MGM GRAND INC, PRE 14A, 2000-06-23

MGM GRAND INC
PRE 14A, 2000-06-23
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>

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

SCHEDULE 14A

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:

[X] Preliminary Proxy Statement

[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[_] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

MGM GRAND, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(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):

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

(4) Proposed maximum aggregate value of transaction:

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

(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.:

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

(3) Filing Party:

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(4) Date Filed:

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

Notes:

Reg. (S) 240.14a-101.

SEC 1913 (3-99)

<PAGE>

PRELIMINARY COPY
MGM GRAND, INC.
3600 Las Vegas Blvd. South, Las Vegas, Nevada 89109
----------------
NOTICE OF ANNUAL MEETING TO BE HELD ON
August 1, 2000
----------------
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 August 1, 2000, 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 changing the Company's name to MGM MIRAGE.

3. To consider and act upon an amendment to the Company's Annual
Performance Based Incentive Plan for Executive Officers.

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

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 June 23, 2000 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 3600 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/ James J. Murren /s/ Scott Langsner

James J. Murren Scott Langsner
President and Chief Financial Senior Vice President and
Officer Secretary/Treasurer

July 7, 2000

PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY.
Use the enclosed envelope, which requires no postage for mailing in the United
States.

<PAGE>

PRELIMINARY COPY

MGM GRAND, INC.
3600 Las Vegas Blvd. South
Las Vegas, Nevada 89109

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

PROXY STATEMENT
July 7, 2000

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

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 and 4 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 July 7, 2000.

The authorized capital stock of the Company presently consists of
300,000,000 shares of Common Stock, $.01 par value per share (the "Common
Stock"). At the close of business on June 23, 2000, the record date for
determining stockholders entitled to vote at the meeting, 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 the
Common Stock will be required for 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 a proposal.

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 against Proposal 2 but will not be counted
in determining the number of shares necessary for approval of other proposals.
Shares represented by such broker non-votes will, however, be counted for
purposes of determining whether there is a quorum. The matters to be brought
before the meeting are not considered to substantially affect the rights or
privileges of the Common Stock.
<PAGE>

Shown below is certain information as of June 23, 2000 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
beneficial owner of more than five percent of the outstanding shares of Common
Stock, by the Named Executives, as defined under Item 11. 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 Percent
Beneficially of
Name and Address(1) Owned(2) Class
------------------- ------------ -------
<S> <C> <C>
Kirk Kerkorian 95,010,244(3) %
150 S. Rodeo Drive, Ste. 250
Beverly Hills, CA 90212

Alex Yemenidjian 712,784(4) *
3500 Broadway Street
Santa Monica, CA 90404

J. Terrence Lanni 674,422(4) *
John T. Redmond 46,162(4) *

Daniel M. Wade 131,600(4) *

James J. Murren 198,000(4) *

Scott Langsner 27,816(4) *

James H. Fox *

All directors and executive officers
as a group ( persons) 96,977,858(3)(4)(5) %
</TABLE>
--------
* Less than one percent (1%)

(1) Unless otherwise indicated, the address for the persons listed is 3600 Las
Vegas Blvd. South, Las Vegas, Nevada 89109.

(2) The quantity of shares listed reflects the effect of the Company's
February 10, 2000 two-for-one stock split. 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, 91,221,432 are held by Tracinda Corporation ("Tracinda"),
a Nevada corporation wholly owned by Mr. Kerkorian.

(4) Included in these amounts are 638,108 shares, 44,162 shares, 129,000
shares, 190,000 shares and 23,800 shares subject to stock options
exercisable on or prior to August 22, 2000 held by Messrs. Yemenidjian,
Lanni, Redmond, Wade, Murren and Langsner, respectively.

(5) Also included are shares subject to stock options exercisable on or
prior to August 22, 2000, of which six non-employee directors hold 7,200
shares each (see "Election of Directors"), one non-employee director holds
3,200 shares, and one non-employee director holds 1,200 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, 3, 4 and 5, and Mr. Kerkorian's vote will be
sufficient to cause adoption of these Proposals.

2
<PAGE>

Recent Developments

On May 31, 2000, the Company completed its acquisition of Mirage Resorts,
Incorporated ("Mirage Resorts"). The Company's acquisition of Mirage was
effected by merging a subsidiary of the Company into Mirage Resorts (the
"Merger"), with Mirage Resorts continuing as the surviving corporation. As
consideration for the Merger, the Company paid Mirage Resorts' stockholders
$21.00 in cash for each share of Mirage Resorts common stock outstanding on
completion of the Merger. In addition, each outstanding option to purchase
Mirage Resorts common stock became the right to receive the difference between
$21.00 per share and the per share exercise price of such option. The total
consideration paid to Mirage Resorts stockholders and option holders was
approximately $4.4 billion.

Effective February 2000, J. Terrence Lanni rejoined the Company in a full-
time executive capacity as Chairman of the Board. In addition, effective on
June 1, 2000, the Company appointed Robert H. Baldwin as President and Chief
Executive Officer of Mirage Resorts, with responsibility for Bellagio, The
Mirage, Treasure Island, the Boardwalk Hotel and Casino, The Golden Nugget,
The Golden Nugget in Laughlin and Beau Rivage in Biloxi, Mississippi, and Gary
N. Jacobs as Executive Vice President-General Counsel of the Company. Both Mr.
Baldwin and Mr. Jacobs were elected to the Company's Board of Directors, and
Mr. Baldwin was elected to the Executive Committee of the Board of Directors.
In addition, four former members of the Mirage Resorts Board of Directors were
elected to the Company's Board of Directors and are included, together with
Messrs. Baldwin and Jacobs, among the nominees named under "Election of
Directors."

3
<PAGE>

ELECTION OF DIRECTORS

Proposal No. 1

Information Concerning the Nominees

One of the purposes of the meeting is to elect 20 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 following table sets forth for each nominee for Director his name,
principal occupation for at least the past five years, beneficial ownership of
Company Common Stock, age as of June 23, 2000 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.

