STATION CASINOS INC, DEF 14A, 1996-07-18

STATION CASINOS INC
DEF 14A, 1996-07-18
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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

STATION 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
STATION CASINOS, INC.
2411 WEST SAHARA AVENUE
LAS VEGAS, NEVADA 89102

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 20, 1996
TO BE HELD AT THE PALACE STATION HOTEL & CASINO
2411 WEST SAHARA AVENUE
LAS VEGAS, NEVADA 89102

To the Stockholders:

NOTICE is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Station Casinos, Inc. (the "Company") will be held at Palace
Station Hotel & Casino on Tuesday, August 20, 1996 at 10:00 a.m. local time, for
the following purposes:

1. To elect three directors to serve for a term of three years until
the 1999 Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified;

2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the Company's 1997 fiscal year;

3. To approve a proposed amendment to the Company's Stock Compensation
Program, increasing the maximum aggregate number of shares of the Company's
common stock subject to the Stock Compensation Program and to qualify the
Stock Compensation Program for certain tax benefits; and

4. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.

Holders of the Company's common stock, par value $.01 per share, at the
close of business on July 18, 1996, the record date fixed by the Company's board
of directors (the "Board of Directors"), are entitled to notice of and to vote
at the Annual Meeting. The Board of Directors urges all stockholders of record
to exercise their right to vote at the meeting personally or by proxy.
Accordingly, we are sending you the following Proxy Statement, the enclosed
proxy card and the Annual Report to Stockholders.

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SPECIFY YOUR
VOTE ON THE ACCOMPANYING PROXY CARD AND SIGN, DATE AND RETURN IT AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID ENVELOPE.

Your prompt response will be appreciated.

By Order of the Board of Directors,

/s/ SCOTT M. NIELSON
---------------------------------------------------------------------------
Scott M. Nielson
SECRETARY

Las Vegas, Nevada
July 19, 1996
<PAGE>
STATION CASINOS, INC.
2411 WEST SAHARA AVENUE
LAS VEGAS, NEVADA 89102

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

PROXY STATEMENT
------------------------

The accompanying proxy is solicited by the board of directors (the "Board of
Directors") of Station Casinos, Inc. (the "Company") to be used at the Annual
Meeting of Stockholders on Tuesday, August 20, 1996 (the "Annual Meeting") to be
held at 10:00 a.m. local time at Palace Station Hotel & Casino, 2411 West Sahara
Avenue, Las Vegas, Nevada 89102. This Proxy Statement, the enclosed form of
proxy and the Annual Report to Stockholders are being sent to stockholders on or
about July 19, 1996.

At the Annual Meeting, stockholders will be asked to consider and vote upon
the following matters:

ITEM I: The election of three directors to serve until the 1999 Annual
Meeting.

ITEM II: A proposal to ratify the appointment of Arthur Andersen LLP as
the Company's independent public accountants for the Company's
1997 fiscal year.

ITEM III: A proposed amendment to the Company's Stock Compensation
Program, increasing the maximum aggregate number of shares of
the Company's common stock subject to the Stock Compensation
Program and qualifying the Stock Compensation Program for
certain tax benefits.

Any stockholder giving a proxy may revoke it at any time prior to its
exercise at the Annual Meeting by giving notice of such revocation either
personally or in writing to the Secretary of the Company at the Company's
executive offices, by subsequently executing and delivering another proxy or by
voting in person at the Annual Meeting.

The 1996 Annual Report to Stockholders that accompanies this Proxy Statement
is not to be regarded as proxy soliciting material.

The Board of Directors believes that the election of its director nominees
and the approval of the proposals contained in Items II and III are in the best
interests of the Company and its stockholders and recommends to the stockholders
the approval of each of the nominees and of the proposals contained in Items II
and III.

VOTING

Shares represented by duly executed and unrevoked proxies in the enclosed
form received by the Board of Directors will be voted at the Annual Meeting in
accordance with the specifications made therein by the stockholders, unless
authority to do so is withheld. If no specification is made, shares represented
by duly executed and unrevoked proxies in the enclosed form will be voted FOR
the election as directors of the nominees listed herein, FOR the proposals
contained in Items II and III, with respect to any other matter that may
properly come before the meeting, in the discretion of the persons voting the
respective proxies.

The cost of preparing, assembling and mailing the proxy materials will be
borne by the Company. The Company has retained Continental Stock Transfer &
Trust Company to solicit proxies at an estimated cost of $30,000.

1
<PAGE>
Only holders of record at the close of business on July 18, 1996 (the
"Record Date") of the Company's common stock, $.01 par value (the "Common
Stock"), will be entitled to vote at the Annual Meeting. On the Record Date,
there were 35,318,057 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote on all matters presented at the Annual Meeting.

VOTE REQUIRED

The election of the director nominees requires a plurality of the votes cast
in person or by proxy at the Annual Meeting. Under Nevada law, the Company's
Amended and Restated Articles of Incorporation and the Company's Restated
Bylaws, shares as to which a stockholder abstains or withholds from voting on
the election of directors and shares as to which a broker indicates that it does
not have discretionary authority to vote ("broker non-votes") on the election of
directors will not be counted as voting thereon and therefore will not affect
the election of the nominees receiving a plurality of the votes cast.

Ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the Company's 1997 fiscal year and approval
of the proposal to amend the Company's Stock Compensation Program to increase
the maximum aggregate number of shares of Common Stock subject to the Stock
Compensation Program and to qualify the Stock Compensation Program for certain
tax benefits each require the affirmative vote of a majority of shares present
in person or represented by proxy at the Annual Meeting and entitled to vote at
the Annual Meeting. Under Nevada law, the Company's Amended and Restated
Articles of Incorporation and the Company's Restated Bylaws, each abstention and
broker non-vote on this proposal has the same legal effect as a vote against
such proposal.

The stockholders of the Company have no dissenters or appraisal rights in
connection with any of Items I, II or III.

ITEM I
NOMINEES FOR ELECTION OF DIRECTORS

The Company's Amended and Restated Articles of Incorporation and Restated
Bylaws require that the number of directors on the Board of Directors be not
less than three (3) nor more than fifteen (15). Currently, the Board of
Directors has fixed the number of directors at seven (7). The Board of Directors
presently consists of the following persons: Frank J. Fertitta III, Glenn C.
Christenson, Blake L. Sartini, R. Hal Dean, Lorenzo J. Fertitta, Lowell H.
Lebermann, Jr. and Delise F. Sartini. The Board of Directors is staggered into
three classes. Class I consists of R. Hal Dean and Lowell H. Lebermann, Jr.,
whose terms expire in 1997. Class II consists of Glenn C. Christenson and Blake
L. Sartini, whose terms expire in 1998. Class III consists of Frank J. Fertitta
III, Lorenzo J. Fertitta, and Delise F. Sartini, whose terms expire in 1996. At
each annual meeting, the terms of one class of directors expire. Each director
nominee is elected to the Board of Directors for a term of three years.

At the Annual Meeting three directors are to be elected to serve until the
1999 Annual Meeting and until their successors are elected and qualified. Unless
authority to vote for directors is withheld in the proxy card, it is the
intention of the persons named in the enclosed form of proxy to vote FOR the
re-election of the three nominees listed below. The persons designated as
proxies will have discretion to cast votes for other persons in the event any
nominee for director is unable to serve. At present, it is not anticipated that
any nominee will be unable to serve.

The names and certain information concerning the persons to be nominated as
directors by the Board of Directors at the Annual Meeting are set forth below.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES
LISTED BELOW.

FRANK J. FERTITTA III. Mr. Fertitta has served as Chairman of the Board of
the Company since February 1993, Chief Executive Officer since July 1992 and
President of the Company since 1989. He has held senior management positions
since 1985, when he was named General Manager of Palace

2
<PAGE>
Station Hotel & Casino, a subsidiary of the Company ("Palace Station"). He was
elected a director of the company in 1986, at which time he was also appointed
Executive Vice President and Chief Operating Officer. Mr. Fertitta co-founded
and has been a member of the Board of Directors of Southwest Services, Inc., a
subsidiary of the Company ("Southwest Services") since 1990. In 1992, he
co-founded St. Charles Riverfront Station, Inc., a subsidiary of the Company
("St. Charles Station") and has served as Chairman of the Board of Directors of
that company since that time.

LORENZO J. FERTITTA. Mr. Fertitta has served as a director of the Company
since 1991. He has served as President and Chief Executive Officer of Fertitta
Enterprises, Inc. since June 1993, where he is responsible for managing an
investment portfolio consisting of marketable securities and real property. From
time to time, the investment portfolio contains investments in other gaming
operations. Mr. Fertitta was a co-founder of Southwest Services in 1986, of
Southwest Gaming Services, Inc., a subsidiary of the Company ("Southwest
Gaming") in 1990 and of St. Charles Station in 1992 and has served on their
respective boards since their inception. From 1991 to 1993, he served as Vice
President of the Company.

DELISE F. SARTINI. Ms. Sartini was appointed a director of the company on
August 30, 1995. She has served as Vice President of Community Affairs at Palace
Station in excess of five years. Ms. Sartini was a co-founder of Southwest
Services in 1986, of Southwest Gaming in 1990 and of St. Charles Station in
1992. Ms. Sartini is involved in various charitable organizations and serves on
the Board of Directors of St. Jude's Ranch for Children.

3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the directors, executive officers and certain
key management personnel of the Company and certain of its subsidiaries. All
directors hold their positions until their terms expire and until their
respective successors are elected and qualified. Executive officers are elected
by and serve at the discretion of the Board of Directors until their successors
are duly chosen and qualified.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ------------------------------------------------------------
<S> <C> <C>
Frank J. Fertitta III* 34 Chairman of the Board, President, Chief Executive Officer
and Director

Joseph J. Canfora 37 Executive Vice President and President -- Missouri
Operations

Glenn C. Christenson 46 Executive Vice President, Chief Financial Officer, Treasurer
and Director

Scott M. Nielson 38 Executive Vice President, General Counsel and Secretary

Blake L. Sartini* 36 Executive Vice President, President -- Nevada Operations and
Director

R. Hal Dean 80 Director

Lorenzo J. Fertitta* 27 Director

Lowell H. Lebermann, Jr 57 Director

Delise F. Sartini* 36 Director
</TABLE>

- ------------------------
* Frank J. Fertitta III and Lorenzo J. Fertitta are brothers and Delise F.
Sartini is their sister. Delise F. Sartini is married to Blake L. Sartini.

Set forth below are the Class I and Class II directors whose terms do not
expire this year and executive officers of the Company, along with certain
information regarding these individuals.

