<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MGM GRAND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
MGM GRAND, INC.
3799 LAS VEGAS BLVD. SOUTH, LAS VEGAS, NEVADA 89109
----------------
NOTICE OF ANNUAL MEETING TO BE HELD ON
MAY 7, 1996
----------------
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 7, 1996; at 10:00 a.m., for
the following purposes:
1. To elect a Board of Directors.
2. To consider and act upon an amendment to the Company's Stock Option
Plans.
3. To consider and act upon the ratification of the selection of
independent auditors.
4. 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 14, 1996 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/ Alex Yemenidjian /s/ J. Terrence Lanni
Alex Yemenidjian J. Terrence Lanni
President, Chief Operating Chairman and Chief Executive Officer
Officer and Chief Financial Officer
March 29, 1996
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.
STOCKHOLDER MEETING ADMISSION TICKET NOTE: PLEASE CLIP AND
BRING THE STOCKHOLDER
TIME: 10:00 A.M. MEETING ADMISSION
DATE: May 7, 1996 TICKET. NO ADMISSION
LOCATION: MGM GRAND HOTEL & CASINO WILL BE ALLOWED WITHOUT
3799 Las Vegas Blvd. South THIS TICKET.
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 29, 1996
----------------
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. A properly executed proxy marked "ABSTAIN" although
counted for purposes of determining whether there is a quorum, will not be
voted. With respect to each matter submitted for a vote of stockholders, an
abstention or broker non-vote will have the same effect as a vote cast against
the matter. 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 Proposals 2 and 3 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 29, 1996.
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 14, 1996, the record date for determining stockholders entitled to vote
at the meeting, 49,085,075 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 14, 1996 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 72.4%
4835 Koval Lane
Las Vegas, Nevada 89109
All directors and execu- 35,901,914(1)(2) Sole voting and investment power 73.0%
tive officers as a
group (13 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 123,727 shares of common stock subject to
vested options and 907 shares held in the accounts of such persons in a
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
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 Proposals 2 and 3, and Mr. Kerkorian's vote will be
sufficient to cause adoption of Proposals 2 and 3.
ELECTION OF DIRECTORS
PROPOSAL NO. 1
INFORMATION CONCERNING THE NOMINEES
One of the purposes of the meeting is to elect 12 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, 1996 and
certain other matters.
<TABLE>
<CAPTION>
SHARES OF
FIRST COMMON STOCK
PRINCIPAL OCCUPATION BECAME BENEFICIALLY
NAME (AGE) AND OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
---------- ----------------------- ---------- ------------
<S> <C> <C> <C>
James D. Aljian (63) Executive of Tracinda since October 1988 10,400(2)
1987. Director of Chrysler Corporation
("Chrysler") since February 1996.
Fred Benninger (79) Vice Chairman of the Board of the 1986 21,014(2)(3)(4)
Company since April 1995. Chairman of
the Board of the Company from August
1987 to April 1995. President of the
Company from August 1987 to March
1990, and Chief Executive Officer of
the Company from August 1987 to
January 1991.
Terry Christensen (55) Partner, Christensen, White, Miller, 1987 2,000(2)
Fink, Jacobs, Glaser & Shapiro, LLP,
attorneys, Los Angeles, California
since May 1988. Director of GIANT
GROUP, LTD.
Glenn A. Cramer (74) Director of Transamerica Corporation 1992 5,033(2)
from 1968 to April 1994, and Chairman
of the Executive Committee of
Transamerica Airlines from 1983 to
April 1994.
Willie D. Davis (61) President and Director of All-Pro 1989 500(2)(4)
Broadcasting, Inc., an AM and FM radio
broadcasting company. Director of Sara
Lee Corporation, K-Mart Corporation,
Johnson Controls, Inc., Alliance Bank,
WICOR, Dow Chemical Company, Rally's
Hamburgers, Inc. and LA Gear, Inc.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
FIRST COMMON STOCK
PRINCIPAL OCCUPATION BECAME BENEFICIALLY
NAME (AGE) AND OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
---------- ----------------------- ---------- ------------
<S> <C> <C> <C>
Alexander M. Haig, Jr. Chairman of Worldwide Associates, 1990 --
(72) Inc., an international business
advisory firm. Director of America
Online, Inc. and Interneuron
Pharmaceuticals, Inc. Consultant to
the Company since May 1990.
