<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1394 (AMENDMENT NO. ___)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting material pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PRESIDENT CASINOS, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to the Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it is 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 Form or Schedule and the date of its filing:
(1) Amount previously paid:
_________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________
(3) Filing Party:
_________________________________________________________________
(4) Date Filed:
_________________________________________________________________
<PAGE> 2
PRESIDENT CASINOS, INC.
802 North First Street
St. Louis, Missouri 63102
_________________________
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 19, 1998
_________________________
The 1998 Annual Meeting of Stockholders of President Casinos, Inc. (the
"Company") will be held on August 19, 1998 at 9:30 a.m., prevailing local
time, at the Broadwater Beach Resort, 2110 Beach Boulevard, Biloxi,
Mississippi for the following purposes:
1. To elect two Class III directors to hold office until the 2001 Annual
Meeting of Stockholders; and
2. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
The close of business on July 3, 1998 has been fixed as the record date for
the meeting. Only stockholders of record at that date are entitled to notice
of and to vote at the meeting and any adjournment(s) or postponement(s)
thereof.
All stockholders are cordially invited to attend the meeting. The proxies
are solicited by the Board of Directors of the Company. The business to be
transacted at the meeting is more fully described in the attached proxy
statement, which is hereby made a part of this notice. The Board of Directors
urges you to date, sign and return promptly the enclosed proxy to give voting
instructions with respect to your shares of Common Stock. The return of the
proxy will not affect your right to vote in person if you do attend the
meeting. A copy of the Company's Annual Report is also enclosed.
TIMOTHY MURRAY
Secretary
July 24, 1998
<PAGE> 3
_________________________________________________________________
PRESIDENT CASINOS, INC.
802 North First Street
St. Louis, Missouri 63102
_________________________
PROXY STATEMENT
FOR
1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
AUGUST 19, 1998
_________________________
The enclosed proxy is solicited by the Board of Directors of President
Casinos, Inc. (the "Company"), a Delaware corporation, for use at the 1998
Annual Meeting of Stockholders (the "Annual Meeting") to be held on August 19,
1998 at 9:30 a.m., prevailing local time, at the Broadwater Beach Resort, 2110
Beach Boulevard, Biloxi, Mississippi and any adjournment(s) or postponement(s)
thereof. This proxy statement, the foregoing notice and the enclosed proxy
are first being mailed to stockholders on or about July 24, 1998.
As of the date of this proxy statement, the Board of Directors does not
intend to bring any matter before the Annual Meeting other than the matters
specifically referred to in the notice of the Annual Meeting, nor does the
Board of Directors know of any matter which anyone else proposes to present
for action at the Annual Meeting. However, if any other matter properly comes
before the Annual Meeting, the persons named in the accompanying proxy or
their duly constituted substitutes acting at the Annual Meeting intend to vote
the shares represented by proxy cards granting such persons discretionary
authority to vote on such matters in accordance with their judgment as to the
best interest of the Company on such matters.
If the enclosed proxy is properly executed and returned prior to voting at
the Annual Meeting, the shares represented thereby will be voted in the manner
indicated thereon at the Annual Meeting and any adjournment thereof. In the
absence of instructions, the shares represented at the Annual Meeting by the
enclosed proxy will be voted "FOR" the nominees of the Board of Directors in
the election of directors and "FOR" the grant of discretionary authority on
all other matters. Any proxy may be revoked at any time prior to its exercise
by notifying the Secretary in writing, by delivering a duly executed proxy
bearing a later date or by attending the Annual Meeting and voting in person.
Attendance alone at the Annual Meeting will not of itself revoke a proxy.
VOTING SECURITIES
At the close of business on July 3, 1998, the record date fixed for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting (the "Record Date"), there were 5,032,926 issued and outstanding
shares of the Company's Common Stock, par value $.06 per share (the "Common
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Stock"). There are no other classes of voting securities of the Company
outstanding.
On all matters voted upon at the Annual Meeting and any adjournment(s) or
postponement(s) thereof, each record holder of Common Stock as of the Record
Date will be entitled to one vote per share. Stockholders do not have
cumulative voting rights in the election of directors. The presence, in
person or by proxy, of stockholders entitled to cast at least a majority of
the votes that all stockholders are entitled to cast on each matter to be
acted upon at the Annual Meeting shall constitute a quorum for the purposes of
consideration and action on that matter. Each matter to be voted on shall be
authorized upon receiving the affirmative vote of a majority of the votes cast
by all stockholders entitled to vote thereon.
Shares subject to abstentions will be treated as shares that are present at
the Annual Meeting for purposes of determining the presence of a quorum, and
as voted for purposes of determining the base number of shares voting on a
particular proposal. If a broker or other nominee holder indicates on the
Proxy Card that it does not have discretionary authority to vote the shares it
holds of record on a proposal, those shares will not be considered as present
at the Annual Meeting for purposes of determining a quorum or as voted for
purposes of determining the approval of the stockholders on a particular
proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of the Record Date: (i) by each person known
to the Company to own beneficially more than 5% of the outstanding shares of
the Company's Common Stock; (ii) by each of the Company's directors; (iii) by
each of the executive officers of the Company listed in the Summary
Compensation Table and (iv) by all of such directors and executive officers as
a group.
