MGM GRAND INC, DEF 14A, 1997-03-26

MGM GRAND INC
DEF 14A, 1997-03-26
MISCELLANEOUS AMUSEMENT & RECREATION

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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):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(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:

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(5) Total fee paid:

-------------------------------------------------------------------------

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

-------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

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MGM GRAND, INC.
3799 LAS VEGAS BLVD. SOUTH, LAS VEGAS, NEVADA 89109

----------------

NOTICE OF ANNUAL MEETING TO BE HELD ON
MAY 6, 1997

----------------

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 6, 1997, 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 Certificate of
Incorporation.

3. To consider and act upon the proposed Annual Performance Based
Incentive Plan for Executive Officers.

4. To consider and act upon an amendment to the Company's Nonqualified
Stock Option Plan.

5. To consider and act upon the ratification of the selection of
independent auditors.

6. 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 13, 1997 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,

[SIGNATURE OF ALEX YEMENIDJIAN] [SIGNATURE OF J. TERRENCE LANNI]
Alex Yemenidjian J. Terrence Lanni
President, Chief Operating Chairman and Chief Executive Officer
Officer and Chief Financial
Officer

March 28, 1997

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
MEETING ADMISSION
TICKET. NO ADMISSION
TIME: 10:00 A.M. WILL BE ALLOWED WITHOUT
DATE: May 6, 1997 THIS TICKET.
LOCATION: MGM GRAND HOTEL & CASINO
Grand Theatre
3799 Las Vegas Blvd. South
Las Vegas, Nevada 89109

STOCKHOLDER NAME: ___________________________
[_] WITH SPOUSE [_] WITHOUT SPOUSE
STOCKHOLDER ADDRESS: ________________________

________________________
(PLEASE PRINT)
<PAGE>

MGM GRAND, INC.
3799 LAS VEGAS BLVD. SOUTH
LAS VEGAS, NEVADA 89109

----------------

PROXY STATEMENT
MARCH 28, 1997

----------------

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
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 Proposals 2, 3, 4 and 5 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 28, 1997.

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 13, 1997, the record date for determining stockholders entitled to vote
at the meeting, 57,863,526 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.

The affirmative vote of a plurality of the votes cast at the meeting will be
required for the election of directors. A properly executed proxy marked
"WITHHOLD AUTHORITY" with respect to the election of one or more directors
will not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is a
quorum. The affirmative vote of a majority of the outstanding shares of Common
Stock will be required for approval of Proposal 2. For each other item to be
acted upon at the meeting, the affirmative vote of the holders of a majority
of the shares of Common Stock represented in person or by proxy and entitled
to vote on the item will be required for approval. A properly executed proxy
marked "ABSTAIN," although counted for purposes of determining whether there
is a quorum, will not be voted. Accordingly, an abstention will have the same
effect as a vote cast against the matter.

In accordance with the rules of the New York Stock Exchange, brokers and
nominees may be precluded from exercising their voting discretion with respect
to certain matters to be acted upon (e.g., any proposal which would
substantially affect the rights or privileges of the Common Stock) and thus,
in the absence of specific instructions from the beneficial owner of shares,
will not be empowered to vote the shares on such matters. A broker non-vote
will have the same effect as a vote cast against Proposal 2 but will not be
counted in determining the number of shares necessary for approval for other
proposals. Shares represented by such broker non-votes will, however, be
counted for purposes of determining whether there is a quorum.

1
<PAGE>

Shown below is certain information as of March 13, 1997 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, by the Named Executives, as defined under "Executive
Compensation," 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
NAME AND ADDRESS(1) OWNED OWNERSHIP OF CLASS
------------------- ------------ ---------------- --------
<S> <C> <C> <C>
Kirk Kerkorian 35,621,265(2) Sole voting and 61.6%
4835 Koval Lane investment power
Las Vegas, Nevada 89109

J. Terrence Lanni 240,000(3) Sole voting and --%*
investment power

Alex Yemenidjian 255,000(3) Sole voting and --%*
investment power

Fred Benninger 30,000(3) Sole voting and --%*
investment power

Scott Langsner 33,207(3) Sole voting and --%*
investment power

Edward J. Jenkins 5,300(3) Sole voting and --%*
investment power

Kenneth Rosevear 20,000(3) Sole voting and --%*
investment power

All directors and executive offi- 36,257,387(2)(3) Sole voting and 62.2%
cers as a group (15 persons) investment power
</TABLE>

- --------
* Less than one percent (1%)

(1) Unless otherwise indicated, the address for the persons listed is 3799 Las
Vegas Blvd. South, Las Vegas, Nevada 89109.
(2) Of these shares, 31,726,859 are held by Tracinda Corporation ("Tracinda"),
a Nevada corporation wholly owned by Mr. Kerkorian.
(3) Included in these amounts are 200,000 shares, 215,000 shares, 20,000
shares, 29,000 shares, 5,000 shares and 10,000 shares subject to stock
options exercisable on or prior to May 12, 1997 held by Messrs. Lanni,
Yemenidjian, Benninger, Langsner, Jenkins and Rosevear, respectively, and
907 shares held in Mr. Langsner's 401(k) Savings Plan.

As indicated above, Mr. 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 this Proxy Statement. Since the holders of Common Stock do not have
cumulative voting rights and since Mr. Kerkorian's shares represent more than
50% of the shares 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, 3, 4, and 5, and Mr. Kerkorian's vote will be
sufficient to cause adoption of Proposals 2, 3, 4 and 5.

2
<PAGE>

ELECTION OF DIRECTORS

PROPOSAL NO. 1

INFORMATION CONCERNING THE NOMINEES

One of the purposes of the meeting is to elect 11 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 or her
earlier resignation or removal.

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 Company Common Stock, age as of March 13, 1997
and certain other matters. 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.

Fred Benninger (80) Vice Chairman of the 1986 30,000(2)(3)
Board of the 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 (56) Partner, Christensen, 1987 2,000(2)
Miller, Fink, Jacobs,
Glaser, Weil & Shapiro,
LLP, attorneys, Los
Angeles, California,
since May 1988. Director
of GIANT GROUP, LTD.,
Rally's Hamburgers, Inc.
and Checkers Drive-In
Restaurants, Inc.