Lee A. Iacocca (71) From November 1978 to September 1983, 1993 --
Director of 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 Foundation, Inc.,
Chairman of the Committee for
Corporate Support for the Joslin
Diabetes Foundation, Founder and
Chairman of the Advisory Board to the
Iacocca Institute at Lehigh
University, Chairman of the Iacocca
Foundation, a member of the Advisory
Board of Reading is Fundamental,
honorary Chairman of the National PTA
since 1991, and an honorary trustee of
Lehigh University. Director of New
World Communications Group, Inc. and
Koo Koo Roo Chicken, Inc.
Kirk Kerkorian (78) Chief Executive Officer, President and 1987 35,621,265(5)
sole director and stockholder of
Tracinda.
J. Terrence Lanni (53) Chairman of the Company since July 1995 40,000(2)(4)
1995. Chairman of the Executive
Committee and Chief Executive Officer
of the Company since June 1995.
President of the Company from June
1995 to July 1995. President and Chief
Operating Officer of Caesars World,
Inc. from April 1981 to February 1995.
Director of Santa Anita Realty, Inc.
and Santa Anita Operating Company.
Walter M. Sharp (79) President of Walter M. Sharp Company 1986 29,482(2)
(financial consultants) and a
consultant to Tracinda.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
FIRST COMMON STOCK
PRINCIPAL OCCUPATION BECAME BENEFICIALLY
NAME (AGE) AND OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
---------- ----------------------- ---------- ------------
<S> <C> <C> <C>
Alex Yemenidjian (40) President of the Company since July 1989 125,028(2)(3)
1995. Chief Operating Officer of the
Company since June 1995. Executive
Vice President of the Company from
June 1992 to July 1995, and Chief
Financial Officer of the Company since
May 1994. Chairman of the Executive
Committee of the Company from January
1991 to June 1992. President and Chief
Operating Officer of the Company from
March 1990 to January 1991. Executive
of Tracinda since January 1990.
Jerome B. York (57) Vice Chairman of Tracinda since 1995 5,000
September 1995. Senior Vice President
and Chief Financial Officer of IBM
Corporation from May 1993 to September
1995, and Director of IBM Corporation
from January 1995 to September 1995.
Executive Vice President Finance and
Chief Financial Officer of Chrysler
from May 1990 to May 1993. Director of
Chrysler from April 1992 to May 1993.
</TABLE>
4
<PAGE>
- --------
(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 11,014 shares subject to vested stock options
for Mr. Benninger, and 85,028 shares subject to vested stock options for
Mr. Yemenidjian.
(4) Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors to file reports of
ownership of the Common Stock with the Securities and Exchange Commission.
Executive officers and directors are required to furnish the Company with
copies of all Section 16(a) forms that they file. Based upon a review of
these filings and representations from the Company's directors and
executive officers that no other reports were required, the Company notes
that J. Terrence Lanni filed his initial report (approximately 10 days)
late, Fred Benninger filed one report (approximately 9 days) late with
respect to two transactions and Willie D. Davis filed a Form 5 with
respect to one transaction for which he did not file a Form 4.
(5) Of this amount, 31,726,859 shares are owned by Tracinda.
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 J.
Terrence Lanni (Chairman), Fred Benninger, Kirk Kerkorian, Walter M. Sharp,
Alex Yemenidjian and Jerome B. York. The Executive Committee held fifteen
meetings during fiscal 1995, and acted by written consent once.
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, Glenn A. Cramer, and Jerome B.
York. The Audit Committee held three meetings during fiscal 1995.