Name of Beneficial Owner No. of Shares (1) % of Class
------------------------ ------------------ ----------
John E. Connelly 1,644,113 (2) 32.7%
John S. Aylsworth 170,334 (3) 3.3%
Terrence L. Wirginis 74,625 (4) 1.5%
Karl G. Andren 38,350 (5) *
James A. Zweifel 13,400 (6) *
Royal J. Walker, Jr. 13,400 (7) *
All executive officers and
directors as a group (6 persons) 1,954,222 37.0%
- --------------------------------------------
* Less than 1%
(1) Except as otherwise noted in the footnotes to this table, to the
Company's knowledge each of the persons named in the table has sole
voting and investment power with respect to all shares of Common Stock
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shown as beneficially owned by them.
(2) Includes shares owned of record by entities controlled by Mr. Connelly.
Also includes 37,500 shares beneficially owned by Mr. Connelly but
subject to purchase options granted to certain individuals. Mr.
Connelly's address is 2180 Noblestown Road, Pittsburgh, PA 15205.
(3) Includes 168,667 shares issuable pursuant to stock options which are
currently exercisable or within 60 days after the Record Date.
(4) Includes 26,800 shares issuable pursuant to stock options which are
currently exercisable or within 60 days after the Record Date.
(5) Consists of 12,500 shares owned by New York Cruise Lines, Inc. ("NYCL"),
of which Mr. Andren is Chairman and a principal stockholder; 25,550
shares issuable pursuant to stock options which are currently
exercisable or within 60 days after the Record Date; and 300 shares owned
by Mr. Andren's minor children.
(6) Includes 11,733 shares issuable pursuant to stock options which are
currently exercisable or within 60 days after the Record Date.
(7) Consists exclusively of shares issuable pursuant to stock options which
are currently exercisable or exercisable within 60 days after the Record
Date.
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three classes.
At each Annual Meeting of Stockholders, directors are elected for a term of
three years to succeed those directors whose terms are expiring.
At the Annual Meeting, two individuals will be elected to serve as a Class
III directors of the Company, each for a term of three years or until their
respective successors are duly elected and qualified. The nominees receiving
the vote of holders of a majority of the shares entitled to vote and
represented in person or by proxy at the Annual Meeting will be elected.
Stockholders do not have the right to cumulate votes in the election of
directors.
The persons named as proxies on the accompanying proxy card intend to vote
all duly executed proxies for the election of John E. Connelly and John S.
Aylsworth as Class III directors, except as otherwise directed by the
stockholder on the proxy card. Messrs. Connelly and Aylsworth are currently
directors of the Company. If for any reason Messrs. Connelly or Aylsworth
become unavailable for election, which is not now anticipated, the persons
named in the accompanying proxy card will vote for such substitute nominees as
is designated by the Board of Directors.
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The directors of the Company, together with certain information about them,
are set forth below.
Name Age Director Since Positions with the Company
---- --- -------------- --------------------------
John E. Connelly 72 1992 Chairman of the Board,
and Chief Executive
Officer (Class III)
John S. Aylsworth 48 1995 President and Chief Operating
Officer (Class III)
Terrence L. Wirginis 46 1993 Vice Chairman of the Board
and Vice President-Marine
and Development (Class II)
Karl G. Andren 51 1993 Director (Class I)
Royal P. Walker, Jr. 38 1996 Director (Class I)
Nominees for Terms Expiring in 1998
JOHN E. CONNELLY has served as Chairman and a director of the Company and
its predecessors since their inception. Mr. Connelly has also served as Chief
Executive Officer of the Company from its inception until March 1995 and since
July 1995. Mr. Connelly served as President of the Company from July 1995
until July 1997. Entities controlled by Mr. Connelly have owned and operated
the Gateway Clipper Fleet in Pittsburgh from its inception in 1958 through
1996, the Station Square Sheraton Hotel in Pittsburgh from 1981 to 1998 and
the Broadwater Beach Resort from 1992 until such time as the purchase of the
property by a limited liability company in which the Company and Mr. Connelly
have interests. In 1984, Mr. Connelly founded World Yacht Enterprises, a
fleet of dinner cruise, sightseeing and excursion boats in New York City. In
1985, he started Gateway Riverboat Cruises in St. Louis, a predecessor to the
Company. Mr. Connelly is also the founder, owner and Chief Executive Officer
of J. Edward Connelly Associates, Inc., a marketing firm based in Pittsburgh,
Pennsylvania.
JOHN S. AYLSWORTH has been President and Chief Operating Officer since July
1997, and a director of the Company since July 1995. Mr. Aylsworth served as
Executive Vice President and Chief Operating Officer of the Company from March
1995 to July 1997. Prior to joining the Company, Mr. Aylsworth served as an
executive officer for Davis Companies, located in Los Angeles, California.
From January 1992 through October 1994, Mr. Aylsworth was Chief Executive
Officer of The Sports Club Company, a company which operates premier health
and fitness facilities in Los Angeles and Irvine, California. From February
1989 through December 1991, Mr. Aylsworth was Chief Financial Officer of
SpectreVision Co., a Dallas, Texas based supplier of in-room entertainment and
interactive information systems in the hotel industry.