JOSEPH J. CANFORA. Mr. Canfora was appointed Executive Vice President of
the Company in February 1994 and President -- Missouri Operations in August 1995
under a new five-year employment contract. From 1990 to 1993, Mr. Canfora served
as Vice President and from 1990 to 1995 he served as Chief Operating Officer. He
has served as President of St. Charles Station since December 1993. From 1990 to
1992, he held the position of Vice President and General Manager of Palace
Station. Since 1984 Mr. Canfora has held several positions with the Company
including Food & Beverage Director (1984-1985), Director of Operations
(1985-1990) and Vice President of Operations (1990-1992). Prior to joining the
Company, Mr. Canfora held management positions at Binion's Horseshoe, the Maxim
Hotel and Casino and the Aladdin Hotel and Casino.

GLENN C. CHRISTENSON. Mr. Christenson was appointed Executive Vice
President of the Company in February 1994. From 1989 to 1993, he served as Vice
President. He has served as Chief Financial Officer since 1989, as Treasurer
since 1992 and as a director since 1993. Mr. Christenson is a Certified Public
Accountant. From 1983 to 1989, he was a partner of the international accounting
firm of Deloitte Haskins & Sells (now Deloitte & Touche), where he served as
partner-in-charge of audit services for the Nevada practice and National Audit
partner for the Hospitality Industry. Mr. Christenson has served on the Board of
Directors of the Nevada Resort Association and was Chairman of the Nevada Resort
Associations's Internal Revenue Service ("IRS") Liaison Committee.

SCOTT M. NIELSON. Mr. Nielson was appointed Executive Vice President of the
Company in June 1994. In 1991 he was appointed General Counsel and in 1992 he
was appointed Secretary of the Company. From 1991 through June 1994, he served
as Vice President of the Company. From 1986 to

4
<PAGE>
1991, Mr. Nielson was in private legal practice, most recently as a partner in
the Las Vegas firm of Schreck, Jones, Bernhard, Woloson & Godfrey, where he
specialized in gaming law and land use planning and zoning. Mr. Nielson is a
member of the American Bar Association, the Nevada Bar Association and the
International Association of Gaming Attorneys.

BLAKE L. SARTINI. Mr. Sartini was appointed Executive Vice President of the
Company and President-Nevada Operations in February 1994. From 1991 to 1993, he
served as Vice President of Gaming Operations. He has served as a director since
1993 and has over 10 years of experience in the hotel and casino industry. From
1985 to 1990, Mr. Sartini held various management positions at the Company, and
he co-founded and has been a member of the Board of Directors of Southwest
Services since 1990. He has served as President of Southwest Gaming since
January 1993. In 1992, he co-founded St. Charles Station and serves as its Vice
President.

R. HAL DEAN. Mr. Dean has served as a director of the Company since June
1993 and is chairman of the Human Resources Committee. Mr. Dean presently is a
member of the Board of Directors of the Civic Center Redevelopment Corp. of St.
Louis, Missouri (from 1968) and of LaBarge, Inc. (from 1984) in St. Louis. Mr.
Dean retired in 1981 from the Ralston Purina Company, having served 43 years in
various capacities including Chairman of the Board (1968-1980) and Chief
Executive Officer (1964-1980). Mr. Dean has served on several other Boards of
Directors including those of Gulf Oil Corp., Pittsburgh, Pennsylvania
(1970-1985), Chase Manhattan Bank International Advisory Group, New York, New
York (1965-1970), Mercantile Trust Co., St. Louis, Missouri (1969-1987), General
American Life Insurance Co., St. Louis, Missouri (1972-1987), Barnes Hospital,
St. Louis, Missouri (1979-1985) and Chevron Corp., San Francisco, California
(1985-1989).

LOWELL H. LEBERMANN, JR. Mr. Lebermann has served as a director of the
Company since October 1993 and is chairman of the Audit Committee. Mr. Lebermann
presently is a member of the Executive Committee of Valero Energy Corp. as well
as the President and sole owner of Centex Beverage, Inc., a wholesale
distributor of domestic and imported beverages. He is a former member of the
Board of Directors of First City National Bank of Austin, Texas (1978-1988). He
is currently Vice Chairman, Board of Regents, for the University of Texas
System. He was also a former Council member for the City of Austin, Texas
(1971-1977), and a former member of the Board of Directors of the Texas Workers'
Compensation Fund (1971-1993).

MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met ten times during fiscal 1996. The Board of
Directors has standing Audit and Human Resources Committees. The Board of
Directors does not have a standing Nominations Committee. None of the members of
the Board of Directors attended less than 75% of the meetings of the Board of
Directors held or of the total number of meetings held by all committees of the
Board of Directors on which various members served during the fiscal year ended
March 31, 1996. The current members of each of the Board of Directors'
committees are listed below.

THE AUDIT COMMITTEE

The current members of the Audit Committee are Lowell H. Lebermann, Jr.,
Chairman, and R. Hal Dean. During the 1996 fiscal year, the Audit Committee met
once.

The Audit Committee, comprised solely of outside directors, meets
periodically with the Company's independent public accountants, management and
internal auditors to discuss accounting principles, financial and accounting
controls, the scope of the annual audit, internal control, regulatory compliance
and other matters; advises the Board of Directors on matters related to
accounting and auditing; and reviews management's selection of independent
public accountants. The independent public accountants and the internal auditors
have complete access to the Audit Committee without management present to
discuss results of their audit and their opinions on adequacy of internal
controls, quality of financial reporting and other accounting and auditing
matters.

5
<PAGE>
THE HUMAN RESOURCES COMMITTEE

The current members of the Human Resources Committee are R. Hal Dean,
Chairman, and Lowell H. Lebermann, Jr. The Human Resources Committee met six
times during fiscal 1996.

The Human Resources Committee, currently comprised solely of outside
directors, reviews and takes action regarding terms of compensation, employment
contracts and pension matters that concern officers and key employees of the
Company. The Human Resources Committee also reviews and takes action regarding
grants of options and restricted shares to employees that are issued under the
Stock Option Program, other than awards under the Nonemployee Directors Plan.

COMPENSATION OF DIRECTORS

Directors who are not directly or indirectly affiliated with the Company
received a fee of $1,500 for each board meeting attended, $750 for each
committee meeting attended, and a monthly fee of $3,000. All directors are
reimbursed for expenses connected with attendance at meetings of the Board of
Directors. All directors are eligible to participate in the Company's Stock
Compensation Program. See "Stock Compensation Program" as described hereinafter.

HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In fiscal 1996, the Human Resources Committee consisted of R. Hal Dean and
Lowell Lebermann, Jr., both outside directors of the Company.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors and
persons who own more than 10% of the Company's Common Stock to file reports of
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (the
"Commission"). Executive officers, directors and 10% stockholders are required
by the Commission to furnish the Company with copies of all Forms 3, 4 and 5
they file.

Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all its executive officers, directors and
greater than 10% beneficial owners complied with all the filing requirements
applicable to them with respect to transactions during fiscal 1996 with the
following exceptions: Mr. Frank J. Fertitta III filed four late reports covering
transactions with respect to a number of gifts, a stock purchase, the grant of
stock options and the modification of the terms of certain options. Mr. Joseph
J. Canfora filed a late report covering transactions with respect to a stock
option grant and a repricing transaction. Mr. Glenn C. Christenson filed a late
report covering transactions with respect to a stock option grant and a
repricing transaction. Mr. Blake L. Sartini filed eight late reports covering
transactions with respect to a number of gifts, stock options and a stock
purchase. Mr. Scott M. Nielson filed a late report covering transactions with
respect to a stock option grant and a repricing transaction. Mr. Lorenzo J.
Fertitta filed five late reports covering transactions with respect to a number
of gifts, a stock purchase and an expiration of stock options. Mrs. Delise F.
Sartini filed seven late reports covering transactions with respect to a number
of gifts, the grant of stock options, the repricing of stock options and a stock
purchase. Mr. R. Hal Dean filed two late reports covering three transactions.
Mr. Lowell H. Lebermann, Jr. filed two late reports covering two transactions.

LEGAL PROCEEDINGS INVOLVING DIRECTORS, OFFICERS, AFFILIATES OR BENEFICIAL OWNERS

No director, officer, affiliate or beneficial owner of the Company, or any
associate thereof, is a party adverse to the Company or any of its subsidiaries
in any lawsuit nor has a material adverse interest thereto.

6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDERS

The following table sets forth as of May 31, 1996 certain information
regarding the shares of Common Stock beneficially owned by each stockholder who
is known by the Company to beneficially own in excess of 5% of the outstanding
shares of Common Stock, by each director and named executive officer and by all
executive officers and directors as a group.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER (2) PERCENT OF CLASS
- ------------------------------------------------------------------------ ------------- -----------------
<S> <C> <C>
Frank J. Fertitta III................................................... 5,714,902 15.7

Blake L. Sartini (3).................................................... 4,728,881 13.0

Lorenzo J. Fertitta..................................................... 4,686,444 12.9

Delise F. Sartini (3)................................................... 4,634,307 12.7

Glenn C. Christenson.................................................... 124,330 *

Joseph J. Canfora....................................................... 119,251 *

Scott M. Nielson........................................................ 121,161 *

R. Hal Dean............................................................. 29,265 *

Lowell H. Lebermann, Jr................................................. 16,000 *

Executive Officers and Directors as a Group (9 persons)................. 15,550,472 42.8
</TABLE>

- ------------------------
* Less than one percent

(1) Unless otherwise indicated in the footnotes to this table and subject to the
community property laws where applicable, each of the stockholders named in
this table has sole voting and investment power with respect to the shares
shown as beneficially owned. The address of each of the stockholders named
in this table is: c/o Station Casinos, Inc., 2411 West Sahara Avenue, Las
Vegas, Nevada 89102.

(2) Of the total number of shares reported in this table, the following are the
approximate number of vested options beneficially owned by each individual
in the table: Frank J. Fertitta III 571,205; Blake L. Sartini 104,812;
Lorenzo J. Fertitta 69,300; Delise F. Sartini 10,238; Glenn C. Christenson
91,130; Joseph J. Canfora 98,251; Scott M. Nielson 77,161; R. Hal Dean
17,500 and Lowell H. Lebermann, Jr. 15,000.

(3) Reflects beneficial ownership shared by Blake and Delise Sartini. Blake and
Delise Sartini do not, however, share beneficial ownership of the vested
options reflected in note (2) and thus have different total ownership
figures.