Glenn A. Cramer (75) Director of Transamerica 1992 5,033(2)
Corporation from 1968 to
April 1994, and Chairman
of the Executive
Committee of
Transamerica Airlines
from 1983 to April 1994.

Willie D. Davis (62) President and Director 1989 500(2)
of All-Pro 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.

Alexander M. Haig, Jr. Chairman of Worldwide 1990 200(2)
(72) Associates, Inc., an
international business
advisory firm. Director
of America Online, Inc.
and Interneuron
Pharmaceuticals, Inc.
Consultant to the
Company since May 1990.

Kirk Kerkorian (79) Chief Executive Officer, 1987 35,621,265(4)
President and sole
director and stockholder
of Tracinda.
</TABLE>

3
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
FIRST COMMON STOCK
PRINCIPAL OCCUPATION AND BECAME BENEFICIALLY
NAME (AGE) OTHER DIRECTORSHIPS A DIRECTOR OWNED(1)
-------------------------- ------------------------ ---------- ------------
<C> <S> <C> <C>
J. Terrence Lanni (54) Chairman of the Company 1995 240,000(2)(3)
since July 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 (80) President of Walter M. 1986 29,482(2)
Sharp Company (financial
consultants) and a
consultant to Tracinda.

Alex Yemenidjian (41) President of the Company 1989 255,000(2)(3)
since July 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
from January 1990 to
January 1997.

Jerome B. York (58) Vice Chairman of 1995 5,000(2)
Tracinda since 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>
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(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 these amounts are 20,000 shares, 200,000 shares and 215,000
shares subject to stock options exercisable on or prior to May 12, 1997
held by Messrs. Benninger, Lanni and Yemenidjian, respectively.

(4) Of this amount, 31,726,859 shares are owned by Tracinda.

4
<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 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
Alexander M. Haig, Jr. filed one report late with respect to one transaction.

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. There is no nominating committee
or committee performing a similar function.

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 twenty
meetings during fiscal 1996 and acted by written consent five times.

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 four meetings during fiscal 1996.

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 compensation 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
Jerome B. York. The Committee held sixteen meetings during fiscal 1996.

5
<PAGE>

BOARD MEETINGS. The Board of Directors held three meetings during 1996. 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 1996, all Directors attended at
least 95% of the aggregate of all meetings of the Board of Directors and
committees on which they served (held during the period for which they
served).

FEES FOR BOARD AND COMMITTEE SERVICE. Directors who are compensated as full-
time employees of the Company receive no additional compensation for service
on the Board of Directors or its committees. Each Director who is not a full-
time employee of the Company is paid $26,000 per annum, plus $750 per meeting
of each Executive Committee meeting 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.

On February 28, 1997, the Compensation and Stock Option Committee adopted a
stock option grant program pursuant to the Nonqualified Stock Option Plan and
subject to stockholder approval of Proposal No. 4 herein, whereby members of
the Company's Board of Directors who are not full-time employees of the
Company would receive an initial grant of 5,000 stock options, and subsequent
yearly grants of 1,000 stock options during their respective terms as
directors.

During 1994, 1995, and 1996, 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, 1996, 1995, and 1994, of those persons who were, at
December 31, 1996, (i) the Chief Executive Officer, (ii) the other most highly
compensated Executive Officers of the Company who have received in excess of
$100,000, (iii) Kenneth Rosevear, who relinquished his position as Senior Vice
President - Development on October 1, 1996 in favor of the position of
President and Chief Operating Officer of MGM Grand Development, Inc., a wholly
owned subsidiary of the Company, and (iv) T. Patrick Smith who relinquished
his position of Vice President-Real Estate on September 30, 1996
(collectively, 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 OPTION(A) COMPENSATION(B)
- ----------------------- ---- ---------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni 1996 $1,000,000 $500,000(C) $ -- -- $ --
Chairman and Chief 1995 583,333(D) -- -- 1,000,000 85,000
Executive Officer 1994 -- -- -- -- --

Alex Yemenidjian 1996 750,000 423,750(C) -- -- --
President, Chief 1995 410,416(D) -- -- 400,000 --
Operating Officer, and 1994 275,000 100,000 -- -- --
Chief Financial Offi-
cer

Fred Benninger 1996 110,000 97,500(C) -- -- --
Vice-Chairman of the 1995 401,666 -- -- -- --
Board 1994 610,000 165,000 -- -- --

Scott Langsner 1996 183,333 50,000(C) -- 7,500 --
Secretary/Treasurer 1995 160,000 25,000(E) -- -- --
1994 149,583 25,000 -- 15,000 9,990

Edward J. Jenkins 1996 140,000 30,000(C) -- -- --
Vice President 1995 32,105 -- -- 25,000 --
1994 -- -- -- -- --

- -------
Kenneth Rosevear 1996 277,500(F) 300,000(C) -- 15,000 --
Senior Vice 1995 33,750 -- -- 50,000 --
President 1994 -- -- -- -- --
-Development

T. Patrick Smith 1996 196,999 -- -- -- --
Vice President 1995 72,916 -- -- 50,000 4,536
-Real Estate 1994 -- -- -- -- --
</TABLE>
- -------
(A) During the years indicated, the only long-term compensation was pursuant
to the Company Non-qualified 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 the Company
offices in Las Vegas, Nevada.

(C) In February 1997, certain of the Named Executives received bonuses based
on (1) the financial performance of the Company for 1996 and (2) the Named
Executives' Individual performance (see "Compensation Committee Report on
Executive Compensation") as follows: Mr. Lanni--$500,000; Mr.
Yemenidjian--$375,000; Mr. Langsner--$50,000; Mr. Jenkins--$30,000; and
Mr. Rosevear--$300,000. Additionally, in February 1996, Mr. Yemenidjian
and Mr. Benninger received $48,750 and $97,500, respectively, pursuant to
long-term incentive agreements as detailed herein. See "Long Term
Incentive Agreements."

7
<PAGE>

(D) Pursuant to the terms of their respective employment, Mr. Lanni's annual
salary was $1,000,000 and Mr. Yemenidjian's annual salary was $750,000.
The amounts shown cover a period of less than one year.

(E) Represents payment from the MGM Grand-Bally's Monorail Limited Liability
Company, of which the Company is a 50% owner.

(F) Mr. Langsner's annual salary was $180,000; the excess shown here
represents a retroactive salary adjustment. Mr. Rosevear's annual salary
was $300,000; the amount shown covers a period of less than one year.

