SHOWBOAT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 31, 1995
To the Shareholders of Showboat, Inc.
The Annual Meeting of the Shareholders of Showboat, Inc. (the
"Company") will be held at the Memphis Room, Showboat Hotel, Casino and
Bowling Center, 2800 Fremont Street, Las Vegas, Nevada 89104, on
Wednesday, May 31, 1995, at 10:00 a.m., Pacific Daylight Time, for the
following purposes:
(1) To elect three (3) directors each to serve a three (3) year
term;
(2) To ratify the Board's selection of KPMG Peat Marwick as
independent public accountants to examine and report on the Company's
financial statements for the fiscal year ending December 31, 1995; and
(3) To transact such other business as may be properly come
before the meeting.
Only shareholders of record at the close of business on April 3,
1995 are entitled to notice of and to vote at the Annual Meeting. The
stock transfer books will not be closed.
Shareholders are cordially invited to attend the meeting in
person. SHAREHOLDERS DESIRING TO VOTE IN PERSON MUST REGISTER AT THE
MEETING WITH THE INSPECTOR OF ELECTIONS PRIOR TO THE FIRST VOTE BEING
TAKEN AT THE MEETING. IF YOU WILL NOT BE ABLE TO ATTEND THE MEETING IN
PERSON, YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED FORM
OF PROXY AND TO RETURN IT WITHOUT DELAY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE SO THAT YOUR SHARES MAY BE REGULARLY VOTED AT THE MEETING.
A copy of the 1994 Annual Report to Shareholders is enclosed.
By order of the Board of Directors,
/s/ H. Gregory Nasky
H. GREGORY NASKY,
Secretary
DATED: April 28, 1995
SHOWBOAT, INC.
2800 Fremont Street
Las Vegas, Nevada
89104
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Showboat,
Inc. ("Company") in connection with the annual meeting of the Company
to be held on May 31, 1995, and at any adjournment thereof, for the
purposes indicated and at the place and time specified in the
accompanying Notice of Annual Meeting of Shareholders.
At this annual meeting, the shareholders will have the opportunity
to elect three directors each to serve a three year term; to ratify the
Board of Directors' selection of KPMG Peat Marwick as the Company's
independent public accountants for the year ending December 31, 1995;
and to transact such other business as may properly come before the
meeting.
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
THE COMPANY. This Proxy Statement and the accompanying form of proxy
are being mailed to shareholders on or about April 28, 1995. Any
shareholder giving a proxy has the power to revoke it prospectively by
giving written notice to the Company, addressed to H. Gregory Nasky,
Secretary, at the Company's principal address before the meeting, by
delivering to the Company a duly executed proxy bearing a later date,
or by notifying the Company at the annual meeting before any vote is
taken.
We hope all the Company's shareholders will attend the annual
meeting. Regardless of whether you plan to attend, the Company does
request that you sign and date the enclosed proxy and return it
promptly to the Company in the enclosed postage prepaid envelope. The
shares represented by the enclosed proxy will be voted if the proxy is
properly executed and received by the Company prior to the date of the
meeting, or any adjournment thereof.
VOTING SECURITIES
The close of business on April 3, 1995 was fixed by the Board of
Directors as the record date for determination of the shareholders
entitled to vote at the meeting. The securities entitled to vote at
the annual meeting consist of shares of $1.00 par value common stock
("Common Stock") of the Company, with each share entitling its owner to
one vote. Common Stock is presently the only class of voting
securities which is outstanding. At the close of business on April 3,
1995, there were outstanding 15,399,655 shares of Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN OTHER BENEFICIAL OWNERS
The following table sets forth the number of shares of Common
Stock subject to options held by the Company's directors and those
executive officers named in the Summary Compensation Table (see, page
11), by all directors and executive officers as a group, and by persons
beneficially owning more than 5% of the outstanding Common Stock at the
close of business on March 28, 1995. The address for all directors and
executive officers of the Company is: Showboat, Inc., 2800 Fremont
Street, Las Vegas, Nevada 89104. Security ownership was verified with
filings with the Securities and Exchange Commission received by the
Company, and according to individual verification as of March 28, 1995,
which the Company solicited and received from the beneficial owners
listed in the following table:
<TABLE>
<CAPTION>
Name Amount and Nature of Beneficial Ownership
Number of
Shares Number of
Beneficially Shares Total Number
Owned Subject to of Shares Percent
Excluding Options Beneficially
Shares Beneficially Owned
Subject to Owned(2)
Options(1)
<S> <C> <C> <C> <C>
J.K. Houssels(3) 1,183,077(4) 28,000 1,211,077 7.9
William C. Richardson 5,000 10,000 15,000 *
John D. Gaughan 174,824(5) 10,000 184,824 1.2
Jeanne S. Stewart 404,686 10,000 414,686 2.7
Frank A. Modica 71,169(6) 32,000 121,169 *
H. Gregory Nasky 15,760(7) 15,000 30,760 *
J. Kell Houssels, III(8) 93,017 40,000 133,017 *
George A. Zettler 1,958 10,000 11,958 *
Carolyn M. Sparks 350,058(9) 8,000 358,058 2.3
Donald L. Tatzin(10) 0 4,000 4,000 *
Mark J. Miller(11) 12,700 16,000 28,700 *
All Directors and Executive
Officers as a Group (15 persons) 2,353,099 229,400 2,582,499 16.5
FMR Corp. 937,150(12) 0 937,150 6.1
State of Wisconsin
Investment Board 1,461,000(13) 0 1,461,000 9.5
MacKay-Shields
Financial Corporation 955,800(14) 0 955,800 6.2
Massachusetts Financial
Services Company 983,550(15) 0 983,550 6.4
<FN>
_______________
* Beneficial ownership does not exceed 1% of the outstanding
Common Stock.