7
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or accrued by the
Company to the Chief Executive Officer of the Company and to each of the four
most highly compensated executive officers of the Company (other than the Chief
Executive Officer) for services rendered to the Company in all capacities during
the fiscal years ended March 31, 1996, 1995 and 1994.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ----------------------------
------------------------------------- OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
SALARY COMPENSATION STOCK AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS ($)(2) ($)(3) ($)(4) OPTIONS (5) ($)(6)
- --------------------------------- --------- ------------ ------------ ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank J. Fertitta III ........... 1996 $ 959,423 $ 365,000 -- -- 106,027 $ 135,812
Chairman of the Board, President 1995 901,231 215,000 -- $ 1,350,000 125,000 18,418
and Chief Executive Officer 1994 853,269 365,000 -- -- 750,000 18,418

Joseph J. Canfora ............... 1996 374,731 115,000 -- -- 182,894 299,896
Executive Vice President and 1995 274,965 100,500 -- 324,000 40,000 12,337
President -- Missouri Operations 1994 227,861 115,000 -- -- 150,000 10,250

Glenn C. Christenson ............ 1996 392,312 130,000 -- -- 174,713 110,938
Executive Vice President, Chief 1995 274,965 100,500 -- 324,000 40,000 15,904
Financial Officer and Treasurer 1994 227,861 115,000 -- -- 135,000 18,761

Scott M. Nielson ................ 1996 342,365 95,000 -- -- 145,223 57,056
Executive Vice President, 1995 248,750 90,000 -- 270,000 25,000 --
General Counsel and Secretary 1994 215,423 115,000 -- -- 120,000 --

Blake L. Sartini ................ 1996 367,038 115,000 73,416 -- 39,063 77,539
Executive Vice President and 1995 253,500 90,000 73,993 216,000 32,500 20,728
President -- Nevada Operations 1994 243,000 115,000 70,799 -- 120,000 20,728
</TABLE>

- ------------------------------
(1) For the fiscal years ended March 31, 1996 and 1995, amounts include salary
deferred under the Company's Deferred Compensation Plan of $70,369 and
$51,421 for Mr. Fertitta, $37,476 and $15,187 for Mr. Canfora, $0 and
$10,803 for Mr. Christenson, and $34,240 and $15,550 for Mr. Nielson.

(2) Each of Messrs. Fertitta, Canfora, Christenson, Nielson and Sartini is
entitled to a minimum annual bonus equal to 5% of his base salary under his
employment agreement. Amounts shown are the amounts earned for the fiscal
years without consideration as to the year of payment. For fiscal year
ended March 31, 1996 and 1995, amounts include bonuses deferred under the
Company's Deferred Compensation Plan of $21,500 and $14,783 for Mr.
Fertitta, $55,050 and $32,500 for Mr. Canfora, $100,000 and $39,782 for Mr.
Christenson, $9,000 and $15,000 for Mr. Nielson and $0 and $15,000 for Mr.
Sartini.

(3) For the fiscal years ended March 31, 1996, 1995 and 1994, Other Annual
Compensation did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus reported, except for Blake L. Sartini during the
fiscal years ended March 31,1996, 1995 and 1994. The Company provides
certain perquisites, including certain personal services, to the named
executive officers. For the fiscal years ended March 31, 1996, 1995 and
1994, the costs of providing these services were approximately $55,000,
$52,000 and $42,000 respectively, for Mr. Sartini.

(4) As of March 31, 1996, the total number of shares of restricted stock held
by Messrs. Fertitta, Canfora, Christenson, Nielson and Sartini, and the
value of such shares as of such date, was 75,000, 18,000, 18,000, 15,000
and 12,000, and $871,875, $209,250, $209,250, $174,375 and $139,500,
respectively. The shares of restricted stock vest 20% per year through
April 4, 1999. Holders of shares of restricted stock will receive
dividends, if any, declared on the Company's shares of Common Stock.

(5) On May 1, 1995, the Company undertook a repricing of option shares
previously granted in 1995 and 1994 at exercise prices ranging from $13 per
share to $20 per share. Messrs. Canfora, Christenson and Nielson had
190,000, 175,000 and 145,000 option shares cancelled and 143,831, 132,860,
and 108,951 option shares issued at an exercise price of $12 per share to
replace the cancelled option shares.

(6) These amounts represent premiums for life and disability insurance policies
provided by the Company. For fiscal year 1996 these amounts represent
"split dollar" life insurance premiums for Messrs. Fertitta, Canfora,
Christenson, Nielson and Sartini. The "split-dollar" life insurance
premiums have been pro-rated from August 15, 1995, the date of the
contract, through March 31, 1996. The policy premiums will be returned to
the Company through the cash surrender value upon termination of the
agreement or in the form of death benefit proceeds. For fiscal year 1996,
$250,000 of Mr. Canfora's amount was a one-time bonus in connection with
his relocation to Missouri pursuant to his employment contract dated
October 1995.

8
<PAGE>
OPTIONS GRANTED IN FISCAL 1996

The following table provides information related to options to purchase the
Company's Common Stock granted to the named executive officers (the "Executive
Officers") during the fiscal year ended March 31, 1996 and the number and value
of such options held as of the end of such fiscal year.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------ ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#)(1)(2) FISCAL YEAR (3) ($/SHARE) DATE 5% ($) 10% ($)
- ----------------------------- ----------------- ----------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Fertitta III........ 106,027 6.65% $ 14.375 05/31/05 $ 958,522 $2,429,084
Joseph J. Canfora............ 143,831 9.03 12.000 04/30/05 1,085,455 2,750,755
39,063 2.45 14.375 05/31/05 353,144 894,935
Glenn C. Christenson......... 132,860 8.34 12.000 04/30/05 1,002,659 2,540,935
41,853 2.63 14.375 05/31/05 378,366 958,854
Scott M. Nielson............. 108,951 6.84 12.000 04/30/05 822,224 2,083,678
36,272 2.28 14.375 05/31/05 327,912 830,993
Blake L. Sartini............. 39,063 2.45 14.375 04/30/05 353,144 894,935
</TABLE>

- ------------------------
(1) Messrs. Canfora, Christenson and Nielson had 190,000, 175,000 and 145,000
option shares repriced, respectively, and such options were cancelled for
new option shares in the amount of 143,831, 132,860 and 108,951,
respectively, priced at an exercise price of $12 per share. The repricing
was approved by the Company's Human Resource Committee of the Board of
Directors (see Repricing of Stock Options below).

(2) Executives receive options pursuant to the Company's Stock Compensation
Program described elsewhere in this Proxy Statement. The material terms of
that program related to recipients, grant timing, number of options, option
price and duration are determined by the Program Administrators, subject to
certain limitations.

(3) Including options of all employees that were granted in the repricing during
the fiscal year (see Repricing of Stock Options below).

FISCAL YEAR END OPTION VALUES

The following table provides information related to options to purchase the
Company's Common Stock held by the Executive Officers at the end of the fiscal
year ended March 31, 1996. There were no exercises of options to purchase the
Company's Common Stock during the fiscal year ended March 31, 1996.

FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL
YEAR END (#)(1)
--------------------------
NAME EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Frank J. Fertitta III....................................................... 400,000 581,027
Joseph J. Canfora........................................................... 67,161 115,731
Glenn C. Christenson........................................................ 61,127 113,584
Scott M. Nielson............................................................ 52,507 92,715
Blake L. Sartini............................................................ 72,500 119,063
</TABLE>

- ------------------------
(1) At March 31, 1996, no options granted were in-the-money.

REPRICING OF STOCK OPTIONS

In May 1995, the Human Resources Committee authorized the "repricing" of all
of the Company's outstanding stock options, other than options held by the
Company's major stockholders, Frank J. Fertitta III, Blake L. Sartini and
Lorenzo J. Fertitta, and by the Company's outside directors, R. Hal Dean and
Lowell H. Lebermann, Jr. Pursuant to the repricing, options to purchase an
aggregate of 1,116,500 shares of Common Stock at exercise prices ranging from
$13.00 per share to $20.00

9
<PAGE>
per share were cancelled and options ("replacement options") to purchase an
aggregate of 872,680 shares of Common Stock at an exercise price of $12.00 per
share (the market value on the date of the repricing) were issued in lieu
thereof. Except for the reduced number of option shares and exercise price, the
vesting periods and other terms of the options were not changed. Immediately
after the repricing, replacement options to purchase an aggregate of 258,410
shares were vested. The number of replacement options was determined based upon
the Black-Scholes valuation model, so that the expected value of the replacement
options equalled the expected value of the options being cancelled. The Human
Resources Committee believes that the repricing was necessary in light of
competitive conditions in the gaming industry to retain and provide incentives
to key management personnel.

TEN YEAR OPTION REPRICING

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF MARKET
SECURITIES SECURITIES PRICE OF LENGTH OF
UNDERLYING UNDERLYING STOCK AT EXERCISE NEW ORIGINAL OPTION
DATE OF OPTIONS REPRICED TIME OF PRICE AT TIME EXERCISE TERM REMAINING AT
NAME REPRICING CANCELLED OPTIONS REPRICING OF REPRICING PRICE DATE OF REPRICING
- ---------------------- --------- ----------- ----------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph J. Canfora..... 05/01/95 150,000 109,705 $ 12.00 $ 20.00 $ 12.00 8 years
05/01/95 30,000 24,742 $ 12.00 $ 18.00 $ 12.00 9 years
05/01/95 10,000 9,384 $ 12.00 $ 13.00 $ 12.00 9 years
Glenn C. Christenson.. 05/01/95 135,000 98,734 $ 12.00 $ 20.00 $ 12.00 8 years
05/01/95 30,000 24,742 $ 12.00 $ 18.00 $ 12.00 9 years
05/01/95 10,000 9,384 $ 12.00 $ 13.00 $ 12.00 9 years
Scott M. Nielson...... 05/01/95 120,000 87,764 $ 12.00 $ 20.00 $ 12.00 8 years
05/01/95 20,000 16,495 $ 12.00 $ 18.00 $ 12.00 9 years
05/01/95 5,000 4,692 $ 12.00 $ 13.00 $ 12.00 9 years
</TABLE>

EMPLOYMENT AGREEMENTS

The Company and each of Frank J. Fertitta III, Joseph. J. Canfora, Glenn C.
Christenson, Scott M. Nielson and Blake L. Sartini are parties to employment
agreements (the "Employment Agreements") pursuant to which Mr. Fertitta has
agreed to serve as the President and Chief Executive Officer through May 1,
1998, Mr. Canfora has agreed to serve as Executive Vice President and President
- -- Missouri Operations through October 1, 2000, Mr. Christenson has agreed to
serve as the Executive Vice President, Chief Financial Officer and Treasurer
through May 1, 1998, Mr. Nielson has agreed to serve as Executive Vice
President, General Counsel and Secretary of the Company through November 30,
1999 and Mr. Sartini has agreed to serve as Executive Vice President and
President -- Nevada Operations through November 30, 1999 (together the
"Executive Officers"). The Employment Agreements provide that the Executive
Officers shall devote reasonable time and attention to the business and affairs
of the Company. Mr. Fertitta's Employment Agreement does not prohibit Mr.
Fertitta from engaging in any business or assisting any other entity in
competition with the Company during the term of his employment and does not
affect continuation of his health and welfare benefits thereafter. The
Employment Agreements are subject to automatic 60-month extensions after
completion of their respective terms, unless terminated by the Company or the
respective Executive Officer. Each Employment Agreement provides for a base
salary (to be adjusted upward by the consumer price index as of January 1 of
each calendar year), an annual cash bonus in an amount determined by the Board
of Directors of the Company of at least 5% of the Executive Officer's base
salary as of January 1 of each calendar year, or as of April 1 in the case of
Mr. Canfora and the inclusion of the Executive Officer in all plans and programs
of the Company made available to the Company's Executive Officer or salaried
employees generally, including group life insurance, accidental death and
dismemberment insurance, hospitalization, surgical and major medical coverage,
long-term disability, vacations and holidays. As of June 1, 1996 and retroactive
to April 1, 1996, Mr. Fertitta's annual base salary is $1,000,000, Mr. Canfora's
annual base salary is $420,000, Mr. Christenson's annual base salary is
$450,000, Mr. Nielson's annual base salary is $375,000 and Mr. Sartini's annual
base salary is $420,000. The Executive Officers will also be entitled to life
insurance and certain other benefits and perquisites in addition to those made
available to the Company management generally. These other benefits include

