<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AZTAR CORPORATION
- - --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
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<PAGE>
[LOGO OF AZTAR CORPORATION]
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
March 29, 1999
Dear Fellow Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Aztar Corporation to be held on Thursday, May 6, 1999 at The Tropicana
Casino and Resort, Brighton Avenue and The Boardwalk, Atlantic City, New
Jersey, at 11:00 a.m. local time.
The principal business of the Annual Meeting will be the election of three
directors to serve individual terms and to approve the adoption of the 1999
Employee Stock Option and Incentive Plan. As more fully described in the
accompanying Proxy Statement, the Board of Directors recommends that you vote
FOR the election of the Board's nominees and FOR the adoption of the 1999
Employee Stock Option and Incentive Plan. Each of these nominees is currently
a director of Aztar and has provided dedicated service to the Company.
After more than 20 years of distinguished service to your Company, John R.
Norton, III is retiring as a director. We gratefully acknowledge his many
contributions to Aztar over the years.
Your vote is most important, regardless of the number of shares you own.
Whether or not you plan to attend the Annual Meeting, please sign, date and
return the enclosed proxy card as soon as possible in the postage-paid
envelope provided. This will not prevent you from voting in person at the
Annual Meeting or at any adjournment or postponement thereof, but will assure
that your vote is counted if you are unable to attend.
As in past years, members of the Company's management will review the
performance and prospects of the Company at the Annual Meeting and will be
available to answer your questions. Your Board of Directors and Management
look forward to greeting personally all of you who are able to attend.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
Paul E. Rubeli
/s/ Paul E. Rubeli
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
[LOGO OF AZTAR CORPORATION]
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 6, 1999
To the Shareholders of Aztar Corporation:
Notice is hereby given that the 1999 Annual Meeting of Shareholders (the
"Meeting") of Aztar Corporation ("Aztar") will be held at The Tropicana Casino
and Resort, Brighton Avenue and The Boardwalk, Atlantic City, New Jersey, at
11:00 a.m. on Thursday, May 6, 1999, for the following purposes:
1. To elect three Directors to serve until the 2002 Annual Meeting of
Shareholders or until their successors are elected and qualified;
2. To approve the adoption of the 1999 Employee Stock Option and Incentive
Plan described herein.
3. To transact such other business as may properly come before the Meeting
or any adjournments or postponements thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.
Pursuant to Aztar's By-Laws, the Board of Directors has fixed Wednesday,
March 10, 1999, as the record date for the determination of shareholders
entitled to notice of and to vote at the Meeting and at any adjournments or
postponements thereof. Only holders of Aztar's common stock at the close of
business on that date are entitled to notice of, and to vote at, the Meeting
and at any adjournments or postponements thereof.
Aztar's Board of Directors and Management cordially invite you to attend the
Meeting. In addition, you are requested to sign and date the enclosed proxy
card, which is solicited by the Board of Directors, and to mail it promptly in
the enclosed postage-paid envelope. The proxy will not be used if you attend
and vote at the Meeting in person.
By Order of the Board of Directors
Nelson W. Armstrong, Jr.
/s/ NELSON W. ARMSTRONG, JR.
Secretary
Approximate date of mailing to shareholders:
March 29, 1999
I M P O R T A N T
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL
PROMPTLY YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
PROXY STATEMENT
OF
AZTAR CORPORATION
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
ANNUAL MEETING OF SHAREHOLDERS
May 6, 1999
GENERAL
This Proxy Statement and the enclosed Proxy Card are furnished in connection
with the solicitation of proxies by the Board of Directors of Aztar
Corporation ("Aztar" or the "Company"), to be used at the 1999 Annual Meeting
of Shareholders of Aztar and at any adjournments or postponements thereof (the
"Meeting"). The Meeting will be held at The Tropicana Casino and Resort,
Brighton Avenue and The Boardwalk, Atlantic City, New Jersey, on Thursday, May
6, 1999, at 11:00 a.m. This Proxy Statement, together with the accompanying
Notice of Annual Meeting and Proxy Card, are being first mailed to
shareholders on or about March 29, 1999.
VOTING AND REVOCABILITY OF PROXIES
March 10, 1999, has been fixed as the record date (the "Record Date") for
the determination of shareholders entitled to notice of and to vote at the
Meeting. Only holders of shares of Aztar's common stock, par value $.01 per
share ("Common Stock"), at the close of business on that date are entitled to
notice of, and to vote at, the Meeting and any adjournment or postponement
thereof. As of March 10, 1999, there were 45,341,104 shares of Common Stock
outstanding. Holders of Common Stock as of the close of business on the Record
Date are entitled to one vote per share, subject to the provisions of the
Company's Certificate of Incorporation.
Proxies solicited by the Board of Directors of the Company which are
properly executed and returned to the Company will be voted at the Meeting,
and at any adjournments or postponements thereof, in accordance with the
directions given thereon. Executed proxies on which no directions are
indicated will be voted FOR Proposal 1 (the election of the Company's nominees
as directors) and FOR Proposal 2 (the adoption of the 1999 Employee Stock
Option and Incentive Plan). If any other matters are properly brought before
the Meeting, the proxies solicited by the Board of Directors will be voted on
such matters as determined in accordance with the judgment of the persons
named thereon. Other than the election of three directors to the Board of
Directors and the approval of the 1999 Employee Stock Option and Incentive
Plan, the Board of Directors is not currently aware of any other matters to be
brought before the Meeting.
The presence in person or by proxy of the holders of record of a majority of
the shares of Common Stock issued and outstanding is necessary to constitute a
quorum at the Meeting. If a quorum is not present or represented at the
Meeting, the shareholders entitled to vote, present or represented by proxy,
have the power to adjourn the meeting from time to time, without notice other
than an announcement at the Meeting, until a quorum is present or represented.
Assuming a quorum is present, directors will be elected by a plurality of the
votes cast at the Meeting. Under applicable Delaware law, abstentions and
broker non-votes will be excluded. The 1999 Employee Stock Option and
Incentive Plan will be approved by the affirmative vote of the majority of
shares present in person or represented by proxy. Under applicable Delaware
law and rules of the New York Stock Exchange abstentions will be counted as a
vote against the proposal and broker non-votes will be excluded.
1
<PAGE>
A vote FOR the Board of Directors' nominees on the accompanying Proxy Card
will give the proxies named therein discretionary authority to vote with
respect to the election of any person recommended by the Board of Directors as
a director where the nominee is unable or unavailable to serve (an event not
now anticipated).
Execution of a Proxy Card will not affect your right to attend the Meeting
and to vote in person. A shareholder executing a proxy may revoke such proxy
at any time before it is voted by (i) filing a written notice of revocation
with the Secretary of the Company at the address provided above, (ii) filing a
duly executed proxy bearing a later date or (iii) attending and voting in
person at the Meeting. Attendance at the Meeting without voting thereat will
not revoke a proxy previously executed and duly submitted by you.
Regardless of the number of shares of Common Stock owned, it is important
that shareholders be represented by proxy or in person at the Meeting.
Shareholders are requested to vote by completing the enclosed Proxy Card and
returning it in the enclosed postage-paid envelope.
ELECTION OF DIRECTORS OF THE COMPANY
Nominees for Election as Directors
Pursuant to the Company's Certificate of Incorporation, the Board of
Directors consists of not less than five nor more than thirteen Directors and
is divided among three classes of members holding three-year staggered terms,
with each class as nearly equal in number as possible. The Board of Directors
has adopted an amendment to the Company's By-Laws in which those directors who
were not age seventy at the time the amendment was adopted would retire from
the Board of Directors at the next Annual Meeting of Shareholders held after
they reach seventy years of age. A class of three directors will be elected at
the Meeting to serve until the 2002 Annual Meeting of Shareholders or until
their respective successors have been elected and qualified. The Company's
Board of Directors has nominated the following three individuals to serve as
directors: John B. Bohle, Linda C. Faiss, and Paul E. Rubeli, all of whom are
currently members of the Board. Each of the Board of Directors nominees has
consented to being named in this Proxy Statement and to serve as a director if
elected. However, if for any reason any Board nominee should become unable or
unavailable to serve as a director, the persons named in the enclosed proxy
may vote with discretionary authority for a substitute. The enclosed proxy
cannot be voted for a greater number of persons than three. The Board of
Directors intends to vote all of the shares for which it is given proxies, to
the extent permitted thereunder, FOR the election of the Board's nominees.
The table below includes certain information as of March 1, 1999, regarding
the three nominees of the Board of Directors and also regarding the other
seven Directors whose terms of office will continue after the Meeting.
<TABLE>
<CAPTION>
Name, Age, and Principal Occupations (1994-Present) and Year First
Year Present Certain Other Directorships Became a
Term Expires Presently Held Director(/1/)
-------------- ---------------------------------------- -------------
<C> <S> <C>
Nominees
John B. Bohle, 55 Senior Vice President and Partner of Ray & 1992
(1999) Berndtson since 1981 (executive
recruiting services).
Linda C. Faiss, 56 Partner, Faiss Foley Merica LLC (public 1997
(1999) relations and government affairs) since
1998, formerly Senior Vice President of
Dunn Reber Glenn Marz (advertising/public
relations agency).
Paul E. Rubeli, 55 Chairman, President and Chief Executive 1985
(1999) Officer of the Company.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD'S NOMINEES FOR ELECTION
AS DIRECTORS.
2
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations (1994-Present)
Name, Age, and and Year First
Year Present Certain Other Directorships Became a
Term Expires Presently Held Director(/1/)
-------------- ------------------------------------ -------------
<C> <S> <C>
Other Directors
Gordon M. Burns, 46 President of Katama Capital 1998(/2/)
(2001) (investment firm) since 1998;
formerly Senior Managing Director,
Union Bank of Switzerland.
Edward M. Carson, 69 Retired (formerly Chairman of First 1975(/3/)
(2001) Interstate Bancorp from 1990 to
1995); Director of Castle & Cooke,
Inc. (real estate and resorts),
Schuff Steel Company, Terra
Industries, Inc. (agribusiness
products), and Wells Fargo Bank.