(1)Unless otherwise specifically stated herein, each person has
sole voting power and sole investment power as to the identified Common
Stock ownership.
(2)Shares subject to currently exercisable options or otherwise
subject to issuance within 60 days of March 28, 1995, pursuant to
either the 1989 Directors' Stock Option Plan, the 1989 Executive Long
Term Incentive Plan, or the 1994 Executive Long Term Incentive Plan.
(3)Mr. Houssels may be deemed to be a control person. Mr.
Houssels is the Chairman of the Board of the Company.
(4)Mr. Houssels' shareholdings include 11,450 shares held in his
individual retirement account and 35,700 shares as a trustee of the
J.K. Houssels, Jr. 1976 Trust Agreement. He disclaims beneficial
ownership of 8,800 shares owned by his wife and such shares are
excluded from this table.
(5) Mr. Gaughan's shareholdings include 86,000 shares held by
Exber, Inc., a Nevada corporation controlled by Mr. Gaughan, and 69,674
shares over which he shares voting power and investment power with his
wife.
(6)Mr. Modica's shareholdings include 71,169 shares held by him as
trustee of the Frank A. Modica Revocable Family Trust. In 1994, Mr.
Modica was awarded 10,000 restricted shares of Common Stock and options
to purchase 40,000 shares of Common Stock pursuant to the 1994
Executive Long Term Incentive Plan. Mr. Modica forfeited his right to
those restricted shares and options as a result of his retirement as an
officer of the Company on February 28, 1995.
(7)Mr. Nasky is the Secretary of the Company. Mr. Nasky's
shareholdings include 1,250 shares owned by Mr. Nasky's wife over which
he does not have voting power or investment power.
(8)Mr. Houssels, III is the President and Chief Executive Officer
of the Company.
(9)Ms. Sparks' shareholdings include 227,000 shares beneficially
owned by her as a co-trustee of the Fred L. Morledge Family Trust and
123,058 shares beneficially owned by her as a co-trustee of The Sparks
Family Trust.
(10)Mr. Tatzin has been Executive Vice President of the Company
since March 22, 1995.
(11)Mr. Miller is the Executive Vice President-Operations of the
Company. Mr. Miller is also the President and Chief Executive Officer
of Atlantic City Showboat, Inc., a subsidiary of the Company.
(12)FMR Corp. ("FMR"), the parent holding company of Fidelity
Management & Research Company, reported on a Schedule 13G dated
February 13, 1995, that it has sole investment discretion with respect
to all of such shares and sole voting discretion with respect to 51,400
of such shares. FMR's address is 82 Devonshire Street, Boston, MA
02109.
(13)State of Wisconsin Investment Board ("Investment Board"), a
Wisconsin State Agency, reported on a Schedule 13G dated February 13,
1995, that it has sole voting and investment discretion to all such
shares. The Investment Board's address is P.O. Box 7842, Madison,
Wisconsin 53707.
(14)MacKay-Shields Financial Corporation ("MSFC") reported on a
Schedule 13G dated February 10, 1995, that it has sole voting and
investment discretion to all such shares. With respect to such shares,
MSFC beneficially owns 854,800 shares or 5.5% of the total outstanding
Common Stock at December 31, 1994, on behalf of Main Stay High Yield
Corporate Bond Fund, an investment company registered under the
Investment Company Act of 1940. MSFC's address is 9 West 57th Street,
New York, New York 10019.
(15)Massachusetts Financial Services Company ("MFSC") reported on
a Schedule 13G dated February 6, 1995, that it has sole voting and
investment discretion as to all such shares. MFSC's address is 500
Boylston Street, Boston, Massachusetts 02116.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors
consisting of nine persons who are elected for staggered terms of
three years each. Three directors' terms expire at this meeting;
two in 1996; and four in 1997. Directors are to serve until
their successors are elected and have been qualified.
Each Company director may be required to be found suitable
or qualified, as applicable, by the Nevada Gaming Commission, the
New Jersey Casino Control Commission, or the New South Wales
Casino Control Authority (collectively, the "Gaming Authorities")
to serve as a director of the Company. All present directors of
the Company who were required to be found suitable or qualified
by the Gaming Authorities have been found suitable or qualified.
The New Jersey Casino Control Commission requires each director
to renew his or her qualification every two to four years. Such
license renewal by the New Jersey Casino Control Commission
entails extensive updating of background information and possible
additional investigation and hearings as to each director's
qualifications. Should any director no longer be found suitable
or qualified by the Gaming Authorities that individual shall
become ineligible to continue to serve on the Board of Directors
and a majority of the remaining directors may appoint a qualified
replacement to serve as a director until the next annual meeting
of shareholders.
If the enclosed proxy is duly executed and received in time
for the meeting, and if no contrary specification is made as
provided therein, the proxy will be voted in favor of electing
the nominees, J.K. Houssels, William C. Richardson and Jeanne S.
Stewart, each for a three-year term of office. All of the
nominees have consented to serve if elected and the Board of
Directors presently has no knowledge or reason to believe that
any of the nominees will be unable to serve. If any such nominee
shall decline or be unable to serve, the proxy will be voted for
such person as shall be designated by the Board of Directors to
replace any such nominee. Any vacancies on the Board of
Directors which occur during the year will be filled, if at all,
by the Board of Directors through an appointment of an individual
to serve only until the next annual meeting of shareholders.
There will not be cumulative voting for the election of
directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF THE ELECTION OF MESSRS. HOUSSELS AND RICHARDSON AND
MRS. STEWART.