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
5
<PAGE>
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 Jerome B. York. The Committee held
eleven meetings during fiscal 1995. E. Parry Thomas, formerly a member of the
Committee, resigned as a Director of the Company on February 26, 1996.
BOARD MEETINGS. The Board of Directors held four meetings during 1995. 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 the Company's
matters and documents, and in numerous communications among Board members and
others wholly apart from meetings. During 1995, all directors attended at
least 86% 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
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 1993, 1994 and 1995, 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.
6
<PAGE>
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, 1995, 1994, and 1993, of those persons who were, at
December 31, 1995, (1) the Chief Executive Officer and (2) the other most
highly compensated executive officers of the Company who have received in
excess of $100,000, as well as Robert R. Maxey and K. Eugene Shutler, who
relinquished their positions of President and Chief Executive Officer, and
Executive Vice President and General Counsel, respectively, on July 13, 1995
and November 1, 1995, respectively (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
SHARES
NAME AND OTHER UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS ANNUAL(C) OPTION(A) COMPENSATION(B)
------------------ ---- -------- -------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni 1995
Chairman and Chief 1994 $583,333(F) $ -- $ -- 1,000,000 $85,000
Executive Officer 1993 -- -- -- -- --
-- -- -- -- --
Alex Yemenidjian 1995 410,416(F) -- -- 425,000 --
President, Chief 1994 275,000 100,000 -- -- --
Operating Officer, 1993 275,000 -- -- 25,000 67,862
and Chief Financial
Officer
Fred Benninger 1995 401,666 -- -- 50,000 --
Vice-Chairman of 1994 610,000 165,000 -- -- --
the Board 1993 610,000 -- -- 50,000 --
Scott Langsner 1995 160,000 25,000(G) -- -- --
Secretary/Treasurer 1994 149,583 25,000 -- 15,000 9,990
1993 135,000 -- -- -- 43,776
Robert R. Maxey(D) 1995 525,000 -- -- -- --
President and Chief 1994 525,000 250,000 -- -- --
Executive Officer 1993 525,000 -- -- 65,000 --
K. Eugene Shutler(E) 1995 334,062 -- 161,250 -- --
Executive Vice 1994 325,000 50,000 231,250 -- 25,480
President and General 1993 325,000 -- -- -- 41,645
Counsel
</TABLE>
- --------
(A) 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.
(B) The amounts in this column represent a moving allowance and reimbursement
of moving costs incurred by employees related to relocation to Company
offices in Las Vegas, Nevada.
(C) Represents payments pursuant to long term incentive agreements as detailed
herein--see page 9.
(D) Mr. Maxey resigned from the Company on July 13, 1995, with a severance
agreement which calls for continuation of salary to July 13, 1996, vesting
of stock options to February 15, 1996, exercisability of vested stock
options to October 15, 1996, and payment pursuant to a long term incentive
agreement on February 1, 1996.
(E) Mr. Shutler resigned from the Company on November 1, 1995, with a
severance agreement which calls for continuation of salary to May 1, 1996,
vesting of stock options to February 1, 1996, exercisability of vested
stock options to August 1, 1996, and payment pursuant to a long term
incentive agreement on February 1, 1996.
(F) Pursuant to the terms of their respective employment, Mr. Lanni's annual
salary is $1,000,000 and Mr. Yemenidjian's annual salary is $750,000.
(G) Represents payment from the MGM Grand-Bally's Monorail Limited Liability
Company, of which the Company is a 50% owner.