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DIRECTORS CONTINUING IN OFFICE
Terms Expiring in 1999
KARL G. ANDREN has been Chairman of Circle-Line Sightseeing Yachts, Inc., a
subsidiary of NYCL, which operates the leading sightseeing cruise line in New
York City, since 1981. In addition, NYCL owns World Yacht, Inc., a fleet of
luxury dinner cruise, sightseeing and excursion boats in New York City. Mr.
Andren is a principal stockholder in NYCL. Mr. Andren is a member of the
Company's Audit and Compensation Committees.
ROYAL P. WALKER, JR. became a member of the Company's Board of Directors on
June 4, 1996. Mr. Walker is an attorney from Jackson, Mississippi and since
June 1, 1992 has served on the staff of The Institute for Disability Studies
for the State of Mississippi University System. From June 1991 through May
1992 he served as the first Executive Director of the Mississippi Gaming
Commission. Mr. Walker is a member of the Company's Audit and Compensation
Committees.
Term Expiring in 2000
TERRENCE L. WIRGINIS has served as Vice Chairman of the Board since July
1997. Mr. Wirginis has served as Vice President, Marine and Development since
August 1995 and as a director since the Company's inception. Mr. Wirginis
provided consulting services to the Company with respect to the Company's
marine operations and the development and improvement of the Company's
facilities since its inception until August 1995. The Company has been
advised that Mr. Wirginis devotes an insubstantial amount of his time to
Gateway Clipper Fleet, a company in which he has an ownership interest. Mr.
Wirginis is the grandson of Mr. Connelly.
Recommendation of Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ELECTION OF JOHN E. CONNELLY AND JOHN S. AYLSWORTH AS CLASS III
DIRECTORS. The directors and officers of the Company intend to vote their
shares in favor of the nominees.
Meetings and Committees of the Board of Directors
During fiscal 1998, the Board of Directors held seven formal and telephonic
meetings. During fiscal 1998, all Board of Directors members attended at
least seventy-five percent of the aggregate number of meetings of the full
Board of Directors and of each committee on which such director serves.
The Audit Committee, which is currently comprised of Messrs. Andren and
Walker, and whose tasks include reviewing the Company's audited financial
statements and making recommendations to the full Board of Directors
concerning the Company's audits and selection of independent public
accountants, met one time during fiscal year 1998. In addition, the Company
has established a Compensation Committee, also currently composed of Messrs.
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<PAGE> 8
Andren and Walker, whose responsibilities include determining salaries,
bonuses and other compensation for the Company's executive officers and
administering the Company's stock option plan. The Company's Compensation
Committee met twice during fiscal year 1998.
Compensation of Directors
During fiscal 1998, directors who were not employees of the Company received
annual director's fees of $24,000. Directors who are employees of the Company
do not receive director's fees. Directors of the Company are entitled to
receive discretionary grants of stock options under the Company's stock option
plan. In addition, under the Company's stock option plan, each non-employee
director elected to the Board of Directors receives a grant of non-qualified
stock options to purchase 5,000 shares of Common Stock at the fair market
value of the Company's Common Stock on the date of grant. These stock options
are exercisable immediately with respect to one-half of the shares and become
exercisable with respect to the remainder of the shares in two equal annual
installments.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for making all compensation decisions with respect to the
executive officers of the Company. The Committee currently consists of
Messrs. Andren and Walker, both of whom were elected to the Committee in June
1996.
Compensation Policies
Underlying the Committee's decision with respect to executive officers'
compensation is the premise that it is fundamentally important that the
Company be able to attract, retain, motivate and benefit from the guidance and
experience of suitably talented and qualified individuals. The Company's
compensation policy is based upon the principal that the financial rewards to
the executives should be aligned with the financial interests of the
stockholders of the Company. In this manner, the Committee believes that the
Company will meet its ultimate responsibility to its stockholders by striving
to create a suitable long-term return on their investment through earnings
from operations and prudent management of the Company's business and
operations. As part of the compensation policy, the Committee believes that
its executives should be encouraged to acquire equity interests in the
Company, thereby providing additional incentives, corresponding to the
interests of stockholders, to provide their maximum effort toward the success
and profitability of the Company's businesses and the achievement of increased
stockholder value. The Company's compensation packages for its executive
officers consist of three major components: base salary, bonus and stock
options.
Each year, the Committee conducts a full review of the Company's executive
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compensation program, as well as a review of each executive's performance
during the year. As part of such review, the Committee periodically reviews
publicly available information regarding the compensation levels and policies
in the context of other companies within the gaming industry, as well as with
a broader group of companies of comparable size and complexity. In addition,
the Committee uses its discretion to set executive compensation based upon
external and internal factors and the particular executive's circumstances.
Base Salary
The base salary level for each of the Company's executives is principally
based upon the level and scope of the responsibilities of the office, the pay
levels of similarly positioned executive officers among companies competing
for the services of such executives and a consideration of the level of
experience and performance profile for the particular executive officer.