10
<PAGE>
participation in the Supplemental Executive Retirement Plan in the case of Mr.
Fertitta, and participation in the Supplemental Management Retirement Plan in
the case of Messrs. Canfora, Christenson, Nielson and Sartini. Additionally,
each of the Executive Officers is a participant in the Company's Special
Long-Term Disability Plan. Mr. Canfora, Mr. Christenson, Mr. Nielson and Mr.
Sartini also participate in the Company's Long-Term Stay-On Performance
Incentive Plan.

In the event that an Executive Officer's employment is terminated as a
result of his death or Disability (as defined in his Employment Agreement), the
Executive Officer or his legal representative will receive, among other
payments, all amounts owed the Executive Officer under his Employment Agreement
as of the date of his death or Disability, including a pro-rated bonus, and his
then-current salary for 24 months, in the case of Mr. Fertitta, or 12 months, in
the case of the other Executive Officers, or until his disability insurance
payments begin. In the event an Executive Officer's employment is terminated (i)
by the Company other than for Cause (as defined in his Employment Agreement) or
Disability or (ii) by the Executive Officer for Good Reason (as defined in his
Employment Agreement), (including the Company's failure to perform certain
material obligations under his Employment Agreement, a material reduction in the
Executive Officer's responsibilities, a Change of Control (as defined in his
Employment Agreement) or the Company's refusal to extend the initial term of the
Executive Officer's Employment Agreement), the Executive Officer will receive
the amounts payable under his Employment Agreement as of the date of
termination, including a prorated bonus, plus a lump sum payment equal to three
times his base salary and a payment equal to his average annual bonus over the
past three years, in the case of Mr. Fertitta, or a lump sum payment equal to
two times his base salary and a payment equal to his average annual bonus over
the past three years, in the case of the other Executive Officers, any deferred
bonus, expense reimbursement and continuation of his health and welfare
benefits, at the level in effect at the time of his termination of employment
through the end of the 60th month, in the case of Mr. Fertitta, or the 36th
month, in the case of the other Executive Officers, following such termination,
or the economic equivalent. The Executive Officers will be obligated to provide
consulting services to the Company during the period covered by any such
payment. Immediately upon a Change of Control, each Executive Officer will
receive a payment equal to three times his base amount (as defined in Section
280G of the Internal Revenue Code of 1986, as amended (the "Code")) less one
dollar. Additionally, in the event an Executive Officer's employment is
terminated within 24 months following a Change of Control, either without Cause
(as defined in the Employment Agreement) or by the Executive Officer for Good
Reason (other than based on a Change of Control), the Executive Officer will be
entitled to five times, in the case of Mr. Fertitta, or three times, in the case
of the other Executive Officers, an amount to equal to (i) the greater of (x)
his annual base salary at the time of the Change of Control or (y) his annual
base salary at the time of termination of his employment plus (ii) five times,
in the case of Mr. Fertitta, or three times, in the case of the other Executive
Officers, an amount equal to the highest annual bonus received by such Executive
Officer within three years preceding the termination of his employment,
immediate vesting of any restricted stock of the Company held in the Executive's
name or for his benefit, immediate vesting of any stock options and/or stock
appreciation rights granted by the Company, immediate cash-out of any phantom
stock units granted to the Executive or immediate vesting and pay out of
incentive share units and continuation of all employee benefits and perquisites
for a period of 60 months, in the case of Mr. Fertitta, or 36 months, in the
case of the other Executive Officers, following such termination of employment,
or the economic equivalent thereof. In certain circumstances, if any payments
pursuant to the termination of employment provisions of the Employment
Agreements constitute certain payments subject to limitations under Section 280G
of the Code, each Executive Officer will receive a payment equal to three times
his base amount (as defined in Section 280G of the Code) less one dollar.
However, not all Change of Control termination benefits may be subject to the
limitations imposed by Section 280G of the Code because the definition of Change
of Control contained in the Employment Agreements covers more events than the
definition of Change of Control contained in Section 280G of the Code. Certain
provisions of the Employment Agreements could have the effect of delaying or
preventing a Change of Control of the Company.

11
<PAGE>
STOCK COMPENSATION PROGRAM

The Company has adopted a Stock Compensation Program (the "Program") which
includes: (i) an Incentive Stock Option Plan providing for the grant of
incentive stock options, (ii) a Compensatory Stock Option Plan providing for the
grant of nonqualified stock options, (iii) a Restricted Shares Plan providing
for the grant of restricted shares of Common Stock and (iv) a Nonemployee
Directors Stock Option Plan under which directors who are not employees of the
Company are granted nonqualified stock options. Officers, key employees,
directors (whether employees or non-employees) and independent contractors or
consultants of the Company or its subsidiaries are eligible to participate in
the Compensatory Stock Option Plan and the Restricted Shares Plan. However, only
employees of the Company and it subsidiaries are eligible to participate in the
Incentive Stock Option Plan. Only non-employee directors are eligible to
participate in the Nonemployee Directors Stock Option Plan.

The Program is administered by a committee of at least two disinterested
directors (as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (the "Program Administrators") appointed by the
Board of Directors. Subject to the provisions of the Program, the Program
Administrators have sole authority, in their absolute discretion to determine,
except with regard to awards under the Nonemployee Directors Plan: (a) the
individuals to whom options and restricted shares shall be granted under the
Program; (b) the time or times at which the options and restricted shares may be
granted under the Program; (c) the number of shares subject to each option and
restricted share, the option price and the duration of each option granted under
the Program; and (d) all of the other terms and conditions of options and
restricted shares granted under the Program.

Under the Nonemployee Directors Plan, each nonemployee director receives
options to acquire shares of the Company's Common Stock pursuant to the
following formula: (a) 10,000 shares of Common Stock upon the effective date of
his or her initial appointment to serve as a member of the Board of Directors
and (b) an additional 2,500 shares of Common Stock upon each anniversary of such
date if the nonemployee director is a member of the Board of Directors on such
anniversary. The options are exercisable immediately and will expire on the
tenth anniversary of the grant. The exercise price of the options is the fair
market value of the shares at the time of the grant of the option.

A maximum of 3,517,500 shares of Common Stock have been reserved for
issuance under the Program. If the proposal to increase the number of shares
subject to the Program is approved by stockholders under this Proxy Statement,
an additional 2,789,500 shares of Common Stock will be subject to the Program.
As of March 31, 1996, the Company has granted options to purchase an aggregate
of 2,697,012 shares of Common Stock under the Program, 993,032 of which were
exercisable as of such date. The Program will terminate on May 21, 2003, unless
terminated earlier by the Board of Directors, and no options or restricted
shares may be granted under the Program after such date.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a general summary of certain federal income tax
consequences applicable to the Program. The summary does not reflect any
provisions of the income tax laws of any state or local taxing jurisdiction.
Because the tax consequences of events and transactions under the Program depend
upon various factors, including an employee's own tax status, each employee who
receives a grant or award under the Program should consult his or her own tax
advisor with respect thereto.

Incentive Stock Options
- ----------------------

Upon the grant of an incentive stock option, an optionee will not recognize
any income. No income will be recognized by an optionee upon the exercise of an
incentive stock option if the requirements of the Program and the Internal
Revenue of 1986, as amended (the "Code") are met, including, without limitation,
the requirement that the optionee remain an employee of the Company during the
period beginning on the date of the grant of the incentive stock option and
ending on the day three months (up to one year in the discretion of the Program
Administrators if the optionee becomes disabled) before the date the incentive
stock option is exercised.

12
<PAGE>
The federal income tax consequences of a subsequent disposition of shares of
Common Stock acquired upon the exercise of an incentive stock option will depend
upon when the disposition occurs and the type of disposition.

If such shares are disposed of by the optionee more than two years after the
date of grant of the incentive stock option, and more than one year after such
shares are transferred to the optionee, any gain or loss realized upon such
disposition will be characterized as long-term capital gain or loss, and the
Company will not be entitled to any income tax deduction in respect of the
incentive stock option or its exercise.

If such shares are disposed of by the optionee within two years after the
date of grant of incentive stock option, and more than one year after such
shares are transferred to the optionee (a "disqualifying disposition") and the
disqualifying disposition is a taxable disposition, the excess, if any, of the
amount realized (up to the fair market value of such shares on the exercise
date) over the option price will be compensation taxable to the optionee as
ordinary income, and the Company will be entitled to a deduction (subject to the
provisions of Section 162(m) of the Code) equal to the amount of ordinary income
recognized by the optionee. If the amount realized by the optionee upon such
disqualifying disposition exceeds the fair market value of such shares on the
exercise date, the excess will be characterized as short-term capital gain. If
the option price exceeds the amount realized upon such disqualifying
disposition, the difference will be characterized as short-term capital loss.

If the disqualifying disposition is a non-taxable disposition (for example,
a gift or a sale to a related person), the excess, if any, of the fair market
value of such shares on the exercise date over the option price will be
compensation taxable as ordinary income, and the Company will be entitled to a
deduction (subject to the provisions of Section 162(m) of the Code) equal to the
amount of ordinary income recognized by the optionee.

If an optionee has not remained an employee of the Company during the period
beginning on the date of the grant of an incentive stock option and ending on
the day three months (up to one year in the discretion of the Program
Administrators if the optionee becomes disabled) before the date the incentive
stock option is exercised, the exercise of such option will be treated as the
exercise of a non-qualified stock option with the tax consequences described
below.