Robert M. Haddock, 54 Executive Vice President and Chief 1989
(2000) Financial Officer of the Company.
James L. Kunkel, 61 Vice President, Pinnacle West Capital 1998(/2/)
(2001) Corporation (holding company), and
President of Eldorado Investment
Company, since 1997; formerly
Partner of Coopers & Lybrand.
Robert S. Rosow, 79 Independent Certified Public 1969
(2001) Accountant since 1953.
Richard Snell, 68 Chairman of Pinnacle West Capital 1981
(2001) Corporation (holding company) and
Chairman of Arizona Public Service
Company (electric utility); formerly
Chairman and Chief Executive Officer
of Pinnacle West Capital
Corporation; Director of Pinnacle
West, Arizona Public Service, and
Central Newspapers, Inc.
Terence W. Thomas, 68 Chairman of the Board of Arizona 1978
(2000) Wholesale Supply Company and of
National Brands, Inc. (wholesale
distributors of consumer products)
since 1984.
</TABLE>
- - --------
(1) Aztar Corporation was incorporated in Delaware in June 1989 to operate the
gaming business of Ramada Inc. ("Ramada") after the restructuring of Ramada
(the "Restructuring"), which was completed on December 20, 1989. All
members of the Board of Directors of Ramada as composed at the conclusion
of the Restructuring, with one exception, became members of the Aztar Board
of Directors at the incorporation of the Company. The terms of Directors
set forth above include, with five exceptions, periods of service as
Directors of Ramada.
(2) Mr. Burns and Mr. Kunkel were appointed to the Aztar Board of Directors on
December 21, 1998.
(3) Under the retirement age prescribed by the Company's By-Laws, Mr. Carson
will retire from the Board of Directors at the 2000 Annual Meeting of
Shareholders.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
HOLDERS AND DIRECTORS AND OFFICERS
5% Beneficial Owners
Persons and groups owning in excess of 5 percent of the Common Stock are
required to file certain reports with the Securities and Exchange Commission
regarding such ownership pursuant to applicable federal securities law. Based
upon such reports, the table below sets forth certain information regarding
beneficial owners of more than 5 percent of the Common Stock as of March 1,
1999. The Company knows of no other beneficial owner of more than 5 percent of
its outstanding Common Stock.
<TABLE>
<CAPTION>
Shares of Common Stock Percent of
Name of Beneficial Owner Beneficially Owned Class
------------------------ ---------------------- ----------
<S> <C> <C>
Franklin Resources, Inc.................... 4,030,100 8.9%
777 Mariners Island Boulevard
San Mateo, CA 94404
Gabelli Funds, Inc......................... 6,124,733 13.5%
One Corporate Center
Rye, NY 10580
</TABLE>
Directors and Executive Officers
The table below sets forth certain information regarding Directors' and
executive officers' beneficial ownership of Common Stock as of March 1, 1999.
<TABLE>
<CAPTION>
Shares of Common Stock Percent of
Directors Beneficially Owned* Class
--------- ---------------------- ----------
<S> <C> <C>
John B. Bohle............................. 16,000 **
Gordon M. Burns........................... 5,000 **
Edward M. Carson.......................... 17,400 **
Linda C. Faiss............................ 11,000 **
Robert M. Haddock......................... 714,944 1.6%
James L. Kunkel........................... 6,000 **
John R. Norton, III....................... 30,000 **
Robert S. Rosow........................... 37,596 **
Paul E. Rubeli............................ 978,688 2.2%
Richard Snell............................. 57,000 **
Terence W. Thomas......................... 19,200 **
<CAPTION>
Named Executive Officers
------------------------
<S> <C> <C>
Nelson W. Armstrong, Jr................... 86,064 **
Neil A. Ciarfalia......................... 34,333 **
Meridith P. Sipek......................... 31,000 **
All Directors and Executive Officers as a
group (15 persons)....................... 2,090,703 4.6%
</TABLE>
- - --------
*Including, for Mr. Norton, 13,000 shares held by a self-directed pension
plan; for Mr. Rosow, 400 shares held in an estate of which Mr. Rosow is the
independent executor and in which he disclaims any beneficial interest; for
Messrs. Carson, Norton, Rosow, Snell and Thomas 17,000 shares each, for Mr.
Bohle 16,000 shares, for Mrs. Faiss 11,000 shares, and for Messrs. Burns
and Kunkel 5,000 shares each, which they may acquire by the exercise of
stock options within 60 days; for Messrs. Haddock, Rubeli, Armstrong,
Ciarfalia and Sipek, 699,277, 822,610, 76,667, 28,333, and 25,000 shares,
respectively, which they may acquire by the exercise of stock options
within 60 days; and for the Directors and executive officers as a group (15
persons), 1,808,887 shares, which they may acquire by the exercise of
options within 60 days.
**Less than 1% of the outstanding shares of Common Stock.
4
<PAGE>
THE BOARD AND ITS COMMITTEES
The Board has standing Audit, Compensation and Stock Option, Executive,
Finance and Nominating committees.
The Audit Committee is comprised of Mrs. Faiss and Messrs. Norton, Rosow and
Snell. This Committee is responsible for reviewing the audit's scope, timing
and fee arrangements with Aztar's independent public accountants; reviewing
the audit findings and other financial data submitted by both the Company's
internal auditors and its independent public accountants; and presenting such
findings to the Board.
The Compensation and Stock Option Committee is comprised of Mrs. Faiss and
Messrs. Carson, Norton, Rosow and Thomas. Its responsibilities include
reviewing the executive compensation programs for Aztar's senior executive
officers, including their salary and bonus arrangements, as well as
administering the Company's Stock Option and Incentive Plan and the 1990
Nonemployee Directors Stock Option Plan.
The Executive Committee is comprised of Messrs. Haddock, Rubeli and Snell.
The Executive Committee may act for the full Board of Directors in situations
in which the Board delegates such authority to the Executive Committee or in
situations in which the Executive Committee finds that emergency circumstances
justify expedited action.
The Finance Committee is comprised of Messrs. Bohle, Carson, Haddock, Snell
and Thomas. Its responsibilities include reviewing the various financial
activities of the Company and presenting its findings to the Board.
The Nominating Committee is comprised of Messrs. Bohle, Carson, Norton and
Rubeli. The duties of the Nominating Committee are to nominate persons for
election or re-election to the Board of Directors. The Nominating Committee
may consider proposed nominees for Directors which are forwarded by
shareholders to the Secretary of the Company at the address set forth on the
first page of this Proxy Statement.
During 1998 the Board of Directors held five meetings. The Audit Committee
held five meetings, the Compensation and Stock Option Committee held seven
meetings, the Finance Committee held one meeting, the Nominating Committee
held two meetings, and there were no meetings of the Executive Committee. No
Director attended less than 75 percent of the meetings of the Board and
committees of which he/she was a member.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid and accrued by
the Company for services rendered during each fiscal year presented, for the
chief executive officer and the next four most highly compensated executive
officers of the Company (the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------
Annual Compensation Awards
---------------------------- -------------
Other Annual Securities All Other
Name and Principal Fiscal Salary Bonus Compensation Underlying Compensation
Position Year ($)(1) ($) ($)(2) Options(#)(3) ($)(4)
- - ------------------ ------ ------- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Paul E. Rubeli 1998 607,090 496,314 150,000 3,838
Chairman of the Board, 1997 519,435 -0- 150,000 737
President and Chief 1996 539,090 -0- -0- 1,290
Executive Officer
Robert M. Haddock 1998 439,026 356,989 125,000 3,838
Executive Vice
President 1997 405,930 -0- 125,000 737
and Chief Financial
Officer 1996 421,220 -0- -0- 1,290
Nelson W. Armstrong, Jr. 1998 168,720 66,950 20,000 3,838
Vice President, 1997 162,508 15,531 20,000 2,201
Administration and
Secretary 1996 162,200 15,500 -0- 1,290
Neil A. Ciarfalia 1998 153,748 60,744 10,000 3,838
Treasurer 1997 147,911 14,071 90,432 10,000 2,239
1996 145,469 13,827 53,269 -0- 625
Meridith P. Sipek 1998 153,810 60,770 15,000 3,838
Controller 1997 146,977 13,978 15,000 2,220
1996 146,315 13,912 -0- 1,197
</TABLE>
- - --------
(1) The 1998 and 1997 fiscal years included 26 pay periods as compared to 27
pay periods in the 1996 fiscal year.
(2) Reimbursement of relocation expenses: 1997 $79,168; 1996 $49,235.
(3) Grants of nonqualified stock options under the Aztar Corporation 1989
Stock Option and Incentive Plan (the "1989 Plan").
(4) Commencing July 1, 1997, the Company initiated a limited matching
contribution to its defined contribution savings plan based on eligible
compensation from July 1, 1997. The Named Executive Officers participate
in the plan. The amounts credited to the Named Executive Officers'
accounts in 1998 were $3,200 for Mr. Rubeli; $3,200 for Mr. Haddock;
$3,200 for Mr. Armstrong; $3,200 for Mr. Ciarfalia; and $3,200 for Mr.
Sipek. With the exception of Mr. Ciarfalia who is sixty percent vested,
the other Named Executive Officers are one hundred percent vested. Under
the provisions of the Aztar Employee Stock Ownership Plan (the "Aztar
ESOP"), shares of Aztar's Series B ESOP Convertible Preferred Stock that
were purchased by the Aztar ESOP with the proceeds of a loan are allocated
to participating employees' accounts on a pro rata basis on relative
compensation with some limitations. In addition, as long as the loan is
outstanding, cash dividends on the Preferred Stock are to be utilized for
loan repayments. The value of the cash dividends on the Preferred Stock
held in a participant's account that are used for loan repayments is
replaced by Preferred Stock of an equal value. The value of the Preferred
Stock is the greater of the latest appraisal value of the Preferred Stock,
the value of the conversion of the Preferred Stock into Common Stock at
10.5764 shares of Common Stock for each share of Preferred Stock, or
$100.00 for each share of Preferred Stock, the liquidation preference. The
latest appraised value of the Preferred Stock
6
<PAGE>
is $100.00 per share. Participant accounts are generally payable only on
termination of employment or on retirement. The following shares of
Preferred Stock and the approximate value that were credited to the Named
Executive Officers' accounts in 1998 (other than shares attributable to
dividends from such accounts) were approximately 6 shares ($638) for Mr.