7
<PAGE>
The table below sets forth certain information regarding options granted
during 1995 to the Named Executives.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS GRANTED
----------------------------------------
PERCENT
OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED ANNUAL
GRANTED RATES OF STOCK PRICE
TO EXERCISE APPRECIATION FOR OPTION
EMPLOYEES PRICE TERM(B)
OPTIONS IN FISCAL PER EXPIRATION -----------------------
NAME GRANTED(A) YEAR SHARE DATE 5% 10%
---- ---------- --------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni....... 1,000,000 50.4% $29.125 4/18/05 $16,350,000 $41,440,000
Alex Yemenidjian........ 400,000 20.1% 26.00 12/4/05 6,540,000 16,576,000
</TABLE>
- --------
(A) The options were granted on April 18, 1995 and December 4, 1995,
respectively. All options have a ten year term, 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 options 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, and in
the case of Mr. Lanni, such amounts are based on the re-priced option
value of $26.00 as described below. 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.
The following table sets forth option exercises and year end value tables
for the Named Executives.
AGGREGATED OPTION EXERCISES IN FISCAL 1995 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, 1995 DECEMBER 31, 1995(A)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni....... -- $ -- -- 1,000,000 $ -- $ --
Alex Yemenidjian........ -- -- 74,521 475,479 912,882 618,368
Fred Benninger.......... 150,000 3,093,750 -- 50,000 -- --
Scott Langsner.......... -- -- 28,425 21,575 303,341 30,409
Robert R. Maxey......... -- -- 86,619 29,575 1,061,083 198,683
K. Eugene Shutler....... -- -- 36,603 23,397 466,688 298,312
</TABLE>
- --------
(A) Based upon the market value of the underlying securities at December 31,
1995 of $23.00, minus the exercise price of "in-the-money" options.
The following table sets forth information concerning the repricing of
options held by any executive officer of the Company since January 29, 1986,
the date the Company was incorporated. An aggregate of 1,252,050 options
previously granted to employees of the Company, including the Named Executives
noted herein, were amended during December 1995 to reduce the per share
exercise price to $26.00 (the market price on the date of the amendment) from
exercise prices ranging from $32.50 to $26.25.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET PRICE
SECURITIES OF STOCK AT LENGTH OF ORIGINAL
UNDERLYING TIME OF EXERCISE PRICE NEW OPTION TERM
OPTIONS/SARS REPRICING OR AT TIME OF EXERCISE REMAINING AT DATE
NAME AND REPRICED OR AMENDMENT REPRICING OR PRICE OF REPRICING OR
POSITION DATE AMENDED (#) ($) AMENDMENT ($) ($) AMENDMENT
-------- ------- ------------ ------------ -------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence
Lanni/Chairman and CEO. 12/4/95 1,000,000 $26.00 $29.125 $26.00 112.5 months
Alex
Yemenidjian/President,
COO and CFO ........... 12/4/95 25,000 26.00 26.25 26.00 86 months
Fred Benninger/Vice-
Chairman............... 12/4/95 50,000 26.00 26.25 26.00 86 months
</TABLE>
8
<PAGE>
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. Messrs. Maxey and Shutler resigned from their
positions with the Company on July 13, 1995 and November 1, 1995,
respectively, and the terms of their severance agreements limited payments due
herein as described below. 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. Messrs. Benninger and
Yemenidjian were paid $97,500 and $48,750, respectively, in February 1996.
Pursuant to the terms of Mr. Maxey's severance agreement, $126,750 was paid in
February 1996, and no further payments will be made pursuant to his incentive
agreement.
The Company had 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, 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, $161,250 in February 1995 and $185,000 in February 1996,
pursuant to this agreement. No further payments will be made to Mr. Shutler,
pursuant to the terms of his severance agreement.
9
<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. During 1995,
the Committee was comprised of the three independent directors whose names
appear at the end 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 1995. 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 1995, the
Committee considered, in order of importance, the following: the financial
performance of the Company for 1995, including profitability, return on equity
and cash flow; the executives' levels of responsibility and performance, based
upon evaluations and recommendations of the Chairman of the Board and Chief
Executive Officer as to proposed bonuses for executives other than himself;
and the other components of their compensation attributable to 1995. Based
upon the foregoing, and consistent with the recommendation by the Chairman of
the Board and Chief Executive Officer, the Committee determined not to grant
any bonuses to senior management for 1995 as a result of the Company's
performance in 1995.