The table below sets forth certain information regarding options granted
during 1996 to the Named Executives.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS GRANTED
-----------------------------------------
POTENTIAL
PERCENT REALIZABLE VALUE
OF TOTAL AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK
GRANTED PRICE
TO EXERCISE APPRECIATION FOR
EMPLOYEES PRICE 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..... 7,500 1.03% $41.00 7/8/06 $193,350 $490,050
Kenneth Rosevear... 15,000 2.05% $41.00 7/8/06 386,700 980,100
</TABLE>
- --------
(A) The options were granted on July 8, 1996. All options have a ten-year
term, with 20% of the options becoming exercisable on each of the first
through the fourth anniversary dates, and with full vesting occurring on
the fifth 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.

The following table sets forth option exercises and year end value tables
for the Named Executives.

AGGREGATED OPTION EXERCISES IN FISCAL 1996 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, 1996 DECEMBER 31, 1996(A)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni....... -- $ -- -- 1,000,000 $ -- $8,875,000
Alex Yemenidjian........ -- -- 80,000 470,000 1,853,750 4,933,750
Fred Benninger.......... -- -- 10,000 40,000 88,750 355,000
Scott Langsner.......... -- -- 29,000 28,500 650,375 247,125
Edward J. Jenkins....... -- -- -- 25,000 -- 271,875
Kenneth Rosevear........ -- -- -- 65,000 -- 543,750
T. Patrick Smith........ -- -- -- -- -- --
</TABLE>
- --------
(A) Based upon the market value of the underlying securities at December 31,
1996 of $34.875, minus the exercise price of "in-the-money" options.

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. Benninger and Yemenidjian
and two senior executives who are no longer employed by the Company. 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, 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. Benninger and Yemenidjian, on each
of February 1, 1996, 1997, 1998, cash amounts equal to 10,000 and 5,000,
respectively, and on February 1, 1999, cash amounts equal to 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 and February 1997.

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 1996,
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 1996. 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 1996, the
Committee considered, in order of importance, the following: the financial
performance of the Company for 1996, 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 1996. Based
upon the foregoing compensation factors applied to the results of the 1996
year, the Committee determined to grant bonuses to the Named Executives in
February 1997 as follows: Mr. Lanni--$500,000, Mr. Yemenidjian--$375,000, Mr.
Langsner--$50,000, and Mr. Jenkins--$30,000.

Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Company's Chief Executive Officer and four other most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limitation if certain requirements are met.
The Committee's current policy is to structure the performance-based portion
of the compensation of its executive officers in a manner that complies with
the new statute whenever, in the judgment of the Committee, to do so would be
consistent with the objectives of the compensation plan under which the
compensation would be payable. For information concerning the adoption by the
Committee and the Board of Directors of a performance based bonus plan which
is being submitted to stockholders for approval at the meeting and which is
intended to make the bonuses awarded pursuant thereto fully deductible under
Section 162(m), see "Approval of the Annual Performance Based Incentive Plan
for Executives."

10
<PAGE>

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 stockholders 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 executives' superior or the
Board of Directors) and the amount of stock options previously granted. In
1996, the Committee granted the Named Executives options to purchase shares of
Common Stock in the following amounts: Scott Langsner, 7,500 shares; and
Kenneth Rosevear, 15,000 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.

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 agreement, Mr. Lanni's
salary is $1,000,000 per year. In considering whether to pay Mr. Lanni a bonus
for 1996, the Committee considered, in order of importance, the following: the
financial performance of the Company for 1996, including profitability, return
on equity and cash flow; the level of responsibility and performance of the
Chief Executive Officer; and the other components of his compensation
attributable to 1996. Based upon the foregoing factors applied to the results
of 1996 and upon the compensation policies described above, the Committee
determined to grant Mr. Lanni a bonus of $500,000 for 1996.

/s/ James D. Aljian
-------------------------------------
JAMES D. ALJIAN

/s/ Walter M. Sharp
-------------------------------------
WALTER M. SHARP

/s/ Jerome B. York
-------------------------------------
JEROME B. YORK

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 five year period commencing January 1, 1992 and
ended December 31, 1996.

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 indices provide 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

[PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
[diamond] MGM Grand, Inc. 100 168 344 212 202 307
[square] Dow Jones Equity Market Index 100 109 119 120 166 206
[triangle] Dow Jones Casinos Group 100 154 236 181 240 262
</TABLE>
- --------
* Assumes $100 invested on January 1, 1992 in each of Company stock, the Dow
Jones Equity Market Index, and the Dow Jones Casinos Group.

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. MGM Grand Hotel, Inc. will make matching contributions of 25% up
to an annual limit of 1% of a participant's salary (based upon a maximum
annual salary of $150,000) 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 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 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 also 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 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 employee superannuation funds. 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, under certain circumstances or normal
retirement.

On March 26, 1996, the Compensation and Stock Option Committee of the Board
of Directors determined to adjust the vesting provision of the Company's
Nonqualified Stock Option Plan and Incentive Stock Option Plan to provide for
the vesting of future stock option grants under the plans at 20% on each of
the first four anniversary dates of the grant, with full vesting on the fifth
anniversary date of the grant. The Compensation and Stock Option Committee
also determined that pro-rata vesting at times other than successive
anniversary dates of the date of grant is no longer applicable. Stock option
holders with grants dated prior to March 26, 1996 were given the opportunity
to accept or decline the new vesting provisions with regard to their existing
grants, and if they accepted and conformed to the new standard vesting
schedule, a new effective date of April 1, 1996 was adopted solely for
purposes of determining the subsequent yearly 20% vestings.

On May 7, 1996, the Company made a commitment to grant 15 shares of Company
Common Stock to each of its employees in exchange for continued active
employment through the one-year anniversary date of the commitment. As a
result of the stock grant commitment, deferred

13
<PAGE>

compensation in the amount of $4,982,000 was recognized based upon 8,279
employees and a market price of $40.125 per share on the date of commitment.
The deferred compensation is included in stockholders' equity, and is
amortized (after adjustment for employee attrition) monthly over the one-year
commitment period. As of December 31, 1996, approximately $2,819,000 has been
amortized and reflected as an increase to stockholders' equity.