Robert H. Baldwin (49) President and Chief 2000
Executive Officer of
Mirage Resorts since
June 1, 2000.
Mr. Baldwin was
appointed Chief
Financial Officer and
Treasurer of Mirage
Resorts on an interim
basis in September 1999.
He has also been
President and Chief
Executive Officer of our
Bellagio subsidiary
since June 1996. Prior
to that, he was
President and Chief
Executive Officer of our
Mirage subsidiary from
August 1987 to April
1997.

Fred Benninger (83) Vice Chairman of the 1986 21,200(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 (59) Partner, Christensen, 1987 11,200(2)(3)
Miller, Fink, Jacobs,
Glaser, Weil & Shapiro,
LLP, attorneys,
Los Angeles, California,
since May 1988. Director
of GIANT GROUP, LTD. and
Checkers Drive-In
Restaurants, Inc.
</TABLE>

4
<PAGE>

Willie D. Davis (65) President and Director 1989 8,200(2)(3)
of All-Pro Broadcasting,
Inc., an AM and FM radio
broadcasting company,
for more than the past
five years. Director of
MGM Inc., Sara Lee
Corporation, K-Mart
Corporation, Johnson
Controls, Inc., Alliance
Bank, WICOR, Inc., Dow
Chemical Company,
Checkers Drive-In
Restaurants, Inc.,
Strong Fund and Bassett
Furniture Industries,
Incorporated.

Alexander M. Haig, Jr. Chairman of Worldwide 1990 7,600(2)(3)
(75) Associates, Inc., an
international business
advisory firm. Director
of MGM Inc., America
Online, Inc.,
Interneuron
Pharmaceuticals, Inc.
and Preferred Employers
Holdings, Inc.
Consultant to the
Company since May 1990.

Gary Jacobs (55) Executive Vice 2000
President--General
Counsel of the Company
since June 2000. Prior
thereto, partner,
Christensen, Miller,
Fink, Jacobs, Glaser,
Weil & Shapiro, LLP.
Mr. Jacobs is Of Counsel
to that firm and is a
Director of The
InterGroup Corporation.

Kirk Kerkorian (82) Chief Executive Officer, 1987 95,010,244(4)
President and sole
director and stockholder
of Tracinda. Director of
MGM Inc. since October
1996.

J. Terrence Lanni (57) Chairman of the Company 1995 674,422(2)(3)
since July 1995.
Chairman of the
Executive Committee
since June 1995. Chief
Executive Officer of the
Company from June 1995
to December 1999.
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,
Inc. and MI
Entertainment, Inc.
</TABLE>

5
<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>
George J. Mason (69) Mr. Mason is a Senior 2000
Managing Director of
Bear Stearns & Co.,
Incorporated,
Los Angeles, California,
an investment banking
and brokerage firm, and
has been employed by
that firm since 1973. He
was a member of the
Board of Directors of
Mirage Resorts since
1973, as well as a
member of the Mirage
Resorts Audit, Stock
Option and Bonus
committees.

James J. Murren (38) President and Chief 1998 198,000(2)
Financial Officer of the
Company since December
1999. Chief Financial
Officer of the Company
since January 1998.
Executive Vice President
of the Company from
January 1998 to December
1999. Prior thereto,
Managing Director and
Co-Director of research
for Deutsche Morgan
Grenfell ("DMG"), having
served DMG in various
other capacities since
1984.

Ronald M. Popeil (64) Mr. Popeil has been the 2000
President of RONCO,
Incorporated, the
principal business of
which is inventing,
marketing and producing
consumer products, since
he co-founded that
company in May 1984. He
is recognized as a
pioneer in the field of
direct response
television marketing. He
was a member of the
Board of Directors of
Mirage Resorts since
1979, as well as a
member of the Audit,
Stock Option and Bonus
committees.

John T. Redmond (41) Co-Chief Executive 1999 46,162(2)(3)
Officer of the Company
since December 1999.
President and Chief
Operating Officer of
Primadonna Resorts from
March 1999 to December
1999. Senior Vice
President of MGM Grand
Development, Inc. from
August 1996 to September
1998. Director of MGM
Grand Detroit, LLC.
since July 1997, Vice-
Chairman from April 1998
to February 2000, and
Chairman since February
2000. Prior thereto,
Senior Vice President
and Chief Financial
Officer of Caesars
Palace and Desert Inn,
having served in various
senior operational and
development positions
with Caesars World, Inc.

Walter M. Sharp (83) President of Walter M. 1986 66,164(2)(3)
Sharp Company (financial
consultants) for more
than the past five years
and a consultant to
Tracinda through April
1997.
</TABLE>

6
<PAGE>

Daniel B. Wayson (47) Mr. Wayson is, and has 2000
been for many years, a
principal of Wayson
Properties,
Incorporated, a real
estate development and
holding company, and
other real estate and
business ventures. He
served as President and
Chief Executive Officer
of a former Mirage
Resorts New Jersey
gaming subsidiary from
December 1994 through
February 1987. He was a
member of the Board of
Directors of Mirage
Resorts since 1987.

Melvin B. Wolzinger (79) Mr. Wolzinger is, and 2000
has been for many years,
a general partner in W.
W. Investment Co., a
real estate holding
company in Las Vegas,
Nevada. He has been a
principal owner of
various restaurants and
casino gaming
establishments in Las
Vegas for many years and
a stockholder of Mirage
Resorts for
approximately 40 years.
He was a member of the
Board of Directors of
Mirage Resorts since
1973, as well as a
member of the Mirage
Resorts Audit, Stock
Option and Bonus
committees.

