MGM GRAND INC, DEF 14A, 1999-03-19

MGM GRAND INC
DEF 14A, 1999-03-19
MISCELLANEOUS AMUSEMENT & RECREATION

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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:

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(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):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] 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:

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(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:

<PAGE>

MGM GRAND, INC.
3799 Las Vegas Blvd. South, Las Vegas, Nevada 89109
----------------
NOTICE OF ANNUAL MEETING TO BE HELD ON
May 4, 1999
----------------
To the Stockholders:

The Annual Meeting of Stockholders of MGM Grand, Inc., a Delaware corporation
(the "Company"), will be held at MGM Grand Hotel, 3799 Las Vegas Blvd. South,
Las Vegas, Nevada, on May 4, 1999, 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 1997 Non-
Qualified and Incentive 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 11, 1999 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 and Chief Operating Officer Chairman and Chief Executive Officer

March 31, 1999

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 4, 1999 | TICKET. NO ADMISSION
LOCATION: MGM GRAND HOTEL & CASINO | WILL BE ALLOWED WITHOUT
Grand Theatre | THIS TICKET.
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 31, 1999

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

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 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 31, 1999.

The authorized capital stock of the Company presently consists of 75,000,000
shares of Common Stock, $.01 par value per share (the "Common Stock"). At the
close of business on March 11, 1999, the record date for determining
stockholders entitled to vote at the meeting, 61,758,829 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. 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 not be counted in determining the number of shares necessary for approval
of the proposals. Shares represented by such broker non-votes will, however,
be counted for purposes of determining whether there is a quorum. None of the
three matters to be brought before the meeting are considered to substantially
affect the rights or privileges of the Common Stock.
<PAGE>

Shown below is certain information as of March 11, 1999 with respect to
beneficial ownership (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of shares of
Common Stock by the only person or entities 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
Beneficially Percent of
Name and Address(1) Owned(2) Class
------------------- ------------ ----------
<S> <C> <C>
Kirk Kerkorian 38,005,122(3) 59.98%
150 S. Rodeo Drive, #250
Beverly Hills, CA 90212

J. Terrence Lanni 1,035,015(4) 1.63%

Alex Yemenidjian 430,000(4) --%*

Daniel Wade 89,300(4) --%*

James J. Murren 3,000 --%*

Scott Langsner 45,222(4) --%*

Capital Research and Management Company 3,650,000(5) 5.76%
333 South Hope Street
Los Angeles, CA 90071

All directors and executive officers 39,751,189(3)(4)(6) 62.74%
as a group (16 persons)
</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) 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.

(3) Of these shares, 34,110,716 are held by Tracinda Corporation ("Tracinda"),
a Nevada corporation wholly owned by Mr. Kerkorian.

(4) Included in these amounts are 1,000,000 shares, 390,000 shares, 89,000
shares, and 41,000 shares subject to stock options exercisable on or prior
to May 11, 1999 held by Messrs. Lanni, Yemenidjian, Wade, and Langsner,
respectively, and 907 shares held in Mr. Langsner's 401(k) Savings Plan.

(5) Based upon a Schedule 13G, dated December 31, 1998, filed by Capital
Research and Management Company, an investment advisor under the
Investment Advisors Act of 1940, which is deemed to be the beneficial
owner of 3,650,000 shares of Common Stock as a result of acting as
investment advisor to various investment companies.

(6) Also included are 65,600 shares subject to stock options exercisable on or
prior to May 11, 1999, of which seven non-employee directors hold 2,200
shares each (see "Election of Directors"), and one non-employee director
holds 50,200 shares.

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 the Proxy Statement. Since the holders of Common Stock do not have
cumulative voting rights and since Mr. Kerkorian's shares represent more than
50% of the shares 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.

2
<PAGE>

ELECTION OF DIRECTORS

Proposal No. 1

Information Concerning the Nominees

One of the purposes of the meeting is to elect 13 Directors, each of whom
will serve until the next annual meeting of stockholders or until his or her
respective successor shall have been elected and qualified or until his or her
earlier resignation or removal.

The table set forth below names each nominee for Director and gives
information concerning their principal occupation for at least the past five
years, beneficial ownership of Company Common Stock, age as of March 11, 1999
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.

<TABLE>
<CAPTION>
Shares of
First Common Stock
Principal Occupation and Became Beneficially
Name (age) Other Directorships a Director Owned(1)
-------------------------- ------------------------ ---------- ------------
<C> <S> <C> <C>
James D. Aljian (66) Executive of Tracinda 1988 12,600(2)(3)
since October 1987.
Director of Chrysler
Corporation ("Chrysler")
from February 1996 to
November 1998, and
member of Shareholder's
Committee of Daimler
Chrysler Corporation
since November 1998.
Director of Metro-
Goldwyn-Mayer Inc. ("MGM
Inc.") since October
1996, of which Tracinda
has an approximate 89.6%
ownership interest.

Fred Benninger (82) Vice Chairman of the 1986 60,200(2)(3)
Board of the Company
from April 1995 to March
1998. 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 (58) Partner, Christensen, 1987 4,200(2)(3)
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 (77) Director of Transamerica 1992 7,233(2)(3)
Corporation from 1968 to
April 1994, and Chairman
of the Executive
Committee of
Transamerica Airlines
from 1983 to April 1994.

Willie D. Davis (64) President and Director 1989 2,700(2)(3)
of All-Pro Broadcasting,
Inc., an AM and FM radio
broadcasting company.
Director of MGM Inc.,
Sara Lee Corporation, K-
Mart Corporation,
Johnson Controls, Inc.,
Alliance Bank, WICOR,
Dow Chemical Company,
Rally's Hamburgers,
Inc., Strong Fund and
Bassett Furniture
Company.
</TABLE>

3
<PAGE>

Kirk Kerkorian (81) Chief Executive Officer, 1987 38,005,122(4)
President and sole
director and stockholder
of Tracinda. Director of
MGM Inc. since October
1996.

J. Terrence Lanni (56) Chairman of the Company 1995 1,035,015(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, and a Director
from January 1982 to
February 1991. Director
of Santa Anita
Companies. Director of
Meditrust Operating
Company, a New York
Stock Exchange listed
real estate investment
trust from November 1997
to April 1998.