INFORMATION CONCERNING BOARD OF DIRECTORS, NOMINEES THERETO
AND EXECUTIVE OFFICERS
The following information is furnished with respect to each member
of the Board of Directors or nominee thereto, each of whom, unless
otherwise indicated, has served as a director continuously since the
year shown opposite his or her name. Similar information is presented
for the executive officers who are not directors. There are no family
relationships between or among any of the Company's directors, nominees
to the Board of Directors or executive officers, except J.K. Houssels
and Jeanne S. Stewart formerly were married and are the parents of
J. Kell Houssels, III.
<TABLE>
<CAPTION>
IDENTIFICATION OF DIRECTORS AND NOMINEES
DIRECTOR
NAME AND POSITION WITH THE COMPANY(1) AGE SINCE BACKGROUND INFORMATION(1)
<S> <C> <C> <S>
J.K. HOUSSELS 72 1960 Until May 1994, President
(Nominee for term expiring in 1998) and Chief Executive Officer
Chairman of the Board of the Company, of the Company; Vice
Showboat Operating Company, Showboat Chairman of the Board of
Development Company, Ocean Showboat, Directors of Union Plaza
Inc., Ocean Showboat Finance Hotel and Casino, Inc., Las
Corporation, Showboat Louisiana, Inc., Vegas, Nevada; until July
Showboat Missouri, Inc., Lake Pontchar 1991, Director of First
train Showboat, Inc., Showboat Western Financial Corpora
Indiana, Inc., Showboat Mohawk, Inc. tion (savings and loan asso
and Showboat Australia Pty Limited; ciation), Las Vegas,
Director of Atlantic City Showboat, Nevada.
Inc.
WILLIAM C. RICHARDSON 68 1972 Independent financial con
(Nominee for term expiring in 1998) sultant, Los Angeles, Cali
Director of the Company and Ocean fornia; since January 1986,
Showboat, Inc. arbitrator and mediator for
the American Arbitration
Association and self
regulatory organizations;
until March 1991,
President, Chief Executive
Officer and Vice Chairman
of Western Capital
Financial Group, Los
Angeles, California.
JOHN D. GAUGHAN 74 1978 Chairman of the Board and
(Term expires in 1997) President of Exber, Inc.,
Director of the Company and all doing business as the El
subsidiaries. Cortez Hotel and the Wes
tern Hotel and Casino, Las
Vegas, Nevada; Chairman of
the Board of Union Plaza
Hotel and Casino, Inc., Las
Vegas, Nevada.(2)
JEANNE S. STEWART 72 1979 Retired attorney, Las
(Nominee for term expiring in 1998) Vegas, Nevada.
Director of the Company and Ocean
Showboat, Inc.
FRANK A. MODICA 67 1980 Until February 1995, Execu
(Term expires in 1997) tive Vice President and
Director of the Company and all sub Chief Operating Officer of
sidiaries; Chairman of the Board of the Company and President
Atlantic City Showboat, Inc. and Chief Executive Officer
of Showboat Operating Com
pany; Director of First
Security Bank (formerly Con
tinental National Bank),
Las Vegas, Nevada.
H. GREGORY NASKY 52 1983 From March 1994 to February
(Term expires in 1997) 1995, Chief Executive Offi
Executive Vice President of the cer and Managing Director
Company; Secretary and Director of the of Showboat Australia Pty
Company and all subsidiaries. Limited and Sydney Harbour
Casino; since March 1994,
of counsel to the law firm
Kummer Kaempfer Bonner &
Renshaw, Las Vegas, Nevada,
general counsel to the
Company; until February
1994, member of the law
firm of Vargas & Bartlett,
Las Vegas and Reno, Nevada,
previous general counsel to
the Company.
J. KELL HOUSSELS, III 45 1983 From January 1990 to May
(Term expires in 1997) 1994, Vice President of the
President, Chief Executive Officer of Company; from May 1993 to
the Company and Showboat Development June 1994, President and
Company; Director of Showboat, Inc. Chief Executive Officer of
and all subsidiaries; Executive Vice Atlantic City Showboat,
President of Ocean Showboat, Inc. Inc.; from January 1990 to
May 1993, President and
Chief Operating Officer of
Atlantic City Showboat,
Inc.;
GEORGE A. ZETTLER 67 1986 Since February 1994, Presi
(Term expires in 1996) dent of Zimex, Redondo
Director of the Company and Ocean Beach, California; until
Showboat, Inc. January 1994, President
World Trade Services Group,
Long Beach, California;
until January 1991,
President, United Export
Trading Company, Los
Angeles, California.
CAROLYN M. SPARKS 53 1991 Co-owner of International
(Term expires in 1996) Insurance Services, Las
Director of the Company and Ocean Vegas, Nevada; until
Showboat, Inc. January 1991, Vice Presi
dent, Secretary and Trea
surer of International
Insurance Services, Ltd.;
until December 1990, claims
administrator for Inter
national Insurance
Services, Ltd.; Director of
Southwest Gas Corporation;
Director of PriMerit Bank -
Federal Savings Bank, Las
Vegas, Nevada; Regent,
University and Community
College System of Nevada.
<FN>
_______________
(1)Positions held with the Company and any other business experience
since 1988 and other directorships in companies with a class of
securities registered under Section 12 of the Securities Exchange
Act of 1934 ("Exchange Act") or subject to the requirements of
Section 15(d) of the Exchange Act and companies registered under the
Investment Company Act of 1940.
(2)Mr. Gaughan also owns the Nevada Hotel and Casino, the Gold Spike
Inn and Casino, and a controlling interest in the Las Vegas Club
Hotel & Casino, each of which is located in Las Vegas, Nevada.