Effective November, 1996, the Company and MGM Grand Hotel, Inc. adopted an
Employee Stock Purchase Plan. The plan provides eligible employees the
opportunity to purchase shares of the Company's Common Stock via payroll
deductions. The price for each share of Common Stock is the weighted average
price paid for all shares purchased by the Plan Administrator on behalf of the
participating employees on the last trading day of each month. The Company and
MGM Grand Hotel, Inc. pay the administrative costs of the plan. The plan may
be amended or terminated at any time by the Company's Board of Directors or by
a committee designated by the Board of Directors.

The Company's Board of Directors may adopt other benefit plans, including an
employee retirement plan. 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 pretax operating profits to be available for distribution on
a discretionary basis. The terms and benefit levels of any such plans have not
yet been determined.

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 6 to 18
months depending on when the termination occurred. "Cause" is defined as: (i)
misconduct or negligence in the performance of Mr. Lanni's material duties or
the refusal to perform such duties; (ii) any breach of Mr. Lanni's
representations, warranties or covenants; (iii) failure by Mr. Lanni to
promptly obtain or retain any permits, licenses or approvals required by state
or local authorities; (iv) Mr. Lanni's death or disability for a period of six
consecutive months; (v) indictment or conviction of Mr. Lanni for a crime,
other than traffic violations or similar misdemeanors; or (vi) the Board of
Directors, after reasonable inquiry, concludes that Mr. Lanni has engaged in
conduct materially adverse to the Company. Pursuant to the agreement, Mr.
Lanni was granted options to purchase 1,000,000 shares of Common Stock, which
vest 20% on April 1, 1997; April 1, 1998; April 1, 1999; April 1, 2000; and
April 1, 2001. 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
(a "Change in Control"), as distinguished from a change in control resulting
from the issuance of treasury shares or from any other transaction, all
unvested stock options become fully vested.

Alex Yemenidjian, President, Chief Operating Officer and Chief Financial
Officer of the Company, has an employment agreement 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. The granted options totaling 125,000 and 25,000 shares vest 20% in each
of the third, fourth and fifth years, and 40% in the sixth year from the date
of the grants, while the 400,000 share grant vests 20% on April 1, 1997; April
1, 1998; April 1, 1999; April 1, 2000; and April 1, 2001. If there is a Change
in Control of the Company, all unvested stock options become fully vested.

14
<PAGE>

Edward J. Jenkins, Vice President of the Company, and Kenneth Rosevear,
President and Chief Operating Officer of MGM Grand Development, Inc. each has
an employment agreement, pursuant to which they received an annual salary of
$140,000 and $300,000, respectively, and which is terminable by either party
upon 30 days notice. If there is a Change in Control of the Company, all
unvested stock options held by Mr. Jenkins become fully vested. With regard to
Mr. Rosevear, upon a Change in Control of the Company, 50,000 stock options
become fully vested and 15,000 stock options become fully vested if employment
status is diminished within twelve months following a Change in Contol. In
addition, Mr. Rosevear has an agreement with the Company which provides that
he will receive 7 1/2% of the net profits, after all expenses, from any
operational venture in South Africa commenced after October 10, 1995 by the
Company, subject to certain limitations.

Christensen, Miller, Fink, Jacobs, Glaser, Weil, & 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 rendered relate to litigation, sales of securities, financing
transactions, acquisitions and dispositions of certain assets and operations,
tax matters and other business transactions, contracts and agreements.

During 1996, the Company contributed $22,500,000 to New York-New York Hotel
and Casino, LLC. ("NYNY LLC"), its 50% joint venture with Primadonna Resorts,
Inc., as its share of capital contribution to the hotel/casino construction
project.

For the twelve months ended December 31, 1996, the Company and its
subsidiaries rented aircraft from Tracinda for various business purposes. The
aggregate amount of rental payments were $990,000, and the rent payments were
at rates which management believes are generally below those offered by third
parties. The Company and Tracinda have entered into various other transactions
and arrangements which, individually and in the aggregate, are not material.

The Company, through its wholly owned subsidiary MGM Grand Hotel, Inc., has
entered into an agreement with NYNY LLC to lease space in the New York-New
York Hotel and Casino ("NYNY") to operate a race book and sports pool. The
terms of the lease are for ten years from the commencement date of January 3,
1997, with an option for an additional term of ten years. MGM Grand Hotel,
Inc. is obligated to pay to NYNY LLC a minimum annual rent of $200,000 versus
a percentage rent based upon gross revenue, as defined by the Nevada Gaming
Commission and Nevada State Gaming Control Board. The percentage rent is based
on a graduated scale of gross revenue at percentages ranging from 12% to 15%.
During 1996, no amounts were paid under this agreement. NYNY commenced
operations on January 3, 1997. Additionally, MGM Grand Hotel, Inc. leased
office facilities to NYNY LLC during 1996, for which it received rental
payments of approximately $56,000, and provided various other hotel goods and
services for which NYNY LLC paid approximately $85,000. On September 4, 1996,
the Company also entered into an agreement with NYNY LLC to provide exclusive
floral services through its wholly owned subsidiary MGM Grand Merchandising,
Inc., at rates generally comparable to those offered by third parties. No
payments were made by NYNY LLC and no services were rendered under the floral
service contract during 1996. MGM Grand Hotel, Inc. entered into an agreement
with NYNY LLC effective December 14, 1996, whereby it agreed to provide
certain of its employees to perform services at NYNY. In exchange, NYNY agreed
to reimburse MGM Grand Hotel, Inc. for all payroll and related costs arising
from such services, which, during 1996, were immaterial in amount.

In conjunction with the Company's 50% interest in the MGM Grand-Bally's
Monorail Limited Liability Company, the Company, through its wholly owned
subsidiary MGM Grand Hotel, Inc., contributed approximately $1,230,000 to the
joint venture as part of its operating contribution during 1996. Also during
1996, the Company made capital contributions of approximately $88,000 to the
MGM Grand-Bally's Monorail Limited Liability Company.

15
<PAGE>

Pursuant to an agreement dated December 23, 1996 between MGM Grand Hotel,
Inc. and MGM/UA Home Entertainment, Inc. ("MGM/UA"), a wholly owned subsidiary
of Metro-Goldwyn-Mayer Inc., a California based motion picture studio in which
Tracinda has a 72% ownership interest, MGM Grand Hotel, Inc. can utilize key
art and still photographs from certain Metro-Goldwyn-Mayer Inc. and United
Artists Corporation motion pictures for the period commencing on December 27,
1996 and ending on July 1, 1997. In exchange, MGM Grand Hotel, Inc. agreed to
promote MGM/UA motion picture video cassettes for availability in one or more
retail venues. During December 1996, MGM Grand Hotel, Inc. purchased video
cassettes in amounts that are not material.