Annual adjustments to each executive officer's salary are also based on the
foregoing factors. Additionally, the Committee considers the prevailing
economic conditions, the relationship of any such adjustments to those
provided to other employees within the Company, the performance of the
executive's duties and responsibilities and other performance-related criteria
that may be relevant with respect to such executive officer at the time.
The base salaries for each of Messrs. Connelly, Aylsworth, Wirginis and
Zweifel were determined pursuant to employment agreements with the Company.
Bonuses
Bonuses are viewed as a reward for individual contributions to the Company's
performance, based not only on the Company's short-term results but also on
the contributions each executive officer has made to the potential for future
growth of the Company's profits. In addition, consideration is given to the
achievement of selected financial goals and progress in meeting other long-
term objectives, as well as the executive officers' leadership role in these
activities. In light of these considerations, for fiscal 1998, Messrs.
Aylsworth, Zweifel and Wirginis received cash bonuses of $220,002, $59,400 and
$59,400, respectively.
Stock Options
Pursuant to the Company's stock option plan, stock options may be granted to
the Company's executive officers. The Committee believes that long-term
incentive compensation such as stock options are the most direct way of tying
executive compensation to increases in stockholder value. The Committee
believes that awards of stock options are an important complement to the cash
elements of the Company's executive officers' compensation described above as
they align the executive's interests with those of the Company's stockholders.
Stock options granted with an exercise price are generally equal to the
market price of the Company's Common Stock on the date of grant, and typically
are subject to vesting requirements based upon the executive's continued
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employment with the Company. This approach is designed to create incentives
for the executive to seek to achieve consistent improvement in the Company's
performance and creation of stockholder value over the long-term, and
additionally provides an incentive for the executive to remain in the service
of the Company.
The Committee from time to time has evaluated the level of long-term
incentives provided to each of the executive officers of the Company. When
considering whether to make grants of stock options, the Committee reviews
each officer's relative contributions to corporate performance, the practices
of other comparable companies and takes into consideration the effect such
awards might have on Company performance and stockholder value. Executive
officers who join the Company are typically granted options to purchase shares
of the Company's Common Stock based upon a consideration of such executive's
level of duties.
Mr. Connelly's Compensation
Mr. Connelly has agreed to serve as Chairman of the Board of the Company
until June 1, 2003. Prior to December 18, 1992, Mr. Connelly did not receive
any salary or bonus from the Company. The Committee believes that Mr.
Connelly's cash compensation is significantly below the cash compensation paid
to chief executive officers of the Company's competitors and peer companies.
This report is submitted by the members of the Committee.
Karl G. Andren
Royal P. Walker, Jr.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
compensation paid by the Company during the three fiscal years ended February
28/29, 1998, 1997 and 1996, respectively, to each of the named executive
officers of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
-------------------- ------------
Securities All
Fiscal Underlying Other
Name and Principal Position Year Salary Bonus Options/SARs Compensation (1)
- --------------------------- ------ ------ ----- ------------ ----------------
<S> <C> <C> <C> <C> <C>
John E. Connelly (2) 1998 $200,000 $ -- -- $ 3,200
Chairman of the Board and 1997 200,000 -- -- 2,258
Chief Executive Officer 1996 200,000 -- -- 2,660
John S. Aylsworth (3) 1998 $400,000 $220,002 346,667 (4) $ 5,186
President and Chief 1997 299,327 56,875 66,667 (5) 22,648 (6)
Operating Officer 1996 273,501 44,331 66,667 53,263 (6)
Terrence L. Wirginis (7) 1998 $180,000 $ 59,400 52,000 $ 4,310
Vice Chairman of the 1997 150,000 17,063 5,000 2,216
Board and Vice President 1996 157,415 -- -- 1,097
- -Marine and Development
James A. Zweifel (8) 1998 $180,000 $ 59,400 26,000 (4) $ 5,651
Executive Vice 1997 150,000 17,063 5,000 (5) 2,408
President and 1996 53,890 -- 5,000 303
Chief Financial Officer
</TABLE>
(1) Except as otherwise noted, represents contributions made to the Company's
401(k) plan for the account of the named executive.
(2) Mr. Connelly also served as Chief Executive Officer of the Company from
its inception until March 1995 and from July 1995 through the present.
(3) Mr. Aylsworth became an employee of the Company in March 1995.
(4) On August 22, 1997, the Company repriced certain outstanding stock
options with exercise prices ranging from $5.625 to $37.00 per share by
amending the terms of such options to provide for an exercise price of
$2.625 per share. In connection with such repricing each of Messrs.
Aylsworth, Wirginis and Zweifel had previously granted options for
66,667, 10,000 and 5,000 shares, respectively, repriced. See "Repricing
of Stock Options."
(5) On June 19, 1996, the Company repriced certain outstanding stock options
with exercise prices ranging from $36.00 to $54.00 per share by amending
the terms of such options to provide for an exercise price of $11.625 per
share. In connection with such repricing each of Messrs. Aylsworth,
Wirginis and Zweifel had previously granted options for 66,667, 2,500 and
5,000 shares, respectively, repriced. See "Repricing of Stock Options."
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(6) Includes $20,060 and $50,000 in 1997 and 1996, respectively, in
relocation expense reimbursements.