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 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. In
1995, the Committee granted the Named Executives options to purchase shares of
Common Stock in the following amounts: J. Terrence Lanni, 1,000,000 shares;
and Alex Yemenidjian, 400,000 shares. The Committee determined that the other
Named Executives 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.
10
<PAGE>
The Company's stock option plans have been utilized to provide executives
and other key employees with increased motivation and incentive to exert their
best efforts on behalf of the Company through the opportunity to benefit from
appreciation in the value of the Common Stock. Due to a decline in the price
of the Common Stock in 1995, certain options outstanding under the Company's
Nonqualified Stock Option Plan held by the Named Executives were exercisable
at prices which exceeded the current market value of the Common Stock. In
December 1995, the Committee concluded that such options were not providing
the intended incentive value. In order to restore the incentive value to such
options, the Committee approved the repricing of options held by certain of
the Named Executives to $26.00 per share, the closing price of the Common
Stock on the New York Stock Exchange on the repricing date, as follows: Mr.
Lanni, options for 1,000,000 shares with the price reduced from $29.125 per
share; Mr. Benninger, options for 50,000 shares with the price reduced from
$26.25 per share; and Mr. Yemenidjian, options for 25,000 shares with the
price reduced from $26.25 per share. See "Ten-Year Option/SAR Pricings."
Effective November 1, 1995, the Committee increased Mr. Yemenidjian's base
salary to $750,000, based upon his additional responsibilities as President
and Chief Operating Officer of the Company. The Committee intends to review
the compensation arrangements of its senior executives from time to time and
make adjustments where appropriate. 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.
COMPENSATION AWARDED TO THE CHIEF EXECUTIVE OFFICER
J. Terrence Lanni became President and Chief Executive Officer of the
Company effective June 1, 1995, and was named Chairman of the Board and Chief
Executive Officer on July 13, 1995. Mr. Lanni is eligible to participate in
the same executive compensation plans available to the Company's other senior
executives. Pursuant to the terms of his employment, Mr. Lanni's salary is
$1,000,000 per year. In determining Mr. Lanni's compensation for 1995, the
Committee applied the policies described above and determined to grant him
options to purchase 1,000,000 shares of Common Stock pursuant to the Company's
Nonqualified Stock Option Plan.
Effective June 1, 1995, Robert R. Maxey resigned his position as President
and Chief Executive Officer of the Company, and on July 13, 1995, Mr. Maxey
resigned as Chairman of the Board of the Company. Payments that Mr. Maxey has
received and will receive in connection with his resignation are described
under the Summary Compensation Table. The Committee's actions taken with
respect to Mr. Maxey's resignation reflect the Committee's reasonable judgment
of Mr. Maxey's service and position with the Company since January 1991.
/s/ James D. Aljian
-------------------------------------
JAMES D. ALJIAN
/s/ Walter M. Sharp
-------------------------------------
WALTER M. SHARP
/s/ E. Parry Thomas
-------------------------------------
E. PARRY THOMAS
11
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder 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, 1991
and ended December 31, 1995.
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 MGM Grand Las
Vegas, 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
[PLACE GRAPH HERE]
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<C> <S> <C> <C> <C> <C> <C> <C>
[triangle] MGM Grand Inc......................... 100 117 196 401 247 236
[bullet] Dow Jones Equity Market Index......... 100 132 144 158 159 221
[square] Dow Jones Casinos Group............... 100 153 237 362 278 368
</TABLE>
- --------
* Assumes $100 invested on December 31, 1990 in each of Company stock, the
Dow Jones Equity Market Index, and the Dow Jones Industry Index.
12
<PAGE>
BENEFIT PLANS
MGM Grand Hotel, Inc., 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, short term bond fund, or foreign equity 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 1% of a participant's
salary, MGM Grand Hotel, Inc. 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 the
participant's 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, Inc. 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.
