<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under 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)(1) 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.:
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(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO OF AZTAR CORPORATION]
2390 East Camelback Road, Suite 400
Phoenix, Arizona 85016
March 29, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of Aztar Corporation to be held on Thursday, May 11, 2000 at The Ritz Carlton
Hotel, 2401 East Camelback Road, Phoenix, Arizona, at 11:00 a.m. local time.
The principal business of the Annual Meeting will be the election of two
directors to serve individual terms. 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. Each of these nominees is currently
a director of Aztar and has provided dedicated service to the Company.
After 25 years of distinguished service to your Company, Edward M. Carson
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,
/s/ Paul E. Rubeli
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 11, 2000
To the Shareholders of Aztar Corporation:
Notice is hereby given that the 2000 Annual Meeting of Shareholders (the
"Meeting") of Aztar Corporation ("Aztar") will be held at The Ritz Carlton
Hotel, 2401 East Camelback Road, Phoenix, Arizona, at 11:00 a.m. on Thursday,
May 11, 2000, for the following purposes:
1. To elect two Directors to serve until the 2003 Annual Meeting of
Shareholders or until their retirement date or until their successors
are elected and qualified;
2. 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 Thursday,
March 16, 2000, 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
/s/ NELSON W. ARMSTRONG, JR.
Nelson W. Armstrong, Jr.
Secretary
Approximate date of mailing to shareholders:
March 29, 2000
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 11, 2000
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 2000 Annual Meeting
of Shareholders of Aztar and at any adjournments or postponements thereof (the
"Meeting"). The Meeting will be held at The Ritz Carlton Hotel, 2401 East
Camelback Road, Phoenix, Arizona, on Thursday, May 11, 2000, 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,
2000.
VOTING AND REVOCABILITY OF PROXIES
March 16, 2000, 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 adjournments or postponements
thereof. As of March 16, 2000, there were 41,983,331 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). 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 two directors to the Board of Directors, 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. Abstentions and broker non-votes will each
be included in the determination of the number of shares present for quorum
purposes. 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.
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).
1
<PAGE>
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 two directors will be elected at
the Meeting to serve until the 2003 Annual Meeting of Shareholders or until
their retirement date or until their respective successors have been elected
and qualified. The Company's Board of Directors has nominated the following
two individuals to serve as directors: Robert M. Haddock and Terence W.
Thomas, both 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 two.
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, 2000, regarding
the two nominees of the Board of Directors and also regarding the other seven
Directors whose terms of office will continue after the Meeting.
<TABLE>
<CAPTION>
Principal Occupations (1995-
Name, Age, and Present) and Year First
Year Present Certain Other Directorships Became a
Term Expires Presently Held Director(/1/)
-------------- ---------------------------- -------------
<C> <S> <C>
Nominees
Robert M. Haddock, 55 Executive Vice President and Chief 1989
(2000) Financial Officer of the Company.
Terence W. Thomas, 69 Chairman of the Board of Arizona 1978(/2/)
(2000) Wholesale Supply Company and of
National Brands, Inc. (wholesale
distributors of consumer
products) since 1984.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD'S NOMINEES FOR ELECTION
AS DIRECTORS.
2
<PAGE>
Other Directors
<TABLE>
<CAPTION>
Name, Age, and Principal Occupations (1995-Present) and Year First
Year Present Certain Other Directorships Became a
Term Expires Presently Held Director(/1/)
-------------- ---------------------------------------- -------------
<C> <S> <C>
Gordon M. Burns, 47 President of Katama Capital (investment 1998
(2001) firm) since 1998; formerly Senior
Managing Director, Union Bank of
Switzerland.
John B. Bohle, 56 Senior Vice President and Partner of Ray & 1992
(2002) Berndtson since 1981 (executive
recruiting services).
Linda C. Faiss, 57 Co-owner and President, Faiss Foley Merica 1997
(2002) LLC (public relations and government
affairs) since 1998, formerly Senior Vice
President of Dunn Reber Glenn Marz
(advertising/public relations agency).
James L. Kunkel, 62 Vice President, Pinnacle West Capital 1998
(2001) Corporation (electricity and real
estate), and President of Eldorado
Investment Company since 1997; formerly
Partner of Coopers & Lybrand.
Robert S. Rosow, 80 Independent Certified Public Accountant 1969
(2001) since 1953.
Paul E. Rubeli, 56 Chairman, President and Chief Executive 1985
(2002) Officer of the Company.
Richard Snell, 69 Chairman of Pinnacle West Capital 1981(/2/)
(2001) Corporation (electricity and real
estate); and of its Arizona Public
Service Company subsidiary; formerly
Chairman and Chief Executive Officer of
Pinnacle West; Director of Pinnacle West,
Arizona Public Service, and Central
Newspapers, Inc.
