<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CASINO DATA SYSTEMS
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[CASINO DATA SYSTEMS LOGO]
3300 Birtcher Drive
Las Vegas, Nevada 89118
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 26, 1999
TO THE STOCKHOLDERS OF CASINO DATA SYSTEMS:
Please take notice that the Annual Meeting of Stockholders of Casino Data
Systems will be held, pursuant to due call by the Board of Directors of the
Company, at the Corporate Offices of the Company located at 3300 Birtcher Drive,
Las Vegas, Nevada, on July 26, 1999 at 11:00 a.m. Pacific Daylight Time, or at
any adjournment or adjournments thereof, for the purpose of considering and
taking appropriate action with respect to the following:
1. To elect three directors to two year terms and two directors to one
year terms.
2. To transact any other business as may properly come before the
meeting or any adjournments thereof.
Pursuant to due action of the Board of Directors, stockholders of record on
June 21, 1999 (the "Record Date") will be entitled to vote at the meeting or any
adjournments thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL IN
AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING.
By Order of the Board of Directors
CASINO DATA SYSTEMS
/s/ Steven A. Weiss
Chairman of the Board of Directors
Las Vegas, Nevada
June 25, 1999
<PAGE> 3
PROXY STATEMENT
CASINO DATA SYSTEMS
3300 BIRTCHER DRIVE
LAS VEGAS, NEVADA 89118
-------------------------------------
PROXY STATEMENT
-------------------------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
JULY 26, 1999
PROXIES AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Casino Data Systems (the "Company") to be
used at the Annual Meeting of stockholders of the Company to be held July 26,
1999. Only stockholders of record at the close of business on June 21, 1999 (the
"Record Date") will be entitled to vote at the meeting or any adjournments
thereof. The approximate date on which this Proxy Statement and the accompanying
proxy were first sent or given to stockholders was June 25, 1999.
The presence, in person or by proxy, of the holders of a majority of the
shares of common stock issued and outstanding is necessary to constitute a
quorum at the meeting. Proxies in the accompanying form which are properly
executed, duly returned to the Company and not revoked will be voted in
accordance with the instructions therein. Unless instructions to the contrary
are provided, the proxy will be voted in favor of the election of each of the
director nominees named in the proxy. The presence at the meeting of a
stockholder will not revoke his or her proxy. A proxy may be revoked at any time
before it is voted by written notice to the Company, addressed to Steven A.
Weiss, Chairman of the Board of Directors, at the principal offices of the
Company or by giving written notice to the Company at the meeting; provided,
however, that a revocation shall not be effective until such notice has been
received by the Company and a revocation shall not affect a vote on any matter
cast prior to such receipt.
1
<PAGE> 4
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The Company has outstanding one class of voting securities, common stock,
no par value, of which 18,207,647 shares were outstanding as of the close of
business on June 21, 1999. Each share of common stock is entitled to one vote on
all matters put to a vote of stockholders. The following table sets forth, as of
the Record Date, certain information regarding the beneficial ownership of
shares of common stock by each director and/or director nominees of the Company,
each of the executive officers listed in the Summary Compensation Table, each
person known to the Company to be the beneficial owner of more than five percent
of the outstanding shares, and all directors and executive officers as a group.
Except as otherwise indicated, each stockholder has sole voting and investment
power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ --------- -------
<S> <C> <C>
Steven A. Weiss(2)(3)....................................... 2,913,966 15.9
Lee Lemas(4)................................................ 12,500 *
Howard Yenke................................................ 5,000 *
Phil E. Bryan(5)............................................ 14,063 *
Thomas E. Gardner(6)........................................ 6,625 *
John F. Harvey.............................................. 1,000 *
Franklin Resources, Inc.(7)................................. 1,575,000 8.7
All current executive officers, directors and director
nominees, as a group (5 persons)(8)....................... 2,953,154 16.1
</TABLE>
- -------------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and includes generally voting power
and/or investment power with respect to securities. Shares of the Company's
common stock subject to options currently exercisable or exercisable within
60 days of the date hereof, are deemed outstanding for computing the
percentage ownership of the person holding such options but are not deemed
outstanding for computing the percentage ownership of any other person.
Except as otherwise indicated, the Company believes that the beneficial
owners of the common stock listed above, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable, and that there
are no other affiliations among the stockholders listed in the table.
(2) The address of such person is 3300 Birtcher Drive, Las Vegas, Nevada 89118.