Alex Yemenidjian (44) Chairman of the Board 1989 712,784(2)(3)
and Chief Executive
Officer of MGM Inc.
since April 1999 and a
Director of MGM Inc.
since November 1997.
President of the Company
from July 1995 to
December 1999. Chief
Operating Officer of the
Company from June 1995
to April 1999. 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 from February 1999
to April 1999.
</TABLE>

7
<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>
Jerome B. York (62) Chairman, President and 1995 17,200(2)(3)
Chief Executive Officer
of Micro Warehouse,
Inc., a reseller of
computer hardware,
software and peripheral
products, since
. Vice Chairman
of Tracinda from
September 1995 to
October 1999. 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. Waste
Management, Inc. and
National TechTeam, Inc.
</TABLE>
--------
(1) The quantity of shares listed reflects the effect of the Company's
February 10, 2000 two-for-one stock split. 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 August 22, 2000 held as follows:

<TABLE>
<CAPTION>
Name Shares
---- -------
<S> <C>
Mr. Aljian........................... 7,200
Mr. Benninger........................ 1,200
Mr. Christensen ..................... 7,200
Mr. Cramer .......................... 3,200
Mr. Davis ........................... 7,200
Mr. Haig ............................ 7,200
Mr. Lanni ........................... 638,108
Mr. Murren .......................... 190,000
Mr. Redmond.......................... 44,162
Mr. Sharp ........................... 7,200
Mr. Wade............................. 129,000
Mr. Yemenidjian...................... 664,460
Mr. York ............................ 7,200
</TABLE>

(4) Of this amount, 91,221,432 shares are owned by Tracinda.

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.

8
<PAGE>

INFORMATION REGARDING
BOARD AND COMMITTEES

Certain Committees: Functions, Memberships and Meetings. The following is a
brief description of the functions of certain committees of the Board of
Directors and the identity of their members. 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), James D. Aljian, Robert H.
Baldwin, Fred Benninger, Kirk Kerkorian, James J. Murren, John T. Redmond,
Walter M. Sharp, Daniel M. Wade, Alex Yemenidjian and Jerome B. York. The
Executive Committee held 10 meetings during fiscal 1999 and acted by written
consent 8 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 Fred Benninger
(Chairman), Willie D. Davis and Glenn A. Cramer. The Audit Committee held 4
meetings during fiscal 1999.

The 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 Chairman, President and Chief Executive Officer of
the Company; and Jerome B. York, an executive of Tracinda from September 1995
to October 1999, and a director of MGM Inc. The Compensation Committee held 17
meetings during fiscal 1999. Alex Yemenidjian, President of the Company until
December 1999, and a Director of the Company, has served as a member of the
MGM Inc. Compensation Committee from November 1997 to April 1999. See "Certain
Transactions."

Board Meetings. The Board of Directors held four meetings during 1999, 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

9
<PAGE>

through the review of documents and in numerous communications among Board
members and others. During 1999, all Directors attended at least 92.5% 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. During 1999, each Director who
was not a full-time employee of the Company was paid $26,000 per annum, plus
$750 per meeting of each Executive Committee meeting attended, if such
Director was a member of the Executive Committee of the Board of Directors.
Each member of the Audit Committee received $1,500 for each meeting attended
(subject to an annual $6,000 maximum), and each member of the Compensation
Committee received $750 per quarter. Directors are also reimbursed expenses
for attendance at Board and Committee meetings.

Effective July 1, 2000, each Director who is not a full-time employee of the
Company is paid $38,000 per annum, plus $1,500 for each Board meeting attended
($750 if such Board meeting was attended telephonically), plus $750 per
meeting of each Executive Committee meeting attended ($375 if such meeting of
the Executive Committee was attended telephonically), 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 ($750 if such
meeting of the Audit Committee was attended telephonically), 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 10,000 stock options, and subsequent yearly grants of 2,000
stock options during their respective terms as directors. Effective July 1,
2000, the annual grants were increased to 5,000 stock options during their
respective terms as Directors.

During 1997, 1998, 1999, 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.

10
<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, 1999, 1998, and 1997, of those persons who were, at
December 31, 1999, (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>
Daniel M. Wade 1999 $ 533,333(I) $621,415(C) $ -- $ 943,000(I) $ --
Co-Chief Executive 1998 500,000 300,000(G) -- -- (J) --
Officer 1997 450,000 253,125(G) -- 50,000 --

John Redmond 1999 401,025(I) 880,000(H) -- 1,015,838(I) 13,000
Co-Chief Executive 1998 347,500 300,000(H) -- 120,000(J) --
Officer 1997 270,000 135,000(H) -- 30,000 --

James J. Murren 1999 400,000(I) 377,132(C) -- 250,000(I) --
President and Chief 1998 359,375(F) 230,000(D) -- 950,000(J) 62,771
Financial Officer 1997 -- -- -- -- --

Scott Langsner 1999 200,000 123,139(C) -- -- --
Senior Vice President 1998 200,000 100,000(D) -- -- (J) --
& Secretary/Treasurer 1997 200,000 118,037(E) -- 14,000 591

James Fox 1999 100,000 10,000(C) -- -- --
Vice President-- 1998 97,500 5,000(D) -- -- --
Internal Audit 1997 10,474(F) 5,000(E) -- 10,000 --

J. Terrence Lanni 1999 996,154(K) 940,248(C) -- -- --
Chairman (K) 1998 1,000,000 500,000(D) -- -- --
1997 1,000,000 983,642(E) -- -- 591

Alex Yemenidjian 1999 382,564(K) 705,186(C) -- -- --
Director (K) 1998 750,000 472,500(D) -- -- --
1997 750,000 826,482(E) -- -- --
</TABLE>
--------
(A) During the years indicated, the only long-term compensation was pursuant
to the Company Nonqualified Stock Option Plan. No grants have been made
under the Company Incentive Stock Option Plan. The quantity of shares
listed reflects the effect of the Company's February 10, 2000 two-for-one
stock split.

(B) The amount of $13,000 in benefit of Mr. Redmond represented an auto
allowance with regard to his responsibilities at Primadonna Resorts. 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. The amounts of $591 in this column
for 1997 represent value received pursuant to the May 1997 employee stock
grant program.