James J. Murren (37) Executive Vice President 1998 3,000(2)
and Chief Financial
Officer of the Company
since January 1998.
Prior thereto, Managing
Director and Co-Director
of research for Deutsche
Morgan Grenfell ("DMG"),
having served DMG in
various other capacities
since 1984.

Gary E. Primm (58) Mr. Primm served as -- 2,967,743(3)
Chairman and President
of Primadonna Resorts,
Inc. from September 1996
to March 1999, and Chief
Executive Officer and a
director from its
inception in March 1993
to March 1999. Mr. Primm
also served as President
of Primadonna Resorts,
Inc. from its inception
in March 1993 to
February 1995. Mr. Primm
also served as Chairman
of the Board of New
York-New York Hotel and
Casino, LLC from July
1995 to March 1999. Mr.
Primm is also a director
of Primm South Real
Estate Company, Ernie
Corporation and Dry
Lake, Inc.

Walter M. Sharp (82) President of Walter M. 1986 31,682(2)(3)
Sharp Company (financial
consultants) and a
consultant to Tracinda.
</TABLE>

4
<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>
Alex Yemenidjian (43) President of the Company 1989 430,000(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 from May
1994 to January 1998.
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, and since
February 1999. Director
of MGM Inc. since
November 1997.

Jerome B. York (60) Vice Chairman of 1995 7,200(2)(3)
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. Director of
MGM Inc. since October
1996. In addition, Mr.
York serves on the board
of directors of Apple
Computer, Inc. and Waste
Management, Inc.
</TABLE>
- --------
(1) Except as otherwise indicated and subject to applicable community property
and similar laws, the persons listed as beneficial owners of the shares
have sole voting and investment power with respect to such shares.

(2) The number of shares shown as beneficially owned represents less than 1%
of the outstanding shares.

(3) Included in these amounts are shares subject to stock options exercisable
on or prior to May 11, 1999 held as follows:

<TABLE>
<CAPTION>
Name Shares
---- ---------
<S> <C>
Mr. Aljian......................... 2,200
Mr. Benninger...................... 50,200
Mr. Christensen.................... 2,200
Mr. Cramer......................... 2,200
Mr. Davis.......................... 2,200
Mr. Haig........................... 2,200
Mr. Lanni.......................... 1,000,000
Mr. Primm.......................... 72,600
Mr. Sharp.......................... 2,200
Mr. Yemenidjian.................... 390,000
Mr. York........................... 2,200
</TABLE>

(4) Of this amount, 34,110,716 shares are owned by Tracinda.

5
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of 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 all reports were filed on a timely basis.

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. The current members of the Executive
Committee are J. Terrence Lanni (Chairman), Fred Benninger, Kirk Kerkorian,
James J. Murren, Walter M. Sharp, Alex Yemenidjian and Jerome B. York. The
Executive Committee held 10 meetings during fiscal 1998 and acted by written
consent 6 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 Jerome B. York
(Chairman), Fred Benninger, James D. Aljian, Willie D. Davis and Glenn A.
Cramer. The Audit Committee held 4 meetings during fiscal 1998.

Compensation Committee Interlocks and Insider Participation - The functions
of the Compensation and Stock Option Committee (the "Compensation 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 Compensation Committee
recommends executive compensation policy to the Board, determines compensation
of senior executives of the Company, determines the performance criteria and
bonuses to be granted pursuant to the Company's Annual Performance Based
Incentive Plan, and administers and approves granting of Company stock
options. The Compensation Committee's authority and oversight extends to total
compensation, including base salaries, bonuses, stock options, and other forms
of compensation. The Compensation 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 Compensation
Committee member. The current members of the Compensation Committee are James
D. Aljian (Chairman), an executive of Tracinda and director of MGM Inc., a
California-based motion picture studio in which Tracinda has an approximate
89.6% ownership interest; Fred Benninger, formerly Vice Chairman of the
Company and prior thereto

6
<PAGE>

Chairman, President and Chief Executive Officer of the Company; and Jerome B.
York, an executive of Tracinda and a director of MGM Inc. The Compensation
Committee held 16 meetings during fiscal 1998. Alex Yemenidjian, President and
Chief Operating Officer and a Director of the Company, has served as a member
of the MGM Inc. Compensation Committee since November 1997, and Frank Mancuso,
Chairman of the Board and Chief Executive Officer of MGM Inc., served as a
Director of the Company from December 1997 through April 1998. See "Certain
Transactions".

Board Meetings. The Board of Directors held four meetings during 1998, and
did not act by unanimous written consent. The work of the Company's Directors
is performed not only at meetings of the Board of Directors and its
committees, but also by consideration of the Company's business through the
review of documents and in numerous communications among Board members and
others. During 1998, all Directors attended at least 88% 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 Committee receives $750 per
quarter. Directors are also reimbursed expenses for attendance at Board and
Committee meetings.

In February 1997, the Compensation Committee adopted a stock option grant
program pursuant to the Nonqualified Stock Option Plan, which received
subsequent stockholder approval, 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 1996, 1997, and 1998, 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.

7
<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, 1998, 1997, and 1996, of those persons who were, at
December 31, 1998, (i) the Chief Executive Officer, and (ii) the other four
most highly compensated Executive Officers of the Company who have received in
excess of $100,000 (collectively, the "Named Executives").

Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
-------------------------------- ------------
Shares
Name and Principal Other Underlying All Other
Position Year Salary Bonus Annual Option(A) Compensation(B)
- ------------------ ---- ---------- -------- ------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni 1998 $1,000,000 $500,000(C) $ -- -- $ --
Chairman and Chief 1997 1,000,000 983,642(D) -- -- 591
Executive Officer 1996 1,000,000 500,000(E) -- -- --

Alex Yemenidjian 1998 750,000 472,500(C) -- -- --
President and Chief 1997 750,000 826,482(D) -- -- --
Operating Officer 1996 750,000 423,750(E) -- -- --

Daniel M. Wade 1998 500,000 300,000(G) -- -- (H) --
Executive Vice 1997 450,000 253,125(G) -- 25,000 --
President 1996 397,692 340,000(G) -- 25,000 --

James J. Murren 1998 359,375(F) 230,000(C) -- 475,000(H) 62,771
Executive Vice 1997 -- -- -- -- --
President and Chief 1996 -- -- -- -- --
Financial Officer

Scott Langsner 1998 200,000 100,000(C) -- -- (H) --
Secretary/Treasurer 1997 200,000 118,037(D) -- 7,000 591
1996 183,333 50,000(E) -- 7,500 --
</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 of $591 in this column for 1997 represent value received
pursuant to the employee stock grant program in May 1997 (see "Benefit
Plans"). The amount of $62,771 in benefit of Mr. Murren in 1998
represented moving benefits provided and reimbursement of moving costs
incurred related to his relocation to Las Vegas, Nevada.