</FN>
</TABLE>
NON-DIRECTOR EXECUTIVE OFFICERS
G. Clifford Taylor, Jr., 49, has been Treasurer of the
Company and Showboat Operating Company since February 1981. He
served as Treasurer of Showboat Development Company from June
1983 to May 1993. He has been Treasurer of Ocean Showboat, Inc.
since December 1983, Atlantic City Showboat, Inc. since June 1984
and Ocean Showboat Finance Corporation since December 1986. He
also has served as the Assistant Secretary of the Company since
May 1990. Until February 1995, Mr. Taylor was the Executive Vice
President and Chief Operating Officer of Showboat Operating
Company. He serves at the pleasure of the respective boards of
directors.
R. Craig Bird, 48, has been Executive Vice President-Finance
and Development of the Company since June 1994 and the Executive
Vice President and Chief Operating Officer of Showboat
Development Company since October 1993. Mr. Bird was Vice
President-Financial Administration of Atlantic City Showboat,
Inc. from March 1990 to October 1993. He serves at the pleasure
of the respective boards of directors.
Mark J. Miller, 38, has been Executive Vice President-
Operations of the Company since June 1994; President and Chief
Executive Officer of Atlantic City Showboat, Inc. since May 1994;
Vice President-Finance of Ocean Showboat since April 1988; Vice
President-Finance and Chief Financial Officer of Ocean Showboat
since April 1991. From October 1993 to June 1994, Mr. Miller
served as Executive Vice President and Chief Operating Officer of
Atlantic City Showboat, Inc. and he was Vice President-Finance
and Chief Financial Officer of Atlantic City Showboat, Inc. from
December 1988 to October 1993. He serves at the pleasure of the
respective boards of directors.
Donald L. Tatzin, 43, has been an Executive Vice President
of the Company since March 22, 1995 and an Executive Vice
President of Showboat Development Company since April 1993. Mr.
Tatzin has been a consultant with Arthur D. Little, Inc., San
Francisco, California since June 1976.
Paul S. Harris, 59, has been Senior Vice President-Human
Resources of the Company since June 1994. Mr. Harris served as
Vice President-Organization and Development of Atlantic City
Showboat, Inc. from July 1988 to June 1994.
Leann Schneider, 41, has been Vice President-Finance and
Chief Financial Officer of the Company and Showboat Operating
Company since May 1990; Chief Financial Officer and Treasurer of
Showboat Development Company since May 1993; Treasurer of
Showboat Mohawk, Inc., Showboat Louisiana, Inc., Lake
Pontchartrain Showboat, Inc. since July 1993; Treasurer of
Showboat Indiana, Inc. since September 1993; and Treasurer of
Showboat Missouri, Inc. since February 1995. From December 1989
until May 1990, she served as Vice President-Financial Relations
and Chief Financial Officer of the Company. She serves at the
pleasure of the respective boards of directors.
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 directors and executive officers, and
persons who own more than ten percent of the Common Stock, to
file with the Securities and Exchange Commission and the New York
Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock. Directors, executive
officers and greater than ten percent shareholders are required
by Securities and Exchange Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 1994, all Section 16(a) filing
requirements were complied with, except that one report of
ownership for one transaction, covering an aggregate of three
shares, was filed late by George A. Zettler, and one report of
ownership for one transaction, covering an aggregate of 350
shares was filed late by R. Craig Bird. Mr. Zettler's late
filing disclosed a purchase of Common Stock due to a dividend
reinvestment which was inadvertently not timely reported on
Mr. Zettler's Forms 4, and Mr. Bird's late filing disclosed a
purchase of Common Stock by his children which also was
inadvertently not timely reported on Mr. Bird's Forms 4.
INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
The entire Board of Directors met eleven times during the
year ended December 31, 1994 and each incumbent director, other
than Mr. Nasky, attended at least 75% of the board meetings held
and committee meetings held for committees of which each was a
member. Mr. Nasky resided in Sydney, Australia during 1994
assisting the Company's efforts to obtain the exclusive full-
service gaming license in Sydney. Mr. Houssels, Mr. Houssels,
III and Mr. Nasky are the only directors who are employees of the
Company.
The NOMINATING COMMITTEE met once during the twelve months
ended December 31, 1994. The Nominating Committee's
responsibilities include: interviewing potential nominees to the
Board of Directors; recommending to the Board of Directors
qualified nominees to fill Board of Directors vacancies;
developing procedures to identify potential nominees to the Board
of Directors; and developing criteria for Board of Directors
membership. During 1994, the Nominating Committee consisted of
Mr. Richardson and Ms. Stewart.
The Nominating Committee will consider nominees to the Board
of Directors submitted in writing by shareholders to the
Secretary of the Company at least seventy-five days prior to the
initiation of solicitation of the shareholders for the election
of directors in the event of an election other than at an annual
meeting; and seventy-five days before the corresponding date that
had been the record date for the previous year's annual meeting
or seventy-five days before the date of the next annual meeting
of shareholders announced in the previous year's proxy materials
in the event of an election at an annual meeting. Such
shareholder's written notice to the Secretary shall set forth:
(a) as to each person whom the shareholder proposes to nominate
for election or re-election as a director (i) the name, age,
business address, and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class
and number of shares of capital stock of the Company beneficially
owned by the person, (iv) a description of all arrangements or
understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations have to be made by the
shareholder, (v) any other information relating to the person
that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, and (vi) the consent
of such nominee to serve as a director; and (b) as to the
shareholder giving the notice, (i) the name and record address of
such shareholder, and (ii) the class and number of shares of
capital stock of the Company which are beneficially owned by the
shareholder.