(C) In February 2000, certain of the Named Executives received bonuses
pursuant to the Company's Annual Performance Based Incentive Plan for
executive officers (see "Compensation Committee Report on Executive
Compensation") as follows: Mr. Wade--$471,415; Mr. Murren--$377,132;

11
<PAGE>

Mr. Langsner--$113,139; Mr. Fox--$10,000; Mr. Lanni--$940,248; and Mr.
Yemenidjian--$705,186. Additionally in July 1999, Messrs. Wade and Langsner
received $150,000 and $10,000, respectively, for services rendered in the
opening of MGM Grand Detroit Casino.

(D) The Named Executives did not qualify for 1998 bonuses pursuant to the
Company's Annual Performance Based Incentive Plan for executive officers.
However, based upon the attainment of certain other Company goals, the
Named Executives received bonuses in February 1999 as follows: Mr. Murren--
$200,000; Mr. Langsner--$75,000; Mr. Fox--$5,000; Mr. Lanni--$500,000; and
Mr. Yemenidjian--$375,000. 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").

(E) 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. Langsner--$118,037; Mr. Fox--$5,000; Mr. Lanni--
$983,642; and Mr. Yemenidjian--$737,732. Additionally, Mr. Yemenidjian
received $40,000 in April 1997 pursuant to commencement of an employment
contract, and Mr. Yemenidjian received $48,750 in February 1998 pursuant to
a long-term incentive agreement.

(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. Mr. Fox's annual salary was $97,500; 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, 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. Redmond served as President and Chief Operating Officer of Primadonna
Resorts, the Company's wholly owned subsidiary from March 1999 through
December 1999, and received a bonus in February 2000 based on the 1999
financial performance of Primadonna Resorts, as well as his individual
performance. As a Named Executive commencing in December 1999, 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 $300,000 in July 1999
and $100,000 in February 2000 based upon the successful July 1999 opening
of the MGM Grand Detroit Casino, and the attainment of certain other
Company goals. Mr. Redmond served as Senior Vice President of MGM Grand
Development from August 1996 to September 1998, and received a 1998 bonus
of $300,000 in February 1999, and a 1997 bonus of $135,000 in February
1998, based on successful construction projects during 1998 and 1997.

(I) Messrs. Wade, Redmond and Murren were elected to the offices as set forth
on December 30, 1999. Their respective annual salaries are now $800,000
effective June 1, 2000 (see "Compensation Committee Report on Executive
Compensation" and "Certain Transactions"). Additionally, on December 13,
1999, stock options were granted in various amounts which provided each
individual an aggregate of 1,200,000 outstanding stock options (adjusted to
reflect the Company's February 10, 2000 two-for-one stock split) (see
"Option Grants in Last Fiscal Year"). Included in Mr. Wade's aggregate
option grant of 943,000 shares was a grant of 100,000 shares in May 1999.
Included in Mr. Redmond's aggregate option grant of 1,015,838 shares was a
grant of 100,000 shares in March 1999.

12
<PAGE>

(J) Mr. Murren's options were granted in January 1998 and repriced in June
1998. Mr. Wade's and Mr. Langsner's options for 100,000 shares and 29,000
shares respectively, which were originally granted in 1996 and 1997, were
repriced in June 1998. Mr. Redmond's options were granted in April 1998
and repriced in June 1998, additionally, Mr. Redmond's options granted in
July 1997 and August 1996 for 30,000 shares and 50,000 shares,
respectively, were repriced in June 1998.

(K) Mr. Lanni resigned as Chief Executive Officer of the Company effective
December 30, 1999, and accordingly, the salary shown covers a period of
less than one year. Subsequently, Mr. Lanni rejoined the Company in a
full-time executive capacity as Chairman of the Board. See "Recent
Developments" and "Certain Transactions." Mr. Yemenidjian resigned as
Chief Operating Officer of the Company in April 1999, and as President of
the Company effective December 30,1999, and accordingly, the salary shown
covers a period of less than one year.

The table below sets forth certain information regarding options granted
during 1999 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 Exercise Rates of Stock Price
Total Options Price Appreciation for Option
Options Granted to Per Term(B)
Granted Employees in Share Expiration -----------------------
Name (A)(C) Fiscal Year (C) Date 5% 10%
---- ------- ------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Wade.......... 843,000 19.8% $23.875 12/13/09 $12,657,526 $32,076,657
100,000 2.4% $24.000 5/3/09 $ 1,509,347 $ 3,824,982
John T. Redmond......... 915,838 21.5% $23.875 12/13/09 $13,751,179 $34,848,187
100,000 2.4% $18.875 3/1/09 $ 1,187,039 $ 3,008,189
James J. Murren......... 250,000 5.9% $23.875 12/13/09 $ 3,753,715 $ 9,512,650
</TABLE>
--------
(A) The options have a ten-year term, with 20% of the options becoming
exercisable on each of the first through the fifth anniversary dates of
the grant.

(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.

(C) The quantity of shares and the price listed reflects the effect of the
Company's February 10, 2000 two-for-one stock split.

13
<PAGE>

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

Aggregated Option Exercises in Fiscal 1999 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, 1999(B) December 31, 1999(A)
Acquired on Value ------------------------- --------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. Wade.......... 143,000 $ 1,637,875 69,000 1,131,000 $ 874,531 $3,530,094
John T. Redmond......... 15,838 185,107 24,162 1,175,838 286,169 3,696,542
James J. Murren......... -- -- 190,000 1,010,000 2,250,313 9,321,563
Scott Langsner.......... 70,000 1,117,394 23,800 35,200 296,506 426,650
James Fox............... -- -- 1,208 8,000 14,307 94,750
J. Terrence Lanni....... 961,892 11,225,855 1,038,108 -- 12,619,500 --
Alex Yemenidjian........ 435,540 7,132,730 664,460 -- 8,077,342 --
</TABLE>
--------
(A) Based upon the market value of the underlying securities at December 31,
1999 of $25.1563 after giving effect to the Company's two-for-one stock
split, minus the exercise price of "in-the-money" options.