Rubeli; 6 shares ($638) for Mr. Haddock; 6 shares ($638) for Mr. Armstrong;
6 shares ($638) for Mr. Ciarfalia; and 6 shares ($638) for Mr. Sipek.
Subject to compensation limits and plan eligibility, similar allocations
were made to the Named Executive Officers' accounts in 1997 and 1996.
Stock Options Granted in Last Fiscal Year Table
The following table reflects certain information regarding nonqualified stock
options granted in the last fiscal year to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
Percent of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base Grant Date
Granted in Fiscal Price Expiration Present
Name (#)(1) Year ($/sh)(2) Date Value ($)(3)
---- ---------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Paul E. Rubeli.......... 150,000 30.5 7.75 5/11/08 593,715
Robert M. Haddock....... 125,000 25.4 7.75 5/11/08 494,763
Nelson W. Armstrong,
Jr..................... 20,000 4.1 7.75 5/11/08 79,162
Neil A. Ciarfalia....... 10,000 2.0 7.75 5/11/08 39,581
Meridith P. Sipek....... 15,000 3.1 7.75 5/11/08 59,372
</TABLE>
- - --------
(1) All options were granted under the 1989 Plan. Options vest over a three-
year period, and vesting accelerates under the change of control provisions
of the 1989 Plan.
(2) Exercise price equals fair market value on date of grant.
(3) The value has been calculated using the Black-Scholes stock option
valuation methodology. The model assumed a stock price volatility factor of
.51; a risk-free interest rate of 5.74% and no dividends. The options have
an exercise period of ten years; however, the estimated effective option
life for each person is five years from the date of the grant.
(4) The expiration dates of certain options due to expire on (a) March 8, 1998
were extended to March 8, 2000, and (b) December 9, 2001 were extended to
December 9, 2006.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Value Table
The following table sets forth for the Named Executive Officers the aggregate
number of option exercises and the value realized on such options exercised,
based on the difference between the fair market value of a share of Common
Stock at the exercise date less the applicable exercise price and the aggregate
number of exercisable and unexercisable options held at fiscal year-end and the
value of such options based on the market value of a share of Common Stock at
fiscal year-end less the applicable exercise price.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at FY-End
Shares FY-End (#) ($)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Paul E. Rubeli.......... -0- -0- 822,610/250,000 925,344/0
Robert M. Haddock....... -0- -0- 699,277/208,333 782,406/0
Nelson W. Armstrong,
Jr..................... -0- -0- 76,667/33,333 94,875/0
Neil A. Ciarfalia....... -0- -0- 28,333/16,667 0/0
Meridith P. Sipek....... 20,000 88,388 25,000/25,000 1,250/0
</TABLE>
7
<PAGE>
Supplemental Retirement Plans
In connection with the Restructuring, the Company assumed certain of the
obligations of Ramada for a deferred compensation program designed to provide
supplementary retirement benefits to certain executive officers and to certain
key employees. Certain of the executive officers of the Company participated
in the deferred compensation program. The maximum available benefit (payable
over 15 years commencing with the participant's retirement at or after age 65)
is 15% of his expected salary at age 65 (determined by assuming annual
increases in salary at the time of electing to participate at the compounded
rate of 6%). As a result of the Restructuring completed in 1989, participants
are fully vested in their accrued benefits. The annual benefits payable upon
retirement at age 65 are $124,504 for Mr. Rubeli; $85,944 for Mr. Haddock;
$42,069 for Mr. Armstrong; and $40,944 for Mr. Sipek.
The Company has a Nonqualified Retirement Plan for Senior Executives to
supplement the retirement income for certain executives selected at the
discretion of the Board of Directors. The non-funded plan provides that such
an executive upon retirement at age 65 will receive annually 50% of the
average of the last five full years of compensation from the Company less any
amounts received under an Aztar tax-qualified defined benefit plan and primary
Social Security. Messrs. Rubeli and Haddock are participants in the plan and
the estimated annual benefits payable upon retirement at age 65 based on
actuarial assumptions are $598,395 for Mr. Rubeli and $426,034 for Mr.
Haddock.
Compensation of Directors
Directors who are not full-time employees of the Company are each paid
$30,000 per year and are reimbursed for any expenses incurred in attending
Directors' meetings. In addition, each such nonemployee Director receives a
fee of $1,000 for attending each Directors' meeting and $750 for attending
each committee meeting; committee chairpersons receive an additional $500 for
each committee meeting attended.
In addition, nonemployee Directors are granted an option to purchase 5,000
shares of Common Stock when first appointed to the Board and are entitled to
receive annually on the day after the Annual Meeting of Shareholders options
to purchase 3,000 shares of Common Stock at an exercise price equal to the
market price of the Common Stock on such dates.
In connection with the Restructuring, the Company has assumed the
obligations of Ramada for a deferred compensation plan for those Directors who
were not employed by the Company. Under the Directors' Deferred Compensation
Program (the "Directors' Program"), a monthly benefit will be paid for a
period of 10 years beginning at the later of age 70 or the cessation of the
directorship. Benefits vest fractionally each month during the first five
years of participation; however, Directors who were age 65 upon entering the
Directors' Program, or who would reach age 65 during the vesting period, would
be fully vested at that time. Normal benefits payable are based on the amount
of the initial deferral and the number of years of participation from entry
into the Directors' Program until age 70. All of the nonemployee Directors of
Ramada participated in the Directors' Program. As a result of the
Restructuring, participants are fully vested in their accrued benefits.
Participants were given a one-time irrevocable election to receive a lump sum
cash payment of the present value of their benefits in lieu of the 120 monthly
installments currently provided in the agreements. The annual benefits
payable, upon cessation of the directorship, for those Directors who elected
not to receive the cash payment are: $45,039 for Mr. Norton and $11,424 for
Mr. Rosow.
Severance Agreements
In connection with the Restructuring, the Company has assumed the
obligations of Ramada under the severance agreements (the "Severance
Agreements") with Messrs. Rubeli, Haddock, Armstrong and Sipek and certain
other key employees. The Severance Agreements set forth the terms and
conditions of each such executive's termination of employment with the Company
following a "change in control". During 1995, the Severance Agreements were
rewritten as Aztar Agreements, and Mr. Ciarfalia received a similar "change in
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<PAGE>
control" agreement. The new Severance Agreements provide for the payment of
severance benefits to the executive officer if his employment is terminated
either by the Company without "cause" (as defined) or by the executive with
"good reason" (as defined), which includes the assignment to the executive of
duties inconsistent with his prior status or a reduction in his base salary or
benefits. In early 1998, the Severance Agreements were amended to provide for
three years salary for Messrs. Rubeli and Haddock and two years salary for the
other executive officers. Upon such termination with respect to any of the
executives, the benefits described below would become payable to such
executives.
In the case of Messrs. Rubeli and Haddock, severance benefits consist of a
lump-sum cash payment, payable within 13 days after termination of employment,
equal to three times the sum of the executive's annual base salary plus the
average bonuses awarded to him in the three years preceding termination of
employment, cash-out of outstanding options and vesting and distribution of
any restricted stock. The other executive officers would receive twice their
annual base salary plus average bonus, plus the other described benefits. The
Company would also maintain employee insurance benefits plans in effect for
the executives' continued benefit, or provide substantially equivalent
benefits, for two years. Except in the case of the severance benefits of
Messrs. Rubeli and Haddock, the amount of the severance benefits is limited to
the amount that would be deductible by the Company under the federal tax laws.
Based upon current salary levels, the appropriate lump-sum cash payment that
would be payable under the Severance Agreements to Messrs. Rubeli, Haddock,
Armstrong, Ciarfalia and Sipek if their employment is terminated, excluding
any payment relating to stock options or restricted stock, would be $2,471,514
for Mr. Rubeli; $1,732,188 for Mr. Haddock; $420,720 for Mr. Armstrong;
$383,494 for Mr. Ciarfalia, and $383,506 for Mr. Sipek.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended 1998, the Compensation and Stock Option
Committee (the "Compensation Committee") was comprised of Mrs. Faiss and
Messrs. Carson, Norton, Rosow and Thomas.
Board Compensation Committee Report
During the Company's last fiscal year the Compensation Committee held seven
meetings. The functions performed by the Compensation Committee include
reviewing the executive compensation programs for the senior executive
officers, including their salary and bonus arrangements, as well as
administering the Company's Stock Option and Incentive Plan and the 1990
Nonemployee Directors Stock Option Plan.
Upon the completion of the Restructuring and the commencement of operations
of Aztar (a new company in a new industry group), the Compensation Committee,
in conjunction with outside consultants, studied various executive
compensation practices of companies in the early stages of their respective
life cycle, of companies of a similar size, and of companies in the same
industry, including, but not limited to, all of the companies that comprised
the Dow Jones Casino Index at that time. The Dow Jones Casino Index is
utilized in the Performance Graph set forth in a following subsection. The
Compensation Committee concluded that an appropriate compensation package for
the chief executive officer and the senior management group at such stage of
the Company's development should be comprised of an ownership interest; a base
salary; and an annual incentive bonus based on the Company's financial
performance. The Compensation Committee believed that such a package would
compensate executives in a manner that rewarded both current performance and
long-term performance and would provide the executive with a financial
interest in the success of the Company similar to the interests of the
Company's Shareholders. The Compensation Committee also concluded that the
total compensation should be at a level for each executive which would allow
the Company to attract and retain talented executives whose services are
necessary to ensure the continued success of the Company.