The COMPENSATION COMMITTEE met ten times during the twelve
months ended December 31, 1994. Responsibilities include
reviewing the performance of the Company's officers and
recommending to the Board of Directors remuneration arrangements
and compensation plans involving the Company's directors,
executive officers, and key employees, including, but not limited
to, the incentive bonus plans for the Company's Las Vegas and
Atlantic City operations. The Compensation Committee also serves
as the administrators of the 1989 Executive Long Term Incentive
Plan and the 1994 Executive Long Term Incentive Plan
(collectively the "Incentive Plans"). Pursuant to the Incentive
Plans, the Compensation Committee makes recommendations to the
Board of Directors respecting the grant of options or awards of
restricted stock and construes and interprets the Incentive
Plans. During 1994, the Compensation Committee consisted of Mr.
Richardson and Mr. Zettler.
The AUDIT COMMITTEE met six times during the twelve months
ended December 31, 1994. The Audit Committee's responsibilities
and functions include: review of reports of independent public
accountants to the Company; review of the Company's financial
practices, internal controls and policies with officers and key
personnel; review of such matters with the Company's independent
public accountants to determine the scope of compliance and any
deficiencies; select and recommend to the Board of Directors a
firm of independent public accountants to audit annually the
books and records of the Company; review and discuss the scope of
such audit; report periodically on such matters to the Board of
Directors; and perform such other functions as the Board of
Directors from time to time shall delegate to said committee.
During 1994, the Audit Committee consisted of Mr. Gaughan, Mr.
Zettler, and Mrs. Sparks.
EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT
MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH ON PAGE 15
SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
OVERVIEW. The Compensation Committee of the Board of
Directors ("Compensation Committee") administers the Company's
executive compensation programs. The Compensation Committee
presently consists of Mr. Richardson and Mr. Zettler.
The compensation philosophy of the Company is based on two
central objectives:
* To provide competitive executive compensation
opportunities to attract, motivate and retain qualified
and motivated executive officers; and
* To align the Company's financial results and the
compensation paid to the Company's executive officers
with the enhancement of shareholder value.
The Company's compensation policy is structured so that
executive officers' compensation is dependent, in one part, on
the degree to which the Company achieves its current year
business plan objectives, and in another part, on the increase of
shareholder value.
COMPENSATION PROGRAMS. The Company's compensation programs
consist of a base salary, an annual incentive bonus, and an award
of restricted stock and/or stock options. The base salary is
targeted to fairly recognize each executive officer's unique
value and historical contributions to the success of the Company
in light of the industry median salary for the equivalent
position in the relevant market. The annual incentive bonus is
based on actual performance compared to pre-established
quantitative and qualitative performance objectives which may
include Company, operating subsidiary, and individual components.
The Company and operating subsidiary performance is generally
measured against the annual budgeted operating profits set forth
at the beginning of the year for the Company and/or the
particular operating subsidiary applicable to an individual.
Individual goals are also set at the beginning of the year for
each executive officer, and are determined through a series of
meetings with the Company's Compensation Committee and outside
compensation consultants. At the end of each quarter, an
evaluation of performance compared to all relevant objectives is
conducted in order to determine the incentive award amount
earned. In no event may an executive officer receive an annual
incentive award if pre-established threshold levels of
performance are not achieved. The Company's long-term incentive
compensation consists of awards of restricted stock and stock
options. Awards of restricted stock, which are forfeited if the
executive officer fails to be continuously employed by the
Company or one of its subsidiaries, provide an incentive to the
executive officer to remain in the employ of the Company. Awards
of stock options become exercisable over time and only have value
if the Company's Common Stock increases in value.
The Compensation Committee believes that it is important to
compensate executive officers on the basis of individual and
Company financial performance, including the enhancement of
shareholder value. To this end, the Compensation Committee
actively uses the incentive-based compensation programs, namely,
annual incentive bonuses and awards of restricted stock and/or
stock options. For 1994, the bonus compensation and the award of
restricted shares and options to the Chief Executive Officer and
the four named executive officers represented the incentive-based
compensation.
CHIEF EXECUTIVE OFFICER. The base salary of J. Kell
Houssels, III, the Company's President and Chief Executive
Officer, is targeted to fairly recognize his leadership skills
and management responsibilities in light of the median level for
chief executive officers of similar gaming companies. Mr.
Houssels, III salary was increased for the 1994 fiscal year based
upon a review of compensation of similarly sized gaming
companies. Mr. Houssels, III 1994 annual incentive award was
based on pre-established management objectives which included
both financial and non-financial objectives. Mr. Houssels, III
financial objectives included a comparison of consolidated EBITDA
for Atlantic City Showboat, Inc. to budgeted EBITDA.
Mr. Houssels, III non-financial objectives included, (i) the
implementation of the 1994 business plan for the Atlantic City
Showboat; (ii) continual improvement of customer experience and
employee satisfaction at the Atlantic City Showboat; and (iii)
the development and implementation of the business plan and
budget for Showboat's development division. Non-financial
objectives also included spearheading the Company's development
activities both domestically and internationally. Additionally,
Mr. Houssels, III received 10,000 restricted shares, which vest
over a five-year period, and options to purchase 40,000 shares of
Common Stock of the Company. The Committee believes that the
primary duty of the Chief Executive Officer is to enhance
shareholder value. The restricted shares and options were
granted primarily based upon competitive practices within the
gaming industry.
February 23, 1995 COMPENSATION COMMITTEE
William C. Richardson
George A. Zettler
The following tables set forth compensation received by J.K.