(B) The quantity of shares listed reflects the Company's February 10, 2000
two-for-one stock split.

14
<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 1999, 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),
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 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
1999.

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 1999 on achievement by the Company of 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 $1,000,000.

The majority of the performance goals set by the Compensation Committee in
1999 were met, and accordingly, the Company's senior executives qualified for
bonuses for 1999 under the Incentive Plan. In determining whether to grant any
bonuses to such executives for 1999, the Compensation Committee also
considered the successful achievement of certain other Company goals,
including (1) the completion of the acquisition of Primadonna Resorts, Inc.,
including the other 50% interest in New York-New York Hotel and Casino and (2)
the opening of the MGM Grand Detroit temporary casino. 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 Chief Executive Officer as to
proposed bonuses for executives other than himself; and the other components
of the senior executives' compensation attributable to 1999. The Compensation
Committee determined, on January 31, 2000, to grant bonuses for 1999 to the
Named Executives (other than Mr. Lanni, the Company's Chairman of the Board
and who served as Chief Executive

15
<PAGE>

Officer until December 30, 1999) as follows: Mr. Yemenidjian--$705,186; Mr.
Wade--$471,415 (who became Co-Chief Executive Officer of the Company on
December 30, 1999); Mr. Murren--$377,132; Mr. Langsner--$113,139; and Mr.
Fox--$10,000, based upon the factors and compensation policies discussed
above, and upon the recommendations of Mr. Lanni.

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 1999, the Compensation
Committee granted to Mr. Redmond and Mr. Wade, who became the Company's Co-
Chief Executive Officers on December 30, 1999, and to Mr. Murren options to
purchase 1,015,838 shares, 943,000 shares and 250,000 shares of Common Stock,
respectively (as adjusted to give effect to the two-for-one stock split which
occurred on February 10, 2000), and determined that the other Named Executives
had adequate stock incentives at that time. The Compensation Committee
anticipates that it will grant additional options to the Company's senior
executive officers in the future.

Compensation Awarded to the former 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. In October 1999, Mr. Lanni announced his
intention to step down as Chief Executive Officer at year end. As Chief
Executive Officer, Mr. Lanni was 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 was
$1,000,000 per year. In considering whether to pay Mr. Lanni a bonus for 1999,
the Compensation Committee considered the achievement of the Company goals as
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 1999. The Compensation Committee determined, on
January 31, 2000, to grant Mr. Lanni a bonus of $940,248 for 1999, based upon
the foregoing factors and upon the compensation policies described in this
report.

Compensation Awarded to the Co-Chief Executive Officers

Mr. Redmond and Mr. Wade became Co-Chief Executive Officers of the Company
effective December 30, 1999. During 1999, Mr. Redmond served as Vice Chairman
of MGM Grand Detroit, LLC and President and Chief Operating Officer of
Primadonna Resorts, and Mr. Wade served as Executive Vice President of the
Company until April 1999 and as the Company's Chief Operating Officer
thereafter. As Co-Chief Executive Officers, Messrs. Redmond and Wade are
eligible to participate in the future in the same executive compensation plans
available to the Company's other senior executives. Pursuant to the terms of
their employment agreements now in effect, each of Mr. Redmond and Mr. Wade
now receives a salary of $800,000 per year. In considering whether to pay
Messrs. Redmond and Wade bonuses for 1999, the Compensation Committee
considered the achievement of the 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 each; and
the other components of their compensation attributable to 1999. The
Compensation Committee determined, on January 31, 2000, to grant Mr. Wade a
bonus of $471,415

16
<PAGE>

for 1999 pursuant to the Incentive Plan. In addition, for 1999 results, the
Compensation Committee determined to pay Mr. Wade and Mr. Redmond bonuses
outside of the Incentive Plan totaling $150,000 and $300,000, respectively, in
September 1999, and an additional $100,000 in February 2000 to Mr. Redmond (see
"Executive Compensation: Summary Compensation Table--Note (H)"), based upon the
foregoing factors and upon the compensation policies described in this report.

JAMES D. ALJIAN

FRED BENNINGER

JEROME B. YORK

17
<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, 1994
and ended December 31, 1999.

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]
<TABLE>
<CAPTION>
DOW JONES DOW JONES
EQUITY MARKET CASINOS
MGM GRAND, INC. INDEX GROUP
--------------- ------------- ----------
<S> <C> <C> <C>
December 31,
1994 $100 $100 $100
1995 $ 95 $104 $133
1996 $145 $105 $145
1997 $150 $146 $127
1998 $112 $184 $ 87
1999 $209 $233 $132
</TABLE>
--------
* Assumes $100 invested on January 1, 1994 in each of the Company's Common
Stock, the Dow Jones Equity Market Index, and the Dow Jones Casinos Group.

18
<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, or foreign equity fund
as directed by the participant. MGM Grand Hotel, Inc. will make matching
contributions of 50% up to an annual limit of 2% 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 Savings Plan"). The New York-New York Savings Plan allows
participants to defer, on a pretax basis, a portion of their salary and
accumulate tax deferred earnings as a retirement fund. All deferred amounts
vest immediately and are invested in either an equity, balanced income, money
market or short-term bond fund, as directed by the participant. New York-New
York Hotel & Casino, LLC. 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 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.

Mirage Resorts has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering its non-union employees. The plan allows
employees to defer, within prescribed limits, up to 15% of their income on a
pre-tax basis through contributions to the plan. Mirage Resorts matches,
within prescribed limits, 50% of eligible employees' contributions up to 4% of
their individual earnings. Mirage Resorts also has deferred compensation and
retirement arrangements with certain of its executives and directors. Benefits
payable under the arrangements represent unfunded and unsecured liabilities of
Mirage Resorts.