Pursuant to a License Agreement between the Company, Metro-Goldwyn-Mayer
Inc. and Metro-Goldwyn-Mayer Film Co. dated February 29, 1980, the Company has
exclusive rights in perpetuity to use certain trademarks, trade names and
logos in and in connection with the Company's hotel and gaming operations.

APPROVAL OF AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION

PROPOSAL NO. 2

DESCRIPTION OF THE AMENDMENT

Subject to the approval of the stockholders, the Board of Directors has
approved, and declared advisable, the amendment of the Company's Certificate
of Incorporation to comply with the requirements of the New Jersey Casino
Control Act, in preparation for anticipated future gaming activities in the
State of New Jersey. The New Jersey Casino Control Act requires a publicly
traded holding company or a casino licensee to have certain language in its
certificate of incorporation. Essentially, the certificate of incorporation
must contain language to the effect that securities of such a corporation are
held subject to the condition that if a holder is found to be disqualified by
the New Jersey Casino Control Commission, such holder shall dispose of its
interest in the corporation, as reflected in new Article 12 set forth below.
In addition, the Board of Directors has approved new Article 13 set forth
below, as permitted by the Delaware General Corporation Law.

TEXT OF THE AMENDMENT

The proposed amendment to the Company's Certificate of Incorporation adds a
new Article 12 and Article 13 as follows:

"12 (A). Except as is otherwise expressly provided in instruments
containing the terms of the Corporation's securities, which instruments
have been approved by the New Jersey Casino Control Commission (hereinafter
"Commission"), if and when the Corporation shall become, and so long as the
Corporation shall remain, a publicly traded holding company as defined in
the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq. (hereinafter
"Act"), in accordance with Section 82d(7) and (9) of the Act, all
securities of the Corporation shall be held subject to the condition that
if a holder thereof is disqualified by the Commission pursuant to the Act
("Disqualified Holder"), such Disqualified Holder shall dispose of his
interest in the Corporation's securities within 120 days or such other time
period required by the Commission following the Corporation's receipt of
notice (the "Notice Date") of such Disqualified Holder. Promptly following
the Notice Date, the Corporation shall personally deliver a copy of such
written notice to the Disqualified Holder, mail it to such Disqualified
Holder at the address shown on the Corporation's books and records, or use
any other reasonable means of delivering a copy of such written notice to
the Disqualified Holder. Failure of the Corporation to provide notice to a
Disqualified Holder after making reasonable efforts to do so shall not
preclude the Corporation from exercising its rights under this Article 12.
Failure of the Corporation to exercise its rights under this Article 12
shall not preclude the Corporation from exercising its rights under Article
13.

16
<PAGE>

(B). A Disqualified Holder shall reimburse the Corporation for all
expenses incurred by the Corporation in performing its obligations and
exercising its right under this Article 12 or Article 13.

13. So long as the Corporation holds (directly or indirectly) a license
or franchise from a governmental agency to conduct its business, which
license or franchise is conditioned upon some or all of the holders of the
Corporation's stock possessing prescribed qualifications, any and all
shares of the Corporation's stock shall be subject to redemption by the
Corporation, at its sole option and in its sole discretion, to the extent
necessary to prevent the loss of such license or franchise or to reinstate
it.

Any shares of the Corporation's stock redeemable pursuant to this Article
13 may be called for redemption immediately for cash, property or rights,
including securities of the Corporation or another corporation, on not less
than five (5) days notice to the holder(s) thereof at a redemption price
equal to the average closing price of such stock on a national securities
exchange for the 45 trading days immediately preceding the date of the
redemption notice; or if such stock is not so traded, then the average of
the high and low closing bid price of the stock as quoted by the National
Association of Securities Dealers Automated Quotation system for such 45
trading day period; or if such stock is not so quoted, the redemption price
shall be determined in good faith by the Corporation's Board of Directors."

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION

APPROVAL OF THE MGM GRAND, INC.
ANNUAL PERFORMANCE BASED
INCENTIVE PLAN FOR EXECUTIVE OFFICERS

PROPOSAL NO. 3

The proposed MGM Grand, Inc. Annual Performance Based Incentive Plan for
Executive Officers (the "Performance Plan") is an annual bonus plan designed
to provide certain senior executive officers with incentive compensation based
upon the achievement of pre-established performance goals. The Performance
Plan is intended to provide an incentive for profitable growth and to motivate
participating executive officers toward even higher achievement and operating
results, to tie their goals and interests to those of the Company and its
stockholders and to enable the Company to attract and retain highly qualified
executive officers. The Chief Executive Officer and other executive officers
of the Company who are among the four most highly compensated are eligible to
participate in the Performance Plan. The Performance Plan will be administered
by the Compensation and Stock Option Committee (the "Committee") of the Board
of Directors. The Committee will approve the specific executive officers who
will participate in the Performance Plan in a given year prior to, or at the
time of, the establishment of the performance objectives for such year.

The Performance Plan is designed to comply with Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), which limits the tax
deductibility by the Company of compensation paid to certain executive
officers to $1,000,000 per officer. Compensation paid pursuant to a plan
approved by the stockholders that meets the requirements of Section 162(m) is
exempted from this limitation and is fully deductible. The Committee has
approved the Performance Plan for submission to the stockholders in order to
maintain the full deductibility of compensation paid to covered executive
officers.

Within 90 days of the beginning of each calendar year, the Committee will
approve performance goals including specific performance objectives and
establish computation formulae or methods for

17
<PAGE>

determining each participant's bonus for that year. The objectives include any
one or more of the following business criteria for the Company as a whole or
any of its subsidiaries or operating units: stock price; market share; gross
revenue; pretax operating income; cash flow; earnings before interest, taxes,
depreciation and amortization; earnings per share; return on equity; return on
invested capital or assets; return on revenues; cost reductions and savings;
and productivity. In addition, to the extent consistent with the goal of
providing for deductibility of compensation under the Code, performance goals
may include a participant's attainment of personal objectives with respect to
any of the foregoing performance goals or negotiating transactions and sales
or developing long-term business goals.