(C) The Named Executives did not qualify for bonuses pursuant to the Company's
Annual Performance Based Incentive Plan for executive officers (see
"Compensation Committee Report on Executive Compensation"). However, based
upon the attainment of certain other Company goals, the Named Executives
received bonuses in February 1999 as follows: Mr. Lanni--$500,000; Mr.
Yemenidjian--$375,000; Mr. Murren--$200,000; and Mr. Langsner--$75,000.
Additionally, in March 1998, Mr. Murren received $30,000 pursuant to
commencement of an employment contract (see "Certain Transactions"); in
February 1999, Mr. Langsner received $25,000 pursuant to commencement of
an employment contract (see "Certain Transactions"); and in February 1999,
Mr. Yemenidjian received $97,500 pursuant to a long-term incentive
agreement as detailed herein (see "Certain Transactions").

(D) In February 1998, certain of the Named Executives received bonuses
pursuant to the Company's Annual Performance Based Incentive Plan for
executive officers as follows: Mr. Lanni--$983,642;

8
<PAGE>

Mr. Yemenidjian--$737,732; and Mr. Langsner--$118,037. Additionally, in
April 1997, Mr. Yemenidjian received $40,000 pursuant to commencement of an
employment contract (see "Certain Transactions"), and in February 1998, Mr.
Yemenidjian received $48,750 pursuant to a long-term incentive agreement as
detailed herein (see "Certain Transactions").

(E) In February 1997, certain of the Named Executives received bonuses based
on (i) the financial performance of the Company for 1996 and (ii) the
Named Executives' individual performance as follows: Mr. Lanni--$500,000;
Mr. Yemenidjian--$375,000; Mr. Langsner--$50,000. Additionally, in
February 1997, Mr. Yemenidjian received $48,750 pursuant to a long-term
incentive agreement as detailed herein (see "Certain Transactions").

(F) Pursuant to the terms of his employment agreement, Mr. Murren's annual
salary was $375,000. The amount shown covers a period of less than one
year.

(G) Mr. Wade served as President and Chief Operating Officer of MGM Grand
Hotel, Inc., the Company's wholly owned subsidiary, through October 1998,
and received bonuses based on the financial performance of MGM Grand
Hotel, Inc., as well as his individual performance. As a Named Executive
commencing in October 1998, he did not qualify for a bonus pursuant to the
Company's Annual Performance Based Incentive Plan (see "Compensation
Committee Report on Executive Compensation "), however, he did receive a
bonus of $50,000 based upon a partial year of employment with the Company
and the attainment of certain other Company goals.

(H) Mr. Murren's options were granted in January 1998 and repriced in June
1998. Mr. Wade's and Mr. Langsner's options granted in 1996 and 1997 were
repriced in June 1998. See "Ten Year Option/SAR Repricings."

The table below sets forth certain information regarding options granted
during 1998 to the Named Executives.

Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of Securities
Underlying Options Granted Potential Realizable
--------------------------------------------- Value at Assumed Annual
Percent of Rates of Stock Price
Total Options Exercise Appreciation for Option
Granted to Price Term(B)
Options Employees in Per Expiration -----------------------
Name Granted (A) Fiscal Year Share Date 5% 10%
- ---- ----------- ------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Wade.......... 25,000 .8% $26.625 7/08/06 $ 418,608 $ 1,060,835
25,000 .8% $26.625 7/07/07 $ 418,608 $ 1,060,835

James J. Murren......... 475,000 15.0% $36.25 1/16/08 $10,828,779 $27,442,253
475,000 15.0% $26.625 1/16/08 $ 7,953,552 $20,155,862

Scott Langsner.......... 7,500 .2% $26.625 7/08/06 $ 125,582 $ 318,250
7,000 .2% $26.625 7/07/07 $ 117,210 $ 297,034
</TABLE>
- --------
(A) Mr. Wade's and Mr. Langsner's options were originally granted in 1996 and
1997 and were repriced on June 22, 1998. Mr. Murren's options were
originally granted on January 16, 1998 and were repriced on June 22, 1998.
The options have a ten-year term, with 20% of the options becoming
exercisable on each of the first through the fourth anniversary dates of
the repricing, and with full vesting occurring on the fifth anniversary
date of the repricing.

(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.

9
<PAGE>

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

Aggregated Option Exercises in Fiscal 1998 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, 1998 December 31, 1998(A)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni....... -- $ -- 400,000 600,000 $ 450,000 $675,000
Alex Yemenidjian........ -- -- 300,000 250,000 2,243,750 281,250
Daniel M. Wade.......... -- -- 63,000 137,000 206,750 275,125
James J. Murren......... -- -- -- 475,000 -- 237,500
Scott Langsner.......... -- -- 41,000 23,500 490,875 26,375
</TABLE>
- --------
(A) Based upon the market value of the underlying securities at December 31,
1998 of $27.125, minus the exercise price of "in-the-money" options.

The following table sets forth information concerning the repricing of
options held by any of the Company's executive officers of the Company since
January 29, 1986, the date the Company was incorporated. An aggregate of
1,252,050 options and 1,820,950 options previously granted to employees of the
Company, including the Named Executives noted herein, were amended during
December 1995 and June 1998, respectively. The December 1995 repricing reduced
the per share exercise price to $26.00 (the market price on the date of the
amendment) from exercise prices ranging from $26.25 to $32.50. The June 1998
repricing reduced the per share exercise price to $26.625 (the market price on
the date of the amendment) from exercise prices ranging from $33.1875 to
$44.125.