Based on the results of the above-mentioned study, the Compensation
Committee set a base salary for the chief executive officer in mid-1990 which
increased his base salary to a level that was more in line with the comparable
compensation of the chief executive officers and/or division heads of other
casino companies. At such time, base salaries were also set for the other
executive officers. A bonus plan was also established for the
9
<PAGE>
chief executive officer; similar plans were established for the other
executive officers. The bonus plans are based on the degree to which the
Company meets certain goals set by the Compensation Committee based on the
annual profitability of the Company which may lead to accrual of bonuses which
may not exceed stated maximum percentages of base salaries (up to 90% for the
chief executive officer, among others). Notwithstanding the pre-established
performance targets, the Compensation Committee at its discretion may award up
to the maximum bonus available to a specific officer(s) under the plan, based
on subjective factors such as outstanding performance by an officer in his
specific area of responsibility. Bonuses, if earned, are payable as soon as
practicable after each fiscal year-end. In order to provide the senior
management group (approximately 26 persons including the chief executive
officer and the other executive officers) with an ownership interest, an
initial grant of nonqualified stock options and restricted stock (both vesting
equally over a three-year period) was made upon and shortly following the
completion of the Restructuring. A second grant of options to the senior
management group and of options and restricted stock to the executive officers
was made in December 1991. No grants were made to the executive officers in
1992, 1993 or 1994.
With the continued proliferation of gaming across the country, there has
been a significant demand for experienced senior executives in the gaming
industry. After several years of relative stability, the senior management
group experienced significant turnover. As a result, the Committee again
retained the services of an independent compensation consultant. The study
indicated that the Company's direct compensation levels were consistently
below industry median practices. However, considering the continuing pressures
on earnings and cash flows and wanting to maintain compensation packages that
are performance related, it was decided to maintain the restrictions in place
on salary adjustments and therefore, only nominal salary increases were made
at that time. In addition, the maximum percentages of base salaries utilized
for bonus accruals were increased, and an additional grant of time-based
restricted stock (restricted shares vest equally over a three-year period from
the date of grant--one-third on each anniversary date) to certain members of
the senior management group including the executive officers, and a grant of
performance-based restricted stock (restrictions vest when certain pre-
established price levels of the Common Stock are achieved) to the executive
officers was made in 1995. No grants were made to the executive officers in
1996.
The Committee retained the services of an independent compensation
consultant in 1997 and 1998. In May of 1997 and May of 1998 grants of
nonqualified stock options were made to certain members of the senior
management group including the executive officers. In addition, in 1998, in
order to continue to properly incentivize certain members of management, the
expiration dates of certain stock options were extended for periods of two
years and five years.
Since (a) the base salary for the chief executive officer had not been
adjusted for three years and (b) he had not received a bonus under the bonus
plan since the 1994 plan year, the Committee instructed the independent
compensation consultant to conduct a compensation study with respect to the
chief executive officer's peer group. The Committee approved salary increases
for the chief executive and the chief financial officer in 1998. Also, as a
result of a peer group review, the severance agreements for the executive
officers, among others, were amended to provide for three times the sum of the
executive's annual base salary plus the average bonuses awarded him in the
three years preceding termination of employment for the chief executive
officer and the chief financial officer and two times base salary and average
bonuses for the other executive officers.
Based on the Company's 1998 earnings, as compared to the pre-established
targets, certain levels of earnings were achieved and the bonuses were accrued
as earned under the 1998 bonus plan year.
As a result of the chief executive officer's bonus for the 1998 bonus plan
year (paid in 1999), his 1999 compensation may slightly exceed the limits on
deductibility set forth in section 162(m) of the Internal Revenue Code of
1986, as amended. The Compensation Committee has not established a policy
regarding compensation in excess of these limits, but will continue to review
this issue.
As a result of the 1989 Stock Option and Incentive Plan expiring in June
1999, and therefore no stock options being available for future grants, the
Committee directed management to prepare a new stock option
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<PAGE>
plan for Board of Directors' approval (February 24, 1999) and subsequent
inclusion in the 1999 Proxy Statement for shareholder approval.
The executive compensation policies and procedures that were established
after the Restructuring have remained relatively constant. The Compensation
Committee may periodically engage outside consultants to provide updated
information on compensation practices in general as well as in the industry.
As described above, during 1989, 1990, 1994, 1995, 1997 and 1998, the
Committee retained the services of an independent compensation consultant.
By Compensation and Stock Option Committee
Edward M. Carson
Linda C. Faiss
John R. Norton, III
Robert S. Rosow
Terence W. Thomas
11
<PAGE>
APPROVAL OF THE 1999 EMPLOYEE STOCK OPTION
AND INCENTIVE PLAN
Background
At the Meeting, the shareholders will be asked to approve the Aztar
Corporation 1999 Employee Stock Option and Incentive Plan (the "1999 Plan")
which was adopted by the Company's Board of Directors in February 1999. A
summary of the terms of the 1999 Plan appears below, and a copy of the Plan is
attached as Exhibit A to this Proxy Statement.
The 1989 Stock Option and Incentive Plan adopted at the inception of Aztar
expires in June 1999. The Board approved the 1999 Plan because it firmly
believes that it is in the Company's best interests that its employees own
equity in the Company. The Board believes that ownership of Common Stock by
employees serves to more closely align the interests of employees with those
of shareholders in having the Company prosper and the Common Stock value
increase.
The amount of options (4,000,000) to be granted to the named executive
officers, the officers and/or key employees (approximately 30 persons in
total) has not been determined. It is anticipated that the shares of Aztar
Common Stock underlying the 1999 Plan will be registered under the Securities
Act upon the 1999 Plan being approved by the shareholders.
THE BOARD OF DIRECTORS BELIEVES THAT THE 1999 EMPLOYEE STOCK OPTION AND
INCENTIVE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS A VOTE
FOR APPROVAL OF SUCH PLAN.
Summary of the 1999 Plan
The 1999 Plan will authorize the grant of up to 4,000,000 Aztar Shares
(which may be authorized and unissued shares, treasury shares or a combination
thereof) pursuant to options, restricted shares, deferred stock and
performance shares granted to officers and key employees of Aztar and its
subsidiaries during the period commencing with shareholder approval of the
1999 Plan and ending on the tenth anniversary thereof. The 1999 Plan also
provides for the award of performance shares to officers and employees in key
positions of Aztar or its subsidiaries to encourage them to achieve Aztar
profit and growth objectives. The total number of persons who may receive
grants of options, awards of restricted stock or deferred stock, or grants of
performance shares under the 1999 Plan is estimated by the Company to be
approximately 30. All grants or awards under the 1999 Plan will be made in
consideration of services rendered or to be rendered by the recipients
thereof. The Compensation and Stock Option Committee (the "Committee") will
determine the number of shares for which options and other awards may be
granted to any employee. The Plan provides for adjustments to reflect any
future stock dividends, stock splits or other relevant capitalization changes.
Aztar Shares which are attributable to options which expire or are otherwise
terminated without being exercised or to awards of restricted stock, deferred
stock or performance shares which are forfeited will be available for issuance
in connection with future grants or awards under the 1999 Plan.
Options
Options to be granted under the 1999 Plan may be either "incentive stock
options" within the meaning of Section 422(a) of the Internal Revenue Code
(the "Code") or nonqualified options. Options will be exercisable within 10
years after the date of the grant. Option periods may be extended. No option
can be granted at an option price of less than 100% of fair market value at
the time the option is granted in the case of an incentive stock option and
shall not, in any event, be less than par value. In the case of incentive
stock options, the aggregate fair market value (determined as of the time the
option is granted) of the shares granted to any optionee (under all plans of
Aztar and any parent or subsidiary corporation) which may become exercisable
for the first time in any calendar year may not exceed $100,000, or such other
limit as may be imposed under the Code. If and to the extent determined by the
Committee which administers the 1999 Plan in granting any
12
<PAGE>
option, upon exercise of such option the option price and any withholding tax
required by law may be paid in cash, in Aztar Shares (value at their fair
market value on the date of exercise) or by a combination of cash and such
shares. The 1999 Plan will also authorize the Committee to grant stock
appreciation rights ("SARs"), limited stock appreciation rights ("LSARs") or
both.
Restricted Stock/Deferred Stock
Shares of restricted stock or deferred stock awarded under the 1999 Plan
will be restricted as to transfer and subject to forfeiture during a specified
period or periods. Each award will be subject to such conditions, terms,
forfeitures and restrictions, including the lapse of such restrictions, as
determined by the Committee. During such period of restriction, the recipient
will have all other rights of a stockholder, including but not limited to the
right to receive dividends and vote such shares. Shares of restricted stock or
deferred stock awarded, and any right to vote such shares and to receive
dividends thereon, may not be sold, assigned, transferred, pledged or
otherwise encumbered during the period of restriction applicable to such
share. The Committee will have the discretion to accelerate the lapse of
restrictions in certain circumstances.
Performance Shares
Performance Shares granted under the 1999 Plan will permit recipients to
earn such awards over time, payable in cash or Aztar Shares, based on
attainment of specified performance goals.
Termination and Amendment
The Aztar Board may amend, suspend or terminate the 1999 Plan at any time
but no such action may adversely affect the rights of optionees under any
option, restricted share, deferred stock, performance share, SAR or LSAR
previously granted and no amendment may increase the total number of shares
which may be issued under the 1999 Plan.
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion is for general information only and is based on the
Federal income tax law now in effect, which is subject to change, possibly
retroactively. This summary does not discuss all aspects of Federal income
taxation which may be important to particular holders of the Common Stock in
light of their individual investment circumstances or to certain types of
holders subject to special tax rules, nor does it address specific state,
local or foreign tax consequences. This summary assumes that the Common Stock
acquired upon exercise of an option or vesting of a restricted award will be
held as a "capital asset" (generally property held for investment) under the
Code.
Nonqualified Stock Options
A participant will generally not be subject to Federal income tax upon the
grant of a nonqualified stock option (a "NSO"). Rather, at the time of
exercise of such NSO, the participant will recognize ordinary income for
Federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the exercise price. The Company will
generally be entitled to a tax deduction at such time and in the same amount
as the participant recognizes ordinary income.
A participant will recognize a capital gain or capital loss upon a sale or
exchange of stock acquired upon exercise of an NSO in an amount equal to the
difference between the fair market value of such stock on the date it was
acquired and the amount realized in the sale or exchange. Such gain or loss
will be long-term if the stock has been held for more than one year.