(3) Includes options to purchase 135,812 shares that are exercisable within 60
days. Also includes 453,225 shares which are held by a trust for the benefit
of Mr. Weiss' spouse and 353,024 shares which are held by a trust of which
Mr. Weiss' spouse is one of the beneficiaries. Mr. Weiss disclaims
beneficial ownership of these shares.
(4) Includes options to purchase 12,500 shares that are exercisable within 60
days.
(5) Includes options to purchase 14,063 shares that are exercisable within 60
days.
(6) Includes options to purchase 5,625 shares that are exercisable within 60
days.
(7) The address of such entity is 901 Mariners Island Blvd., 6th Floor, San
Mateo, CA 94404. Beneficial ownership is based upon the most recent Schedule
13G filed with the Securities and Exchange Commission on January 26, 1999.
(8) Includes options to purchase 168,000 shares that are exercisable within 60
days.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Bylaws, as amended, provide for the division of the Board of
Directors into two classes, each class serving for a term of two years;
provided, however, that at the 1999 Annual Meeting of Stockholders, three
directors are to be elected to serve until the 2001 Annual Meeting and two
directors are to be elected to serve until the 2000 Annual Meeting, or, in all
cases, until their successors are elected and qualified. Management proposes for
election to the Board of Directors the nominees listed below. Messrs. Weiss,
Harvey and Gardner are nominees for terms expiring in the year 2001, and Messrs.
Bryan and Yenke are nominated for terms expiring in 2000. During 1999, Diana L.
Bennett resigned and is not standing for re-election. All of the persons listed
below have consented to serve as a director, if elected. If any nominee should
withdraw or otherwise become unavailable for reasons not presently known, the
proxies which otherwise would have been voted for such nominee will be voted for
such substitute nominee as may be selected by the Board of Directors. Shares
represented at the meeting in person or by proxy but not voted will nevertheless
be counted for purposes of determining the presence of a quorum. Directors will
be elected by a plurality of the votes cast. Only votes cast for a nominee will
be counted, except that the accompanying proxy will be voted for the five
nominees named therein in the absence of instructions to the contrary.
Abstentions and instructions on the accompanying proxy card to withhold
authority to vote for one or more of the nominees will result in such nominee(s)
receiving fewer votes.
STEVEN A. WEISS, age 36, founded the Company in June 1990 and has served as
the Company's Chairman of the Board since from June 1990 to August 1994, and
from November 1994 to the present. Mr. Weiss has served as an executive officer
of the Company since its inception, and currently serves as its Chief Executive
Officer. Mr. Weiss designed the prototype slot accounting and player tracking
system that later developed into the Company's OASIS information management
system in 1991. Prior thereto, Mr. Weiss was employed by Bally as a consultant
in connection with its slot information system.
HOWARD W. YENKE, age 62, served the Company as Chief Executive Officer from
June 1998 to February 19, 1999, and has served as a Director since June 1998.
Prior to joining the Company, Mr. Yenke served as President and Chief Executive
Officer of Silent Systems, Inc., a private company providing thermal and
acoustic products to the personal computer industry, a position he began in
November 1997. From June 1996 to November 1997, Mr. Yenke served as President,
Chief Executive Officer and Director of Lanart Corporation, a privately held
company providing LAN connectivity solutions to the computer industry. Mr. Yenke
was also President and CEO of Enterprise Development Corporation of Palm Beach
County, a not-for-profit consulting services company from November 1994 to
November 1996. During the same time period, Mr. Yenke was President, CEO and
Director of Technology Deployment Holdings Company, Inc., a for profit
investment firm. From May 1994 to October 1994, Mr. Yenke served as President,
CEO and Director of ARCO Computer Products Company, a privately held company
providing PC peripheral products to the computer industry. From 1989 to 1994,
Mr. Yenke was employed by Boca Research, Inc. in several capacities including
President and CEO. Prior thereto, Mr. Yenke was employed by IBM Corporation for
over 25 years in various executive and management positions. Mr. Yenke also sits
on the boards of directors of Checkmate Electronics, Inc.