TEN-YEAR OPTION/SAR REPRICINGS

<TABLE>
<CAPTION>
Length of
Number of Exercise Original
Securities Market Price of Price at Option Term
Underlying Stock at Time of Time of New Remaining at
Options/SARs Repricing or Repricing or Exercise Date of
Repriced or Amendment Amendment Price Repricing or
Name and Position Date Amended (#) ($) ($) ($) Amendment
----------------- ------- ------------ ---------------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Terrence Lanni 12/4/95 1,000,000 $26.000 $29.125 $26.000 112.5 months
Chairman and CEO

Alex Yemenidjian 12/4/95 25,000 26.000 26.250 26.000 86 months
President and COO

Daniel M. Wade 12/4/95 25,000 26.000 30.250 26.000 112 months
Executive Vice 6/22/98 25,000 26.625 41.000 26.625 97 months
President 6/22/98 25,000 26.625 35.125 26.625 109 months

James J. Murren 6/22/98 475,000 26.625 36.25 26.625 115 months
Executive Vice
President/CFO

Scott Langsner 6/22/98 7,500 26.625 41.00 26.625 97 months
Secretary/Treasurer 6/22/98 7,000 26.625 35.125 26.625 109 months
</TABLE>

10
<PAGE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Compensation Policies

The Compensation Committee of the Board of Directors is responsible for
establishing, monitoring and implementing the policies governing the
compensation of the Company's executives. During 1998, the Committee was
comprised of the three Directors whose names appear at the bottom of this
report. These policies may be summarized as follows:

1. The Company's compensation programs should be effective in attracting,
motivating and retaining key executives;

2. There should be a correlation between the compensation awarded to an
executive, the performance of the Company as a whole, and the executive's
individual performance; and

3. The Company's compensation programs should provide the executives with
a financial interest in the Company similar to the interests of the
Company's stockholders.

The Company's executives are compensated through a combination of salary,
performance bonuses and long-term incentive arrangements (where appropriate),
grants of stock options under the Company's Nonqualified Stock Option Plan and
Incentive Stock 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 1998. Stock option grants are considered by the Compensation
Committee from time to time.

The Company's Annual Performance Based Incentive Plan for Executive Officers
(the "Incentive Plan") provides for performance-based bonuses for executives
who are "covered employees" under Section 162(m) of the Internal Revenue Code.
Section 162(m) generally disallows a tax deduction to public companies for
compensation over $1 million paid to any such 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 Compensation Committee based the
performance measure in 1998 on achievement by the Company of target revenues
and net income before tax, subject to application of an adjustment factor. The
actual bonus awards, if any, under the Incentive Plan are determined by the
Compensation Committee, provided that no bonus award may exceed the lesser of
100% of the eligible executive's annual base salary as in effect at the
beginning of the plan year or $1 million.

The performance goals set by the Compensation Committee in 1998 were not
met, and accordingly, the Company's senior executives did not qualify for any
bonuses for 1998 under the Incentive Plan. However, in determining whether to
grant any bonuses to such executives for 1998, the Compensation Committee also
considered the successful achievement of certain other Company goals,
including (i) the issuance of $500 million in Senior Collateralized Notes at
favorable rates in February 1998, (ii) the negotiation and execution of the
December 1998 merger agreement for the acquisition of Primadonna Resorts,
Inc., and (iii) the progress made in the Company's Detroit endeavors,
including the MGM Grand Detroit temporary casino construction, financing and
licensing activities. In addition, the Compensation Committee considered the
following factors, in order of importance: an assessment of overall Company
performance; the executives' levels of responsibility and performance based
upon evaluations and recommendations of the Chairman of the Board and

11
<PAGE>

Chief Executive Officer as to proposed bonuses for executives other than
himself; and the other components of the senior executives' compensation
attributable to 1998. The Compensation Committee also considered the fact that
the Company would not be permitted to deduct that portion of any bonus which,
when added to the salary received by the Named Executive, would exceed
$1 million. The Compensation Committee determined, in February 1999, to grant
bonuses for 1998 to the Named Executives (other than the Chief Executive
Officer) as follows: Mr. Yemenidjian--$375,000; Mr. Wade--$50,000; Mr.
Murren--$200,000; and Mr. Langsner--$75,000, based upon the factors and
compensation policies discussed above, and upon the recommendations of the
Chairman of the Board and Chief Executive Officer.

The Compensation 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 Compensation Committee strongly believes that
stock ownership in the Company is a valuable incentive to executives and that
the grant of stock options to them serves to align their interests with the
interests of the shareholders as a whole and encourages them to manage the
Company for the long term. The Compensation 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 1998, the Compensation
Committee granted to Mr. Murren options to purchase 475,000 shares of Common
Stock and determined that the other Named Executives had adequate stock
incentives at that time. In addition, in June 1998, because many outstanding
stock options had exercise prices substantially above the current market price
of the Common Stock, the Company offered to reprice outstanding stock options
at $26.625 per share, the market price of the Common Stock at the date of the
repricing, provided the option holder agreed to a new vesting schedule for the
repriced options. Of the Named Executives, only certain options held by
Messrs. Wade, Murren and Langsner were repriced. See "Ten-Year Option/SAR
Repricings". The Compensation Committee anticipates that it will grant
additional options to the Company's senior executive officers in the future.

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 1998, the Compensation Committee considered the achievement of the other
Company goals set forth above, as well as the following factors, in order of
importance: an assessment of overall Company performance; the level of
responsibility and performance of the Chief Executive Officer; and the other
components of his compensation attributable to 1998. The Compensation
Committee also considered the fact that the Company would not be permitted to
deduct any of the bonus paid to Mr. Lanni for 1998. The Compensation Committee
determined, in February 1999, to grant Mr. Lanni a bonus of $500,000 for 1998,
based upon the achievement of the factors and the compensation policies
described in this report.

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

/s/ Fred Benninger
-------------------------------------
FRED BENNINGER

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

12
<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 which commenced December 31, 1993
and ended December 31, 1998.

Comparison of Five Year Cumulative Total Return
Among the Company, Dow Jones Equity Market Index,
and the Dow Jones Casinos Group

[PERFORMANCE GRAPH APPEARS HERE]
December 31,
-----------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
MGM Grand, Inc. 100 62 59 89 92 69
Dow Jones Equity Market Index 100 101 139 171 229 294
Dow Jones Casinos Group 100 77 102 111 98 67
- --------
* Assumes $100 invested on January 1, 1994 in each of Company's Common Stock,
the Dow Jones Equity Market Index, and the Dow Jones Casinos Group.

