- --------
(A) The options were granted on June 6, 1994, 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 1994 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, 1994 DECEMBER 31, 1994(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 $ 428,000 $1,712,000
Fred Benninger -- -- 150,000 50,000 2,006,250 --
Alex Yemenidjian -- -- 25,000 125,000 334,375 1,337,500
K. Eugene Shutler -- -- 20,000 80,000 277,500 1,110,000
Scott Langsner -- -- 25,000 25,000 315,625 57,500
</TABLE>
- --------
(A) Based upon the market value of the underlying securities at December 31,
1994 of $24.125, 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 and $111,647 in February 1995 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
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") is responsible for establishing, monitoring and implementing the
policies governing the compensation of the Company's executives. The Committee
is comprised of the three independent directors whose names appear at the
bottom of this report. 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 with
a financial interest in the Company similar to the interests of the
Company's stockholders.
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 Company's Nonqualified Stock Option Plan
and Incentive Stock Option Plan. 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. 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
stockholder values. The Company did not enter into any long-term incentive
arrangement with any executives in 1994. Stock option grants are considered by
the Committee from time to time.
The Committee believes that the return earned by the Company's stockholders
should be an important factor in determining compensation of the Company's
executives. In considering bonuses for the Company's executives for 1994, the
Committee considered, in order of importance, the following: the financial
performance of the Company for 1994, including profitability, return on equity
and cash flow; the executives' levels of responsibility and performance, based
upon evaluations and recommendations of the President and Chief Executive
Officer as to proposed bonuses for executives other than himself; and the other
components of their compensation attributable to 1994. Based upon the
foregoing, the Committee granted the following bonuses to the most highly
compensated executives: Mr. Maxey, $250,000; Mr. Benninger, $165,000; Mr.
Yemenidjian, $100,000; Mr. Shutler, $50,000; and Mr. Langsner, $25,000.
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. While
Mr. Langsner was granted an option to purchase 15,000 shares of Common Stock in
1994, the Committee determined that Messrs. Maxey, Benninger, Yemenidjian and
Shutler had adequate stock incentives at this time. The Committee anticipates
that it will grant additional options to the Company's senior executive
officers in the future.
9
<PAGE>
The salaries of Mssrs. Maxey, Benninger, Yemenidjian and Shutler did not
change in 1994 because the Committee believes that such officers were
adequately compensated in light of the bonuses awarded to them for 1994. The
Committee intends to review the compensation arrangements of its senior
executives from time to time and make adjustments where appropriate.
COMPENSATION AWARDED TO THE CHIEF EXECUTIVE OFFICER
Robert F. 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 1994 the Committee applied the policies described above and determined to
grant him a bonus of $250,000 for 1994. The Committee did not adjust his base
salary of $525,000 or award Mr. Maxey any additional stock options in 1994
because the Committee believes that the options currently owned by him and his
long-term compensation agreement with the Company provide him with an incentive
to remain with the Company and enhance its performance.
JAMES D. ALJIAN
-------------------------------------
James D. Aljian
WALTER M. SHARP
-------------------------------------
Walter M. Sharp
E. PARRY THOMAS
-------------------------------------
E. Parry Thomas
10
<PAGE>
STOCKHOLDER 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, 1990 and ended
December 31, 1994.
The Company does not believe that comparison to any of the Dow Jones indices
or any other company for periods prior to December 1993 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, 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
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG MGM GRAND, INC., DOW JONES EQUITY MARKET INDEX AND
DOW JONES CASINOS GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
DOW JONES DOW JONES
Measurement Period MGM EQUITY MARKET CASINOS
(Fiscal Year Covered) GRAND, INC.** INDEX GROUP
- --------------------- ---------- --------- ---------
<S> <C> <C> <C>
Measurement Pt- 1989 $100 $100 $100
FYE 1990 $ 62 $ 96 $ 67
FYE 1991 $ 73 $127 $102
FYE 1992 $122 $138 $158
FYE 1993 $250 $152 $241
FYE 1994 $154 $153 $185
</TABLE>
- --------
* Assumes $100 invested on December 31, 1989 in each of Company stock, the Dow
Jones Equity Market Index, and the Dow Jones Industry Index.
** Beginning in December 1989, trading commenced on the New York Stock
Exchange.
11
<PAGE>
BENEFIT PLANS
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.