Effective with the September 1995 acquisition of the Diamond Beach Hotel and
Casino ("MGM Grand Australia") by MGM Grand Australia Pty., Ltd., an
Australian employee retirement fund was acquired. The plan is subject to the
Superannuation Industry (Supervision) Act of 1993 imposing a legal obligation
on MGM Grand Australia to contribute to all employees. MGM Grand Australia
maintains two categories for the plan, depending on employment status:
category (A) for executive employees and category (B) for staff. Death and
Disablement benefits are provided for all members, however, category (A)
members receive increased coverages under both benefits. The company
contributes 6% of salary to satisfy the Superannuation Guarantee Legislation,
and allows participants to defer, on a pretax basis, a portion of their salary
(minimum 3%) and accumulate tax deferred earnings as a retirement fund. The
full amount vested in members retirement accounts is payable to the member
following termination of employment or normal retirement.
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.
13
<PAGE>
CERTAIN TRANSACTIONS
J. Terrence Lanni, Chairman and Chief Executive Officer of the Company, has
an employment agreement with the Company pursuant to which he receives an
annual salary of $1,000,000 and which is terminable by either party on 30 days
notice. If the agreement is terminated without cause (as defined) by the
Company during the first five years of its term, Mr. Lanni is entitled to
continue to receive his monthly salary, less any income or benefits received
as a result of Mr. Lanni's employment elsewhere, for a period of six to 18
months depending on when the termination occurred. Pursuant to the agreement,
Mr. Lanni was granted options to purchase 1,000,000 shares of Common Stock,
which vest 20% in each of the third, fourth and fifth years, and 40% in the
sixth year, of his employment. If there is a change in control of the Company
as the result of stockholders disposing of their shares in a sale, exchange or
merger, all unvested stock options become fully vested.
Alex Yemenidjian, President, Chief Operating Officer and Chief Financial
Officer of the Company, has an employment arrangement with the Company
pursuant to which he receives an annual salary of $750,000 and which is
terminable by either party on 30 days notice. Pursuant to the arrangement, Mr.
Yemenidjian was granted options to purchase 125,000, 25,000 and 400,000 shares
of Common Stock, which vest 20% in each of the third, fourth and fifth years,
and 40% in the sixth year, after his stock option grant, respectively. If
there is a change in control of the Company as the result of stockholders
disposing of their shares in a sale, exchange or merger, all unvested stock
options with regard to the 125,000 and 25,000 share grants become fully
vested, and the stock options with regard to the 400,000 share grant become
fully vested only in the event of termination or diminution of Mr.
Yemenidjian's employment status within the first twelve months following the
change in control.
Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro, LLP, 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 1993, 1994 and 1995, 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.
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 Las Vegas. 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. On January 6, 1995, the Company
contributed the property to New York-New York Hotel, LLC, its joint venture
with Primadonna Resorts, Inc., as its share of capital contribution to the
hotel/casino construction project.
During 1995, the Company and its subsidiaries leased aircraft from Tracinda
for various business purposes. The aggregate amount of rentals was $210,000,
and the rentals were at rates generally comparable to those offered by third
parties. Also during 1995, MGM Grand Las Vegas chartered Tracinda aircraft
through a third party lessor, under an arrangement which resulted in $243,000
of charter fees being remitted to the leasing agent. Also during 1995,
Tracinda purchased fuel and aircraft parts from MGM Grand Air, at its cost, in
amounts that were not material.
Pursuant to an agreement between MGM Grand Las Vegas and Tracinda, MGM Grand
Las Vegas provided account receivable collection services to Tracinda in
connection with the accounts of The Stars' Desert Inn during 1995, in exchange
for 20% of the net collections of The Stars' Desert Inn. MGM Grand Hotel
received total commissions of approximately $76,000 during 1995.
The Company and Tracinda have entered into various other transactions and
arrangements which, individually and in the aggregate, are not material.