13
<PAGE>

BENEFIT PLANS

The Company's Annual Performance Based Incentive Plan for Executive Officers
(the "Incentive Plan"), which was approved by the Company's stockholders in
May 1997, is an annual bonus plan designed to provide certain senior executive
officers with incentive compensation based upon the achievement of performance
goals which are set by the Compensation Committee during the first quarter of
each year. The Incentive Plan provides for performance-based bonuses for
executives who are "covered employees" under Section 162(m) of the Internal
Revenue Code, enacted in 1993. Section 162(m) generally disallows a tax
deduction to public companies for compensation over $1 million paid to any
such company's chief executive officer and four other most highly compensated
executives. Qualifying performance-based compensation will not be subject to
the deduction limitation if certain requirements are met. The Compensation
Committee's current policy is to structure the performance-based portion of
the compensation of its executive officers (currently consisting of stock
option grants and the bonuses granted pursuant to the Incentive Plan) in a
manner that complies with Section 162(m) of the Internal Revenue Code
whenever, in the judgment of the Compensation Committee, to do so would be
consistent with the objectives of the compensation plan under which the
compensation would be payable.

MGM Grand Hotel, Inc., a wholly-owned subsidiary of the Company, separately
adopted a Section 401(k) employee savings plan (the "MGM Hotel Savings Plan").
The MGM 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% (50% commencing January 1, 1999) up to an annual limit of
1% (2% commencing January 1, 1999) of a participant's salary (based upon a
maximum annual salary of $160,000) 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 MGM 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 MGM Hotel Savings Plan.

New York-New York Hotel & Casino, LLC., a wholly-owned subsidiary of the
Company, effective with the March 1, 1999 acquisition of Primadonna Resorts,
Inc., separately adopted a Section 401(k) employee savings plan (the "New
York-New York 401(k) Plan"). The New York-New York 401(k) Plan allows
participants to defer, on a pretax basis, a portion of their salary and
accumulate tax deferred earnings as a retirement fund. All deferred amounts
vest immediately and are invested in either an equity, balanced income, money
market or short-term bond fund, as directed by the participant. New York-New
York will make matching contributions of 50% up to an annual limit of 6% of a
participant's salary (based upon a maximum annual salary of $160,000). 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 New York-New York 401(k) 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.

Effective with the March 1, 1999 acquisition of Primadonna Resorts, Inc. by
the Company, a Section 401(k) employee savings plan (the "Primadonna Savings
Plan") for Primadonna employees was acquired. The Primadonna 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, international equity fund or guaranteed
investment contract as directed by the participant. Primadonna Resorts, Inc.
makes matching contributions of 50% up to an annual limit of 2.5% of a
participant's salary and bonus (based upon a maximum annual salary and bonus
of $160,000). The

14
<PAGE>

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 Primadonna 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.

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.

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 compensation was charged to
stockholders' equity and amortized monthly to compensation expense over the
one year commitment period. On May 7, 1997, 99,045 shares were issued to
employees as a result of the commitment. Over the life of the commitment,
approximately $4 million was amortized to expense.

On March 26, 1996, the Compensation 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 Committee also determined that pro-rata
vesting at times other than successive anniversary dates of the date of grant
would no longer be 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.

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 1998, 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 June
1998, the Committee concluded that such options were not providing the
intended incentive value. In order to restore the incentive value to such
options, the Compensation Committee approved the repricing of options held by
certain of the Named Executives to $26.625 per share, the closing price of the
Common Stock on the New York Stock Exchange on the repricing date, as follows:
Mr. Wade, two option grants for 25,000 shares each with the price reduced from
$41.00 and $35.125 per share, respectively; Mr. Murren, one option grant for
475,000 shares with the price reduced from $36.25 per share; and Mr. Langsner,
two option grants for 7,500 and 7,000 shares each with the price reduced from
$41.00 and $35.125 per share, respectively. See "Ten-Year Option/SAR
Pricings."

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

15
<PAGE>

(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 7% 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.

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. At the time of enrollment in the plan,
each participant must elect either a lump-sum payment or 10-year-installment-
payout to be distributed following termination of employment, normal
retirement or in the event of disability or death.

The Company also maintains stock option plans. 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 through April 1, 2000 pursuant to
which he receives an annual salary of $1,000,000. 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 the period from the date of termination through and
including March 31, 2000. "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, of which 60% have vested
with the balance vesting on April 1, 1999. If there is a change in control in
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 and Chief Operating Officer of the Company, has
a 4-year employment agreement with the Company which commenced April 22, 1997,
pursuant to which he received a signing bonus of $40,000, and receives an
annual salary of $750,000 and which contains a covenant not to compete. The
agreement is terminable by either party. Pursuant to the agreement, the
Company may terminate the agreement for good cause (as defined). In such
event, Mr. Yemenidjian shall be entitled to exercise those of his stock
options granted under the Company's Nonqualified Stock Option Plan as had been
vested but were unexercised as of the date of termination. Also, under the
agreement, if the Company terminates the agreement for other than good cause
(as defined), Mr. Yemenidjian's salary will continue for the term of the
agreement, he will continue to receive certain

16
<PAGE>

employee benefits, and all unvested stock options held will continue to vest
for a period of 12 months. If Mr. Yemenidjian seeks to terminate the agreement
for good cause, he must give the Company 30 days notice to cure the breach. If
such breach is not cured (and the Company does not invoke its right to
arbitration), or if Mr. Yemenidjian terminates without cause upon 30 days
notice, then termination will result and Mr. Yemenidjian shall be entitled to
exercise those of his stock options granted under the Company's Nonqualified
Stock Option Plan as had been vested but were unexercised as of the date of
termination. Mr. Yemenidjian was granted options to purchase 125,000 shares of
Common Stock on January 7, 1991; 25,000 shares on February 5, 1993; and
400,000 shares on December 5, 1995. 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 (as defined) of the Company,
all unvested stock options become fully vested. If the Change in Control
results from an exchange of outstanding Common Stock as a result of which the
Common Stock of the Company is no longer publicly held, then options held by
Mr. Yemenidjian to purchase Common Stock of the Company shall be exercisable
at the time or times they would otherwise have been exercisable for the
consideration (cash, stock or otherwise) which the holders of the Company's
Common Stock received in such exchange.