Houssels, the Company's Chief Executive Officer until May 1994,
and J. Kell Houssels, III, the Company's Chief Executive Officer
after May 1994, and the four other highest paid executive
officers of the Company during the last fiscal year for each year
of the three-year period ended December 31, 1994 for services
rendered in all capacities to the Company and its subsidiaries:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Awards Payouts(1)
Annual Compensation Other Annual Restricted Securities Long-Term All Other
Compensation Stock Underlying Incentive Compensation
Name and Principal Year Salary($) Bonus($) ($) Awards ($) Options/SARs Plans ($)
Position (2) (#)(3) Payouts ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.K. Houssels 1994 200,000 123,728 -0- 167,500 40,000 -0- 44,375(4)
Chairman of the 1993 200,000 144,070 -0- -0- -0- -0- 33,178(5)
Board and, until 1992 200,000 128,718 -0- -0- -0- -0- 44,824(6)
May 1994, President
and Chief Executive
Officer of the
Company
J.Kell Houssels, III 1994 291,808 201,595 -0- 167,500 40,000 109,600(7) 25,290(10)
President and Chief 1993 275,000 164,174 -0- -0- -0- 110,400(8) 19,513(11)
Executive Officer 1992 275,000 164,660 -0- -0- -0- 45,412(9) 19,403(12)
of the Company
since May 1994
Frank A. Modica 1994 284,519 141,255 -0- 167,500(14) 40,000(15) 137,000(16) 38,341(18)
Executive Vice 1993 275,000 154,077 -0- -0- -0- 110,400(8) 46,686(19)
President and Chief 1992 275,000 152,232 -0- -0- -0- 95,607(17) 33,045(20)
Operating Officer
of the Company(13)
H. Gregory Nasky 1994 325,000 91,562 109,142(21) 125,625 30,000 -0- 13,640(22)
Executive Vice 1993 -0- -0- -0- -0- -0- -0- 27,900(23)
President of the 1992 -0- -0- -0- -0- -0- -0- 23,800(23)
Company
Donald L. Tatzin 1994 381,631 15,000 -0- -0- 20,000 -0- 3,932(25)
Executive Vice 1993 -0- -0- -0- -0- -0- -0- 188,063(26)
President of the 1992 -0- -0- -0- -0- -0- -0- -0-
Company(24)
Mark J. Miller 1994 217,146 131,946 -0- 125,625 30,000 34,250(27) 14,982(30)
Executive Vice 1993 165,499 81,515 -0- -0- -0- 34,500(28) 19,110(31)
President - 1992 148,308 79,787 -0- -0- -0- 6,813(29) 16,962(32)
Operations of the
Company; President
and Chief Operating
Officer of Atlantic
City Showboat, Inc.
<FN>
(1)Amounts represented in this column were received by the named
individuals under either the Ocean Showboat, Inc. Stock Exchange
Plan ("Stock Exchange Plan") or the Company's 1989 Executive Long
Term Incentive Plan ("1989 Plan"), or both. Under the Stock
Exchange Plan, the Company exchanged restricted shares of Common
Stock for shares of Ocean Showboat, Inc. Common Stock. The
restricted shares granted under the Stock Exchange Plan vested over
a seven-year period, with the last of the restricted shares of
Common Stock vesting in March 1992. The restricted shares granted
under the 1989 Plan vested over a five-year period, with the last
of the restricted shares vesting in March 1994.
(2)Amounts represented in this column equal the number of
restricted shares of Common Stock granted to the named individuals
under the 1994 Executive Long Term Incentive Plan ("1994 Plan"),
multiplied by the last reported sale price of the Common Stock on
the New York Stock Exchange on the date of grant, or $16.750 per
share. The restricted shares vest over a five-year period, with
the last of the restricted shares of Common Stock vesting in March
1999; provided, however, that vesting on all such restricted shares
will accelerate to the date of any change in control of the
Company. This valuation does not take into account the diminution
in value attributable to the restrictions applicable to the
restricted shares. The number and dollar value of unvested
restricted shares held on December 31, 1994, based on the last
reported sale price of the Company's Common Stock on December 31,
1994, or $14.50 per share, was: J.K. Houssels - 10,000 shares
($145,000); J. Kell Houssels, III - 10,000 shares ($145,000);
Frank A. Modica - 10,000 shares ($145,000); H. Gregory Nasky -
7,500 shares ($108,750); and Mark A. Miller - 7,500 shares
($108,750). Dividends are paid on all restricted shares at the
same rate as on unrestricted shares.
(3)Amounts represented in this column equal the number of shares
of Common Stock underlying the stock options granted to the named
individuals under the 1994 Plan.
(4)Of this amount, $40,719 represents excess coverage life
insurance and medical reimbursement costs and $3,656 represents the
Company's contribution to Mr. Houssels' 401(k) Plan account.
(5)Of this amount, $24,184 represents excess life insurance costs
and $8,994 represents the Company's contribution to Mr. Houssels'
401(k) Plan account.
(6)Of this amount, $36,096 represents excess coverage life
insurance costs and $8,728 represents the Company's contribution to
Mr. Houssels' 401(k) Plan account.
(7)This amount represents the vesting of 6,400 shares under the
1989 Plan.
(8)This amount represents the vesting of 4,800 shares under the
1989 Plan.
(9)Of this amount, $23,612 (1,733 shares) vested under the Stock
Exchange Plan and $21,800 (1,600 shares) vested under the 1989
Plan.
(10)Of this amount, $9,129 represents excess coverage life
insurance, medical reimbursement and other miscellaneous costs and
$16,161 represents the Company's contribution to Mr. Houssels,
III's 401(k) Plan account.
(11)Of this amount, $4,519 represents excess coverage life
insurance and medical reimbursement costs, $6,000 represents an
automobile allowance and $8,994 represents the Company's
contribution to Mr. Houssels, III's 401(k) Plan account.
(12)Of this amount, $4,675 represents excess coverage life
insurance and medical reimbursement costs, $6,000 represents an
automobile allowance and $8,728 represents the Company's
contribution to Mr. Houssels, III's 401(k) Plan account.