At or after the end of each calendar year, the Committee is required by the
terms of the Performance Plan to certify in writing whether the pre-
established performance goals and objectives have been satisfied in such year.
When establishing performance goals and approving the achievement of such
goals, the Committee, in its sole discretion, may ignore extraordinary items,
property transactions, changes in accounting standards and losses or gains
arising from discontinued operations. The actual bonus award for any
participant for such year shall then be determined based upon the pre-
established computation formulae or methods. In no event will any bonus award
for any plan year exceed the lesser of 100% of the participant's annual base
salary as in effect at the beginning of the plan year or $1,000,000. The
Committee has no discretion to increase the amount of any participant's bonus
as so determined, but may reduce the amount of, or totally eliminate, such
bonus if the Committee determines, in its absolute discretion, that such a
reduction or elimination is appropriate in order to reflect the participant's
performance or unanticipated factors.

Approved bonus awards under the Performance Plan are payable in cash as soon
as practicable after the end of each calendar year and after the Committee has
certified in writing that the relevant performance goals were achieved. Awards
that are otherwise payable to a participant who is not employed by the Company
as of the last day of the calendar year will be prorated or eliminated
pursuant to rules established by the Committee in accordance with the
Performance Plan. Each participant will recognize ordinary taxable income upon
receipt of payments under the Performance Plan.

Since the Performance Plan requires performance goals to be set and
participants to be selected for each year, it is not determinable what
benefits, if any, would have been paid to any executive officer if the
Performance Plan had been in effect for 1996.

Amendments can be made to the Performance Plan that can increase the cost of
the plan to the Company and can alter the allocation of benefits among
participating executive officers. However, no such amendment that is
inconsistent with its purpose or with its compliance with applicable law and
the requirements of Section 162(m) will be made without stockholder approval.

The foregoing description of the Performance Plan is qualified in all
respects by the actual provisions of such plan which is attached to this Proxy
Statement as Appendix I.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE PERFORMANCE PLAN

18
<PAGE>

APPROVAL OF AMENDMENT OF THE COMPANY'S
NONQUALIFIED STOCK OPTION PLAN

PROPOSAL NO. 4

DESCRIPTION OF THE AMENDMENT

The Board of Directors is of the opinion that the Option Plan has helped the
Company compete for, motivate and retain high caliber executives,
administrative and professional employees, and that it is in the best interest
of the Company and its stockholders to amend the Option Plan as proposed.
Consistent with the Company's compensation objectives, rewards under the
Option Plan are dependent on those factors which directly benefit the
Company's stockholders and appreciation in the market value of the Common
Stock.

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 (the "Option Plan") to: (i) limit to
1,000,000 the aggregate number of options which may be granted to any
participant in any calendar year; and (ii) delete the prohibition contained in
the Option Plan against granting options to members of the Committee. The
foregoing limitation, which shall be adjusted proportionately in connection
with any change in the Company's capitalization (such as a stock split) is
intended to satisfy the requirements applicable to options intended to qualify
as "performance-based compensation" within the meaning of Section 162(m) of
the Code. The Board of Directors has determined that the grant of options to
purchase Common Stock to directors who are not executive officers of the
Company will benefit the Company by helping to attract and retain qualified
persons to serve as directors and by providing an additional incentive to
directors to improve the Company's long-term performance as a result of
aligning their financial interests with those of the Company and its
stockholders.

In the past, Rule 16b-3 under the Exchange Act provided an exemption from
Section 16(b) of the Exchange Act (which deals with insider trading liability)
for, inter alia, grants of stock options under plans meeting the criteria set
forth in Rule 16b-3. One of such criteria was "disinterested administration,"
i.e., the plan would be administered by a committee of two or more directors
who, with limited exceptions, were not granted equity securities or options
during their committee tenure or the one-year period prior thereto. Under Rule
16b-3 as amended effective August 1996, such "disinterested administration" is
no longer a requirement for an exemption from Section 16(b). Therefore, the
Board of Directors believes that the directors who are members of the
Committee should also be eligible to participate in the aforesaid program to
grant options to non-executive officer directors under the Option Plan and
that the Option Plan should be amended to delete the prohibition against
granting options to members of the Committee.

At the Annual Meeting, stockholders will be asked to approve the following
resolution (deleted material is shown in brackets, and new material is in bold
and underlined).

RESOLVED, that the first paragraph of Section 3 of the Option Plan is hereby
amended to read as follows:

"3. Administration. The Plan shall be administered by the Committee,
consisting of at least three members, appointed by and holding office at the
pleasure of the Board. Members of the Committee shall be members of the Board
[and shall not be eligible to participate in the Plan while serving on the
Committee]. NO PARTICIPANT IN THE OPTION PLAN SHALL BE ENTITLED TO RECEIVE
OPTIONS TO PURCHASE MORE THAN 1,000,000 SHARES IN ANY CALENDAR YEAR."

19
<PAGE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE AMENDMENT OF THE OPTION PLAN

DESCRIPTION OF THE OPTION PLAN

The Option Plan covers up to an aggregate of 5,000,000 shares of Common
Stock and has a ten-year duration. The Option Plan is 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 13, 1997, there were approximately 6,600 employees
currently eligible to participate in the option plans and approximately 143
employees holding outstanding options under the Option Plan. 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 options issued after
March 26, 1996 are exercisable in five equal annual installments of 20%
commencing on the first anniversary date of grant. Options issued prior to
March 26, 1996 also have a ten-year term, and are exercisable in either (i)
four annual installments of varying amounts, or (ii) five equal annual
installments of 20% commencing on the first anniversary date of grant.
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 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 Plan 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 Plan 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
Plan or (iv) make a material change in the class of eligible employees.

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 550,000
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 Company has also agreed that options
for an aggregate of 300,000 shares of Common Stock held by five other officers
of the Company will become fully vested upon a change of control of the
Company, and options for an aggregate of 135,000 shares of Common Stock held
by four other officers 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.

20
<PAGE>

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 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 nonqualified 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 Plan, and 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.