</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) Under the retirement age prescribed by the Company's By-Laws, Messrs. Snell
and Thomas will retire from the Board of Directors at the 2001 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 7,
2000. 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>
Dimensional Fund Advisors Inc. ............ 2,670,900 6.1
1299 Ocean Ave. 11th Floor
Santa Monica, CA 90401
Franklin Resources, Inc. .................. 3,448,000 7.9
777 Mariners Island Boulevard
San Mateo, CA 94404
Gabelli Funds, Inc......................... 6,362,400 14.6
One Corporate Center
Rye, NY 10580
</TABLE>
- --------
* As reported in Dimensional Fund Advisors Inc.'s Schedule 13G, dated
February 11, 2000; Franklin Resources, Inc.'s Schedule 13G, dated January
13, 2000; and Gabelli Funds, Inc.'s Schedule 13D (Amendment No. 9), dated
March 7, 2000.
Directors and Executive Officers
The table below sets forth certain information regarding Directors' and
executive officers' beneficial ownership of Common Stock as of March 7, 2000.
<TABLE>
<CAPTION>
Shares of Common Stock Percent of
Directors Beneficially Owned* Class
--------- ---------------------- ----------
<S> <C> <C>
John B. Bohle............................ 19,000 **
Gordon M. Burns.......................... 8,000 **
Edward M. Carson......................... 20,400 **
Linda C. Faiss........................... 14,000 **
Robert M. Haddock........................ 564,598 1.3
James L. Kunkel.......................... 9,000 **
Robert S. Rosow.......................... 40,596 **
Paul E. Rubeli........................... 838,343 2.0
Richard Snell............................ 60,000 **
Terence W. Thomas........................ 22,200 **
<CAPTION>
Named Executive Officers
------------------------
<S> <C> <C>
Nelson W. Armstrong, Jr.................. 70,345 **
Neil A. Ciarfalia........................ 47,667 **
Meridith P. Sipek........................ 45,667 **
All Directors and Executive Officers as a
group (14 persons)...................... 1,799,788 4.3
</TABLE>
- --------
* Including, 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, Rosow, Snell and Thomas 20,000 shares each,
for Mr. Bohle 19,000 shares, for Mrs. Faiss 14,000 shares, and for Messrs.
Burns and Kunkel 8,000 shares each, which they may acquire by the exercise
of stock options within 60 days; for
4
<PAGE>
Messrs. Haddock, Rubeli, Armstrong, Ciarfalia and Sipek, 326,668, 400,000,
46,668, 41,667 and 41,667 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 (14 persons), 1,001,503 shares, which they
may acquire by the exercise of options within 60 days.
** Less than 1% of the outstanding shares of Common Stock.
THE BOARD AND ITS COMMITTEES
The Board has standing Audit, Compensation and Stock Option, Executive,
Finance and Nominating committees. The current membership of the committees is
as follows, with the chairman of each committee listed first:
<TABLE>
<CAPTION>
Compensation and
Audit Stock Option Executive Finance Nominating
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert S. Rosow Edward M. Carson Paul E. Rubeli Richard Snell John B. Bohle
Linda C. Faiss Gordon M. Burns Robert M. Haddock John B. Bohle Edward M. Carson
James L. Kunkel Linda C. Faiss Richard Snell Gordon M. Carson Paul E. Rubeli
Richard Snell Robert S. Rosow Edward M. Carson
Terence W. Thomas Terence W. Thomas Robert M. Haddock
- ---------------------------------------------------------------------------------------------------
</TABLE>
The Audit 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's 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 Plans and the 1990
Nonemployee Directors Stock Option Plan.
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's responsibilities include reviewing the various
financial activities of the Company and presenting its findings to the Board.
The Nominating Committee's duties are to nominate persons for election or
re-election to the Board of Directors. The Nominating Committee may consider
proposed nominees for Directors whose nominations are forwarded by
shareholders to the Secretary of the Company at the address set forth on the
first page of this Proxy Statement.