(13)Mr. Modica retired from his position as Executive Vice
President and Chief Operating Officer of the Company on
February 28, 1995.
(14)Mr. Modica forfeited his right to the underlying restricted
shares as a result of his retirement as an officer of the Company
on February 28, 1995.
(15)Mr. Modica forfeited his right to these options as a result
of his retirement as an officer of the Company on February 28,
1995.
(16)This amount represents the vesting of 8,000 shares under the
1989 Plan.
(17)Of this amount, $73,807 (5,417 shares) vested under the Stock
Exchange Plan and $21,800 (1,600 shares) vested under the 1989
Plan.
(18)This amount includes $30,483 for excess coverage life
insurance and medical reimbursement costs and $7,858 for
forgiveness of indebtedness.
(19)This amount includes $30,510 in costs for excess coverage
life insurance and a $16,176 automobile allowance.
(20)This amount includes $16,869 in medical reimbursement costs
and a $16,176 automobile allowance.
(21)This amount represents the purchase of 77,000 shares of the
capital stock of Sydney Harbour Casino, including a gross up for
taxes incurred, paid to Mr. Nasky as a one-time overseas premium
for his work in Sydney, Australia.
(22)Of this amount, $9,384 represents excess coverage life
insurance, medical reimbursement and other miscellaneous costs and
$4,256 represents the Company's contribution to Mr. Nasky's 401(k)
Plan account.
(23)This amount represents Mr. Nasky's fees received as a non-
employee director of the Company.
(24)Mr. Tatzin has been Executive Vice President of the Company
since March 22, 1995. Mr. Tatzin's compensation for the year ended
December 1994 was for his position as Executive Vice President of
Showboat Development Company.
(25)This amount represents the Company's contribution to Mr.
Tatzin's 401(k) Plan account.
(26)This amount represents compensation paid to Mr. Tatzin for
services performed as an independent contractor.
(27)This amount represents the vesting of 2,000 shares under the
1989 Plan.
(28)This amount represents the vesting of 1,500 shares under the
1989 Plan.
(29)This amount represents the vesting of 500 shares under the
1989 Plan.
(30)Of this amount, $4,552 represents excess coverage life
insurance and medical reimbursement costs and $10,430 represents
the Company's contribution to Mr. Miller's 401(k) Plan account.
(31)Of this amount, $4,116 represents excess coverage life
insurance and medical reimbursement costs, $6,000 represents an
automobile allowance and $8,994 represents the Company's
contribution to Mr. Miller's 401(k) Plan account.
(32)Of this amount, $4,119 represents excess coverage life
insurance and medical reimbursement costs, $6,000 represents an
automobile allowance and $6,843 represents the Company's
contribution to Mr. Miller's 401(k) Plan account.
</FN>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
</TABLE>
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Base
Name Granted Fiscal Year Price ($/Sh)(3) Expiration 5% ($) 10% ($)
(#)(1,2) Date
<S> <C> <C> <C> <C> <C> <C>
J.K. Houssels 40,000 3.3% 20.250 05/25/2004 509,405 1,290,931
J. Kell Houssels, III 40,000 3.3% 20.250 05/25/2004 509,405 1,290,931
Frank A. Modica(4) 40,000 3.3% 20.250 05/25/2004 509,405 1,290,931
H. Gregory Nasky 30,000 2.4% 20.250 05/25/2004 382,053 968,199
Donald L. Tatzin 20,000 1.6% 20.250 05/25/2004 254,702 645,466
Mark J. Miller 30,000 2.4% 20.250 05/25/2004 382,053 968,199
<FN>
(1)Options granted under the Company's 1994 Executive Long Term Incentive
Plan are exercisable commencing on March 31 in the year following the
date of grant, with 20% of the shares covered thereby becoming
exercisable at that time and with an additional 20% of the option
shares becoming exercisable on each successive March 31. Full vesting
of the options shall occur on March 31, 1999, provided, however, that
vesting of all unexercised options shall accelerate to the date of any
change in control of the Company.
(2)The options were granted for a term of 10 years, subject to earlier
termination in certain events related to death, retirement or
termination of employment.
(3)The exercise price is the last reported sale price of the Common Stock
on the New York Stock Exchange on the date of grant of the options, or
$20.250 per share. The tax withholding obligations related to
exercise may be paid by delivery of already owned shares or by offset
of the underlying shares, subject to certain conditions.
(4)Mr. Modica forfeited his right to the options granted in 1994 as a
result of his retirement as an officer of the Company on February 28,
1995.
</FN>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
</TABLE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
December 31, 1994 (#) December 31, 1994 ($)
Shares Acquired Value
Name on Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
($)(1)
<S> <C> <C> <C> <C> <C> <C>
J.K. Houssels -0- -0- 20,000 40,000 137,500 -0-
J. Kell Houssels, III -0- -0- 32,000 40,000 220,000 -0-
Frank A. Modica -0- -0- 32,000 40,000(1) 220,000 -0-
H. Gregory Nasky -0- -0- 9,000 30,000 47,750 -0-
Donald L. Tatzin -0- -0- -0- 20,000 -0- -0-
Mark J. Miller -0- -0- 10,000 30,000 68,750 -0-
<FN>
(1)Mr. Modica forfeited his right to these options as a result of his
retirement as an officer of the Company on February 28, 1995.
</FN>
</TABLE>
Pension Plan Table
The Company maintains the Supplemental Executive Retirement
Plan (the "SERP"), a nonqualified plan for highly compensated
employees whose retirement benefits are restricted by limitations
of the Internal Revenue Code of 1986, as amended (the "Code")
concerning qualified plans such as the 401(k) Plan. In general,
a participant will receive a retirement benefit under the SERP
equal to a percentage of his final average pay times such
participant's years of service up to 15 years, less any benefits
payable to such participant under the federal Social Security
Act, the 401(k) Plan, or under any stock plan of the Company,
with "final average pay" being the average of such participant's
annual base salary for his last three consecutive years of
service. A participant becomes vested in his benefits under the
SERP upon the participant's 65th birthday or upon the
participant's completion of 10 years of service if the
participant is at least 55 years of age.