PHIL E. BRYAN, JR., age 59, has served as Director of the Company since
April 1995. Mr. Bryan also served as Chief Executive Officer of the Company from
April 1995 to April 1996. Mr. Bryan was the Chief Operating Officer, President
and a director of Boomtown, Inc. from April, 1996 to February, 1999. Since
February 1999, Mr. Bryan has been employed by the Club Cal-Neva in Reno, Nevada
as its President and Chief Executive Officer. Mr. Bryan has more than thirty
years' experience in the gaming industry, including service as the President and
Chief Executive Officer of Gold River Operating Corp. from January 1993 to
February 1995. Prior thereto, Mr. Bryan served as President of the Sands Hotel
and Casino in Las Vegas from January to April 1992 and as Chief Executive
Officer of the Peppermill Casino Resort in Reno, Nevada from August 1982 to
January 1992.
THOMAS E. GARDNER, age 61, is President of LJT Associates, a consulting
firm which provides strategic planning, financial and management services to
corporations and assists investors in late stage venture capital opportunities
and acquisitions, a position he has held since 1993. From 1990 to 1992, Mr.
Gardner was
3
<PAGE> 6
Director Treasury Management Information with BankBoston Corporation. From 1979
to 1990 Mr. Garner was Senior Vice President and a member of the senior
management committee with a predecessor bank, Rhode Island Hospital Trust
National Bank, and acted as head of Treasury and Chairman of the Asset and
Liability Management Committee. Mr. Gardner is Chairman of the Board of
Directors of Access Solutions International, Inc.
JOHN F. HARVEY, age 77, is an independent business consultant. He served on
the Board of Directors of Del Webb Corporation from 1988 to 1994. Mr. Harvey was
a lecturer and member of the finance faculty for the College of Business and
Economics at the University of Nevada, Las Vegas from 1986 to 1992. Prior to his
retirement in 1986, Mr. Harvey was Senior Vice President, Treasurer, Chief
Financial Officer and a director of Summa Corporation (currently The Howard
Hughes Corporation) for a period of eight years. Mr. Harvey also served in
various executive positions with Time Incorporated, Schering-Plough Corporation
and the Times Mirror Company over a period in excess of 30 years.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by each executive officer of
the Company whose salary during the year ended December 31, 1998 exceeded
$100,000, or would have exceeded $100,000 had they been employed by the Company
at the end of the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-
TERM
COMPENSATION
ANNUAL COMPENSATION AWARD
----------------------------------- ------------
ALL OTHER SECURITIES
FISCAL ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS COMPENSATION
- --------------------------- ------ --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Weiss............... 1998 300,000 -- 9,600(1) 100,000 --
Chairman of the Board 1997 300,000 -- 9,600(1) -- --
1996 279,500 -- 9,600(1) 52,750 --
Howard Yenke(2)............... 1998 146,154 5,539(1) 250,000 --
Chief Executive Officer
Kenneth S. Hardesty(3)........ 1998 82,692 59,000 -- -- --
Chief Executive Officer 1997 14,423 -- -- 285,000 36,000(4)
Lee Lemas(5).................. 1998 147,913 -- 4,800(1) 150,000 --
Chief Financial and
Operating Officer
Diana L. Bennett(6)........... 1998 200,000 -- 9,600(1) 100,000 --
President and Chief 1997 200,000 -- 9,600(1) 20,000 --
Operating Officer 1996 160,778 45,000 9,563(1) 55,000 --
Michael Perez(7).............. 1998 171,538 -- -- 100,000 60,000(8)
</TABLE>
- -------------------------
(1) Represents automobile allowances provided to the Company's executive
officers.
(2) Mr. Yenke was not employed by the Company prior to 1998. He served as the
Company's Chief Executive Officer from June 1998 to February 1999.
(3) Mr. Hardesty served as the Company's Chief Executive Officer from December,
1997 to May 15, 1998.
(4) Represents a relocation expense allowance paid pursuant to Mr. Hardesty's
employment agreement with the Company.
(5) Ms. Lemas became an executive officer of the Company in July 1998.
(6) Ms. Bennett served as the Company's President and Chief Operating Officer
from January 1996 to February 1999.
(7) Mr. Perez served as Chief Financial Officer from January 13, 1998 to May 21,
1998.
(8) Represents relocation expense allowances paid pursuant to Mr. Perez'
employment and severance agreements with the Company.