14
<PAGE>
APPROVAL OF AMENDMENT OF THE COMPANY'S STOCK OPTION PLANS
PROPOSAL NO. 2
DESCRIPTION OF THE AMENDMENT
Subject to the approval of the stockholders, the Board of Directors, on the
recommendation of the Compensation and Stock Option Committee, has amended the
Company's Nonqualified Stock Option Plan and Incentive Stock Option Plan
(collectively, the "Option Plans") to increase the number of shares of Common
Stock subject to such plans by 2,500,000. The Board of Directors is of the
opinion that the Option Plans have helped the Company compete for, motivate
and retain high caliber executive, administrative and professional employees,
and that it is in the best interests of the Company and its stockholders to
amend the Option Plans as proposed. Consistent with the Company's compensation
objectives, rewards under the Option Plans are dependent on those factors
which directly benefit the Company's stockholders and appreciation in the
market value of the Common Stock.
The affirmative vote of the holders of at least a majority of the shares of
Common Stock voted at the Annual Meeting is required to approve the amendment
to the Option Plans.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE OPTION PLANS
DESCRIPTION OF THE OPTION PLANS
The Option Plans, as amended, will cover up to an aggregate of 5,000,000
shares of Common Stock, and each has a ten-year duration. The Option Plans are
administered by the Compensation and Stock Option 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 of all classes of stock of the Company and its subsidiaries) are
eligible to receive options. As of March 14, 1996, there were approximately
6,300 employees currently eligible to participate in the option plans and
approximately 90 employees holding outstanding options under the Option Plans.
The exercise price in each instance is 100% of the fair market value of the
Common Stock on the date of grant, subject to any repricing at the option of
the Compensation and Stock Option Committee, 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. Generally,
outstanding options terminate three months after termination of the optionee's
employment for any reason other than the optionee's death and one year after
termination of the optionee's employment due to death. Options are non-
transferable by the holder other than by will or laws of descent and
distribution.
In the event any change is made in the Company's capitalization that results
from a stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares or any similar
change affecting the Common Stock, appropriate adjustment, as determined by
the Compensation and Stock Option Committee, will be made in the exercise
price and in the number and class of shares subject to the option.
In the event of a sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation, holders
of outstanding options will have the right to receive, upon exercise of the
option and payment of the exercise price, the same consideration which the
stockholders of the Company received pursuant to such transaction.
The Board of Directors may amend or terminate the Option Plans from time to
time in such respects as the Board may deem advisable; provided that the Board
may not (i) increase the number of shares subject to the Option Plans without
stockholder approval, (ii) permit the grant of an option with an exercise
price that is less than the fair market value of the Common Stock, (iii)
permit the grant of an option with a term beyond that provided in the Option
Plans or (iv) make a material change in the class of eligible employees.
15
<PAGE>
The Company has agreed that certain options granted to Messrs. Lanni and
Yemenidjian (i.e., options for 1,000,000 shares for Mr. Lanni and 150,000
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. In addition, an option for 400,000
shares granted to Mr. Yemenidjian in December 1995 will become fully vested
upon a change in control of the Company, but only in the event of termination
or diminution of Mr. Yemenidjian's employment status within the first 12
months following the change in control. The Company has also agreed that
options for an aggregate of 350,000 shares of Common Stock held by six other
officers of the Company will become fully vested upon a change of control of
the Company, and options for an aggregate of 75,000 shares of Common Stock
held by one other officer of the Company will become fully vested upon a
change of control of the Company but only in the event of termination or
diminution of such officer's employment status within the first 12 months
following the change in control.
An optionee who is granted an incentive stock option generally will not
recognize taxable income either upon the grant or the exercise of an incentive
option, although the exercise may be subject to the alternative minimum tax.
No deduction will ordinarily be available to the Company as a result of the
grant or exercise of incentive options. Upon the sale or exchange of the
shares underlying an incentive option more than two years after the date of
grant and one year after the date of exercise, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares of the date of exercise or (ii) the
sale price of the shares. Any gain recognized on such a premature disposition
of shares in excess of the amount treated as ordinary income will be
characterized as long-term or short-term capital gain, depending on the
holding period.