During 1999 the Board of Directors held five meetings. The Audit Committee
held five meetings, the Compensation and Stock Option Committee held three
meetings, the Finance Committee held one meeting, the Nominating Committee
held one meeting, 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
---------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Fiscal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($)(1) (#)(2) ($)(3)
------------------ ------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Paul E. Rubeli......... 1999 658,400 585,000 463,000 4,140
Chairman of the Board, 1998 607,090 496,314 150,000 3,838
President and Chief 1997 519,435 -0- 150,000 737
Executive Officer
Robert M. Haddock...... 1999 458,400 405,000 390,000 4,140
Executive Vice 1998 439,026 356,989 125,000 3,838
President 1997 405,930 -0- 125,000 737
and Chief Financial
Officer
Nelson W. Armstrong,
Jr. .................. 1999 176,747 76,296 53,000 4,140
Vice President, 1998 168,720 66,950 20,000 3,838
Administration and 1997 162,508 15,531 20,000 2,201
Secretary
Neil A. Ciarfalia...... 1999 161,325 69,356 20,000 4,140
Treasurer 1998 153,748 60,744 10,000 3,838
1997 147,911 14,071 90,432 10,000 2,239
Meridith P. Sipek...... 1999 161,325 69,356 20,000 4,140
Controller 1998 153,810 60,770 15,000 3,838
1997 146,977 13,978 15,000 2,220
</TABLE>
- --------
(1) Reimbursement of relocation expenses: 1997 $79,168.
(2) Grants of nonqualified stock options under the Aztar Corporation 1999
Employee Stock Option and Incentive Plan (the "1999 Plan") and the Aztar
Corporation 1989 Stock Option and Incentive Plan (the "1989 Plan").
(3) 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 1999 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 eighty 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 appraised 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 the
liquidation preference of $100.00 for each share of Preferred Stock plus
accrued and unpaid dividends. The latest appraised value of the Preferred
Stock is $139.00 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 1999 (other than shares attributable
to dividends from such accounts) were approximately 7 shares ($940) for
Mr. Rubeli; 7 shares ($940) for Mr. Haddock; 7 shares ($940) for Mr.
Armstrong; 7 shares ($940) for Mr. Ciarfalia; and 7 shares ($940) for Mr.
Sipek. Subject to compensation limits and plan eligibility, similar
allocations were made to the Named Executive Officers' accounts in 1998
and 1997.
6
<PAGE>
Stock Options Granted in Last Fiscal Year Table
The following table reflects certain information regarding nonqualified
stock options granted in the last fiscal year to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------
Percent of
Total
Number of Options Grant
Securities Granted to Exercise Date
Underlying Employees or Base Present
Options in Fiscal Price Expiration Value
Name Granted (#)(1) Year ($/sh)(2) Date ($)(3)
---- -------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Paul E. Rubeli.......... 150,000 8.3 7.25 5/06/09 558,060
313,000 17.4 9.8125 9/15/09 1,599,430
Robert M. Haddock....... 125,000 6.9 7.25 5/06/09 465,050
265,000 14.7 9.8125 9/15/09 1,354,150
Nelson W. Armstrong,
Jr. ................... 20,000 1.1 7.25 5/06/09 74,408
33,000 1.8 9.8125 9/15/09 168,630
Neil A. Ciarfalia....... 20,000 1.1 7.25 5/06/09 74,408
Meridith P. Sipek....... 20,000 1.1 7.25 5/06/09 74,408
</TABLE>
- --------
(1) All options were granted under the 1999 Plan. Options vest over a three-
year period, and vesting accelerates under the change of control
provisions of the 1999 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 .52 for both grants; a risk-free interest rate of 5.44% (for the $7.25
grant) and 6.02% (for the $9.8125 grant) and no dividends. The options
have an exercise period of ten years; however, the estimated effective
option life for each person is five years from the date of the grant.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Value Table
The following table sets forth for the Named Executive Officers the
aggregate number of option exercises and the value realized on such options
exercised, based on the difference between the fair market value of a share of
Common Stock at the exercise date less the applicable exercise price and the
aggregate number of exercisable and unexercisable options held at fiscal year-
end and the value of such options based on the market value of a share of
Common Stock at fiscal year-end less the applicable exercise price.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options/SARs In-the-Money Options/SARs
Shares at FY-End (#) at FY-End ($)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Paul E. Rubeli.......... 487,500 3,746,438 435,110/613,000 2,092,849/1,344,250
Robert M. Haddock....... 412,500 3,020,844 370,111/514,999 1,771,290/1,124,372
Nelson W. Armstrong,
Jr..................... 50,000 312,375 40,001/72,999 187,504/170,496
Neil A. Ciarfalia....... -0- -0- 35,000/30,000 77,812/104,376
Meridith P. Sipek....... -0- -0- 35,000/35,000 169,688/120,938
</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: $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". Subsequently, the Severance Agreements were
rewritten as Aztar Agreements, and Mr. Ciarfalia received a similar "change in
8
<PAGE>
control" agreement. The 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. 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 $3,056,514
for Mr. Rubeli; $2,137,188 for Mr. Haddock; $478,452 for Mr. Armstrong;
$436,114 for Mr. Ciarfalia, and $436,070 for Mr. Sipek.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended 1999, the Compensation and Stock Option
Committee (the "Compensation Committee") was comprised of Mrs. Faiss and
Messrs. Burns, Carson, Rosow and Thomas. Mr. John R. Norton, III was a member
of the Compensation Committee and the Board of Directors up to May 1999.