The following table sets forth certain information with respect to stock
options granted pursuant to the Option Plan since January 1, 1996 to (i) the
Named Executives, (ii) all current executive officers as a group, (iii) all
directors who are not executive officers as a group and (iv) 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>
NUMBER OF
NAME & POSITION DOLLAR VALUE ($)(1) OPTIONS
- -------------------------------- ------------------- ---------
<S> <C> <C>
Scott Langsner $ -- 7,500
Secretary/Treasurer

Kenneth Rosevear -- 15,000
Senior Vice President-
Development

All Executive Officers as a -- 9,000
group (2 persons)

All Non-Executive Officer -- 35,000(2)
Directors as a group (7 persons)

Non-Executive Officer -- 19,700
Employees as a group
(8 persons)(3)
</TABLE>
- --------
(1) Based on the difference between the exercise price and the closing price
of the Common Stock of $33.375 as reported on the New York Stock Exchange
Composite Tape on March 13, 1997.

(2) Subject to stockholder approval of Proposal No. 4 herein. See "Information
Regarding Board and Committees."

(3) In addition, the Company has granted 721,000 stock options pursuant to the
Option Plan, to 129 employees of its subsidiaries with a total dollar
value of $655,625.

21
<PAGE>

SELECTION OF AUDITORS

PROPOSAL NO. 5

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, 1997. This firm acted as
auditors for the Company during the year ended December 31, 1996.

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 present at the 1998 Annual Meeting
of Stockholders must be received by the Company on or before November 28, 1997
in order to be included in the form of proxy and proxy statement to be issued
by the Board of Directors at 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 to them.

The Company's Annual Report to Stockholders for the year ended December 31,
1996 accompanies this Proxy Statement.

By Order of the Board of Directors,

[SIGNATURE OF ALEX YEMENIDJIAN] [SIGNATURE OF J. TERRENCE LANNI]
Alex Yemenidjian J. Terrence Lanni
President, Chief Operating Chairman and Chief Executive Officer
Officer and Chief Financial
Officer

22
<PAGE>

APPENDIX I
MGM GRAND, INC.
ANNUAL PERFORMANCE BASED INCENTIVE PLAN
FOR EXECUTIVE OFFICERS

PURPOSE

The MGM Grand, Inc. Annual Performance Based Incentive Plan For Executive
Officers (the "Plan") is an annual short-term incentive plan designed to
reward executive officers of MGM Grand Inc. (the "Company") for achieving
preestablished corporate performance goals. The Plan is intended to provide an
incentive for superior performance and to motivate participating officers
toward the highest levels of achievement and business results, to tie their
goals and interests to those of the Company and its stockholders, and to
enable the Company to attract and retain highly qualified executive officers.
The Plan is also intended to preserve the Company's tax deduction for bonus
compensation paid to executive officers by meeting the requirements for
performance-based compensation under section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").

ARTICLE 1
ELIGIBILITY AND PARTICIPATION

Section 1.1 Participation in the Plan is limited to those executive officers
of the Company who are officers among the named executives in the Company's
annual proxy statements; specifically, any individual who (a) at any time
during the taxable year, served as the chief executive officer of the Company
or acted in such capacity, or (b) is among the four highest compensated
executive officers of the Company other than the chief executive officer. At
or prior to the time performance objectives for a "Performance Period" are
established, as defined in Section 2.2 below, the Compensation and Stock
Option Committee (the "Committee") of the Board of Directors (the "Board")
will designate in writing which executive officers among those eligible shall
participate in the Plan for such Performance Period (the "Participants").

ARTICLE 2
PLAN YEAR, PERFORMANCE PERIODS AND PERFORMANCE OBJECTIVES

Section 2.1 The fiscal year of the Plan (the "Plan Year") shall be the fiscal
year beginning on January 1 and ending on December 31. The performance period
with respect to which bonuses shall be calculated and paid under the Plan (the
"Performance Period") shall generally be the Plan Year; provided, however,
that the Committee shall have the authority to designate different Performance
Periods under the Plan.

Section 2.2 Within the first ninety days of each Performance Period the
Committee shall establish in writing, with respect to such Performance Period,
one or more performance goals, a specific target objective or objectives with
respect to such performance goals, and an objective formula or method for
computing the amount of bonus compensation awardable to each Participant if
the performance goals are attained. Notwithstanding the foregoing sentence,
for any Performance Period, such goals, objectives and formulae must be
established within that number of days, beginning on the first day of such
Performance Period, which is no more than twenty-five percent of the total
number of days in such Performance Period.

Section 2.3 Performance goals shall be based upon one or more of the following
business criteria for the Company as a whole or any of its subsidiaries or
operating units: stock price; market share; gross revenue; pretax operating
income; cash flow; earnings before interest, taxes, depreciation and
amortization; earnings per share; return on equity; return on invested capital
or assets; return on
<PAGE>

revenues; cost reductions and savings; and productivity. In addition, to the
extent consistent with the goal of providing for deductibility of bonus
compensation under the Code, performance goals may be based upon a
Participant's attainment of personal goals with respect to any of the
foregoing performance goals, negotiating transactions and sales, or developing
long-term business goals. Measurements of the Company's or a Participant's
performance against the performance goals established by the Committee shall
be objectively determinable and, to the extent they are expressed in standard
accounting terms, shall be determined according to generally accepted
accounting principles as in existence on the date on which the performance
goals are established.

ARTICLE 3
DETERMINATION OF BONUS AWARDS

Section 3.1 As soon as practicable after the end of each Performance Period,
the Committee shall certify in writing to what extent the Company and the
Participants have achieved the performance goal or goals for such Performance
Period, including the specific target objectives and the satisfaction of any
other material terms of the bonus award, and the Committee shall calculate the
amount of each Participant's bonus for such Performance Period based upon the
performance goals, objectives, and computation formulae for such performance
period established pursuant to Section 2.2 above. The Committee shall have no
discretion to increase the amount of any Participant's bonus as so determined,
but may reduce or totally eliminate any Participant's bonus if it determines,
in its sole and absolute discretion, that such a reduction or elimination is
appropriate with respect to the Participant's performance or any other factors
material to the goals, purposes, and administration of the Plan.

Section 3.2 No Participant's bonus for any Plan Year shall exceed the lesser
of 100% of the Participant's base annual salary as in effect as of the first
day of such Plan Year or $1,000,000.00.

ARTICLE 4
PAYMENT OF BONUS AWARDS

Section 4.1 Approved bonus awards shall be payable by the Company in cash to
each Participant, or to the Participant's estate in the event of the
Participant's death, as soon as practicable after the end of each Performance
Period and after the Committee has certified in writing pursuant to
Section 3.1 that the relevant performance goals were achieved.