5
<PAGE> 8
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes information with respect to options granted
to the executive officers named in the Summary Compensation Table during the
last fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE OF ASSUMED
------------------------------------------------------ ANNUAL RATE
NUMBER OF PERCENTAGE OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPLICATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTION EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- -------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Weiss....... 100,000 10.0 $1.81 10/26/2008 $113,830 $ 288,467
Lee Lemas............. 50,000 5.0 3.00 03/09/2008 94,334 239,061
100,000 10.0 1.53 10/09/2008 96,221 243,843
Howard Yenke.......... 250,000 24.9 3.19 06/04/2008 501,543 1,271,010
Kenneth S. Hardesty... 285,000 28.4 3.75 11/26/2002 230,322 496,007
Diana L. Bennett...... 100,000 10.0 1.81 10/26/2008 113,830 288,467
Mike Perez............ 100,000 10.0 3.13 01/13/2003 86,476 191,090
</TABLE>
- -------------------------
(1) All options were granted at a price equal to the fair market value of the
Company's common stock on the date of grant.
(2) Amounts shown in these columns have been derived by multiplying the exercise
price by the annual appreciation rate shown (compounded for the term of the
options), multiplying the result by the number of shares covered by the
options, and subtracting the aggregate exercise price of the options. The
dollar amounts set forth under this heading are the result of calculations
at the 5 percent and 10 percent rates set by the Securities and Exchange
Commission, and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table summarizes information with respect to options held by
the executive officers named in the Summary Compensation Table and the value of
the options held by such persons as of the end of the last fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNEXERCISED MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Weiss........ -- -- 135,812 109,750 $0 $19,000
Lee Lemas.............. -- -- 12,500 137,500 0 47,000
Howard Yenke........... -- -- 0 250,000 0 0
Diana L. Bennett....... -- -- 45,417 129,583 0 19,000
Kenneth S. Hardesty.... -- -- 0 0 0 0
Mike Perez............. -- -- 0 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Weiss is employed by the Company pursuant to an agreement which expires
on December 31, 1999. Such agreement provides for a base salary of $300,000 per
year, an annual bonus in an amount up to 50 percent of his base salary, and an
$800 per month automobile allowance. Either the Company or Mr. Weiss may
terminate the agreement for any reason prior to its expiration. In the event
that the Company terminates the agreement without cause (as defined) or Mr.
Weiss terminates his employment due to a change in control of the Company or an
adverse change in his working conditions, the Company is obligated to continue
Mr. Weiss' compensation for a period of two years. Mr. Weiss' employment
agreement also contains customary provisions relating to non-competition and
non-disclosure of confidential information.
6
<PAGE> 9
Ms. Lemas and the Company entered into an employment agreement containing
substantially similar terms as the Company's agreement with Mr. Weiss, except
that Ms. Lemas' base salary is $215,000 per year, her annual bonus may be an
amount up to 50 percent of Ms. Lemas' base salary, and upon Ms. Lemas'
termination of employment without cause or in connection with a change in
control, the Company is obligated to continue her compensation for one year.
Ms. Bennett was employed by the Company pursuant to an agreement scheduled
to expire in December 1999. Ms. Bennett left the Company in February 1999. Under
the terms of a severance agreement entered into by and between the Company and
Ms. Bennett, the employment agreement was terminated and Ms. Bennett will
receive severance compensation in the amount of $255,000 over a period of 12
months. Ms. Bennett is subject to certain non-competition provisions expiring in
February 2000.
On June 3, 1998, the Company entered into an employment agreement with
Howard Yenke. Mr. Yenke left the Company in February 1999. Pursuant to a
severance agreement entered into with the Company, Mr. Yenke received six months
severance pay and his employment agreement was terminated.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of Messrs. Gardner
and Phil E. Bryan.
DIRECTOR COMPENSATION
Directors who are not also employees of the Company receive a $25,000
annual director's fee and are reimbursed for costs and expenses they incur to
attend board meetings. Directors who are not also employees of the Company are
entitled to participate in the Company's 1994 Non-Employee Director Stock Option
Plan. This plan is a formula stock option plan that provides for the initial
grant of a stock option covering 11,250 shares upon a person joining the Board
and an annual stock option grant covering 5,625 shares at each annual meeting of
stockholders. Each option granted has a ten-year term, vests equally over a two
year period and has an exercise price equal to the fair market value on the date
of grant.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have been
made by the Compensation and Stock Option Committee (the "Compensation
Committee") of the Board. Each member of the Compensation Committee is a
non-employee director. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Each executive officer who also serves as a director of the Company
abstains from the discussion and vote relating to his or her compensation.