(7) During fiscal 1996, Mr. Wirginis was engaged as a consultant to the
Company. Mr. Wirginis's responsibilities included oversight and
planning with respect to the renovation of the "Admiral" and construction
of new vessels. Mr. Wirginis was paid approximately $73,000 as a
consultant during fiscal 1996. On August 15, 1995, Mr. Wirginis became
an employee of the Company.
(8) Mr. Zweifel joined the Company in November 1995.
The following table contains information concerning the grant of stock
options during fiscal 1998 to the Company's executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
----------------------------------------------
Potential Realizable
Value at Assumed Annual
Number of Percent of Total Rates of Stock Price
Securities Options/SARs Exercise Appreciation for
Underlying Granted to or Base Option Term (3)
Options/SARs Employees in Price Expiration
Name Granted (1) Fiscal Year (2) ($/Sh) Date 5%($) 10%($)
- ---- ------------- ---------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John E. Connelly -- -- -- -- -- --
John S Aylsworth 346,667 (4) 55.7% 2.625 Aug. 2007 $ 572,295 $1,450,307
Terrence L. Wirginis 52,000 (5) 8.3% 2.625 Aug. 2007 85,844 217,546
James A. Zweifel 26,000 (6) 5.0% 2.625 Aug. 2007 42,922 108,773
</TABLE>
(1) On August 22, 1997, the Company repriced certain outstanding stock
options. Pursuant to such repricing, the exercise price of options
previously granted to each of Messrs. Aylsworth, Wirginis and Zweifel for
66,667, 10,000 and 5,000 shares, respectively, were repriced at $2.625.
See "Repricing of Stock Options."
(2) Includes options of all employees that were granted or repriced during
fiscal 1998. See "Repricing of Stock Options."
(3) In accordance with the rules of the Securities and Exchange Commission,
"Potential Realizable Value" has been calculated assuming an aggregate
ten year appreciation of the fair market value of the Company's Common
Stock on the date of the grant, at annual compounded rates of 5% and 10%,
respectively. The market value of the Company's Common Stock on
February 28, 1998 was $3.625 per share.
(4) Options to purchase 102,667 shares of Common Stock were vested as of
February 28, 1998. Options to purchase 66,000 shares of the Company's
Common Stock vested on March 13, 1998. Options to purchase 178,000
shares of the Company's Common Stock will vest on November 11, 1998.
(5) Options to purchase 17,150 shares of Common Stock were vested as of
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February 28, 1998. Options to purchase 1,250, 8,400 and 25,200 shares of
the Company's Common Stock will vest on each of June 19, 1998, August 22,
1998 and November 11, 1998, respectively.
(6) Options to purchase 7,533 shares of Common Stock were vested as of
February 28, 1998. Options to purchase 4,200, 1,667 and 12,600 shares
will vest on each of August 22, 1998, November 1, 1998 and November 11,
1998, respectively.
The following table sets forth information regarding the number and value of
options held by each of the Company's executive officers named in the Summary
Compensation Table during fiscal 1998. None of the named executive officers
exercised any stock options during fiscal 1998.
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs in-the-Money Options/SARs
at Fiscal Year End (#) at Fiscal Year End ($) (1)
------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
John E. Connelly -- -- $ -- $ --
John S. Aylsworth 102,667 244,000 102,667 244,000
Terrence L. Wirginis 17,500 34,850 17,500 34,850
James A. Zweifel 7,533 18,467 7,533 18,467
</TABLE>
(1) Based on the market price of the Company's Common Stock on February 28,
1998, as reported on the Nasdaq National Market, of $3.625 per share,
minus the exercise price.
Report on Repricing of Stock Options
On November 10, 1997, the Compensation Committee of the Board of Directors
(the "Committee") approved a change in the vesting of certain stock options of
the directors and executive officers. The vesting schedule of certain grants
to Messrs. Aylsworth (as to 280,000 options), Andren (as to 42,000 options),
Walker (as to 21,000 options), Wirginis (as to 42,000 options) and Zweifel (as
to 21,000 options) were accelerated from 20% on date of grant and each
anniversary thereafter to 20% on date of grant and on the first anniversary,
and 60% on November 11, 1998. Mr. Aylsworth also had vesting of a grant of
10,000 options accelerated by approximately eight months to November 11, 1998.
In addition, the trading price at which certain options granted to Mr.
Aylsworth with respect to 16,667 shares of Common Stock would vest was amended
from $24.00 to $5.50 per share.
On June 19, 1996, the Compensation Committee of the Board of Directors
approved amendments to the outstanding stock option agreements of each of the
executive officers and certain other employees of the Company. Pursuant to
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such amendments, options to purchase an aggregate of 127,750 shares of Common
Stock at exercise prices ranging from $36.00 to $54.00 per share were repriced
(the "First Repricing") at an exercise price of $11.625 per share, the market
value of the Common Stock on the date of the First Repricing. In addition,
the trading price at which certain options granted to Mr. Aylsworth with
respect to 16,667 shares of Common Stock will vest was amended from $84.00 to
$24.00 per share. Except for such amendments, the vesting periods and other
terms of the stock options affected by the First Repricing were not changed.