Effective November 1994, the Company, and MGM Grand Hotel adopted a
Nonqualified Deferred Retirement Plan for Certain Key Employees not a part of a
collective bargaining unit. The Nonqualified Deferred Retirement Plan allows
participants to defer, on a pretax basis, a portion of their salary and
accumulate tax deferred earnings, plus interest, as a retirement fund. These
deferrals are in addition to those allowed under the Hotel Savings Plan. All
deferred amounts vest immediately. There are no employer matching contributions
made under this plan. 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.
Through the date of sale of the airline on December 31, 1994, MGM Grand Air,
Inc. maintained a noncontributory Section 401(k) employee savings plan for
employees not a part of a bargaining unit. This savings plan allowed
participants to defer, on a pretax basis, a portion of their salary and
accumulate tax deferred earnings as a retirement fund. Maintenance of the
savings plan was assumed by the purchaser of the airline.
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.
12
<PAGE>
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 1992, 1993 and 1994, 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.
The Company's hotel subsidiary agreed to use The Stars' Desert Inn casino,
which was owned by Tracinda, to test certain gaming equipment from July to
September 1993. The Company's subsidiary reimbursed The Stars' Desert Inn for
its estimated costs, and paid approximately $13,000 in 1993 and $229,000 in
1994. 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.
In November 1992, the Company was granted a no cost two-year option from
Tracinda to purchase approximately 18 acres of undeveloped land across the Las
Vegas Strip from the MGM Grand Hotel. Effective September 1, 1994, the option
was extended to September 1, 1995. The option, which gave the Company the right
to acquire the property at Tracinda's purchase cost of $31.5 million, together
with its actual cost incurred in connection with the ownership of the property,
and interest, was exercised on January 5, 1995, for a total cost of
approximately $36.5 million.
In November 1993, the MGM Grand Hotel 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 was completed
on March 1, 1994.
During 1994, the Company and its subsidiaries leased aircraft from Tracinda
for various business purposes. The aggregate amount of rentals was $99,150, and
the rentals were at rates generally comparable to those offered by third
parties. Also during 1994, MGM Grand Hotel chartered Tracinda aircraft through
a third party lessor, under an arrangement which resulted in $92,800 of charter
fees being remitted to Tracinda by the leasing agent. Also during 1994,
Tracinda purchased fuel and aircraft parts from MGM Grand Air, at its cost, in
amounts that are not material.
Pursuant to an agreement between MGM Grand Hotel and Tracinda, MGM Grand
Hotel provided account receivable collection services to Tracinda in connection
with the accounts of The Stars' Desert Inn during 1994, in exchange for 20% of
the net collections of The Stars' Desert Inn. MGM Grand Hotel received total
commissions of approximately $102,000 during 1994.
The Company and Tracinda have entered into various other transactions and
arrangements which, individually and in the aggregate, are not material.
13
<PAGE>
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 LLP, independent certified public accountants, to audit the
consolidated financial statements of the Company and its subsidiaries for the
year ending December 31, 1995. This firm acted as auditors for the Company
during the year ended December 31, 1994.
Representatives of Arthur Andersen LLP 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.
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 1996 Annual Meeting
of Stockholders must be received by the Company on or before November 30, 1995
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,
1994 accompanies this Proxy Statement.
By Order of the Board of Directors,
/s/ ROBERT R. MAXEY
ROBERT R. MAXEY
President and Chief Executive Officer
14
<PAGE>
MGM GRAND, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ALEX YEMENIDJIAN, K. EUGENE SHUTLER 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 South, Las Vegas, Nevada on May 9, 1995, 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)
<PAGE>
This Proxy will be voted as specified herein; if no ----------------
specification is made, this Proxy will be voted for I PLAN TO ATTEND
Items 1 and 2. THE MEETING.
PLEASE MARK VOTES [-] OR [X] [_]
----------------
1. ELECTION OF DIRECTORS Names of Nominees: James D. Aljian,
Fred Benninger, Glenn A. Cramer, Terry
FOR ALL NOMINEES WITHHOLD Christensen, Willie D. Davis, Alexander
NAMED (EXCEPT AUTHORITY M. Haig, Jr., Lee A. Iacocca, Kirk
AS MARKED TO THE FOR ALL NOMINEES Kerkorian, Robert R. Maxey, Walter M.
CONTRARY) NAMED Sharp, K. Eugene Shutler, E. Parry
Thomas, Alex Yemenidjian.
[_] [_]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE FOLLOWING
LINE.)
----------------------------------------
2. Ratification of the appointment of
independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated:____________________, 1995
________________________________
(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
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA as an officer of a corporation,
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" please indicate your full title
- -------------------------------------------- as such.