19
<PAGE>

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 or international equity fund, or in a guaranteed
investment contract as directed by the participant. Primadonna 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 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.

As a result of the July 1999 opening of the MGM Grand Detroit Casino, MGM
Grand Detroit, LLC (a partnership between MGM Grand Detroit, Inc. and the
Company's local partners in Detroit, Michigan) joined the MGM Hotel Savings
Plan with certain adjusted parameters (the "MGM Detroit Savings Plan"). The
MGM Detroit 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, or foreign equity fund
as directed by the participant. MGM Grand Detroit, LLC 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
MGM Detroit 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 and MGM Grand Hotel, Inc. maintain 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.

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 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.

The Company and MGM Grand Hotel, Inc. maintain 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 bonus and
accumulate tax deferred earnings, plus interest, as a retirement fund. These
deferrals are in addition to those

20
<PAGE>

allowed under the MGM 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 of the Board of the Company, has a 4-year
employment agreement with the Company which commenced February 21, 2000, under
which he received a signing bonus of $40,000 and receives a minimum annual
salary of $1,000,000, 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. Lanni
shall be entitled to exercised 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. Lanni'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 the remainder of the term of the agreement. If
Mr. Lanni 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. Lanni
terminates without cause upon 30 days notice, then termination will result and
Mr. Lanni 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. Lanni was granted options to
purchase 400,000 shares of Common Stock on , 2000 with an exercise price
of $ per share. All of these options vest on , 2001. In addition, Mr.
Lanni was granted options to purchase 600,000 shares of Common Stock on May
31, 2000 with an exercise price of $32.50 per share. These options vest in
one-third increments on May 31, 2002, May 31, 2003 and May 31, 2004. In
addition, Mr. Lanni holds vested options to purchase 638,108 shares of Common
Stock, with an exercise price of $13.00 per share. 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. Lanni shall be exercisable at the time
or times they would have been exercisable for the consideration (cash, stock
or otherwise) which the holders of the Company's Common Stock received in such
exchange.

John T. Redmond, Co-Chief Executive Officer of the Company, has a 4-year
employment agreement with the Company which commenced June 1, 2000, under
which he received a signing bonus of $30,000 and receives a minimum salary of
$800,000, 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. Redmond shall be
entitled to exercised 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. Redmond'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 the remaining term of the agreement. If Mr. Redmond 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

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<PAGE>

arbitration), or if Mr. Redmond terminates without cause upon 30 days notice,
then termination will result and Mr. Redmond 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. Redmond was granted options to purchase 150,000 shares of
Common Stock on May 31, 2000 with an exercise price of $32.50 per share. These
options vest 25% annually commencing on May 31, 2001. In addition, Mr. Redmond
has been granted options to purchase Company Common Stock (adjusted to reflect
the Company's February 2000 two-for-one stock split) as follows: 50,000 shares
of Common Stock on August 5, 1996 (which were repriced on June 22, 1998 and
which vest 20% annually from the date of the repricing) of which 9,838 shares
have been exercised; 30,000 shares of Common Stock on July 7, 1997 (which were
repriced on June 22, 1998 and which vest 20% annually from the date of the
repricing) of which 6,000 shares have been exercised; 120,000 shares of Common
Stock on April 6, 1998 (which were repriced on June 22, 1998 and which vest
20% annually from the date of the repricing); 100,000 shares of Common Stock
on March 1, 1999 and 915,838 shares of Common Stock on December 13, 1999
(which vest 20% annually commencing with the first anniversary date of each
grant). 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.
Redmond shall be exercisable at the time or times they would 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, Co-Chief Executive Officer of the Company, has a 4-year
employment agreement with the Company which commenced June 1, 2000, under
which he received a signing bonus of $30,000, and receives a minimum annual
salary of $800,000, 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 the remaining term of the agreement. 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 150,000 shares of Common Stock on May 31, 2000 with an exercise price
of $32.50 per share. These options vested 25% annually commencing May 31,
2001. In addition, Mr. Wade was granted options to purchase Company Common
Stock (adjusted to reflect the Company's February 2000 two-for-one stock
split) as follows: 100,000 shares of Common Stock on September 4, 1990 which
have been exercised; 30,000 shares of Common Stock on January 4, 1993 which
have been exercised; 70,000 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) of which 28,000 shares have been exercised; 50,000
shares of Common Stock on April 3, 1995 (which vest 20% annually commencing
April 1, 1997) of which 30,000 shares have been exercised; 150,000 shares of
Common Stock on November 6, 1995 (which vest 20% annually commencing April 1,
1997) of which 55,000 shares have been exercised; 50,000 shares of Common
Stock on July 8, 1996 (which were repriced on June 22, 1998 and which vest 20%
annually from the date of the repricing); 50,000 shares of Common Stock on
July 7, 1997 (which were repriced on June 22, 1998 and which vest 20% annually
from the date of the repricing); 100,000 shares of Common Stock on May 3, 1999
(which vest 20% annually commencing May 3, 2000); and 843,000 shares of Common
Stock on December 13, 1999 (which vest 20% annually commencing December 13,
2000). If there is

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<PAGE>

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, President and Chief Financial Officer of the Company, has a
4-year employment agreement with the Company which commenced June 1, 2000,
pursuant to which he received a signing bonus of $30,000 and receives a
minimum annual salary of $800,000, 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. 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 the remaining term of
the agreement. If Mr. Murren seeks to terminate the agreement for good cause,
he must give the Company 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 150,000 shares of Common Stock on May 31, 2000 with an exercise price
of $32.50 per share. These options vest 25% annually commencing May 31, 2001.
In addition, Mr. Murren was granted options to purchase Company Common Stock
(adjusted to reflect the Company's February 2000 two-for-one stock split) as
follows: 950,000 shares of Common Stock on January 16, 1998 (which were
repriced on June 22, 1998 and which vest 20% annually from the date of the
repricing); and 250,000 shares of Common Stock on December 13, 1999 (which
vest 20% annually commencing December 13, 2000). 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.