Non-qualified Stock Options
- --------------------------

Upon the grant of a non-qualified stock option, an optionee will not
recognize any income. At the time a non-qualified stock option is exercised, the
optionee will recognize compensation taxable as ordinary income, and the Company
will be entitled to a deduction (subject to the provisions of Section 162(m) of
the Code) in an amount equal to the difference between the fair market value on
the exercise date of the shares of Common Stock acquired pursuant to such
exercise and the option price. Upon a subsequent disposition of such shares, the
optionee will realize long-term or short-term capital gain or loss, depending on
the holding period of such shares. For purposes of determining the amount of
such gain or loss, the optionee's tax basis in such shares will be the sum of
the option price and the amount of ordinary income recognized upon exercise. In
order for any such gain or loss to qualify as long-term capital gain or loss,
the shares must be held for more than one year measured from the exercise date.

Effect of Share for Share Exercise
- -------------------------------

If an optionee elects to tender shares of Common Stock in partial or full
payment of the option price for shares to be acquired upon the exercise of a
non-qualified stock option, the optionee will not recognize any gain or loss on
such tendered shares. The number of shares of Common Stock received by the
optionee upon any such exercise that are equal in number to the number of
tendered shares would retain the tax basis and the holding period of the
tendered shares for capital gain or loss purposes. The optionee will recognize
compensation taxable as ordinary income, and the Company will be entitled to a
deduction (subject to the provisions of Section 162(m) of the Code), in an
amount

13
<PAGE>
equal to the fair market value of the number of shares received by the optionee
upon such exercise that is in excess of the number of tendered shares, less any
cash paid by the optionee. The fair market value of such excess number of shares
would then become the tax basis for those shares and the holding period of such
shares for capital gain or loss purposes will begin on the exercise date. If the
tendered shares were previously acquired upon the exercise of an incentive stock
option, the shares of Common Stock received by the optionee upon the exercise of
the non-qualified stock option that are equal in number to the number of
tendered shares will be treated as shares of Common Stock acquired upon the
exercise of such incentive stock option.

Except as discussed in the following paragraph, if an optionee elects to
tender shares of Common Stock in partial or full payment of the option price for
shares to be acquired upon the exercise of an incentive stock option, the
optionee will not recognize any gain or loss on such tendered shares. No income
will be recognized by the optionee in respect of the shares received by the
optionee upon the exercise of the incentive stock option if, as previously
stated, the requirements of the Program and the Code are met. The Internal
Revenue Service has not yet issued final regulations with respect to a
determination of the basis and the holding period of the shares acquired upon
such an exercise. Regulations proposed by the Internal Revenue Service provide
that for all shares of Common Stock acquired upon such an exercise, the
requisite two year and one year holding periods for stock acquired upon exercise
of an incentive stock option (described above) must be satisfied, regardless of
the holding period applicable to the tendered shares. However, the tax basis
(and holding period for all other federal income tax purposes) of the tendered
shares will carry over to the same number of shares acquired upon the exercise.
The number of shares acquired which is in excess of the number of tendered
shares will have a tax basis of zero and a holding period for all purposes
beginning on the date of exercise. Any subsequent disqualifying disposition will
be deemed first to have been a disposition of the shares with a tax basis of
zero, and then to have been a disposition of the shares with a carry over tax
basis. For purposes of determining the amount of compensation taxable to the
optionee upon a subsequent disqualifying disposition, the option price of the
shares with a tax basis of zero will be deemed to be zero, and the option price
of the shares with a carry over basis will be deemed to be the fair market value
of the shares on the exercise date.

If an optionee elects to tender shares of Common Stock that were previously
acquired upon the exercise of an incentive stock option in partial or full
payment of the option price for shares to be acquired upon the exercise of
another incentive stock option, and such exercise occurs within two years of the
date of grant of such incentive stock option, or within one year after such
tendered shares were transferred to the optionee, the tender of such shares will
be a taxable disqualifying disposition with the tax consequences described above
regarding the disposition within two years of the date of grant of an incentive
stock option, or within one year after shares were acquired upon the exercise of
incentive stock options. The shares of Common Stock acquired upon such exercise
will be treated as shares of Common Stock acquired upon the exercise of an
incentive stock option and the holding period of such shares for all purposes
will begin on the exercise date.

14
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Table I below sets forth the total benefits payable to the Chief Executive
Officer as the sole participant in the Supplemental Executive Retirement Plan
(the "SERP"). Amounts shown in Table I represent the annual benefits to which
the Chief Executive Officer is entitled under the SERP. The amounts listed in
Table I are not currently subject to any deductions for social security or other
offset amounts.

TABLE I

<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION($) 5 10 15 20 25
- ------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
950,000............................................... 237,500 475,000 475,000 475,000 475,000
975,000............................................... 243,750 487,500 487,500 487,500 487,500
1,000,000.............................................. 250,000 500,000 500,000 500,000 500,000
1,025,000.............................................. 256,250 512,500 512,500 512,500 512,500
1,075,000.............................................. 268,750 537,500 537,500 537,500 537,500
1,100,000.............................................. 275,000 550,000 550,000 550,000 550,000
1,125,000.............................................. 281,250 562,500 562,500 562,500 562,500
1,150,000.............................................. 287,500 575,000 575,000 575,000 575,000
1,175,000.............................................. 293,750 587,500 587,500 587,500 587,500
</TABLE>

The SERP, which went into effect on November 30, 1994, is a defined benefit
plan that covers only the Chief Executive Officer of the Company. The SERP
provides a monthly supplemental retirement benefit (the "SRB"), in addition to
any other qualified or non-qualified retirement plan of the Company, equal to
one-twelfth of the product of (a) 50% and (b) the Chief Executive Officer's
final annual compensation, as determined under the SERP. The Chief Executive
Officer will become vested in accrued SRB, upon the latter of (a) the attainment
of age 45 and (b) the completion of ten years of service after the effective
date of the plan, and if a Change of Control (as defined in the SERP) occurs,
the Chief Executive Officer will become fully vested in the SRB.

The SRB is payable upon the later of the Chief Executive Officer's normal
retirement date, the date on which the Chief Executive Officer attains age 55,
or the Chief Executive Officer's termination of employment. Alternatively, the
Chief Executive Officer may elect to commence receiving the SRB upon the later
of the Chief Executive Officer's early retirement date, the date on which the
Chief Executive Officer attains age 45, or the Chief Executive Officer's
termination of employment. In the event of an early retirement election, the SRB
shall be reduced by 6% of such otherwise payable benefit for each year that the
Chief Executive Officer is less than age 55.

The SRB payments shall be made for no less than 15 years after the date on
which the Chief Executive Officer begins to receive payments. If the Chief
Executive Officer dies after the Chief Executive Officer becomes vested and
prior to the date on which the Chief Executive Officer begins to receive SRB
payments, the Company shall pay a survivors benefit to the Chief Executive
Officer's spouse equal to the amount that would have been payable to such spouse
if the Chief Executive Officer had commenced receiving the SRB at age 55 in the
form of a joint and 50% survivor annuity. The Company shall have no duty
whatsoever to set aside or invest any amounts under or in respect of the SERP.
As of June 15, 1996, Frank J. Fertitta III has two years of credited service
under the SERP.

15
<PAGE>
SUPPLEMENTAL MANAGEMENT RETIREMENT PLAN

Table II below sets forth the total benefits payable to Executive Officers,
other than the Chief Executive Officer, selected by the Human Resources
Committee of the Board of Directors to participate in the Company's Supplemental
Management Retirement Plan (the "SMRP"). Amounts shown in Table II represent the
annual benefits to which the covered Executive Officers are entitled under the
SMRP and are not currently subject to any deductions for social security or
other offset amounts.

TABLE II

The SMRP, which went into effect on November 30, 1994, is a defined benefit
plan for the Executive Officers, other than the Chief Executive Officer,
selected by the Human Resources Committee of the Company's Board of Directors.
The SMRP provides a monthly supplemental retirement benefit (the "SRB"), in
addition to any other qualified or non-qualified retirement plan of the Company,
equal to one-twelfth of the product of (a) 40% and (b) the Executive Officer's
final annual compensation, as determined under the SMRP. The Executive Officer
will become vested in the accrued SRB, upon the latter of (a) the attainment of
age 55 and (b) the completion of ten years of service after the effective date
of the plan, and if a Change of Control (as defined in the SMRP) occurs, the
Executive Officer will become fully vested in the SRB.

The SRB is payable upon the later of the Executive Officer's normal
retirement date, the date on which the Executive Officer attains age 60, or the
Executive Officer's termination of employment. Alternatively, the Executive
Officer may elect to commence receiving the SRB upon the later of the Executive
Officer's early retirement date, the date on which the Executive Officer attains
age 55, or the Executive Officer's termination of employment. In the event of an
early retirement election, the SRB shall be reduced by 6% of such otherwise
payable benefit for each year that the Executive Officer is less than age 60.

The SRB payments shall be made for no less than 15 years after the date on
which the Executive Officer begins to receive payments. If the Executive Officer
dies after becoming vested and prior to the date on which the Executive Officer
begins to receive SRB payments, the Company shall pay a survivor's benefit to
the Executive Officer's spouse equal to the amount that would have been payable
to such spouse if the Executive Officer had commenced receiving the SRB at age
60 in the form of a joint and 50% survivor annuity. The Company shall have no
duty whatsoever to set aside or invest any amounts under or in respect of the
SMRP. As of June 15, 1996, Messrs. Joseph J. Canfora, Glenn C. Christenson,
Scott M. Nielson and Blake L. Sartini have two years of service credited under
the SMRP.

DEFERRED COMPENSATION PLAN FOR EXECUTIVES

The Deferred Compensation Plan For Executives (the "DCPE"), in effect as of
November 30, 1994, is a deferred compensation plan for Executive Officers whose
base salaries are at a rate in excess of the amount specified in Section
401(a)(17) of the Code, and who are selected for participation by the Human
Resources Committee of the Board of Directors. Executive Officers may defer up
to 50% of their regular base salary and 100% of any special and/or discretionary
bonuses. The Company has agreed to match 100% of the first 10% of any base
salary and bonus deferred under the plan, pursuant to retroactive modifications
of the DCPE adopted by the Company on March 15, 1996. Additionally, the Company
may, in its sole discretion, credit supplemental contributions to an Executive
Officer's account. Earnings on deferrals shall equal the greater of (i) the
annual return on the Company's

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<PAGE>
Common Stock or (ii) an instrument paying 4% interest per annum. Each
participant's deferred compensation account will be adjusted at the end of the
plan year to reflect earnings and the account balance will be reinvested for the
next plan year. An Executive Officer's accrued balance in a deferred
compensation account shall be fully vested at all times. Matching and
supplemental contributions shall be fully vested after five years of continuous
service. If a Change in Control (as defined in the DCPE) occurs, the Executive
Officer's accrued balance in the Matching Contributions Account and the
Supplemental Contributions Account (both as defined in the DCPE) become fully
vested as of the date of any such Change in Control. Vested accrued balances
shall be paid in cash in one lump sum payment within 15 days of the termination
of employment. If the Executive Officer is terminated for any reason (other than
death) prior to completion of five years of continuous service, any accrued
balance existing under the matching and supplemental accounts is forfeited.
Hardship distributions are permitted under the plan in the event of an
unforeseeable emergency, and will be limited to the amount shown to be necessary
to meet the emergency.