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<PAGE>
Incentive Stock Options
A participant will not be subject to tax upon the grant of an incentive
stock option (an "ISO") or upon its timely exercise. Exercise of an ISO will
be timely if made during its term and if the participant remains an employee
of the Company or a subsidiary at all times during the period beginning on the
date of grant of the ISO and ending on the date three months before the date
of exercise (or one year before the date of exercise in the case of a disabled
employee). Exercise of an ISO will also be timely if made by the legal
representative of a participant who dies (i) while in the employ of the
Company or a subsidiary or (ii) within three months after termination of
employment (or one year in the case of a disabled employee). The tax
consequences of an untimely exercise of an ISO will be determined in
accordance with the rules applicable to NSOs. (See "Certain Federal Income Tax
Effects--Nonqualified Stock Options.")
If stock acquired pursuant to a timely exercised ISO is later disposed of,
the participant will, except as noted below with respect to a "disqualifying
disposition," recognize long-term capital gain or loss equal to the difference
between the amount realized upon such sale and the option price. Under these
circumstances, the Company will not be entitled to any deduction for Federal
income tax purposes in connection with either the exercise of the ISO or the
sale of such stock by the participant.
If, however, a participant disposes of stock acquired pursuant to the
exercise of an ISO prior to the expiration of two years from the date of grant
of the ISO or within one year from the date such stock is transferred to him
upon exercise (a "disqualifying disposition"), generally (i) the participant
will realize ordinary income at the time of the disposition in an amount equal
to the excess, if any, of the fair market value of the stock at the time of
exercise (or, if less, the amount realized on such disqualifying disposition)
over the option exercise price, and (ii) any additional gain realized by the
participant will be subject to tax as short-term or long-term capital gain. In
such case, the Company may claim a deduction for Federal income tax purposes
at the time of such disqualifying disposition for the amount taxable to the
participant as ordinary income. Any capital gain recognized by the participant
will be long-term capital gain if the participant's holding period for the
stock at the time of disposition is more than one year.
The amount by which the fair market value of the stock on the exercise date
of an ISO exceeds the option price will be an item of adjustment for purposes
of the "alternative minimum tax" imposed by Section 55 of the Code.
Exercise with Shares
According to a published ruling of the Internal Revenue Service, a
participant who pays the option price upon exercise of an NSO, in whole or in
part, by delivering shares of stock already owned by the participant will
recognize no gain or loss for Federal income tax purposes on the shares
surrendered, but otherwise will be subject to tax according to the rules
described above for NSOs. (See "Certain Federal Income Tax Effects--
Nonqualified Stock Options.") With respect to shares acquired upon exercise
which are equal in number to the shares surrendered, (i) such shares will be
treated as exchanged for the shares surrendered in a non-taxable transaction,
(ii) the basis of such shares will be equal to the basis of the shares
surrendered, and (iii) the holding period of the shares acquired will include
the holding period of the shares surrendered. With respect to the additional
shares received upon exercise, (a) a participant will recognize ordinary
income in an amount equal to the fair market value of such shares on the date
of receipt, (b) the basis of such additional shares will be equal to the
amount of income recognized, and (c) the holding period for such additional
shares will commence on the date of receipt.
The Treasury Department has issued proposed regulations that, if adopted in
their current form, would appear to provide for the following rules with
respect to the exercise of an ISO by surrender of previously owned shares of
stock. If the shares surrendered in payment of the exercise price of an ISO
are "statutory option stock" (including stock acquired pursuant to the
exercise of an ISO) and if the surrender constitutes a "disqualifying
disposition" (as would be the case, for example, if, in satisfaction of the
option exercise price, the Company
14
<PAGE>
withholds shares which would otherwise be delivered to the participant), any
gain realized on such transfer will be taxable to the optionee, as discussed
above. Otherwise, when shares of stock are surrendered upon exercise of an
ISO, in general, (i) no gain or loss will be recognized as a result of the
exchange, (ii) the number of shares received that is equal in number to the
shares surrendered will have a basis equal to the basis of the shares
surrendered and (except for purposes of determining whether a disposition will
be a disqualifying disposition) will have a holding period that includes the
holding period of the shares exchanged, and (iii) any additional shares
received will have a zero basis and will have a holding period that begins on
the date of the exchange. If any of the shares received are disposed of within
two years of the date of grant of the ISO or within one year after exercise,
the shares with the lowest basis will be deemed to be disposed of first, and
such disposition will be a disqualifying disposition giving rise to ordinary
income as discussed above.
Stock Appreciation Rights
A participant will not be taxed at the time of grant of SARs. Upon the
exercise of SARs, the amount of any cash and the Fair Market Value as of the
date of exercise of Common Stock received is taxable to the participant as
ordinary income. The Company will generally be entitled to a deduction at the
same time and in an amount equal to the amount included in the participant's
income. Upon the sale of shares acquired upon the exercise of SARs, a
participant will recognize capital gain or loss (assuming such Common Stock
was held as a capital asset) in an amount equal to the difference between the
amount realized upon such sale and the Fair Market Value of such Common Stock
on the date that governs the determination of his ordinary income. The capital
gain or loss will be long-term or short-term depending upon whether the shares
have been held for more than one year after the date on which the income was
realized by the participant.
Restricted Awards
In the case of a restricted award, a participant generally will not be
subject to tax upon the grant of such an award, but, rather, the participant
will recognize ordinary income in an amount equal to (i) the fair market value
of the stock at the time the shares become transferable or are otherwise no
longer subject to a substantial risk of forfeiture (as defined in the Code),
minus (ii) the price, if any, paid by the participant to purchase such stock.
The Company will be entitled to a deduction at the time when and in the amount
that the participant recognizes ordinary income. However, a participant may
elect (not later than 30 days after acquiring such shares) to recognize
ordinary income at the time the restricted shares are awarded in an amount
equal to their fair market value at that time, notwithstanding the fact that
such shares are subject to restrictions and a substantial risk of forfeiture.
If such an election is made, no additional taxable income will be recognized
by the participant at the time the restrictions lapse. The Company will be
entitled to a tax deduction at the time when and to the extent that income is
recognized by the participant. Nevertheless, if shares in respect of which
such election was made are later forfeited, no tax deduction is allowable to
the participant for the forfeited shares, and the Company will be deemed to
recognize ordinary income equal to the amount of the deduction allowed to the
Company at the time of the election in respect of such forfeited shares.
15
<PAGE>
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return from
December 30, 1993 to December 31, 1998, of the Company, the Standard & Poor's
500 Index, the Dow Jones Casino Industry Group, the Russell 2000 Index and the
Chicago Board Options Exchange Gaming Index (the "GAX"). The Company plans to
use the Russell 2000 Index and the GAX Index in future graphs. The Company is
not a participant in the S&P 500 Index (comprised of large cap companies) and
is no longer a participant in the Dow Jones Casino Industry Group (the Company
was a participant in the DJCIG when it was originally selected as a peer group
index). The Company is currently a participant in both the Russell 2000 Index
and the GAX Index. The Russell 2000 Index is comprised of companies with more
similar market capitalization to the Company. The graph assumes an investment
of $100 on December 30, 1993 in each of Common Stock, the stocks comprising
the Standard & Poor's 500 Index, the stocks comprising the Dow Jones Casino
Industry Group, the stocks comprising the Russell 2000 Index and the stocks
comprising the GAX.
Aztar Total Cumulative Return
vs. S&P 500, DJCI, Russell 2000, GAX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/30/93 12/29/94 12/28/95 1/2/97 1/1/98 12/31/98
-------- -------- -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
AZR 100.0 88.46 119.23 111.54 98.08 77.89
DJCI 100.0 77.12 98.94 111.45 98.33 67.27
S&P500 100.0 98.40 131.04 157.27 207.07 262.30
GAX 100.0 74.24 87.08 89.65 89.72 67.09
Russell 2000 100.0 96.37 122.56 140.11 170.58 164.71
</TABLE>
16
<PAGE>
SHAREHOLDER PROPOSALS AND OTHER MATTERS
The cost of this solicitation will be borne by the Company. The solicitation
of proxies will be made primarily by mail. Regular employees of the Company
may solicit proxies by telephone or telegraph or in person. Arrangements may
be made with brokerage firms and other custodians, nominees and fiduciaries to
send proxy materials to their principals. The Company may reimburse persons
holding shares in their names or those of their nominees for their expenses in
sending proxies and proxy materials to principals. In addition, the Company
has retained Beacon Hill Partners to assist in the solicitation of proxies at
an estimated cost of $5,500.
Representatives of PricewaterhouseCoopers LLP will be present at the Meeting
and will be available to respond to appropriate questions from the Company's
Shareholders. The representatives will have an opportunity to make a statement
at the Meeting if they desire to do so.
Unless otherwise required by law or the Company's Certificate of
Incorporation or By-Laws, the affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy at the Meeting and
entitled to vote is required for approval of any matter other than the
election of Directors which properly comes before the Meeting or any
adjournments or postponements thereof. Under applicable Delaware law, in
determining whether any such other matter has received the affirmative vote of
the requisite number of shares of Common Stock, (i) abstentions will be
counted and will have the same effect as a vote against such other matter,
(ii) to the extent that applicable stock exchange rules provide the broker
with discretionary authority with respect to such matter, broker non-votes
will be counted and will have the same effect as a vote against such other
matter and (iii) to the extent that applicable stock exchange rules do not
provide the broker with discretionary authority with respect to such matter,
broker non-votes will be excluded.
As previously disclosed, the Company's By-Laws require Shareholders who
intend to nominate directors or propose new business at any Annual Meeting to
provide advance notice of such intended action as well as certain additional
information. This By-Law provision requires Shareholders to provide the
Company with notice of their intent to nominate directors or to propose new
business at an Annual Meeting not less than 60 nor more than 90 days prior to
the anniversary date of the immediately preceding Annual Meeting. However, if
the Annual Meeting is not held within 30 days of the date of the immediately
preceding Annual Meeting, then Shareholders must provide advance notice to the
Company within 10 days after notice or prior public disclosure of the Annual
Meeting is given or made to Shareholders.