On August 22, 1997, the Committee approved amendments to the outstanding
stock option agreements of each of the executive officers and certain other
employees of the Company. Pursuant to such amendments, options to purchase an
aggregate of 152,724 shares of Common Stock at exercise prices ranging from
$5.625 to $37.00 per share were repriced (the "Second Repricing") at an
exercise price of $2.625 per share, the market value of the Common Stock on
the date of the Second Repricing. Except for such amendments, the vesting
periods and other terms of the stock options affected by the First Repricing
were not changed.
The Committee believes that the modifications set forth above were necessary
and appropriate in light of competitive conditions in the gaming industry and
in order to provide a meaningful long-term incentive compensation opportunity
in light of recent trading prices of the Common Stock to management team
members whose efforts are essential to the Company's success.
12
<PAGE> 15
The following table contains certain information concerning the amendments
to stock options of the executive officers of the Company pursuant to the
repricings:
<TABLE>
<CAPTION>
TEN-YEAR OPTION/SAR REPRICINGS TABLE
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at Remaining at
Options/SARs Time of Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended(#) Amendment($) Amendment($) Price($) Amendment
------ ------ ----------- ---------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
John E. Connelly -- -- -- -- -- --
Chairman of the
Board and Chief
Executive Officer
John S. Aylsworth 6/19/96 66,667 (3) $11.625 (1) $ 36.00 $11.625 8 yrs., 8 mos.
President and 8/22/97 66,667 (4) 2.625 (2) 11.625 2.625 7 yrs., 6 mos.
Chief Operating
Officer
Terrence L. Wirginis 8/22/97 5,000 2.625 (2) 11.625 2.625 5 yrs., 4 mos.
Vice Chairman of 8/22/97 5,000 2.625 (2) 11.625 2.625 8 yrs., 10 mos.
the Board and Vice
President-Marine
and Development
James A. Zweifel 6/19/96 5,000 11.625 (1) 36.00 11.625 9 yrs., 4 mos.
Executive Vice 8/22/97 5,000 2.625 (2) 11.625 2.625 8 yrs., 10 mos.
President and
Chief Financial
Officer
</TABLE>
(1) Based on the closing price of a share of Common Stock on June 19, 1996,
the date of amendment of the replacement stock options.
(2) Based on the closing price of a share of Common Stock on August 22, 1997,
the date of amendment of the replacement stock options.
(3) Total includes options with respect to 16,667 shares which were subject
to vesting upon achievement of certain trading prices for the Common
Stock. In connection with the First Repricing described above, the
trading price at which such options vested was amended from $84.00 to
$24.00 per share.
(4) Total includes options with respect to 16,667 shares which were subject
to vesting upon achievement of certain trading prices for the Common
Stock. In connection with the Second Repricing described above, the
trading price at which such options vested was amended from $24.00 to
$5.50 per share.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Karl G. Andren
Royal P. Walker, Jr.
13
<PAGE> 16
Employment Arrangements
In June 1998, the Company entered into separate Amended and Restated
Employment Agreements with each of Messrs. Connelly, Aylsworth, Wirginis and
Zweifel. The agreements with each of Messrs. Connelly, Aylsworth and Wirginis
provide for a term of employment through June 1, 2003, and the agreement with
Mr. Zweifel provides for a term of employment through June 1, 2001. The
agreements are automatically renewable thereafter for successive two-year
terms unless terminated by either party.
The agreements provide for minimum annual base salaries of $200,000 for Mr.
Connelly, $400,000 for Mr. Aylsworth, $180,000 for Mr. Wirginis and $180,000
for Mr. Zweifel. Such minimum annual base salaries are subject to increases
at the discretion of the Board of Directors. Each such executive officer may
also receive incentive bonuses provided through any incentive compensation
plan of the Company.
Each employment agreement provides that if the Company terminates the
employment of the executive without Cause or if the executive terminates his
employment for Good Reason prior to a Change in Control of the Company, the
Company will be required to pay such executive officer severance benefits
including the continuation of the executive's then-current annual salary for a
minimum of one year and a maximum of two years (except for Mr. Zweifel's
agreement, which provides for salary continuation for a one-year period), and
the continuation of certain welfare benefits to which he otherwise would have
been entitled. "Cause" is generally defined as (i) any breach or failure to
perform duties or follow instructions of the Board of Directors, (ii)
commission of fraud, misappropriation, embezzlement or other acts of
dishonesty, alcoholism, drug addiction or dependency or conviction of a felony
or gross misdemeanor if the Board of Directors determines such conduct is
materially adverse to Company, (ii) breach of the employment agreement by the
executive, (iv) the refusal by any gaming commission with jurisdiction over
the Company's facilities to grant a license to the executive or any suspension
or revocation of a license previously granted to the executive. "Good Reason"
is generally defined as (i) a significant and adverse change in the nature or
scope of the executive's position, authority, duties or responsibility, (ii) a
failure to continue the executive officer's then-current participation in
benefits or compensation; (iii) within a period of one year following a Change
in Control (as defined), resignation by the executive in his sole and absolute
discretion, or (v) any material breach of the agreement by the Company.