Pursuant to rules designed to enhance disclosure of the Company's policies
toward executive compensation, set forth below is a report prepared by the
Compensation Committee addressing the Company's compensation policies for the
year ended December 31, 1998 as they affected the Company's executive officers.
The following report of the Compensation Committee, as well as the Performance
Graph set forth herein, are not soliciting materials, are not deemed filed with
the Securities and Exchange Commission (the "SEC") and are not incorporated by
reference in any filing of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether made before or after the date of this Proxy Statement and
irrespective of any general incorporation language in any such filing.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual objectives and long-term goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. The Compensation
Committee intends to set executive compensation at levels that the Compensation
Committee believes to be consistent with others in the Company's industry.
7
<PAGE> 10
There are three elements in the Company's executive compensation program,
all determined by individual and corporate performance.
- Base salary compensation
- Annual incentive compensation
- Stock options
Base salary compensation and increases are determined by the potential
effect the individual has on the Company, the skills and experiences required by
the job, and the performance and potential of the incumbent in the job.
Effective in April 1996, the Compensation Committee instituted a bonus
incentive compensation plan which allows each executive to earn a percentage of
such executive's base salary (up to 50%), payable quarterly, dependent upon the
Company's earnings performance for such fiscal year.
Awards of stock grants under the Company's 1993 Stock Option and
Compensation Plan (the "Plan") are designed to promote the identity of long-term
interests between the Company's executives and its stockholders, and assist in
the retention of executives. The Plan also permits the Committee to grant stock
options to key personnel. Options become exercisable based upon criteria
established by the Company.
While the value realizable from exercisable options is dependent upon the
extent to which the Company's performance is reflected in the market price of
the Company's common stock at any particular point in time, the decision as to
whether such value will be realized in any particular year is determined by each
individual executive and not by the Compensation Committee. Accordingly, when
the Committee recommends that an option be granted to an executive, that
recommendation does not take into account any gains realized that year by that
executive as a result of his or her individual decision to exercise an option
granted in a previous year.
The Compensation Committee does not anticipate that any of the compensation
payable to executive officers of the Company in the coming year will exceed the
limits and deductibilities set forth in section 162(m) of the Internal Revenue
Code of 1986, as amended. The Compensation Committee has not established a
policy regarding compensation in excess of these limits, but will continue to
monitor this issue.
By the Compensation and Stock Option Committee
THOMAS E. GARDNER
PHIL E. BRYAN
8
<PAGE> 11
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission (the "SEC") requires that the
Company include in this Proxy Statement a line-graph presentation comparing
cumulative, five-year return to the Company's stockholders (based on
appreciation of the market price of the Company's common stock) on an indexed
basis with (i) a broad equity market index and (ii) an appropriate published
industry or line-of-business index, or peer group index constructed by the
Company. The following presentation compares the Company's common stock price
from December 31, 1993 to December 31, 1998, to the S&P 500 Stock Index and a
"peer group" index created by the Company over the same period. The "peer group"
index that the Company believes is representative of its industry includes Acres
Gaming, Inc., Alliance Gaming Corporation, Anchor Gaming, GTech Holdings Corp.,
International Game Technology, Shuffle Master, Inc., Powerhouse Technologies,
Inc. (formerly known as Video Lottery Technologies, Inc.), WMS Industries, and
Silicon Gaming, Inc.
In the graph, the presentation assumes that the value of an investment in
each of the Company's common stock, the S&P 500 Index, and the two peer group
indices was $100 on December 31, 1993, and that any dividends paid were
reinvested in the same security.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/31/93)
LOGO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS 12/31/93 12/31/94 12/29/95 12/30/96 12/31/97 12/31/98
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Casino Data Systems $100.00 $ 60.00 $142.86 $ 58.93 $ 24.64 $ 17.14
- --------------------------------------------------------------------------------------------------------------------
Peer Group $100.00 $ 61.51 $ 72.35 $ 95.97 $119.93 $123.77
- --------------------------------------------------------------------------------------------------------------------
S&P 500 $100.00 $101.53 $139.69 $171.82 $229.13 $293.74
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
Bloomberg Financial Markets.
PROPOSALS OF STOCKHOLDERS
All proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders of the Company must be received by the Company at its
executive offices on or before December 23, 1999.