An optionee granted nonqualified stock options will not recognize any
taxable income at the grant of the option, but will generally realize ordinary
income for federal income tax purposes at the time of exercise of such options
equal to the difference between the fair market value of the Common Stock on
the date of exercise and the exercise price. Any taxable income recognized in
connection with an option exercised by an optionee who is an employee of the
Company will be subject to tax withholding by the Company. Upon resale of such
shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
described above, will be treated as long-term or short-term capital gain or
loss, depending upon on the holding period. The Company will be entitled to a
tax deduction in the same amount as the ordinary income recognized by the
optionee with respect to shares acquired upon exercise of a nonstatutory
option.
The foregoing is only a summary of certain effects of federal income
taxation upon the optionee and the Company with respect to the grant and
exercise of options under the Option Plans, does not purport to be complete
and does not discuss the tax consequences of the optionee's death or the
income tax laws of any local, state or foreign jurisdiction in which any
optionee may reside.
16
<PAGE>
The following table sets forth certain information with respect to stock
options granted pursuant to the Nonstatutory Stock Option Plan during 1995 to
(i) the Named Executives, (ii) all current executive officers as a group,
(iii) all non-executive officer employees as a group. The options shown below
are not necessarily indicative of the number of options that may be granted in
the future.
AMENDED PLAN BENEFITS
NONQUALIFIED STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME & POSITION DOLLAR VALUE ($)(1) NUMBER OF OPTIONS
--------------- ------------------- -----------------
<S> <C> <C>
J. Terrence Lanni $12,250,000 1,000,000
Chairman and Chief
Executive Officer
Alex Yemenidjian 306,250 25,000
President, Chief Operating Officer and
Chief Financial Officer
Fred Benninger 612,500 50,000
Vice Chairman
All Executive Officers
as a group (3 persons) 13,168,750 1,075,000
Non-Executive Officer 2,168,863 177,050
Employees as a group
(55 persons)
</TABLE>
- --------
(1) Based on the difference between the exercise price and the closing price
of the Common Stock of $38.25 as reported on the New York Stock Exchange
Composite Tape on March 14, 1996.
17
<PAGE>
SELECTION OF AUDITORS
PROPOSAL NO. 3
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, 1996. This firm acted as
auditors for the Company during the year ended December 31, 1995.
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 1997 Annual
Meeting of Stockholders must be received by the Company on or before November
30, 1996 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,
1995 accompanies this Proxy Statement.
By Order of the Board of Directors,
/s/ Alex Yemenidjian /s/ J. Terrence Lanni
Alex Yemenidjian J. Terrence Lanni
President, Chief Operating Chairman and Chief Executive Officer
Officer and Chief Financial Officer
18
<PAGE>
- --------------------------------------------------------------------------------
MGM GRAND, INC.
Proxy for Annual Meeting of Stockholders
May 7, 1996
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints ALEX YEMENIDJIAN, JAMES D. ALJIAN 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 7, 1996, 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, 2, and 3.
(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 Items 1, 2 and 3.
PLEASE MARK VOTES A OR B
Please mark your
votes as indicated
in this example
[X]
<TABLE>
<C> <C> <S>
1. ELECTION OF DIRECTORS Names of Nominees: James D. Aljian, Fred Benninger, Terry Christensen,
Glenn A. Cramer, Willie D. Davis, Alexander M. Haig, Jr., Lee A. Iacocca,
FOR all nominees WITHHOLD Kirk Kerkorian, J. Terrence Lanni, Walter M. Sharp, Alex Yemenidjian,
named (except AUTHORITY Jerome B. York.
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. Approval of Amendment of the Company's Stock Option Plans.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Ratification of the appointment
of independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated: _____________________, 1996
__________________________________
(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.
- --------------------------------------------------------------------------------