Each employment agreement additionally provides that each such executive
officer will be paid severance benefits in the event that his employment with
the Company is terminated by the Company without Cause or by the executive for
Good Reason within two years of a Change in Control of the Company. The
Change in Control provisions would require, in addition to any other benefits
to which the executive is entitled, a lump-sum cash payment in an amount equal
to 2.99 times the executive officer's average annual base compensation, as
determined pursuant to the employment agreement. If payment of the foregoing
amounts and any other benefits received or receivable upon termination after a
Change in Control would subject such executive officer to the payment of a
14
<PAGE> 17
federal excise tax, the total amount payable by the Company to such executive
officer would be increased by an amount sufficient to provide such executive
officer (after satisfaction of all excise taxes and federal income taxes
attributable to such increased payment) with a net amount equal to the federal
excise tax owed by the executive officer.
Change in Control is generally defined as (i) the acquisition by any person
of beneficial ownership of 20% or more of the combined voting power of the
Company's then outstanding securities; (ii) a change in the composition of the
Company's Board of Directors such that during any two consecutive years the
incumbent directors and their nominees do not constitute a majority of the
Board; (iii) a merger or consolidation of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which the holders
of the Common Stock prior to such event do not have the same proportionate
ownership of the common stock of the surviving corporation, (iv) a merger or
consolidation of the Company in which the Company is the continuing or
surviving corporation in which the holders of the Company's Common Stock
immediately prior to such event do not own 50% or more of the outstanding
stock of the surviving corporation; or (v) approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company or the sale of
substantially all of the assets of the Company. A transfer by Mr. Connelly
and certain related persons and entities which would otherwise be sufficient
to constitute a Change of Control would not constitute a Change of Control for
the purpose of triggering a payment to Mr. Connelly, but would constitute a
change in control for each of the other executives.
STOCK PERFORMANCE GRAPH
The following table compares the cumulative total stockholder return on the
Company's Common Stock during the period from December 11, 1992 through
February 28, 1998, with the cumulative return on Dow Jones Casinos Index (the
"DJ Casinos Index") and the Standard & Poor's 500 Stock Index ("S&P 500")
assuming $100 was invested in the Company's Common Stock on December 11, 1992
and in each of the foregoing indices and assumes reinvestment of any dividends
(no dividends have been paid on the Company's Common Stock during the periods
presented). The comparisons are required by the Securities Exchange
Commission and are not intended to forecast or be indicative of possible
future performance of the Company's Common Stock.
02/93 02/94 02/95 02/96 02/97 02/98
------- ------- ------- ------- ------- -------
President Casinos, Inc. 100.00 122.56 47.56 14.41 4.57 4.42
S&P 500 100.00 108.34 116.31 156.68 197.68 266.87
DJ Casinos Index 100.00 169.29 141.79 196.94 177.18 166.09
CERTAIN TRANSACTIONS
The Company previously had an operating lease with BH Acquisition
Corporation ("BH"), a wholly-owned entity of Mr. Connelly for its Biloxi
mooring site, parking facilities, offices and a warehouse. Rent under the
operating lease agreement was approximately $3,303,000 annually, on a triple
15
<PAGE> 18
net basis. On July 24, 1997, President Broadwater, LLC ("PBLLC"), a limited
liability company in which the Company and a wholly-owned entity of Mr.
Connelly have ownership interests, acquired the real estate and improvements
from BH for $40,500,000. The property comprises approximately 260 acres and
includes a marina, two hotels and an adjacent 18-hole golf course
(collectively, the "Broadwater Property").
Prior to the acquisition discussed above, the Company arranged for groups to
stay at the Broadwater Resort complex in anticipation that members of these
groups would utilize the Company's gaming facilities. Room costs, which were
at fair market value, were paid either by the group members, tour operators,
the Company or a combination thereof. During fiscal 1998, the Company paid
approximately $857,000 to a company controlled by Mr. Connelly to pay for such
room and related costs.
During fiscal 1995, the Company, Mr. Connelly and certain other parties were
defendants in litigation involving the Broadwater Resort complex, known as the
"Pratt litigation." On February 17, 1995, the Company, as well as the other
parties to such litigation, entered into a settlement agreement pursuant to
which all claims in such litigation were dismissed with prejudice. In
connection with the settlement, on February 17, 1995, the Company entered into
a loan agreement with BH for the principal amount of $1,000,000 (the "Existing
Note") to fund the first of four payments for the Pratt litigation settlement.
On February 15, 1996, the Existing Note was amended and restated (the "Amended
and Restated Note") to extend the maturity date one calendar year and the
Company entered into a second loan agreement (the "New Note") with BH for
principal amount of $1,000,000 to fund the third installment of the
settlement. The Amended and Restated Note and the New Note bore interest at
the rate of 13.0% per annum payable monthly. Interest earned on such related
party borrowings was $103,000, $260,000 and $135,000 for the years ended
February 28/29, 1998, 1997 and 1996, respectively. In conjunction with the
acquisition of the Broadwater Property, all principal and outstanding interest
on the notes was paid.
During fiscal 1998, the Company used a plane owned by an affiliate of Mr.
Connelly and reimbursed said affiliate $34,000. The amount charged by the
affiliate is based on the fair market rate charged by unrelated third parties.