Daniel M. Wade, Executive Vice President of the Company, has a 5-year
employment agreement with the Company which commenced April 22, 1997, under
which he received a signing bonus of $40,000, and receives an annual salary of
$500,000 and which contains a covenant not to compete. The agreement is
terminable by either party. Under the agreement, the Company may terminate the
agreement for good cause (as defined). In such event, Mr. Wade shall be
entitled to exercise those of his stock options granted under the Company's
Nonqualified Stock Option Plan as had been vested but were unexercised as of
the date of termination. Also, pursuant to the agreement, if the Company
terminates the agreement for other than good cause (as defined), Mr. Wade's
salary will continue for the term of the agreement, he will continue to
receive certain employee benefits, and all unvested stock options held will
continue to vest for a period of 12 months. If Mr. Wade seeks to terminate the
agreement for good cause, he must give the Company 30 days notice to cure the
breach. If such breach is not cured (and the Company does not invoke its right
to arbitration), or if Mr. Wade terminates without cause upon 30 days notice,
then termination will result and Mr. Wade shall be entitled to exercise those
of his stock options granted under the Company's Nonqualified Stock Option
Plan as had been vested but were unexercised as of the date of termination.
Mr. Wade was granted options to purchase 50,000 shares of Common Stock on
September 4, 1990 which were exercised on February 19, 1997; 15,000 shares of
Common Stock on January 4, 1993 (which vest 20% in each of the third, fourth
and fifth years, and 40% in the sixth year from the date of the grant); 35,000
shares of Common Stock on June 6, 1994 (which vest 20% in each of the third,
fourth and fifth years, and 40% in the sixth year from the date of the grant);
25,000 shares of Common Stock on April 3, 1995 (which vest 20% annually
commencing April 1, 1997); 75,000 shares of Common Stock on November 6, 1995
(which vest 20% annually commencing April 1, 1997); 25,000 shares of Common
Stock on July 8, 1996 (which vest 20% annually commencing June 22, 1999); and
25,000 shares of Common Stock on July 7, 1997 (which vest 20% annually
commencing June 22, 1999). If there is a Change in Control (as defined) of the
Company, all unvested stock options become fully vested. If the Change in
Control results from an exchange of outstanding Common Stock as a result of
which the Common Stock of the Company is no longer publicly held, then options
held by Mr. Wade to purchase Common Stock of the Company shall be exercisable
at the time or times they would otherwise have been exercisable for the
consideration (cash, stock or otherwise) which the holders of the Company's
Common Stock received in such exchange.

James J. Murren, Executive Vice President and Chief Financial Officer of the
Company, has a 5-year employment agreement with the Company which commenced
January 16, 1998, pursuant to which he received a signing bonus of $30,000,
and receives an annual salary of $375,000 which was increased to $400,000
effective January 1, 1999, and which contains a covenant not to compete. The

17
<PAGE>

agreement is terminable by either party. Pursuant to the agreement, the
Company may terminate the agreement for good cause (as defined). In such
event, Mr. Murren shall be entitled to exercise those of his stock options
granted under the Company's Nonqualified Stock Option Plan as had been vested
but were unexercised as of the date of termination. Also, pursuant to the
agreement, if the Company terminates the agreement without good cause (as
defined), Mr. Murren's salary will continue for the term of the agreement, he
will continue to receive certain employee benefits and all unvested stock
options held will continue to vest for a period of 12 months. If Mr. Murren
seeks to terminate the agreement for good cause, he must give the Company 30
days notice to cure the breach. If such breach is not cured (and the Company
does not invoke its right to arbitration), or if Mr. Murren terminates without
cause upon 30 days notice, then termination will result and Mr. Murren shall
be entitled to exercise those of his stock options granted under the Company's
Nonqualified Stock Option Plan as had been vested but were unexercised as of
the date of termination. Mr. Murren was granted options to purchase 475,000
shares of Common Stock on January 16, 1998, which were repriced on June 22,
1998 and vest 20% annually from the date of the repricing. If there is a
Change in Control of the Company (as defined), all unvested stock options
become fully vested. If the Change in Control results from an exchange of
outstanding Common Stock as a result of which the Common Stock of the Company
is no longer publicly held, then options held by Mr. Murren to purchase Common
Stock of the Company shall be exercisable at the time or times they would
otherwise have been exercisable for the consideration (cash, stock or
otherwise) which the holders of the Company's Common Stock received in such
exchange.

Scott Langsner, Secretary/Treasurer of the Company, has a 4-year employment
agreement with the Company which commenced December 9, 1998, pursuant to which
he received a signing bonus of $25,000, and receives an annual salary of
$200,000 and which contains a covenant not to compete. The agreement is
terminable by either party. Pursuant to the agreement, the Company may
terminate the agreement for good cause (as defined). In such event, Mr.
Langsner shall be entitled to exercise those of his stock options granted
under the Company's Nonqualified Stock Option Plan as had been vested but were
unexercised as of the date of termination. Also, pursuant to the agreement, if
the Company terminates the agreement without good cause (as defined), Mr.
Langsner's salary will continue for the term of the agreement, he will
continue to receive certain employee benefits and all unvested stock options
held will continue to vest for a period of 12 months. If Mr. Langsner seeks to
terminate the agreement for good cause, he must give the Company 30 days
notice to cure the breach. If such breach is not cured (and the Company does
not invoke its right to arbitration), or if Mr. Langsner terminates without
cause upon 30 days notice, then termination will result and Mr. Langsner shall
be entitled to exercise those of his stock options granted under the Company's
Nonqualified Stock Option Plan as had been vested but were unexercised as of
the date of termination. Mr. Langsner was granted options to purchase 25,000
shares of common stock on September 4, 1990 and 10,000 shares on November 9,
1992 (all of which have vested); 15,000 shares on June 6, 1994 (which vest 20%
in each of the third, fourth and fifth years, and 40% in the sixth year from
the date of the grant); 7,500 shares on July 8, 1996 and 7,000 shares on July
7, 1997 (which vest 20% annually commencing June 22, 1999). If there is a
Change in Control (as defined) of the Company, all unvested stock options
become fully vested. If the Change in Control results from an exchange of
outstanding Common Stock as a result of which the Common Stock of the Company
is no longer publicly held, then options held by Mr. Langsner to purchase
Common Stock of the Company shall be exercisable at the time or times they
would otherwise have been exercisable for the consideration (cash, stock or
otherwise) which the holders of the Company's Common Stock received in such
exchange.

As part of its overall compensation packages for certain of its senior
executives, in February 1993, the Company entered into a long term incentive
agreement with Mr. Yemenidjian and three 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

18
<PAGE>

Mr. Yemenidjian's salary, performance bonuses and grants of stock options. The
Company agreed to pay to Mr. Yemenidjian, on each of February 1, 1996, 1997
and 1998, cash amounts equal to 5,000 and on February 1, 1999, cash amounts
equal to 10,000 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 Mr. Yemenidjian were employed by the Company on the applicable
date, subject to proration in the event such employment terminated after
February 1, 1996. Mr. Yemenidjian was paid $48,750 in each of February 1996,
February 1997 and February 1998, and he was paid $97,500 in February 1999.