Board Compensation Committee Report
During the Company's last fiscal year the Compensation Committee held three
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 Plans 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 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 that 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 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
9
<PAGE>
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, 1998 and 1999 grants of
nonqualified stock options were made to certain members of the senior
management group including the executive officers. In addition, in September
of 1999, based on the upcoming expiration (December 1999) of the initial grant
of stock options made when Aztar Corporation commenced operations, grants of
nonqualified stock options were made to certain members of the senior
management group including certain of the executive officers.
During 1998, as the result of the base salary for the chief executive
officer not being adjusted for three years, and the fact that 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 officer and the chief
financial officer in 1998.
Based on the Company's 1999 earnings, as compared to the pre-established
targets, certain levels of earnings were achieved and the bonuses were accrued
as earned under the 1999 bonus plan year.
As a result of the chief executive officer's bonus for the 1998 and 1999
bonus plan years (paid in 1999 and 2000), his 1999 and 2000 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, the Committee directed management to prepare a new stock option plan
(the 1999 Plan) for Board of Directors' and shareholder approval. The 1999
Plan was approved by the shareholders at the Annual Meeting held on May 6,
1999.
10
<PAGE>
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
Gordon M. Burns
Edward M. Carson
Linda C. Faiss
Robert S. Rosow
Terence W. Thomas
11
<PAGE>
COMPARATIVE STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return from
December 29, 1994 to December 30, 1999, of the Company, the Russell 2000 Index
and the Chicago Board Options Exchange Gaming Index (the "GAX"). The Company
is currently a participant in both the Russell 2000 Index and the GAX Index.
The graph assumes an investment of $100 on December 29, 1994 in each of Common
Stock, the stocks comprising the Russell 2000 Index and stocks comprising the
GAX.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AZR, GAX AND RUSSELL 2000
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period RUSSELL
(Fiscal Year Covered) AZR GAX 2000
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 12/29/94 $100.00 $100.00 $100.00
FYE 12/28/95 $134.78 $117.29 $127.18
FYE 01/02/97 $126.09 $120.76 $145.39
FYE 01/01/98 $110.87 $120.85 $177.01
FYE 12/31/98 $ 88.04 $ 90.36 $170.91
FYE 12/30/99 $188.04 $136.80 $201.14
</TABLE>
12
<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 ChaseMellon Consulting Services to assist
in the solicitation of proxies at an estimated cost of $7,500.
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 1999 Annual Meeting was held on May 6, 1999, and the 2000
Annual Meeting is scheduled to be held on May 11, 2000, which is within 30
days of the anniversary date of the 1999 Annual Meeting. Accordingly, assuming
the 2000 Annual Meeting is held as scheduled, notice of a proposed director
nomination or new business to be brought before the 2000 Annual Meeting must
have been received in proper form on or after February 5, 2000, and on or
prior to March 7, 2000. In addition, assuming the 2000 Annual Meeting is held
as scheduled and the 2001 Annual Meeting of Shareholders is held within 30
days of May 11, 2001, notice of a proposed director nomination or new business
to be brought before the 2001 Annual Meeting must be received in proper form
on or after February 11, 2001, and on or prior to March 12, 2001.
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 2001 Proxy Statement must be received by the
Company at its executive offices in Phoenix, Arizona, not later than December
1, 2000.
13
<PAGE>
AZTAR CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS
May 11, 2000
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Paul E. Rubeli 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 11, 2000, at 11:00 a.m., local time, at The Ritz Carlton Hotel,
2401 East Camelback Road, Phoenix, Arizona (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 PROPOSAL 1.
---
IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED,
YOU WILL BE DEEMED TO HAVE VOTED FOR PROPOSAL 1.
---
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. 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]
<PAGE>
THE BOARD OF DIRECTORS OF AZTAR RECOMMENDS A VOTE FOR PROPOSAL 1.
---
Please mark
your votes [X]
as indicated
in this example
FOR WITHHOLD AUTHORITY
1. The election as all nominees to vote for
directors of all listed below all nominees below
nominees listed
below (except [_] [_]
as marked to the
contrary):
Robert M. Haddock and Terence W. Thomas (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.)
-----------------------------------------------------------------------------
2. 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 PROPOSAL 1 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 16,
2000: 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 -