Mr. Connelly and his affiliates guaranteed debt capital leases of the
Company in fiscal 1998. The highest aggregate sum guaranteed in fiscal year
1998 was $4,200,000. The guaranteed amount as of February 28, 1998 was
$3,800,000.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file with the Securities and Exchange
Commission initial reports of beneficial ownership and changes in ownership of
the Company's Common Stock. To the knowledge of management, based solely on
its review of copies of such reports furnished to the Company, all Section
16(a) filing requirements were met, except that a Form 4 Statement of Changes
16
<PAGE> 19
in Beneficial Ownership required to be filed by Mr. Connelly on or before July
10, 1997 with respect to one acquisition of securities was filed in June 1998.
GENERAL INFORMATION
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for fiscal 1998 has been
furnished to stockholders with the mailing of this Proxy Statement.
UPON WRITTEN REQUEST OF ANY PERSON WHO ON JULY 3, 1998 WAS A RECORD OWNER OF
THE COMPANY'S COMMON STOCK OR WHO REPRESENTS IN GOOD FAITH THAT HE OR SHE WAS
ON SUCH DATE A BENEFICIAL OWNER OF SUCH COMMON STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING, THE COMPANY WILL SEND TO SUCH PERSON, WITHOUT CHARGE, A COPY
OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1998
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR THIS
REPORT SHOULD BE DIRECTED TO:
BECKI RITTER, INVESTOR RELATIONS
PRESIDENT CASINOS, INC.
802 NORTH FIRST STREET
ST. LOUIS, MISSOURI 63102
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent public accountants
for 1998 and has been selected by the Board of Directors to continue in such
capacity during fiscal year 1999. Representatives of Deloitte & Touche LLP
are expected to be present at the Annual Meeting to respond to appropriate
questions, and such representatives will have the opportunity to make
statements if they so desire.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual Meeting of
Stockholders must be received by the Company at the address appearing on the
first page of this proxy statement by March 26, 1999, in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The Company will bear the cost of the solicitation
of the Board of Directors' proxies for the Annual Meeting, including the cost
of preparing, assembling and mailing proxy materials, the handling and
tabulation of proxies received and charges of brokerage houses and other
institutions, nominees and fiduciaries in forwarding such materials to
beneficial owners. In addition to mailing proxy materials, such solicitation
may be made in person or by telephone, telegraph or telecopy by directors,
officers or regular employees of the Company.
17
<PAGE> 20
PRESIDENT CASINOS, INC.
FOR THE HOLDERS OF PRESIDENT CASINOS, INC. COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS
1998 ANNUAL MEETING OF STOCKHOLDERS - AUGUST 19, 1998
The undersigned stockholder of PRESIDENT CASINOS, INC. (the "Company"),
revoking all previous proxies, hereby appoints JOHN E. CONNELLY and JOHN S.
AYLSWORTH and each of them acting individually, with full power of
substitution, as proxies of the undersigned, and authorizes either or both of
them to vote all shares of the Company's Common Stock held of record by the
undersigned as of the close of business on July 3, 1998 at the 1998 Annual
Meeting of Stockholders of the Company to be held August 19, 1998, at 9:30
a.m. prevailing local time, at the Broadwater Beach Resort, 2110 Beach
Boulevard, Biloxi Mississippi and any adjournment(s) or postponements(s)
thereof (the "Annual Meeting"), according to the votes the undersigned would
be entitled to cast if then personally present.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" THE NOMINEES FOR DIRECTOR LISTED AND "FOR" THE GRANT OF
DISCRETIONARY AUTHORITY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on reverse side)
** FOLD AND DETACH HERE **
<PAGE> 21
1. Election of Two Class III Directors-John E. Connelly and John S.
Aylsworth.
/ / FOR the nominees for director named above.
/ / WITHHOLD AUTHORITY to vote for nominee.
(Instruction: To withhold authority for an individual nominee, write the name
of such nominee on the space provided below.)
____________________________________________
2. The authority of the proxies, in their discretion, to vote on such other
business as may properly come before the Annual Meeting, or any
adjournments(s) or postponement(s) thereof.
/ / FOR / / AGAINST / / ABSTAIN
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE ANNUAL MEETING
AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The undersigned
also hereby ratifies all that the said proxies may do by virtue thereof and
hereby confirms that this proxy shall be valid and may be voted regardless of
whether the stockholder's name is signed as set forth below or a seal affixed
or the description, authority or capacity of the person signing is given or
any other defect of signature exists.
DATED:__________________________________, 1998
________________________________________
(Stockholder's Signature)
________________________________________
(Stockholder's Signature)
NOTE: PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT TO THE COMPANY.
Please sign this proxy exactly as the name appears in the address above. If
shares are registered in more than one name, all owners should sign. If
signing in a fiduciary or representative capacity, such as attorney-in-fact,
executor, administrator, trustee or guardian, please give full title and
attach evidence of authority. If signer is a corporation, please sign the
full corporate name and an authorized officer should sign his/her name and
title and affix the corporate seal.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES.
** FOLD AND DETACH HERE **
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE ABOVE PROXY
CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