Christensen, Miller, Fink, Jacobs, Glaser, Weil, & Shapiro, LLP, a law firm
of which Terry Christensen, a member of the Board of Directors of the Company,
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.

Gary E. Primm, a proposed member of the Board of Directors of the Company,
is also an officer, director and major shareholder of Primm South Real Estate
Company, Ernie Corporation and Dry Lake, Inc. (collectively, the "Primm Family
Companies"). The Primm Family Companies maintain relationships with the
Company, as a result of the acquisition by the Company of Primadonna Resorts,
Inc. on March 1, 1999, as described below:

Three hotel/casinos owned by a subsidiary of Primadonna Resorts, Inc. are
located on approximately 143 acres of land on both sides of Interstate 15
at the California/Nevada state line, substantially all of which are leased
from Primm South Real Estate Company. The lease has an expiration date of
2043 and an option to renew for an additional 25 years. Rent for all
properties under the lease, set by two appraisers selected by the lessor
and the subsidiary, is approximately $451,000 per month. Rent is to
increase each year by the cost of living, but not more than 8% in any one
year. Every eight years the rent is to be reset by the appraisers in the
manner described above, or, if they are unable to agree, by another
appraiser selected by the other two appraisers. The lease provides that for
a fee of $100,000 per year, adjusted after each 10 years of the lease term
by the cost of living but no more than 8% per year, the remaining acreage
owned by the lessor may not be used for any gaming activity unless operated
by the subsidiary. In addition, the lessor has made available rent-free to
the subsidiary, acreage for a wastewater treatment plant operated by the
subsidiary and for the associated rapid infiltration basins.

Until February 28, 1999, a subsidiary of Primadonna Resorts, Inc. and Mr.
Primm owned undivided interests of 75% and 25%, respectively, in a Model
1125 Astral SP aircraft. Operational expenses of the aircraft were borne by
the parties based on actual flight hours utilized by each. During 1998, the
plane flew 158 hours, of which 74 hours, or 47%, were for the subsidiary's
purposes. As of February 28, 1999, Mr. Primm owed the subsidiary
approximately $46,643 for expenses arising from the joint ownership of this
aircraft. On February 28, 1999, the subsidiary and Mr. Primm sold the
aircraft to an unrelated third party for cash. On February 26, 1999,
Mr. Primm agreed to purchase a hangar and support facilities from an
affiliate of the Company for $1,900,000 which the subsidiary and Mr. Primm
agreed represents fair market value of such assets pursuant to that certain
Asset Disposition Agreement contemplated by the Agreement and Plan of
Merger dated December 2, 1998, by and among the Company, MGM Grand
Acquisition Corp., and Primadonna Resorts, Inc. (the "Merger Agreement").

19
<PAGE>

Mr. Primm and his brothers and sisters own and operate a convenience
store located just south of the Primm Valley Resort & Casino facility
across the California border. A subsidiary of Primadonna Resorts, Inc.
provides certain services and supplies for $2,000 per month. In addition,
the subsidiary supplies the store with stand-by security services at its
cost plus 10%, as well as water and sewer services at the generally
prevailing rates in Las Vegas.

A subsidiary of Primadonna Resorts, Inc. entered into agreements
(commonly known as split-dollar life insurance agreements) in January 1994,
which agreements were amended and restated in December of 1998, under the
terms of which the subsidiary paid the premiums for certain survivorship
life insurance policies with an aggregate face value of $50 million, on the
lives of Mr. and Mrs. Gary E. Primm. Insurance benefits become payable when
both have died, and the subsidiary will have an interest in the insurance
benefits equal to the amount of unreimbursed premiums it has paid, with the
balance payable to a trust created by Mr. and Mrs. Primm for the benefit of
their children (the "Trust"). As provided in the Merger Agreement, Mr.
Primm, the Trust, and the subsidiary entered into an Agreement Regarding
Certain Insurance, dated March 1, 1999, which amended certain provisions
concerning the payment of premiums and repayment of premiums to the
subsidiary which will now occur on the earlier of: (i) the death of Mr.
Primm; or (ii) March 1, 2009.

A subsidiary of Primadonna Resorts, Inc. is a party to a Construction,
Operation and Reciprocal Easement Agreement by and among Fashion Outlet of
Las Vegas, a Nevada general partnership ("FOLV"), and certain entities
owned and controlled by Gary E. Primm and his brothers and sisters. The
affiliate also furnishes water and sewer services to the retail mall owned
and operated by FOLV adjoining the subsidiary's Primm Valley Resort &
Casino facility pursuant to a Lease of Water Rights and Wastewater Capacity
to which certain entities owned and controlled by Gary E. Primm and his
brothers and sisters are parties ("Water Lease"). One of such controlled
entities, Primm 650 Limited Partnership, is landlord to FOLV under a long-
term ground lease ("FOLV Lease") and would succeed to FOLV's interests
under the Water Lease in the event the FOLV Lease was terminated.

On February 28, 1997, the Compensation Committee adopted a stock option
grant program pursuant to the Nonqualified Stock Option Plan, which was
subsequently approved by stockholders, 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.

For the twelve months ended December 31, 1998, the Company and its
subsidiaries rented aircraft from Tracinda for various business purposes. The
aggregate amount of rental payments were approximately $306,000, 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.

In August 1998, Tracinda agreed to sell its building and land (approximately
.56 acre located at 4835 Koval Lane, Las Vegas, Nevada) to the Company's
subsidiary, MGM Grand Hotel, Inc., for $1,800,000. The Company, based on
appraisals it received, believes that this purchase was on terms comparable to
what it could have obtained for the land and building on an arms length basis
in an equivalent transaction with a third party.