Robert H. Baldwin, President and Chief Executive Officer of Mirage Resorts,
Incorporated, the Company's wholly owned subsidiary, has a 4-year employment
agreement with Mirage which commenced June 1, 2000, under which he received a
signing bonus of $7,000,000 and receives a minimum annual salary of
$1,000,000, and which contains a covenant not to compete which does not apply
if the Company terminates the agreement for other than good cause (as
defined). The agreement is terminable by either party. Under the agreement, if
the Company terminates the agreement, Mr. Baldwin shall be entitled to
exercised 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. If Mr. Baldwin 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. Baldwin terminates without cause upon 30 days notice, then termination
will result and Mr. Baldwin 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. Baldwin was
granted options to purchase 800,000 shares of Common Stock on May 31, 2000
with an exercise price of $32.50 per share. These options vest 25% annually
commencing on May 31, 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. Baldwin shall be exercisable at the time or times they would

23
<PAGE>

have been exercisable for the consideration (cash, stock or otherwise) which
the holders of the Company's Common Stock received in such exchange.

Gary N. Jacobs, Executive Vice President--General Counsel of the Company,
has a 4-year employment agreement with the Company which commenced June 1,
2000, under which he received a signing bonus of $30,000 and receives a
minimum 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. Jacobs shall be entitled to exercised 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. Jacobs' 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 the remainder of the term of the
agreement. If Mr. Jacobs 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.
Jacobs terminates without cause upon 30 days notice, then termination will
result and Mr. Jacobs 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. Jacobs was granted
options to purchase 500,000 shares of Common Stock on June 1, 2000 with an
exercise price of $31.3125 per share. These options vest 25% annually
commencing on June 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. Jacobs shall be exercisable at the time or times they would 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, Senior Vice President and 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
received an annual salary of $200,000, which was increased to $230,000
effective January 1, 2000, 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 30,000 shares of Common Stock on May 31, 2000 with an exercise price
of $32.50 per share. These options vest 25% annually commencing on May 31,
2001. In addition, Mr. Langsner was granted options to purchase Company Common
Stock (adjusted to reflect the Company's February 2000 two-for-one stock
split) as follows: 50,000 shares of common stock on September 4, 1990 and
20,000 shares on November 9, 1992 (all of which were exercised during 1999);
30,000 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); 15,000
shares on July 8, 1996 and 14,000 shares on July 7, 1997 (which were repriced
on June 22, 1998 and which vest 20% annually from the date of the repricing).
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

24
<PAGE>

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.

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.

During 1997, 1998, and 1999, Alexander M. Haig, Jr., a member of the Board
of Directors of the Company, rendered consulting services to the Company, for
which he received fees at the rate of $50,000 per annum.

In 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
(adjusted to reflect the Company's February 10, 2000 two-for-one stock split)
of 10,000 stock options, and subsequent yearly grants of 2,000 stock options
during their respective terms as directors.

For the twelve months ended December 31, 1999, the Company and its
subsidiaries rented aircraft from Tracinda for various business purposes. The
aggregate amount of rental payments were approximately $120,000, 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.

MGM Grand Hotel, Inc. and certain of its affiliates, purchase on a wholesale
basis from a subsidiary of Metro-Goldwyn-Mayer Inc., a California-based motion
picture studio in which Tracinda has an approximate 89.1% ownership interest
(collectively with its subsidiaries, "MGM Inc."), videocassettes and other
merchandise such as baseball caps, clothing, key chains and watches bearing
the trademarks and logos of MGM Inc. for resale to consumers in retail shops
located within MGM Grand Hotel, Inc. or its affiliate's hotels. For the year
ended December 31, 1999, the Company purchased approximately $20,000 in MGM
Inc. merchandise at rates which management believes are generally comparable
to those offered to third parties. Affiliates of MGM Grand Hotel, Inc. and
MGM Inc. occasionally conduct cross-promotional campaigns, in which MGM Grand
Hotel or its affiliate's hotels and MGM Inc.'s motion picture releases are
promoted together; however, management believes that the amounts involved are
immaterial. MGM Grand Hotel Inc. and MGM Inc. have an ongoing relationship
whereby MGM Grand Hotel can utilize key art, still photographs of artwork and
one-minute film clips from certain of MGM Inc.'s motion picture releases on an
as-needed basis. MGM Grand Hotel, Inc. does not pay any monetary compensation
for these licenses.

Pursuant to a License Agreement between a predecessor in interest to the
Company and Metro-Goldwyn-Mayer Lion Corp. dated February 29, 1980, as
amended, the Company has an open-ended exclusive license to use certain
trademarks, trade names and logos in and in connection with the Company's
resort hotel and/or gaming and other businesses, excluding the filmed
entertainment business. The Company has agreed to pay $1 million per year for
that portion of the license which permits the Company to use the letters "MGM"
combined with the name "Mirage."

During the three year periods ended December 31, 1997, 1998, and 1999, the
Company and MGM Inc. have entered into various other transactions and
arrangements which, individually and in the aggregate, are not material.

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<PAGE>

AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME

Proposal No. 2

On June , 2000, the Board of Directors of the Company approved an
amendment to Article I of Company's Certificate of Incorporation to change the
Company's name to "MGM MIRAGE." The Board of Directors recommends that the
Company's stockholders approve the amendment. The amendment will not be
adopted unless at least a majority of the outstanding shares of Common Stock
is voted "For" its approval. Tracinda Corporation, the Company's largest
stockholder, has indicated that it intends to vote in favor of the amendment.
Therefore, since Tracinda owns approximately % of the outstanding shares,
approval of the amendment is assured. Upon approval of the amendment and the
filing of the appropriate documents with the Delaware Secretary of State,
Article I of the Company's Certificate of Incorporation will be amended to
read in its entirety as follows: "The name of the corporation is MGM MIRAGE."
The Board of Directors believes the proposed name will better describe the
Company following its acquisition of Mirage Resorts, Incorporated.