The Company's 1998 Annual Meeting was held on May 12, 1998, and the 1999
Annual Meeting is scheduled to be held on May 6, 1999, which is within 30 days
of the anniversary date of the 1998 Annual Meeting. Accordingly, assuming the
1999 Annual Meeting is held as scheduled, notice of a proposed director
nomination or new business to be brought before the 1999 Annual Meeting must
have been received in proper form on or after February 11, 1999, and on or
prior to March 13, 1999. In addition, assuming the 1999 Annual
Meeting is held as scheduled and the 2000 Annual Meeting of Shareholders is
held within 30 days of May 6, 2000, notice of a proposed director nomination
or new business to be brought before the 2000 Annual Meeting must be received
in proper form on or after February 5, 2000, and on or prior to March 7, 2000.
During 1998, the Securities and Exchange Commission (the "SEC") adopted
certain modifications to Rule 14a-4, Requirements as to Proxy. Rule 14a-4
provides that a proxy may expressly confer discretionary authority to vote on
any matter raised at an Annual Meeting of Shareholders if the company did not
have notice of the matter at least 45 days before the anniversary date of the
first mailing of proxy materials made by the company the prior year or date
specified by an advance notice provision. The Company is considering amending
its By-Laws so that the advance notice provisions will coincide with or
precede the advance notice provision in the newly adopted Rule 14a-4.
In accordance with federal securities laws, proposals to be submitted by
Shareholders for consideration at the Company's next Annual Meeting and
inclusion in the Company's 2000 Proxy Statement must be received by the
Company at its executive offices in Phoenix, Arizona, not later than November
30, 1999.
17
<PAGE>
EXHIBIT A
AZTAR CORPORATION
1999 EMPLOYEE STOCK OPTION AND INCENTIVE PLAN
Section 1. General Purpose of Plan; Definitions.
The name of this plan is the Aztar Corporation 1999 Employee Stock Option
and Incentive Plan (the "Plan"). The Plan was adopted by the Board (defined
below) on February 24, 1999, subject to the approval of the stockholders of
the Company (defined below) at the next annual meeting of the stockholders of
the Company. The purpose of the Plan is to enable the Company to attract and
retain highly qualified personnel who will contribute to the Company's success
and to provide incentives to the Participants (defined below) that are linked
directly to increases in stockholder value and will therefore inure to the
benefit of all stockholders of the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(1) "Administrator" means the Board, or if and to the extent the Board does
not administer the Plan, the Committee in accordance with Section 2.
(2) "Board" means the Board of Directors of the Company.
(3) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
(4) "Committee" means the Compensation and Stock Option Committee of the
Board or any committee the Board may subsequently appoint to administer the
Plan. To the extent necessary and desirable, the Committee shall be composed
entirely of individuals who meet the qualifications referred to in Section
162(m) of the Code and Rule 16b-3 under the Exchange Act. If at any time or to
any extent the Board shall not administer the Plan, then the functions of the
Board specified in the Plan shall be exercised by the Committee.
(5) "Company" means Aztar Corporation, a Delaware corporation, and any
successor corporation.
(6) "Deferred Stock" means an award made pursuant to Section 7 of the right
to receive Stock at the end of a specified deferral period.
(7) "Disability" means the inability of a Participant to perform
substantially his duties and responsibilities to the Company or any Parent
Corporation or Subsidiary by reason of a physical or mental disability or
infirmity (i) for a continuous period of six months, or (ii) at such earlier
time as the Participant submits medical evidence satisfactory to the
Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The
date of such Disability shall be the last day of such six-month period or the
day on which the Participant submits such satisfactory medical evidence, as
the case may be.
(8) "Eligible Recipient" means an officer or employee of the Company or any
Parent Corporation or Subsidiary, responsible for, or in a position to
contribute to, the management, growth and/or profitability of the business of
the Company and its Subsidiaries.
(9) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto.
(10) "Fair Market Value" means, as of any given date, with respect to any
awards granted hereunder, (A) if the Stock is publicly traded, the closing
sale price of a share of Stock on such date as reported in The Wall Street
Journal, or the average of the closing price of a share of Stock on each day
on which the Stock was traded over a period of up to twenty trading days
immediately prior to such date, (B) the fair market value of a
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share of Stock as determined in accordance with a method prescribed in the
agreement evidencing any award hereunder, (C) in the case of a Limited Stock
Appreciation Right, the "Change of Control Price" (as defined in the agreement
evidencing such Limited Stock Appreciation Right) of a share of Stock as of
the date of exercise or (D) the fair market value of a share of Stock as
otherwise determined by the Administrator in the good faith exercise of its
discretion.
(11) "Incentive Stock Option" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(12) "Limited Stock Appreciation Right" means a Stock Appreciation Right
that can be exercised only in the event of a "Change of Control" (as defined
in the award evidencing such Limited Stock Appreciation Right).
(13) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option, including any Stock Option that provides (as of the
time such option is granted) that it will not be treated as an Incentive Stock
Option.
(14) "Parent Corporation" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50%
or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
(15) "Participant" means any Eligible Recipient selected by the
Administrator, pursuant to the Administrator's authority in Section 2, to
receive grants of Stock Options, Stock Appreciation Rights, Restricted Stock
awards, Deferred Stock awards, Performance Shares or any combination of the
foregoing.
(16) "Performance Share" means an award of shares of Stock pursuant to
Section 7 that is subject to restrictions based upon the attainment of
specified performance objectives.
(17) "Restricted Stock" means an award granted pursuant to Section 7 of
shares of Stock subject to certain restrictions.
(18) "Stock" means the common stock, par value $.01 per share, of the
Company.
(19) "Stock Appreciation Right" means the right pursuant to an award granted
under Section 6 to receive an amount equal to the excess, if any, of (A) the
Fair Market Value, as of the date such Stock Appreciation Right or portion
thereof is surrendered, of the shares of Stock covered by such right or such
portion thereof, over (B) the aggregate exercise price of such right or such
portion thereof.
(20) "Stock Option" means an option to purchase shares of Stock granted
pursuant to Section 5.
(21) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain.
Section 2. Administration.
The Plan shall be administered in accordance with the requirements of
Section 162(m) of the Code (but only to the extent necessary and desirable to
maintain qualification of the Plan under Section 162(m) of the Code) and, to
the extent applicable, Rule 16b-3 under the Exchange Act ("Rule 16b-3") by the
Board or by the Committee, which shall be appointed by, and serve at the
pleasure of, the Board.
The Administrator shall have the power and authority to grant to Eligible
Recipients pursuant to the terms of the Plan: (a) Stock Options, (b) Stock
Appreciation Rights, (c) Restricted Stock, (d) Performance Shares,
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(e) Deferred Stock or (f) any combination of the foregoing. In particular, the
Administrator shall have the authority to:
(a) select Eligible Recipients to be Participants;
(b) determine whether and to what extent Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Performance Shares
or a combination of the foregoing, are to be granted hereunder to
Participants;
(c) determine the number of shares of Stock to be covered by each award
granted hereunder;
(d) determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award granted hereunder (including, but not limited to,
(x) the restrictions applicable to Restricted or Deferred Stock awards and
the conditions under which restrictions applicable to such Restricted or
Deferred Stock shall lapse, and (y) the performance goals and periods
applicable to the award of Performance Shares);
(e) determine the terms and conditions, not inconsistent with the terms
of the Plan, which shall govern all written instruments evidencing the
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Performance Shares or any combination of the foregoing granted hereunder;
and
(f) to reduce the exercise price of any Stock Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by
such Stock Option has declined since the date the Stock Option was granted.
The Administrator shall have the authority, in its discretion, to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall from time to time deem advisable; to interpret the terms
and provisions of the Plan and any award issued under the Plan (and any
agreements relating thereto); and to otherwise supervise the administration of
the Plan.
All decisions made by the Administrator pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and the
Participants.
Section 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for issuance
under the Plan shall be 4,000,000. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares. The aggregate
number of shares of Stock as to which Stock Options, Stock Appreciation
Rights, Restricted Stock, Deferred Stock, and Performance Shares may be
granted to any individual during any calendar year may not, subject to
adjustment as provided in this Section 3, exceed 500,000 shares of Stock
reserved for the purposes of the Plan in accordance with the provisions of
this Section 3.
Consistent with the provisions of Section 162(m) of the Code, as from time
to time applicable, to the extent that (i) a Stock Option expires or is
otherwise terminated without being exercised, or (ii) any shares of Stock
subject to any Restricted Stock, Deferred Stock or Performance Share award
granted hereunder are forfeited, such shares shall again be available for
issuance in connection with future awards under the Plan. If any shares of
Stock have been pledged as collateral for indebtedness incurred by a
Participant in connection with the exercise of a Stock Option and such shares
are returned to the Company in satisfaction of such indebtedness, such shares
shall again be available for issuance in connection with future awards under
the Plan.
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Upon any reclassification, recapitalization, stock split (including a stock
split in the form of a stock dividend) or reverse stock split; any merger,
combination, consolidation, or other reorganization; any spin-off, split-up,
or similar extraordinary dividend distribution ("spin-off") in respect of the
Stock (whether in the form of securities or property); any exchange of Stock
or other securities of the Company, or any similar, unusual or extraordinary
corporate transaction in respect of the Stock; or a sale of all or
substantially all of the assets of the Company as an entirety ("asset sale");
the Administrator shall, in such manner, to such extent (if any) and at such
time, in each case as it deems appropriate and equitable in the circumstances
under its sole discretion:
(a) proportionately adjust any or all of (1) the number and type of
shares of Stock (or other securities) that thereafter may be made the
subject of any awards granted hereto (including the specific maxima and
numbers of shares set forth elsewhere in this Plan), (2) the number, amount
and type of shares of Stock (or other securities or property) subject to
any or all outstanding awards granted hereunder, (3) the grant, purchase,
or exercise price of any or all outstanding awards granted hereunder, (4)
the securities, cash or other property deliverable upon exercise of any
outstanding awards granted hereunder, or (5) the performance standards
appropriate to any outstanding awards granted hereunder, or
(b) in the case of a reclassification, recapitalization, merger,
consolidation, combination, or other reorganization, spin off or asset
sale, make provision for a cash payment or for the substitution or exchange
of any or all outstanding share-based awards granted hereunder or the cash,
securities or property deliverable to the holder of any or all outstanding
share-based awards granted hereunder, based upon the distribution or
consideration payable to holders of the Stock upon or in respect of such
event.