MGM Home Entertainment, Inc. ("MGM-HE"), a wholly-owned subsidiary of MGM
Inc., a California-based motion picture studio in which Tracinda, directly or
indirectly, has an approximate 89.6% ownership interest, and MGM Grand Hotel,
Inc., have an ongoing relationship whereby MGM Grand Hotel, Inc. can utilize
key art and still photographs from certain MGM Inc. and United Artists
Corporation motion pictures on an as needed basis. In exchange, MGM Grand
Hotel, Inc. agrees to promote the availability of MGM-HE motion picture video
cassettes. During 1998, MGM Grand Hotel,

20
<PAGE>

Inc. purchased video cassettes and other MGM-HE merchandise for sale in its
retail outlets of approximately $50,000 at rates which management believes are
generally comparable to those offered to third parties. In addition, MGM Grand
Hotel, Inc. provided various goods and services during 1998 for which MGM-HE
paid approximately $35,000.

Pursuant to a License Agreement between a predecessor in interest to the
Company and Metro-Goldwyn-Mayer Film Co. dated as of February 29, 1980, as
amended as of May 18, 1992 and as further amended as of August 6, 1998, the
Company has an exclusive royalty-free license in perpetuity to use certain
trademarks, trade names and logos in and in connection with the Company's
resort hotel and /or gaming businesses, excluding the filmed entertainment
business.

During the three year periods ended December 31, 1998, 1997, and 1996, the
Company and MGM Inc. have entered into various other transactions and
arrangements which, individually and in the aggregate, are not material.

APPROVAL OF AMENDMENT OF THE COMPANY'S 1997 NON-QUALIFIED AND INCENTIVE 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 1997 Nonqualified Stock Option and Incentive Stock Option Plan
(collectively, the "Option Plans") to increase the number of shares of Common
Stock subject to such plans by 3,600,000. 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
the 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 5,100,000
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 that 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 11, 1999, there were approximately
11,799 employees currently eligible to participate in the option plans and
approximately 180 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

21
<PAGE>

generally exercisable in five annual installments of 20% each. An option grant
to one entertainment provider allows exercisability in three annual
installments of 33.33% each. 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 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.

The Company has agreed that certain options granted to certain Named
Executives will, to the extent not already vested, become fully vested upon a
change in control (as defined) of the Company as a result of a sale or
exchange of outstanding Common Stock. See "Certain Transactions".

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 the sale
or exchange equal to the difference between the exercise price and the lower
of (i) the fair market value of the shares on 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
optionee's holding period of the shares. The Company will be entitled to a tax
deduction in the same amount as the ordinary income recognized by the optionee
with respect to such a premature disposition.

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 ordinary income as
described above, will be treated as long-term or short-term capital gain or
loss, depending upon the optionee's holding period of the shares. 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.

22
<PAGE>

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 law 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 during 1998 to (i) the Named Executives (as defined under
"Executive Compensation"), (ii) all current executive officers as a group,
(iii) all non-executive officer directors 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>
Name & Position Dollar Value(1) Number of Options
- --------------- --------------- -----------------
<S> <C> <C>
James J. Murren.............................. $6,115,625 475,000(2)
Executive Vice
President and Chief
Financial Officer

Daniel M. Wade............................... 643,750 50,000(2)
Executive Vice
President

Scott Langsner............................... 186,688 14,500(2)
Secretary/Treasurer

All Executive Officers....................... 6,946,063 539,500(2)
as a group (6 persons)

All Non-Executive............................ 44,000 8,000
Officer Directors
as a group (8 persons)

All Non-Executive............................ 22,202,225 1,733,050
Officer Employees
as a group (173 persons)
</TABLE>
- --------
(1) Based on the difference between the exercise price and the closing price
of the Common Stock of $39.50 on the New York Stock Exchange Composite
Tape on March 11, 1999.

(2) Mr. Murren's options were granted in January 1998 and repriced in June
1998. Mr. Wade's and Mr. Langsner's options granted in 1996 and 1997 were
repriced in June 1998. See "Ten-Year Options/SAR Repricings."

23
<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, 1999. This firm acted as
auditors for the Company during the year ended December 31, 1998.

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 2000 Annual Meeting
of Stockholders must be received by the Company on or before December 1, 1999
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,
1998 accompanies this Proxy Statement.

By Order of the Board of Directors,

/s/ Alex Yemenidjian /s/ J. Terrence Lanni
Alex Yemenidjian J. Terrence Lanni
President and Chief Operating Chairman and Chief Executive
Officer Officer

24
<PAGE>

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

MGM GRAND, INC.

Proxy for Annual Meeting of Stockholders

May 4, 1999

Solicited on Behalf of the Board of Directors

The undersigned hereby appoints TERRY CHRISTENSEN, WILLIE D. DAVIS and GLENN A
CRAMER, 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 4, 1999, 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)

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

MGM GRAND, INC.

Annual Meeting of Stockholders

Tuesday May 4, 1999
10:00 a.m.
MGM Grand Hotel and Casino
Grand Theatre
3799 Las Vegas Blvd. South
Las Vegas, Nevada

ADMISSION TICKET

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

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

<PAGE>

<TABLE>
<S> <C>
This Proxy will be voted as specified herein; if no specification is made, this Please mark [X]
Proxy will be voted for items 1, 2 and 3. your votes as
indicated in
this example

1. Election of Directors Names of Nominees: James D. Aljian, Fred Benninger, Glen A. Cramer, Terry Christensen,
Willie D. Davis, Alexander M. Haig, Jr., Kirk Kerkorian, J. Terrence Lanni, James J.
FOR all nominees WITHHOLD Murren, Gary E. Primm, Walter M. Sharp, Alex Yemenidjian, Jerome B. York.
named (except AUTHORITY
as marked to the for all nominees (INSTRUCTION: To withhold authority to vote for any individual nominee, write that
contrary) named nominee's name on the following line.)
[_] [_] _______________________________________________________________________________________

2. Amendment to the Company's 1997 3. Ratification of the appointment of
Non-Qualified and Incentive Stock independent auditors.
Option Plans.

FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN I plan to attend meeting [_]
[_] [_] [_] [_] [_] [_]

Dated:_______________________________, 1999

________________________________________________
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.
</TABLE>
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

-------------------------
Admission Ticket
-------------------------

Annual Meeting
of
MGM GRAND, INC.
Tuesday May 4, 1999
10:00 a.m.
MGM GRAND HOTEL AND CASINO
GRAND THEATRE
3799 LAS VEGAS BLVD. SOUTH
LAS VEGAS, NEVADA

================================================================================

Agenda
------

1. To elect a Board of Directors.
2. To consider and act upon a proposal to amend the Company's 1997 Non-Qualified
and incentive 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.

================================================================================