SPECIAL LONG-TERM DISABILITY PLAN

The Special Long-Term Disability Plan provides disability benefits to equal
a combined monthly benefit amount of 66% of the average of base salary plus
bonus for the two plan years immediately preceding (but not including) the plan
year in which the participant's employment is terminated due to disability
divided by twelve; provided, however, that the monthly benefit will be reduced
by any benefit the participant receives from all other Company sponsored
disability plans, if any. Benefits begin on the first day of the second month
succeeding the month in which the participant's termination of employment due to
disability occurs. Individuals eligible to participate in the Plan consist of
the Executive Officers as chosen by the Human Resources Committee of the Board
of Directors from key executives nominated by the Chief Executive Officer. The
Human Resources Committee may, in its sole discretion, terminate the
participation of any participant prior to the disability of such participant.
Current participants are Messrs. Frank J. Fertitta III, Joseph J. Canfora, Glenn
C. Christenson, Scott M. Nielson and Blake L. Sartini . The Company is currently
self-insured as to these long-term disability benefits.

LONG-TERM STAY-ON PERFORMANCE INCENTIVE PLAN

The Long-Term Stay-On Performance Incentive Plan is a plan that will pay
$1,000,000 to each of Messrs. Canfora, Christenson, Nielson and Sartini for
continuous employment by all four Executive Officers through March 31, 2001.
Failure by any such Executive Officer, for any reason, to complete the length of
service specified will result in the forfeiture of such Executive Officers'
award and will reduce each of the remaining three Executive Officers' awards by
25%. The award will be issued on April 1, 2001 in shares of the Company's Common
Stock, valued at the award date, if available, or otherwise in cash. The award
will be restricted from April 1, 2001 through April 1, 2004 (the "Restriction
Period"). Each Executive Officer must continue in employment during the
Restriction Period to receive the full amount of his award. The award becomes
unrestricted as follows: (1) 50% of the total number of shares on April 1, 2003
and (2) 50% of the total number of shares on April 1, 2004. Termination of
employment, for any reason during the Restriction Period, will result in
forfeiture of any remaining restricted shares of the Company.

SPLIT-DOLLAR INSURANCE PROGRAM

In August 1995, split-dollar life insurance agreements were entered into for
the Chief Executive Officer and the Executive Officers whereby the Company will
pay the premiums for such life insurance policies and the Company will have an
interest in the insurance benefits equal to the amount of unreimbursed premiums
it has paid, with the balance payable to the beneficiary as named by the
Executive Officer. The face value of each Executive Officer's individual policy
and second-to-die policy is as follows: $10 million and $30 million for Mr.
Fertitta, $5 million and $4 million for Mr. Canfora, $7 million and $0 for Mr.
Christenson, $7 million and $0 for Mr. Nielson and $5 million and $10 million
for Mr. Sartini.

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<PAGE>
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Amended and Restated Articles of Incorporation eliminate
liability of its directors and officers for breach of fiduciary duty as director
and officer, except to the extent otherwise required by the Nevada Revised
Statutes and where the breach involves intentional misconduct, fraud or a
knowing violation of the law.

Section 78.751 of Chapter 78 of the Nevada Revised Statutes and the
Company's Restated Bylaws contain provisions for indemnification of officers and
directors of the Company and, in certain cases, employees and other persons. The
Restated Bylaws require the Company to indemnify such persons to the full extent
permitted by Nevada law. Each such person will be indemnified in any proceeding
if such person acted in good faith and in a manner which such person reasonably
believed to be in, or not opposed to, the best interest of the Company.
Indemnification would cover expenses, including attorneys' fees', judgments,
fines and amounts paid in settlement.

The Company's Restated Bylaws also provide that the Company's Board of
Directors may cause the Company to purchase and maintain insurance on behalf of
any present or past director or officer insuring against any liability asserted
against such person incurred in the capacity of director or officer or arising
out of such status, whether or not the Company would have the power to indemnify
such person. The Company maintains directors' and officers' liability insurance.

The Company has entered into indemnification agreements (the
"Indemnification Agreements") with each director and certain officers, employees
and agents of the Company. Each Indemnification Agreement provides for, among
other things: (i) indemnification to the fullest extent permitted by law for an
indemnified party (the "Indemnitee") unless it is determined, as provided in the
Indemnification Agreement, that indemnification is not permitted under law; and
(ii) prompt advancement of expenses to any Indemnitee in connection with his or
her defense against any claim.

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<PAGE>
REPORT ON EXECUTIVE COMPENSATION (1)

This report is provided by the Human Resources Committee of the Board of
Directors to assist stockholders in understanding the Company's objectives and
procedures in establishing the compensation of the Company's Chief Executive
Officer and other executive officers. The Human Resources Committee is
responsible for (i) reviewing and approving all elements of the total
compensation program for the Company, (ii) aligning the total compensation
program with the Company's business strategy and (iii) assuring stockholders
that the pay delivery programs are effective, responsible, and competitive when
compared to similarly situated organizations.

EXECUTIVE COMPENSATION PROGRAM PHILOSOPHY AND OBJECTIVES

The Human Resources Committee's primary objectives in setting compensation
policies is to develop a program designed to retain the current management team,
reward them for outstanding performance, and attract those individuals needed to
implement its strategy. The Human Resources Committee believes that the Company
will continue to experience significant growth and that the management team that
will best foster and manage such growth is one that is comprised of highly
talented, motivated individuals with a long-term vision for the Company. Thus,
it is the Human Resources Committee's belief that the Company's future success
lies in its ability to recruit and retain individuals with these qualities and
skills that will enable them to manage a business much larger than the Company
is today. The Human Resources Committee also seeks to align the financial
interest of the Company's executives with that of its stockholders and the Human
Resources Committee believes to achieve this goal a significant portion of its
executives' compensation should be "at risk" and tied to the achievement of
annual and long-term corporate performance criteria. The Human Resources
Committee has retained an outside consultant to assist with the design,
implementation, and communication of its compensation program.

BASE SALARY

Base salaries are reviewed annually and may be adjusted based on an
evaluation of the executive's performance in conjunction with a review of
compensation normally received by other individuals holding similar positions at
other organizations with similar revenues and scope of business. For fiscal 1996
the Human Resources Committee has identified a group of fifteen similar casino
and gaming companies that it believes are the Company's competition for
executive level employees. Due to the limited availability of information, the
group of fifteen similar casino and gaming companies identified by the Human
Resources Committee is a different group of companies from that used to create
the stock performance graph. As part of its strategy to attract and retain high
quality executive employees, the Human Resources Committee has established a
policy to pay executive base salaries between the 50th and 75th percentile of
the range of the base salaries paid by the fifteen similar casino and gaming
companies. Actual salaries are determined based upon an assessment of the
individual's contribution and value to the organization and the competitive
market for that position as reflected by the base salaries paid by the fifteen
similar casino and gaming companies.

ANNUAL INCENTIVES

The Human Resources Committee also believes that executive compensation
should also be dependent upon the performance of the Company. To create
incentives for superior performance and to allow executives to share in the
success of the Company, the Human Resources Committee makes a portion of an
executive's compensation dependent upon the annual and long-term performance of
the Company.

Annual incentive awards for fiscal year 1996 performance were based upon the
Company's performance and assessments of the individual executive's contribution
to the success of the Company

- ------------------------
(1) Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, the Report on Executive Compensation shall
not be incorporated by reference in any such filings.

19
<PAGE>
during fiscal year 1996. The Human Resources Committee targets total cash
compensation paid to the Company's executives to be between the 50th and 75th
percentile of that paid by its competitors for executive level employees. Actual
annual incentive payouts are adjusted for the Company's performance and the
individual's contribution during the performance period.

Executives participate in an annual incentive plan administered by the Human
Resources Committee that was implemented on April 1, 1994. This plan makes a
portion of the participant's compensation dependent upon the annual performance
of the Company and also has a component to reward the individual for superior
performance. The purpose of this plan is to focus each executive on the
attainment of financial objectives that the Human Resources Committee believes
are primary determinants of the Company's share price over time. Each year,
specific cash flow and earnings per share goals are approved by the Human
Resources Committee under the plan. To ensure that the award amounts under the
plan are competitive, target award amounts are set at the beginning of each
performance period for each executive based upon the 50th percentile of
comparable award amounts paid by the Company's competitors for executive
employees. The amount of the target award is determined by comparison of actual
cash flow and earnings per share versus the goal cash flow and earnings per
share. The actual award amount may vary from zero to one and a half times the
targeted award amount. The Human Resources Committee has retained discretion to
change the actual award up to 50% of the executive's target, positively or
negatively, based on individual performance.

LONG-TERM INCENTIVES

The Company has provided stock-based incentives to its officers since its
inception. The Human Resources Committee believes that the Company's executives
should have a stake in the long-term success of the business, and that the
Company's executives should have a considerable portion of their total
compensation paid in stock, to give the executive a long-term stake in the
business and to align the executive's interests with those of the Company's
stockholders. These grants of stock options and restricted stock align the
executive's interests with the shareholder's interests as the size of the
executive's reward is dependent on the Company's stock performance. Grants made
to the Company's executives approximate the 75th percentile of expected grant
values for those companies that the Human Resources Committee has identified as
the Company's competition for executive level employees, with the value of any
awards estimated using the Black-Scholes valuation model. Awards have generally
been granted with a vesting schedule of 25% of the award vesting on the date of
grant and 15% on each anniversary date until fully vested, or a vesting schedule
of 20% of the award each anniversary from the date of grant until fully vested.

OTHER EXECUTIVE PROGRAMS

The Company also maintains certain executive benefits and perquisites that
are considered necessary to offer fully competitive opportunities to its
executives. These include, but are not limited to, supplemental retirement
arrangements, employment agreements, and change in control contracts. The
details of these programs are explained under the "Executive Compensation"
section of this proxy statement.

1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER

These same philosophies described above for each executive position were
used by the Human Resources Committee to determine the compensation for the
Chairman of the Board, President, and Chief Executive Officer, Mr. Frank J.
Fertitta III.