In each case, with respect to awards of Incentive Stock Options, no
adjustment will be made that would cause the Plan to violate Section 424(a) of
the Code or any successor provisions without the written consent of holders
materially adversely affected thereby.
In any of such events, the Administrator may take such action prior to such
event to the extent that the Administrator deems the action necessary to
permit the Participant to realize the benefits intended to be conveyed with
respect to the underlying shares in the same manner as is or will be available
to stockholders of the Company generally.
Section 4. Eligibility.
Eligible Recipients shall be eligible to be granted Stock Options, Stock
Appreciation Rights, Restricted Stock awards, Deferred Stock awards or
Performance Shares hereunder. The Participants under the Plan shall be
selected from time to time by the Administrator from among the Eligible
Recipients recommended by the senior management of the Company.
Section 5. Stock Options.
Stock Options may be granted alone or in addition to other awards granted
under the Plan. Stock Options granted under the Plan shall be in such form as
the Administrator may from time to time approve, and the provisions of Stock
Option awards need not be the same with respect to each optionee. Recipients
of Stock Options shall enter into an award agreement with the Company, in such
form as the Administrator shall determine, which agreement shall set forth,
among other things, the exercise price of the Stock Option, the term of the
Stock Option and provisions regarding exercisability of such Stock Option.
More than one Stock Option may be granted to the same optionee and be
outstanding concurrently hereunder.
Stock Options granted under the Plan may be (i) Incentive Stock Options or
(ii) Non-Qualified Stock Options. The Administrator shall have the authority
to grant any officer or employee of the Company (including directors who are
also officers of the Company) Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. To the extent that any Stock Option
does not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
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Stock Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(1) Option Price. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Administrator at the time of grant but
shall not, in the case of Incentive Stock Options, be less than 100% of the
Fair Market Value on such date and shall not, in any event, be less than the
par value (if any) of a share of Stock. If an employee owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company, any Parent Corporation or Subsidiary and an Incentive Stock
Option is granted to such employee, the option price of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
less than 110% of the Fair Market Value on the date such Incentive Stock
Option is granted.
(2) Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; provided, however, the option
term may be extended beyond such ten year term in the sole discretion of the
Administrator, unless shareholder approval is otherwise required by applicable
law. If an employee owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company, any Parent Corporation or
Subsidiary and an Incentive Stock Option is granted to such employee, the term
of such Incentive Stock Option (to the extent required by the Code at the time
of grant) shall be no more than five years from the date of grant.
(3) Exercisability. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Administrator at or after the time of grant. The Administrator may provide
that any Stock Option shall be exercisable only in installments, and the
Administrator may waive such installment exercise provisions at any time, in
whole or in part, based on such factors as the Administrator may determine,
including but not limited to in connection with any "Change of Control" as
defined in the award agreement evidencing such Stock Option.
(4) Method of Exercise. Subject to Section 5(3), Stock Options may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the purchase price. As determined by the
Administrator, payment in whole or in part may be made (i) in cash or its
equivalent, (ii) by means of any cashless exercise procedure approved by the
Administrator, (iii) in the form of unrestricted Stock owned by the optionee
which, (x) in the case of unrestricted Stock acquired upon exercise of an
option, have been owned by the optionee for more than six months on the date
of surrender, and (y) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Stock as to which such Stock Option
shall be exercised, or (iv) in the case of the exercise of a Non-Qualified
Stock Option, in the form of Restricted Stock or Performance Shares subject to
an award hereunder (based, in each case, on the Fair Market Value on the date
the Stock Option is exercised); provided, that in the case of an Incentive
Stock Option, the right to make payment in the form of already owned shares
may be authorized only at the time of grant. If payment of the exercise price
of a Non-Qualified Stock Option is made in whole or in part in the form of
Restricted Stock or Performance Shares, the shares received upon such exercise
shall be restricted in accordance with the original terms of the Restricted
Stock or Performance Share award in question, except that the Administrator
may direct that such restrictions shall apply only to that number of shares
equal to the number of shares surrendered upon such exercise. An optionee
shall generally have the rights to dividends and any other rights of a
stockholder with respect to the Stock subject to the Stock Option only after
the optionee has given written notice of exercise, has paid in full for such
shares, and, if requested, has given the representation described in Section
10(1).
The Administrator may require the voluntary surrender of all or a portion of
any Stock Option granted under the Plan as a condition precedent to the grant
of a new Stock Option. Subject to the provisions of the Plan, such new Stock
Option shall be exercisable at the price, during such period and on such other
terms and conditions as are specified by the Administrator at the time the new
Stock Option is granted. Consistent with
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the provisions of Section 162(m), to the extent applicable, upon their
surrender, Stock Options shall be canceled and the shares previously subject
to such canceled Stock Options shall again be available for grants of Stock
Options and other awards hereunder.
(5) Loans. The Company may make loans available to Stock Option holders in
connection with the exercise of outstanding Stock Options, as the
Administrator, may determine. Such loans shall (i) be evidenced by promissory
notes entered into by the holder of the Stock Option in favor of the Company,
(ii) be subject to the terms and conditions set forth in this Section 5(5) and
such other terms and conditions, not inconsistent with the Plan, as the
Administrator shall determine, (iii) bear interest at the applicable Federal
interest rate or such other rate as the Administrator shall determine, and
(iv) be subject to Board approval (or to approval by the Administrator to the
extent the Board may delegate such authority). In no event may the principal
amount of any such loan exceed the sum of (x) the exercise price less the par
value (if any) of the shares of Stock covered by the Stock Option, or portion
thereof, exercised by the holder, and (y) any federal, state, and local income
tax attributable to such exercise. The initial term of the loan, the schedule
of payments of principal and interest under the loan, the extent to which the
loan is to be with or without recourse against the holder with respect to
principal or interest and the conditions upon which the loan will become
payable in the event of the holder's termination of employment shall be
determined by the Administrator. Unless the Administrator determines
otherwise, when a loan is made, shares of Stock having a Fair Market Value at
least equal to the principal amount of the loan shall be pledged by the holder
to the Company as security for payment of the unpaid balance of the loan, and
such pledge shall be evidenced by a pledge agreement, the terms of which shall
be determined by the Administrator provided, that each loan shall comply with
all applicable laws, including, without limitation, the regulations and rules
of the Board of Governors of the Federal Reserve System and any other
governmental agency having jurisdiction.
(6) Non-Transferability of Options. Unless otherwise determined by the
Administrator, no Stock Option shall be transferable.
(7) Termination of Employment or Service. If an optionee's employment with
the Company terminates by reason of death, Disability or for any other reason,
the Stock Option may thereafter be exercised to the extent provided in the
applicable subscription or award agreement, or as otherwise determined by the
Administrator.
(8) Annual Limit on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to an optionee under this Plan and all other option plans of
the Company, any Parent Corporation or Subsidiary become exercisable for the
first time by the optionee during any calendar year exceeds $100,000, such
Stock Options shall be treated as Non-Qualified Stock Options.
Section 6. Stock Appreciation Rights.
(1) Grant and Exercise. Stock Appreciation Rights may be granted either
alone ("Free Standing Rights") or in conjunction with all or part of any Stock
Option ("Related Rights"). In the case of a Non-Qualified Stock Option,
Related Rights may be granted either at or after the time of the grant of such
Stock Option. In the case of an Incentive Stock Option, Related Rights may be
granted only at the time of the grant of the Incentive Stock Option.
A Related Right or applicable portion thereof granted in conjunction with a
given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related Right
granted with respect to less than the full number of shares covered by a
related Stock Option shall only be reduced if and to the extent that the
number of shares covered by the exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Related Right.
A Related Right may be exercised by an optionee, in accordance with Section
6(2), by surrendering the applicable portion of the related Stock Option. Upon
such exercise and surrender, the optionee shall be entitled
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to receive an amount determined in the manner prescribed in Section 6(2).
Stock Options that have been so surrendered, in whole or in part, shall no
longer be exercisable to the extent the Related Rights have been so exercised.
(2) Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Administrator, including the
following:
(a) Related Rights shall be exercisable only at such time or times and to
the extent that the Stock Options to which they relate shall be exercisable
in accordance with the provisions of Section 5 and this Section 6;
provided, that (i) Limited Stock Appreciation Rights may only be exercised
within the 30-day period following a "Change of Control" (as defined by the
Administrator in the agreement evidencing such Limited Stock Appreciation
Right) and (ii) no Related Right shall be exercisable during the first six
months of its term, except that this additional limitation shall not apply
in the event of death or Disability of the optionee prior to the expiration
of such six-month period.
(b) Upon the exercise of a Related Right, an optionee shall be entitled
to receive up to, but not more than, an amount in cash or that number of
shares of Stock (or in some combination of cash and shares of Stock) equal
in value to the excess of the Fair Market Value as of the date of exercise
over the option price per share specified in the related Stock Option
multiplied by the number of shares of Stock in respect of which the Related
Right is being exercised, with the Administrator determining the form of
payment.
(c) Related Rights shall be transferable only when and to the extent that
the underlying Stock Option would be transferable under Section 5(6).
(d) Upon the exercise of a Related Right, the Stock Option or part
thereof to which such Related Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Section 3 on the
number of shares of Stock to be issued under the Plan, but only to the
extent of the number of shares issued under the Related Right.
(e) A Related Right granted in connection with an Incentive Stock Option
may be exercised only if and when the Fair Market Value exceeds the
exercise price of such Stock Option.
(f) Free Standing Rights shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, that no Free Standing Right
shall be exercisable during the first six months of its term, except that
this limitation shall not apply in the event of death or Disability of the
recipient of the Free Standing Right prior to the expiration of such six-
month period.