The Board of Directors Recommends a Vote for Approval of the Proposed
Amendment to the Certificate of Incorporation.

AMENDMENT TO THE ANNUAL PERFORMANCE BASED INCENTIVE PLAN
FOR EXECUTIVE OFFICERS

Proposal No. 3

Description of the Amendment

The Company's Annual Performance Based Incentive Plan for Executive Officers
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 Co-
Chief Executive Officers 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 is administered by the Compensation and
Stock Option Committee of the Board of Directors.

The Performance Plan currently provides that the maximum annual bonus which
may be paid under the plan is $1,000,000. In order to remain competitive for
the most qualified executives, the Company believes that the maximum amount of
any annual bonus should be increased to the lesser of 150% of an executive's
annual salary or $2.5 million. As is presently the case, even if the
performance goals are met for any particular year, whether or not any bonuses
are paid and the amount of any such bonus (up to the maximum permitted) will
remain in the sole discretion of the Committee The Committee has approved an
amendment to the Performance Plan for submission to the Company's stockholders
to increase the maximum possible annual bonus which may be paid under the
Performance Plan as described above.

The Board of Directors Recommends a Vote for Approval of the Proposed
Amendment to the Performance Plan.

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<PAGE>

Description of the Performance Based Plan

The Performance Plan is designed to comply with Section 162(m) of the
Internal Revenue Code of 1986, as amended, 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.

Within the time period prescribed by law, the Committee approves performance
goals including specific performance objectives and establish computation
formulae or methods for 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 Internal Revenue 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.

Within the time period prescribed by law, 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. Upon adoption of the proposed
amendment to the Performance Plan, no bonus award for any plan year may exceed
the lesser of 150% of the participant's annual base salary as in effect at the
beginning of the plan year or $2.5 million. 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.

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.

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<PAGE>

AMENDMENT TO THE COMPANY'S 1997 NON-QUALIFIED AND
INCENTIVE STOCK OPTION PLANS

Proposal No. 4

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 8,500,000. The Board of Directors is of the
opinion that the Option Plans have helped the Company compete for, motivate
and retain high caliber executive, administrative and professional employees,
and that it is in the best interests of the Company and its stockholders to
amend the Option Plans as proposed. Consistent with the Company's compensation
objectives, rewards under the Option Plans are dependent on those factors
which directly benefit the Company's stockholders and appreciation in the
market value of the Common Stock.

It is not presently determinable who will receive future option grants since
stock option awards are granted by the Compensation and Stock Option Committee
in its discretion from time to time, including grants to executive officers as
well as other key employees. See "Compensation Committee Report on Executive
Compensation" for a discussion of the factors which may be considered in
determining a grant of stock options to executive officers.

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
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 June 23, 2000, there were approximately
employees currently eligible to participate in the option plans and
approximately 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 generally exercisable in annual installments of % 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.

28
<PAGE>

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.

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.

29
<PAGE>

The following table sets forth certain information with respect to stock
options granted since January 1, 2000 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>
John T. Redmond............................... $
Co-Chief Executive
Officer

Daniel M. Wade................................
Co-Chief Executive
Officer

James J. Murren...............................
President and Chief
Financial Officer

J. Terrence Lanni.............................
Chairman of the Board

Alex Yemenidjian..............................
Director

All Current Executive Officers................
as a group ( persons)

All Current Non-Executive.....................
Officer Directors
as a group ( persons)

All Current Non-Executive.....................
Officer Employees
as a group ( persons)
</TABLE>
--------
(1) Based on the difference between the exercise price and the closing price
of the Common Stock of $ on the New York Stock Exchange Composite Tape
on June 23, 2000.

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, 2000. This firm acted as
auditors for the Company during the year ended December 31, 1999.

A representative 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.

30
<PAGE>

OTHER BUSINESS

Management knows of no other business to be transacted, but if any other
matters do come before the meeting, the persons named as proxies or their
substitutes will vote or act with respect to such other matters in accordance
with their best judgment.

NOTICE CONCERNING STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at the 2001 Annual Meeting
of Stockholders must be received by the Company on or before [ ] 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,
1999 accompanies this Proxy Statement.

By Order of the Board of Directors,

James J. Murren Scott Langsner
President and Chief Financial Senior Vice President and
Officer Secretary/Treasurer

31
<PAGE>
PRELIMINARY COPY

MGM GRAND, INC.

Proxy for Annual Meeting of Stockholders

August 1, 2000

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 August 1, 2000, 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 August 1, 2000
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>

This Proxy will be voted as specified herein; Please mark -----
if no specification is made, this Proxy will your vote as X
be voted for Items 1, 2, 3, 4 and 5. indicated in -----
this example

1. Election of Directors Names of Nominees: James D. Aljian,
Robert H. Baldwin, Fred Benninger, Glenn
A. Cramer, Terry Christensen, Willie D.
FOR all nominees WITHHOLD Davis, Alexander M. Haig, Jr., Gary N.
named (except AUTHORITY Jacobs, Kirk Kerkorian, J. Terrence Lanni,
as marked to the for all nominees George J. Mason, James J. Murren, Ronald M.
contrary) named Popeil, John T. Redmond, Walter M. Sharp,
----- ----- Daniel M. Wade, Daniel B. Wayson, Melvin B.
Wolzinger, 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. Amendment to Certificate of Incorporation to change the Company's name to MGM
MIRAGE.

FOR AGAINST ABSTAIN
----- ----- -----

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

3. Amendment to Annual Performance Based Incentive Plan for executive officers.

FOR AGAINST ABSTAIN
----- ----- -----

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

4. Amendment to Stock Option Plans.

FOR AGAINST ABSTAIN
----- ----- -----

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

5. Ratification of the appointment of independent auditors.

FOR AGAINST ABSTAIN
----- ----- -----

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

-----
----- I plan to attend Meeting
| -----
|
Dated: , 2000
-------------------------

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