Section 4.2 A bonus award that would otherwise be payable to a Participant who
is not employed by the Company or one of its subsidiaries on the last day of a
Performance Period may be prorated or not paid based on rules to be
established by the Committee for the administration of the Plan.

ARTICLE 5
OTHER TERMS AND CONDITIONS

Section 5.1 No bonus awards shall be paid under the Plan unless and until the
material terms (within the meaning of the Code and regulations promulgated
thereunder) of the Plan, including the business criteria described in Section
2.3 above, are approved by the stockholders by a majority of votes cast in a
separate vote on the issue in person or by proxy (including abstentions to the
extent abstentions are counted as voting under applicable state law).

Section 5.2 No person shall have any legal claim to be granted an award under
the Plan and the Committee shall have no obligation to treat Participants
uniformly. Except as may be otherwise required by law, bonus awards under the
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of

2
<PAGE>

any kind, either voluntary or involuntary. Bonuses awarded under the Plan
shall be payable from the general assets of the Company and no Participant
shall have any claim with respect to any specific assets of the Company.

Section 5.3 Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the employ of the
Company or any subsidiary or to obligate the Company or any subsidiary to
maintain any employee's compensation at any level.

Section 5.4 The Company or any of its subsidiaries may deduct from any award
any applicable withholding taxes or any amounts owed by the employee to the
Company or any of its subsidiaries.

ARTICLE 6
ADMINISTRATION

Section 6.1 All members of the Committee shall be persons who qualify as
"outside directors" as defined under the Code. Until changed by the Board, the
Compensation and Stock Option Committee of the Board shall constitute the
Committee hereunder.

Section 6.2 The Committee shall have full power and authority to administer
and interpret the provisions of the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Committee deems necessary or advisable.

Section 6.3 Except with respect to matters which under the Code are required
to be determined in the sole and absolute discretion of the Committee, the
Committee shall have full power to delegate to any officer or employee of the
Company the authority to administer and interpret the procedural aspects of
the Plan, subject to the Plan's terms, including adopting and enforcing rules
to decide procedural and administrative issues.

Section 6.4 The Committee may rely on opinions, reports or statements of
officers or employees of the Company or any subsidiary thereof and of Company
counsel (inside or retained counsel), public accountants and other
professional or expert persons.

Section 6.5 The Board reserves the right to amend or terminate the Plan in
whole or in part at any time. Unless otherwise prohibited by applicable law,
any amendment required to conform the Plan to the requirements of the Code may
be made by the Committee. No amendment may be made to the class of individuals
who are eligible to participate in the Plan, the performance criteria
specified in Section 2.3 or the maximum bonus payable to any Participant as
specified in Section 3.2 without stockholder approval unless stockholder
approval is not required in order for bonuses paid to Participants to
constitute qualified performance-based compensation under the Code.

Section 6.6 No member of the Committee shall be liable for any action taken or
omitted to be taken or for any determination made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and hold harmless
each member of the Committee against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any act or omission in connection
with the administration or interpretation of the Plan, unless arising out of
such person's own fraud or bad faith.

Section 6.7 The place of administration of the Plan shall be the State of
Nevada, and the validity, construction, interpretation, administration and
effect of the Plan and of its rules and regulations, and rights relating to
the Plan, shall be determined solely in accordance with the laws of the State
of Delaware.

3
<PAGE>

- --------------------------------------------------------------------------------

MGM GRAND, INC.

Proxy for Annual Meeting of Stockholders

May 6, 1997

Solicited on Behalf of the Board of Directors

The undersigned hereby appoints TERRY CHRISTENSEN, WILLIE D. DAVIS 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 6, 1997, 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 1,2,3,4 and 5.

(Continued and to be SIGNED on the other side)

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

MGM GRAND, INC.

ANNUAL MEETING OF STOCKHOLDERS

Tuesday May 6, 1997
10:00a.m.
MGM Grand Hotel and Casino
3799 Las Vegas Blvd. South
Las Vegas, Nevada

ADMISSION TICKET

This ticket must be presented at the door for entrance to the meeting.

<PAGE>

This Proxy will be voted as specified herein; If no specification is made, this
Proxy will be voted for Items 1,2,3,4 and 5.

Please mark
your votes as
indicated in
this example [X]

1. ELECTION OF DIRECTORS

FOR all nominees WITHHOLD
named (except AUTHORITY
as marked to the for all nominees
contrary) named
[_] [_]

Names of Nominees; James D. Aljian, Fred Benninger, Glenn A. Cramer, Terry
Christensen, Willie D. Davis, Alexander M. Haig, Jr., Kirk Kerkorkian, J.
Terrence Lanni, Walter M. Sharp, Alex Yemenidjian, Jerome B. York.

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line.

- -------------------------------------------------------------------------

2. Approval of an Amendment of the Company's Certificate of Incorporation.

FOR AGAINST ABSTAIN
[_] [_] [_]

3. Approval of the Proposed Annual Performance Based Incentive Plan for
Executive Officers.

FOR AGAINST ABSTAIN
[_] [_] [_]

4. Approval of an Amendment to the Company's Nonqualified Stock Option Plan.

FOR AGAINST ABSTAIN
[_] [_] [_]

5. Ratification of the Appointment of Independent Auditors

FOR AGAINST ABSTAIN
[_] [_] [_]

I plan to attend meeting [_]

Dated: , 1997
--------------------------------------

---------------------------------------------------
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.

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

Admission Ticket

Annual Meeting

MGM GRAND, INC.

Tuesday May 6, 1997
10:00 a.m.
MGM GRAND HOTEL AND CASINO
3799 LAS VEGAS BLVD. SOUTH
LAS VEGAS, NEVADA

---------------------------------------------------------------------------
Agenda

1. To elect a Board of Directors.
2. To consider and act upon an amendment to the Company's Certificate
of Incorporation.
3. To consider and act upon the proposed Annual Performance Based
Incentive Plan for Executive Officers.
4. To consider and act upon an Amendment to the Company's Nonqualified
Stock Option Plan.
5. To consider and act upon the ratification of the selection of
independent auditors.
6. To transact such other business as may properly come before the
meeting or any adjournments thereof.

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