(g) The term of each Free Standing Right shall be fixed by the
Administrator, but no Free Standing Right shall be exercisable more than
ten years after the date such right is granted.
(h) Upon the exercise of a Free Standing Right, a recipient shall be
entitled to receive up to, but not more than, an amount in cash or that
number of shares of Stock (or any combination of cash or shares of Stock)
equal in value to the excess of the Fair Market Value as of the date of
exercise over the price per share specified in the Free Standing Right
(which price shall be no less than 100% of the Fair Market Value on the
date of grant) multiplied by the number of shares of Stock in respect to
which the right is being exercised, with the Administrator determining the
form of payment.
(i) Free Standing Rights shall be transferable only when and to the
extent that a Stock Option would be transferable under Section 5(6).
(j) In the event of the termination of employment or service of a
Participant who has been granted one or more Free Standing Rights, such
rights shall be exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Administrator at or after the
time of grant.
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Section 7. Restricted Stock, Deferred Stock and Performance Shares.
(1) General. Restricted Stock, Deferred Stock or Performance Share awards
may be issued either alone or in addition to other awards granted under the
Plan. The Administrator shall determine the Eligible Recipients to whom, and
the time or times at which, grants of such awards shall be made; the number of
shares to be awarded; the price, if any, to be paid by the recipient of such
awards; the Restricted Period (as defined below) and performance objectives
applicable to Performance Share or Deferred Stock awards; the date or dates on
which restrictions applicable to such Restricted Stock or Deferred Stock
awards shall lapse; and all other conditions of such awards. The Administrator
may also condition the grant of such awards upon the exercise of Stock
Options, or upon such other criteria as the Administrator may determine. The
provisions of such awards need not be the same with respect to each recipient.
In the discretion of the Administrator, loans may be made to Participants in
connection with the purchase of Restricted Stock under substantially the same
terms and conditions as provided in Section 5(5) with respect to the exercise
of Stock Options.
(2) Awards and Certificates. The prospective recipient of a Restricted
Stock, Deferred Stock or Performance Share award shall not have any rights
with respect to such award, unless and until such recipient has executed an
agreement evidencing the award (an "Award Agreement") and delivered a fully
executed copy thereof to the Company, within a period of sixty days (or such
other period as the Administrator may specify) after the award date. Except as
otherwise provided in this Section 7(2), (i) each Participant who is awarded
Restricted Stock or Performance Shares shall be issued a stock certificate in
respect of such shares of Restricted Stock or Performance Shares; and (ii)
such certificate shall be registered in the name of the Participant, and shall
bear an appropriate legend referring to the terms, conditions and restrictions
applicable to such award.
The Company may require that stock certificates evidencing Restricted Stock
or Performance Share awards be held in the custody of the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any such
award, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
With respect to Deferred Stock awards, at the expiration of the Restricted
Period, stock certificates in respect of such shares of Deferred Stock shall
be delivered to the participant, or his legal representative, in a number
equal to the number of shares of Stock covered by such award.
(3) Restrictions and Conditions. The Restricted Stock, Deferred Stock and
Performance Share awards granted pursuant to this Section 7 shall be subject
to the following restrictions and conditions:
(a) Subject to the provisions of the Plan and the Award Agreement
governing such award, during such period as may be set by the Administrator
commencing on the grant date (the "Restricted Period"), the Participant
shall not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock, Performance Shares or Deferred Stock; provided, that the
Administrator may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions in whole or in
part based on such factors and such circumstances as the Administrator may
determine, including, but not limited to, the attainment of certain
performance related goals, the Participant's termination of employment or
service, death or Disability or the occurrence of a "Change of Control" as
defined in the Award Agreement evidencing such award.
(b) Except as provided in Section 7 (3)(a), the Participant shall
generally have all of the rights of a stockholder with respect to shares of
Restricted Stock or Performance Shares, during the Restricted Period. The
Participant shall generally not have the rights of a stockholder with
respect to stock subject to Deferred Stock awards during the Restricted
Period; provided, that dividends declared during the Restricted Period with
respect to the number of shares covered by a Deferred Stock award shall be
paid to the Participant. Certificates for shares of unrestricted Stock
shall be delivered to the Participant promptly after, and only after, the
Restricted Period shall expire without forfeiture in respect of such shares
of Restricted Stock, Performance Shares or Deferred Stock, except as the
Administrator shall otherwise determine.
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(c) The rights of holders of Restricted Stock, Deferred Stock and
Performance Share awards upon termination of employment or service for any
reason during the Restricted Period shall be set forth in the Award
Agreement governing such awards.
Section 8. Amendment and Termination.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any award theretofore granted without such Participant's
consent, or that without the approval of the stockholders (as described below)
would:
(1) except as provided in Section 3, increase the total number of shares of
Stock reserved for the purpose of the Plan;
(2) change the class of officers and employees eligible to participate in
the Plan; or
(3) extend the maximum option period under Section 5(2).
Notwithstanding the foregoing, stockholder approval under this Section 9
shall only be required at such time and under such circumstances as
stockholder approval would be required under Section 162(m) of the Code or
other applicable law, rule or regulation with respect to any material
amendment to any employee benefit plan of the Company.
The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any holder without his or her consent.
Section 9. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.
Section 10. General Provisions.
(1) The Administrator may require each person purchasing shares pursuant to
a Stock Option to represent to and agree with the Company in writing that such
person is acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Stock is then listed, and any applicable federal or state
securities law, and the Administrator may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions.
(2) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan
shall not confer upon any officer or employee of the Company any right to
continued employment or service with the Company, as the case may be, nor
shall it interfere in any way with the right of the Company to terminate the
employment or service of any of its officers or employees at any time.
(3) Each Participant shall, no later than the date as of which the value of
an award first becomes includible in the gross income of the Participant for
federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any federal, state, or
local taxes of any kind required by law to be withheld with respect to the
award. The obligations of the Company under the Plan
A-9
<PAGE>
shall be conditional on the making of such payments or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.
(4) No member of the Board or the Administrator, nor any officer or employee
of the Company acting on behalf of the Board or the Administrator, shall be
personally liable for any action, determination, or interpretation taken or
made in good faith with respect to the Plan, and all members of the Board or
the Administrator and each and any officer or employee of the Company acting
on their behalf shall, to the extent permitted by law, be fully indemnified
and protected by the Company in respect of any such action, determination or
interpretation.
Section 11. Effective Date of Plan.
The Plan shall become effective upon approval by the stockholders of the
Company.
Section 12. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock, Deferred Stock
or Performance Share award shall be granted pursuant to the Plan on or after
the tenth anniversary of the Effective Date, but awards theretofore granted
may extend beyond that date.
A-10
<PAGE>
AZTAR CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS
May 6, 1999
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Robert M. Haddock and Nelson W. Armstrong,
Jr., and each of them, with full power of substitution, attorneys and proxies,
to represent and to vote all shares of Common Stock, par value $.01 per share
("Aztar Common Stock"), of Aztar Corporation ("Aztar") which the undersigned
is entitled to vote at the Annual Meeting of Shareholders to be held on
Thursday, May 6, 1999, at 11:00 a.m., local time, at The Tropicana Casino and
Resort, Brighton Avenue and The Boardwalk, Atlantic City, New Jersey (the
"Meeting") and at any adjournments or postponements thereof, as directed on
the reverse side of this proxy, with all powers the undersigned would possess
if personally present at the Meeting.
THE BOARD OF DIRECTORS OF AZTAR RECOMMENDS A VOTE FOR PROPOSALS 1 and 2.
IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED,
YOU WILL BE DEEMED TO HAVE VOTED FOR PROPOSALS 1 and 2.
---
This proxy will be voted as directed on the reverse side. If no
specifications are made, your shares will be voted FOR Proposal 1--all nominees
for director named above and FOR Proposal 2--approval of the Aztar Corporation
1999 Employee Stock Option and Incentive Plan. Broker non-votes will be
excluded. In their discretion, the named proxies are authorized to vote upon
such other business as may properly come before the Meeting. A majority of the
named proxies, or any substitute or substitutes, who shall be present and act at
the Meeting (or if only one shall be present and act, then that one) shall have
all the powers of the named proxies hereunder.
(Please sign on reverse side)
FOLD AND DETACH HERE
[LOGO OF AZTAR CORPORATION]
<PAGE>
Please mark
your votes
as indicated
in this example [X]
THE BOARD OF DIRECTORS OF AZTAR RECOMMENDS A VOTE FOR PROPOSAL
THE BOARD OF DIRECTORS OF AZTAR RECOMMENDS A VOTE FOR PROPOSAL
<TABLE>
<CAPTION>
<S> <C> <C>
FOR WITHHOLD AUTHORITY
1. The election as directors of all all nominees to vote for
nominees listed below (except as listed below all nominees below
marked to the contrary): [_] [_]
</TABLE>
John B. Bohle, Linda C. Faiss and Paul E. Rubeli (to withhold authority to
vote for any individual nominee, check the "FOR all nominees" box above and
write that nominee's name in the space provided below.)
--------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the Aztar Corporation [_] [_] [_]
1999 Employee Stock Option and
Incentive Plan.
3. With discretionary power upon such other
business as may properly come before the Meeting
or any adjournments or postponements thereof.
IF RETURNED CARDS ARE SIGNED AND DATED
BUT NOT MARKED, THE UNDERSIGNED WILL BE
DEEMED TO HAVE VOTED FOR PROPOSALS 1
AND 2 AND TO HAVE APPOINTED THE PROXIES
WHOSE NAMES APPEAR ON THE FACE HEREOF
TO VOTE ON SUCH OTHER MATTERS AS MAY BE
PROPERLY BEFORE THEM.
Proxies can only be given by shareholders
of record on March 10, 1999: Please
sign your name below exactly as it appears
hereon. When shares of Aztar Stock
are held of record by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a corporation,
please sign in full corporate name by president
or other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Signature(s) ____________________________ Date ______________________________
NOTE: (Please sign as name appears hereon. Joint Owners should each sign. When
signing as attorney, executor, administrator, trustee, guardian, please give
full title as such.)
FOLD AND DETACH HERE