On May 21, 1998, the Securities and Exchange Commission amended Rule 14a-4
of the Securities Exchange Act of 1934. The amendment governs the Company's use
of its discretionary proxy voting authority with respect to a shareholder
proposal which the shareholder has not sought to include in the Company's proxy
statement. The new amendment provides that if a proponent of a proposal fails to
notify the Company at least 45 days prior to the month and day of mailing of the
prior year's proxy statement of a shareholder proposal, then the management
proxies will be allowed to use their discretionary voting authority when the
proposal is raised at the meeting, without any discussion of the matter in the
proxy statement.
9
<PAGE> 12
With respect to the Company's 2000 Annual Meeting of Shareholders, if the
Company is not provided notice of a stockholder proposal which the stockholder
has not previously sought to include in the Company's proxy statement by May 12,
2000, the management proxies will be allowed to use their discretionary
authority as outlined above.
OTHER MATTERS
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held six meetings and took one action in writing
during the last fiscal year. The Company has an audit committee and a
compensation and stock option committee, but does not have a nominating
committee of the Board of Directors.
During 1998, the Company's audit committee consisted of Messrs. Thomas E.
Gardner and Phil E. Bryan. The audit committee recommends to the full Board the
engagement of the independent accountants, reviews the audit plan and results of
the audit engagement, reviews the independence of the auditors, and reviews the
adequacy of the Company's system of internal accounting controls. The audit
committee met twice during the last fiscal year.
The Company's compensation and stock option committee, which consisted of
Messrs. Gardner and Phil E. Bryan, held one meeting during the last fiscal year.
The compensation and stock option committee reviews the Company's remuneration
policies and practices, makes recommendations to the Board in connection with
all compensation matters affecting the Company and administers the Plan.
INDEPENDENT ACCOUNTANTS
KPMG LLP has been the independent public accountants for the Company since
January 1993. A representative of KPMG LLP is expected to attend this year's
Annual Meeting of Stockholders and have an opportunity to make a statement
and/or respond to appropriate questions from stockholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the Nasdaq National Market. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on review of the copies of
such forms furnished to the Company, or written representations that no Forms 5
were required, the Company believes that during the fiscal year ended December
31, 1998, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were satisfied.
SOLICITATION
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the stockholders in connection with this solicitation. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of stock, in which case they will
be reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by telegram or by
special letter.
The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other matters come before the
meeting, it is the intent of the persons named in the enclosed proxy to vote the
proxy in accordance with their best judgment.
The Board of Directors
10
<PAGE> 13
CASINO DATA SYSTEMS
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JULY 26, 1999
The undersigned, a stockholder of Casino Data Systems (the
"Company"), hereby appoints Steven A. Weiss and Bruce W. Benson, and
each of them as proxies, with full power of substitution, to vote on
behalf of the undersigned the number of shares which the undersigned is
then entitled to vote, at the Annual Meeting of the Stockholders of
Casino Data Systems to be held at the corporate offices of the Company
located at 3300 Birtcher Drive, Las Vegas, Nevada, on Monday, July 26,
1999, at 11:00 a.m. and any adjournments or postponements thereof, upon
matters set forth below, with all the powers which the undersigned would
possess if personally present:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS:
WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
FOR all nominees [ ]
(except as marked to the contrary below)
</TABLE>
Nominees for directorships, each for a two-year term:
STEVEN A. WEISS, THOMAS E. GARDNER AND JOHN HARVEY
Nominees for directorships, each for a one-year term:
HOWARD W. YENKE AND PHIL E. BRYAN
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
------------------------------------------------------------------------
2. Upon such other business as may properly come before the meeting and
any adjournments or postponements thereof.
(Continued, and TO BE DATED AND SIGNED on the reverse side)
<PAGE> 14
(continued from other side)
The undersigned hereby revokes all previous proxies relating to the
shares covered hereby and acknowledges receipt of the Notice and Proxy
Statement relating to the Annual Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will
be voted on the matters set forth on the reverse side of this form as
directed by the stockholder, but if no direction is made in the space
provided, it will be voted FOR the election of all nominees to the Board
of Directors.
Date: , 1999
--------------------------
--------------------------
--------------------------
(STOCKHOLDER MUST SIGN EX-
ACTLY AS THE NAME APPEARS AT
LEFT. WHEN SIGNED AS A CORPO-
RATE OFFICER, EXECUTOR, ADMIN-
ISTRATOR, TRUSTEE, GUARDIAN,
ETC., PLEASE GIVE FULL TITLE
AS SUCH. BOTH JOINT TENANTS
MUST SIGN.)