THE CHIEF EXECUTIVE OFFICER'S 1996 BASE SALARY

The Human Resources Committee established Mr. Fertitta's annual base salary
for the fiscal year 1996 based upon a review of compensation by those fifteen
casino and gaming companies identified as having similar revenues and scope of
operations together with an evaluation of the Company's results in fiscal year
1995. As of June 1, 1996 and retroactive to April 1, 1996, Mr. Fertitta's salary
was increased from $950,000 to $1,000,000. This salary adjustment represents
less than a 6% increase which is less than increases generally made to the top
executive at companies in the casino and gaming

20
<PAGE>
industry surveyed. Mr. Fertitta's base salary for fiscal 1996 was also increased
at a lower rate than that of the fifteen casino and gaming companies reviewed
because the Human Resources Committee believes that the primary role of the
Chief Executive Officer is to create long-term stockholder value, and therefore,
more of the Chief Executive Officer's salary should be tied to annual and
long-term incentives.

THE CHIEF EXECUTIVE OFFICER'S 1996 ANNUAL INCENTIVE

The annual incentive earned by the Chief Executive Officer for fiscal year
1996 performance was $350,000. This annual incentive award reflects the
Company's performance and the Chief Executive Officer's individual contribution
to the Company as evaluated by the Human Resources Committee for the year.

CERTAIN EXECUTIVE OFFICER'S 1996 LONG-TERM INCENTIVE

After an analysis with Towers Perrin, the Human Resource Committee's outside
compensation consultant, the Committee concluded that long-term incentive
compensation for the Chief Executive Officer and the President-Nevada Operations
of the Company was not comparable to other executives with similar
responsibilities in the industry. In keeping with the Committee's belief that
the primary role of the Executive Officers is to create long-term shareholder
value, the Committee, working with Towers Perrin, designed a new option grant
specifically intended to align the incentives of the Chief Executive Officer and
the President -- Nevada Operations with interests of shareholders and to provide
the maximum incentive to each of them for maximizing long-term value. As a
result on May 21, 1996, 1,000,000 performance based options were granted to Mr.
Fertitta and 400,000 performance based options were granted to Mr. Sartini,
subject to shareholder approval of the increase in the size of the Program (as
defined below). The number of options was determined after review of the
percentage of option pools devoted to executive officers with similar
responsibilities for comparable companies.

The options exercise price is $14.625 per share, the closing price of the
shares on the date of grant. The options vest in increments of 20% each time the
publicly traded per share price has increased 12% from the $14.625 per share
exercise prices. The Human Resource Committee believes this vesting mechanism
provides a situation where the such Executive Officers are only rewarded for
achieving substantial positive results for the shareholders.

LIMITATION OF TAX DEDUCTION FOR EXECUTIVE COMPENSATION

The Omnibus Budget Reconciliation Act of 1993 (the "Act") prevents publicly
traded companies from receiving a tax deduction on compensation paid to
proxy-named executive officers in excess of $1 million annually, effective for
compensation paid after 1993. The Human Resources Committee believes that there
will be little if any impact from this limitation to the Company in fiscal 1996
due to various exceptions to the $1 million limitation but has recommended
changes to the Stock Compensation Program that would address the future impact
of the Act which changes are set forth in Item III of this Proxy Statement.

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<PAGE>
The Human Resources Committee believes that the Company's other compensation
programs which will result in amounts of compensation in fiscal year 1996 will
either qualify for exceptions to the $1 million limit or that in the aggregate
such amounts of compensation will not significantly exceed $1 million for each
executive.

Respectfully Submitted,

Station Casinos, Inc.
Human Resources Committee

R. Hal Dean, Chairman
Lowell H. Lebermann, Jr.

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<PAGE>
STOCK PERFORMANCE GRAPH (2)

The graph below compares the cumulative total stockholder return of the
Company, with the cumulative total return of the Standard & Poor's 500 Stock
Index ("S&P 500") and the cumulative total return of a peer group with
comparable market capitalization consisting of Ameristar Casinos Inc., Argosy
Gaming Corp., Aztar Corp., Boomtown, Inc., Boyd Gaming Corp., Casino America,
Inc., Casino Magic Corp., Circus Circus Enterprises, Grand Casinos, Inc.,
Hollywood Casino Corp., Jackpot Enterprises, Inc., President Casinos, Inc.,
Primadonna Resorts, Inc., Rio Hotel & Casino, Inc. and Showboat, Inc. The
performance graph assumes that $100 was invested on May 25, 1993 (the date of
the Company's initial public offering) in each of the Company's Common Stock,
common stock of the selected peer group, and the S&P 500. The stock price
performance shown in this graph is neither necessarily indicative of nor
intended to suggest future stock price performance.

COMPARISON OF 34 MONTH CUMULATIVE TOTAL RETURN*
AMONG STATION CASINOS, INC., THE S&P 500 INDEX AND A PEER GROUP

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
STATION CASINOS, INC. PEER GROUP S & P 500
<S> <C> <C> <C>
5/25/93 100 100 100
3/94 88 80 102
3/95 58 66 117
3/96 58 64 155
</TABLE>

*$100 INVESTED ON 05/26/93 IN STOCK OR ON 04/30/93 IN INDEX -- INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING MARCH 31.

- ------------------------
(2) Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, this Performance Graph shall not be
incorporated by reference in any such filings.

23
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

BOULDER STATION LEASE

In June 1993, Boulder Station, Inc. ("Boulder Station") entered into a
ground lease for a 27-acre parcel with KB Enterprises, Inc. ("KBE"). KBE is a
wholly-owned subsidiary of the Frank J. Fertitta and Victoria K. Fertitta
Revocable Family Trust dated June 17, 1989 (the "Fertitta Trust"). Frank J.
Fertitta is the father of Frank J. Fertitta III who is Chairman of the Board and
Chief Executive Officer. The lease has a term of 65 years with monthly payments
of $125,000 through June 1998. In June 1998, and every ten years thereafter, the
rent will be adjusted to the product of the fair market value of the land and
the greater of (i) the then-prevailing annual rate of return for comparably
situated property or (ii) 8% per year. The rent will be further adjusted in June
2003 and every ten years thereafter by a cost of living factor. In no event will
the rent for any period be less than the immediately prior period. Pursuant to
the ground lease, Boulder Station has an option, exercisable at five-year
intervals beginning in June 1998, to purchase the land at fair market value. The
Company believes that the terms of the acquisition and the ground lease are as
fair to the Company as could be obtained from an independent third party.

TEXAS STATION LEASE

In June 1995, Texas Station, Inc. ("Texas Station") entered into a ground
lease for a 47-acre parcel with the Fertitta Trust. The lease has a term of 65
years with monthly rental payments of $150,000 until July 2000. In July 2000,
and every ten years thereafter, the rent will be adjusted to the product of the
fair market value of the land and the greater of (i) the then-prevailing annual
rate of return for comparably situated property or (ii) 8% per year. The rent
will be further adjusted by a cost of living factor after the first ten years
and every ten years thereafter. In no event will the rent for any period be less
than the immediately prior period. Pursuant to the ground lease, the Company
will have an option, exercisable at five-year intervals, to purchase the land at
fair market value. The Company believes that the terms of the acquisition and
the ground lease are as fair to the Company as could be obtained from an
independent third party.

MCNABB/MCNABB/DESOTO/SALTER & CO.

The Company employs McNabb/McNabb/DeSoto/Salter & Co. ("MMDS") from time to
time to provide advertising and marketing research services. Frank J. Fertitta
III, Blake L. and Delise F. Sartini and Lorenzo J. Fertitta collectively own a
50% interest in MMDS. The Company paid MMDS an aggregate of approximately $17.4
million for its services and services it procured on behalf of the Company in
the fiscal year ended March 31, 1996. The Company believes that the terms of the
transactions with MMDS were as fair to the Company as could have been obtained
from an independent third party.

GORDON BIERSCH BREWING COMPANY

The Company owns a 50.001% interest in Town Center Amusements, Inc., a
Nevada limited liability company, doing business as Barley's Casino & Brewing
Company ("Barley's"), which operates a casino and brew pub located in southeast
Las Vegas. Barley's commenced operations in January 1996. Barley's has entered
into a consulting agreement with Gordon Biersch Brewing Company ("Gordon
Biersch"). Frank J. Fertitta III, Blake L. and Delise F. Sartini and Lorenzo J.
Fertitta collectively own a 17% interest in Gordon Biersch. The Fertitta Trust
owns another 23% interest and trusts for the children of the above named
individuals collectively own an 8.6% interest in Gordon Biersch. The consulting
agreement requires Barley's to pay Gordon Biersch $25 for each barrel of beer
brewed, and to reimburse Gordon Biersch for the brewer's salary and other
related costs. Barley's paid Gordon Biersch approximately $20,000 during the
fiscal year ended March 31, 1996. The Company believes the terms of the
transactions with Gordon Biersch were as fair to the Company as could have been
obtained from an independent third party.

24
<PAGE>
HANGAR LEASE

The Company, through its subsidiary, Palace Station Hotel & Casino ("Palace
Station"), rented an aircraft hangar facility, which is owned by the Fertitta
Trust, at a rental rate of $5,400 per month, plus reimbursement of certain
expenses paid on behalf of Palace Station. This lease was terminated by the
Company as of May 1, 1996. The Company believes that such terms were as fair to
Palace Station as could be obtained from an independent third party.

ITEM II
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has selected Arthur Andersen LLP to serve as the
Company's independent public accountants to audit the financial statements of
the Company for the 1997 fiscal year. Arthur Andersen LLP served as the
Company's independent public accountants during the 1996 and 1995 fiscal years.
A representative of Arthur Andersen LLP will attend the Annual Meeting, will be
given an opportunity to make a statement and will be available to answer
appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS, ON THE ADVICE OF ITS AUDIT COMMITTEE,
THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 1997.

Unless a contrary indication is made on the enclosed proxy card, it is the
intention of the persons named in the enclosed form of proxy to vote FOR the
selected accountants.

ITEM III
APPROVAL OF THE PROPOSAL TO AMEND
THE STOCK COMPENSATION PROGRAM

The Board of Directors has proposed to amend Article 3 of the Company's
Stock Compensation Program (the "Program") to increase the maximum aggregate
number of shares of the Company's Common Stock subject to the Program from
3,517,500 to 6,307,000. The proposed amendment to the Program reads as follows:

"Article 3. MAXIMUM NUMBER OF SHARES SUBJECT TO THE PROGRAM. The
maximum aggregate number of shares of Common Stock subject to the Program
shall be 6,307,000 shares."

The Board of Directors believes that the Company's executives and key
employees should have a stake in the long-term success of the business of the
Company and, accordingly, that a considerable portion of their total
compensation should be paid in stock. The Board of Directors is proposing
increasing the percentage of the Company's shares of Common Stock available for
issuance under the Program from 10% of the outstanding Common Stock and Common
Stock issuable on conversion of the Company's $3.50 Convertible Preferred Stock,
the Company's current practice, to approximately 15% of such stock. The
Company's consultants, Towers Perrin, have informed the Company that 15% is
comparable to the 75th percentile reserved in the gaming industry, which is
consistent with the Human Resource Committee's philosophy to grant long-term
incentive compensation at the 75th percentile. In April 1996, the Company
completed a public offering of 2,070,000 shares of its $3.50 Convertible
Preferred Stock and the underlying Common Stock issuable upon conversion of such
preferred stock (initially at a rate of 3.2573 shares of Common Stock for each
share of $3.50 Convertible Preferred Stock). Consequently, the Board of
Directors is proposing to increase the maximum number of shares issuable under
the Program to 6,307,000 or approximately 15% of the aggregate of the currently
outstanding Common Stock and the Common Stock issuable upon conversion of the
Company's outstanding $3.50 Convertible Preferred Stock.

The Board of Directors has also proposed to amend Articles 1 and 14 of the
Program and Article 9 of the Restricted Share Plan portion of the Program to
permit the Board or The Human Resources

25
<PAGE>
Committee to make performance based compensation grants under the Program in
accordance with Section 162(m) of the Internal Revenue Code. The proposed
amendments to the Program read as follows:

1. The Program is proposed to be amended by adding to the first sentence of
Article 1 of the General Provisions thereof an additional provision to read as
follows:

"; PROVIDED, FURTHER, HOWEVER, that the Committee may be comprised
solely of two or more "outside directors" within the meaning of Code Section
162(m) and the regulations thereunder, as amended from time to time, ("Code
Section 162(m)") to effect grants that are intended to qualify as
"performance-based compensation" within the meaning of Code Section 162(m)."

2. The Program is proposed to be amended by adding to the General
Provisions thereof a new Article 14 to read as follows:

"Article 14. MAXIMUM NUMBER OF OPTIONS GRANTED IN ANY CALENDAR
YEAR. Notwithstanding any other provision of the Program, the number of
shares of Common Stock underlying Incentive Options and Nonqualified Options
granted under the Incentive Plan and the Non-qualified Plan of the Program,
respectively, in any calendar year to any individual participating in the
Program shall not exceed the maximum number of shares issuable under the
Program."

3. The Program is proposed to be amended by adding to the Company's
Restricted Share Plan a new Section 9 to read as follows:

"Section 9. PERFORMANCE-BASED RESTRICTED SHARES. The Committee may
also grant Restricted Shares that are subject to a risk of forfeiture if
specified performance criteria are not met within a specified period
("Performance-Based Restricted Shares"). Performance-Based Restricted Shares
shall be forfeited unless preestablished performance criteria specified by
the Committee are met during the applicable restriction period.
Performance-Based Restricted Shares subject to performance criteria are
intended to be "qualified performance-based compensation" within the meaning
of Code Section 162(m) and shall be paid solely on account of the attainment
of one or more preestablished, objective performance goals within the
meaning of Code Section 162(m). Until otherwise determined by the Committee,
Performance-Based Restricted Shares shall become nonforfeitable upon the
attainment of one or more preestablished levels of net income, earnings per
share, total shareholder return, return on equity employed or cash flow. The
payout of any Performance-Based Restricted Shares to any individual may be
reduced, but not increased, based on the degree of attainment of the
performance criteria or otherwise at the discretion of the Committee.
Subject to adjustment under Section 8 of this Plan, all individuals in the
aggregate may not receive in any calendar year Performance-Based Restricted
Shares exceeding, in the aggregate, 1,000,000 shares of Common Stock and any
one individual may not receive in any calendar year Performance-Based
Restricted Shares exceeding 500,000 shares of Common Stock."

The provisions of Section 162(m) of the Internal Revenue Code eliminate the
Company's tax deduction for certain employee compensation in excess of $1
million to the extent it is not "performance-based compensation." The Board of
Directors believes the foregoing amendments to the Program will give the
Company, flexibility to retain such deduction by permitting the grant of
performance based compensation.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
PROPOSED AMENDMENTS TO THE STOCK COMPENSATION PROGRAM.

Unless a contrary indication is made on the enclosed proxy card, it is the
intention of the persons named in the enclosed form of proxy to vote FOR the
proposed amendments.

The Company will file a registration statement with respect to the
additional options promptly after approval of the amendment is received.

On July 8, 1996, the last sale price of the Company's common stock was
$12.50.

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<PAGE>
OTHER MATTERS

The Board of Directors is not aware of any other matters to be presented at
the meeting. If any other matters should properly come before the meeting, the
persons named in the proxy will vote the proxies according to their best
judgment.

STOCKHOLDER PROPOSALS

Stockholder proposals, if any, which may be considered for inclusion in the
Company's proxy materials for the 1997 Annual Meeting must be received by the
Company at its offices at 2411 West Sahara Avenue, Las Vegas, Nevada 89102 not
later than March 18, 1997.

ANNUAL REPORT

The Annual Report to Stockholders for fiscal 1996 accompanies this proxy
statement. Stockholders may obtain a copy of this report without charge by
writing to the Secretary of the Company.

27
<PAGE>
STATION CASINOS, INC.
STOCK COMPENSATION PROGRAM

FIRST AMENDMENT

THIS FIRST AMENDMENT, effective as of July 1, 1996, to the Station Casinos,
Inc. Stock Compensation Program (the "Program") has been made and adopted by
Station Casinos, Inc. (the "Company") pursuant to a resolution of its Board of
Directors (the "Board") made at its July 16, 1996 meeting.

WHEREAS, the Company, effective May 21, 1993, established the Program for
the benefit of key individuals of the Company and its shareholders who will be
or are responsible for the future growth of the Company;

WHEREAS, the Board or a committee appointed by the Board (the "Committee"),
subject to certain limitations, has reserved the right to amend the Program at
any time and from time to time;

WHEREAS, the Program permits the Board or the Committee to grant to key
individuals (i) stock options qualifying as "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) stock options not qualifying as "incentive stock options" within
the meaning of Code Section 422, and (iii) restricted shares; and

WHEREAS, Code Section 162(m) and the regulations thereunder provide that the
Company shall not be entitled to a tax deduction for certain employee
compensation in excess of $1,000,000 to the extent such compensation is not
"performance-based compensation";

NOW, THEREFORE, the Board has determined that the Program shall be, and it
hereby is, amended as follows:

1. The Program is amended by adding to the first sentence of Article 1
of the General Provisions thereof an additional proviso to read as follows:

"; PROVIDED, FURTHER, HOWEVER, that the Committee may be comprised
solely of two or more "outside directors" within the meaning of Code Section
162(m) and the regulations thereunder, as amended from time to time, ("Code
Section 162(m)") to effect grants which are intended to qualify as
"performance-based compensation" within the meaning of Code Section 162(m)."

2. The Program is amended by adding to the General Provisions thereof a new
Article 14 to read as follows:

"Article 14. MAXIMUM NUMBER OF OPTIONS GRANTED IN ANY CALENDAR
YEAR. Notwithstanding any other provision of the Program, the number of
shares of Common Stock underlying Incentive Options and Nonqualified Options
granted under the Incentive Plan and the Nonqualified Plan of the Program,
respectively, in any calendar year to any individual participating in the
Program shall not exceed the maximum number of shares issuable under the
Program."

3. The Program is amended by adding to the Company's Restricted Share Plan
a new Section 9 to read as follows:

28
<PAGE>
Code Section 162(m). Until otherwise determined by the Committee,
Performance-Based Restricted Shares shall become nonforfeitable upon the
attainment of preestablished levels of net income, market price per share,
return on equity employed or cash flow. The payout of any Performance-Based
Restricted Shares to any individual may be reduced, but not increased, based
on the degree of attainment of the performance criteria or otherwise at the
discretion of the Committee. Subject to adjustment under Section 8 of this
Plan, all individuals in the aggregate may not receive in any calendar year
Performance-Based Restricted Shares exceeding, in the aggregate, 1,000,000
shares of Common Stock and any one individual may not receive in any
calendar year Performance-Based Restricted Shares exceeding 500,000 shares
of Common Stock."

4. The Program is amended by deleting the first sentence of Article 3
thereof and adding a new first sentence to read as follows:

"The maximum aggregate number of shares of Common Stock subject to
the Program shall be 6,307,000 shares."

5. Except as expressly amended by this First Amendment the terms and
provisions of the Program shall remain in effect as approved by the shareholders
of the Company on May 21, 1993.

IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed this day of July, 1996.

Station Casinos, Inc.

By:
-----------------------------------

29
<PAGE>
STATION CASINOS, INC.
2411 WEST SAHARA AVENUE, LAS VEGAS, NEVADA 89102

The undersigned hereby appoints FRANK J. FERTITTA, III and SCOTT M. NIELSON,
and each of them, proxies each with full power of substitution, to vote all
stock of the undersigned at the annual meeting of stockholders of Station
Casinos, Inc. (the "Company") to be held August 20, 1996 at 10:00 a.m. local
time at the Palace Station Hotel & Casino, 2411 West Sahara Avenue, Las Vegas,
Nevada and/or at any adjournment of the annual meeting, in the manner indicated
below, all in accordance with and as more fully described in the Notice of
Annual Meeting and accompanying Proxy Statement for the meeting, receipt of
which is hereby acknowledged.

THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED AS INDICATED BELOW:
(1) Election of Directors.

/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary nominees listed below.
below).

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME BELOW.)

Frank J. Fertitta III, Lorenzo J. Fertitta and Delise F. Sertini

(2) To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the Company's 1997 Fiscal
Year. / / FOR / / AGAINST / / ABSTAIN

(3) To approve a proposed amendment to the Company's Stock Compensation Program,
increasing the maximum aggregate number of shares of the Company's common
stock subject to the Stock Compensation Program and to qualify the Stock
Compensation Program for certain tax
benefits. / / FOR / / AGAINST / / ABSTAIN

(4) To vote in their discretion on such other business as may properly come
before the annual meeting or any adjournment thereof.

(CONTINUED ON REVERSE SIDE)
<PAGE>
UNLESS AUTHORITY TO VOTE THEREFORE IS WITHHELD IN THIS PROXY CARD, IT IS THE
INTENTION OF THE PROXIES TO VOTE FOR THE REELECTION OF THE THREE NOMINEES LISTED
AND FOR EACH OF THE OTHER PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED, THIS
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
AFOREMENTIONED PROXIES.
DATE _____________________________________________
SIGNATURE(S) _____________________________________

PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS TO
THE LEFT AND RETURN IN THE ENCLOSED ENVELOPE. IF
ACTING AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, STATE YOUR FULL TITLE AND AUTHORITY WHEN
SIGNING. IF THE SIGNER IS A CORPORATION, PLEASE
SIGN THE FULL CORPORATE NAME BY A DULY AUTHORIZED
OFFICER. IF SHARES ARE HELD JOINTLY, EACH
STOCKHOLDER NAMED SHOULD SIGN.

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING--AUGUST 20,
1996
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE PRE-PAID
ENVELOPE.