The following table shows, as of December 31, 1994, the
approximate annual retirement benefits under the SERP to eligible
employees in specified compensation and years of service
categories, assuming retirement occurs at age 65 and that
benefits are payable only during the employee's lifetime. The
estimated retirement benefits provided in the table have not been
reduced by the amount of benefits payable to an individual
participant under the federal Social Security Act, the 401(k)
Plan, or any stock plan of the Company.
<TABLE>
<CAPTION>
Estimated Annual Benefit ($)
3-Years Final Years of Service at Age 65
Average
Compensation
10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
125,000 41,667 62,500 62,500 62,500 62,500 62,500
150,000 50,000 75,000 75,000 75,000 75,000 75,000
175,000 58,333 87,500 87,500 87,500 87,500 87,500
200,000 66,667 100,000 100,000 100,000 100,000 100,000
225,000 75,000 112,500 112,500 112,500 112,500 112,500
250,000 83,333 125,000 125,000 125,000 125,000 125,000
300,000 100,000 150,000 150,000 150,000 150,000 150,000
400,000 133,333 200,000 200,000 200,000 200,000 200,000
450,000 150,000 225,000 225,000 225,000 225,000 225,000
500,000 166,667 250,000 250,000 250,000 250,000 250,000
</TABLE>
The years of service for certain employees as of December
31, 1994, are as follows: Mr. Houssels, 32 years; Mr. Houssels
III, 9 years; Mr. Modica, 24 years; Mr. Nasky, 1 year;
Mr. Tatzin, 1 year and Mr. Miller, 9 years. The vested benefits
to Mr. Houssels and Mr. Modica, $851,000 and $1,661,000,
respectively, under the SERP have been accrued by the Company.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements (the "Agreements")
with five of the six named executive officers and with eight
additional executive officers and other key employees
(collectively "employees" and individually "employee"). The
Agreements are renewed, unless terminated, on an annual basis.
The Agreements provide for severance benefits if the employee is
terminated by the Company (other than for cause or by reason of
the employee's retirement, death or disability) or by the
employee for Good Reason (as defined in the Agreements) within 24
months after a Change in Control (as defined in the Agreements)
or within 12 months after a Change in Control in the case of
Messrs. Houssels and Houssels, III. Each Agreement provides
that, in the event of a Potential Change in Control (as defined
in the Agreements), the employee shall not voluntarily resign as
an employee, subject to certain conditions, for at least six
months after the occurrence of such Potential Change in Control.
The Agreements provide for: (i) a lump-sum payment equal to
200% of the employee's annual salary if his employment was
terminated by the Company or 100% of the employee's annual salary
if his employment was terminated by the employee for Good Reason
(or, in the case of Messrs. Houssels and Houssels, III, 300% of
their respective annual salary), plus 200% of the average bonuses
awarded to the employee for the three fiscal years preceding the
employee's termination if the employee's employment was
terminated by the Company or 100% of the average bonuses awarded
to employee for the three fiscal years preceding employee's
termination if the employee's employment was terminated by the
employee for Good Reason (or, in the case of Messrs. Houssels and
Houssels, III, 300% of their respective average bonus for the
three fiscal years preceding their respective termination) and
(ii) the reimbursement of legal fees and expenses incurred by the
employee in seeking to enforce employee's rights under the
Agreement. In addition, in the event that payments to the
employee pursuant to employee's Agreement would subject such
employee to a tax imposed by the Code, the employee may reduce
his severance benefits to an amount below the amount which would
require the employee to pay such tax. Certain provisions of the
Agreement could have the effect of delaying or preventing a
Change in Control of the Company. Based on compensation levels
as of December 31, 1994, assuming a Change in Control of the
Company, each of Messrs. Houssels, Houssels, III, Nasky, Tatzin
and Miller would be entitled to receive a maximum lump-sum
payment of $996,516, $1,372,237, $833,124, $793,262, and
$549,468, respectively, under the Agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's executive compensation is determined by the
Compensation Committee of the Board of Directors, no current
member of which is or was an officer of the Company. Throughout
1994, the Compensation Committee consisted of Messrs. Zettler and
Richardson.
PERFORMANCE GRAPH
The following graph compares the cumulative total
shareholder return on the Company's Common Stock for the last
five years with the cumulative total return on the Standard &
Poors 500 Index and an Industry Peer Group Index(1). The graph
assumes that $100 is invested in December 31, 1989 in each of
the Company's Common Stock, the S&P 500 Index and the Industry
Peer Group Index. The total return assumes the reinvestment of
dividends.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Company/Index Name 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Showboat, Inc. 44.07 97.47 189.39 181.89 164.63
S&P 500 Index 96.89 126.42 136.05 149.76 151.74
Industry Peer Group Index 85.56 103.12 154.36 166.19 162.98
<FN>
(1)The Industry Peer Group Index includes the following
companies: Alliance Gaming Corp. (f/k/a United Gaming, Inc.),
American Gaming & Entertainment Ltd. (f/k/a Gamma International
Ltd.) Aztar Corp., Bally Entertainment Corp. (f/k/a Bally Mfg.
Corp.), Caesar's World, Inc., Cedar Fair L.P., Circus Circus
Enterprises, Inc., Disney (Walt) Company, Elsinore Corp., Grand
Casinos Inc., Great American Recreation, Inc., Jackpot
Enterprises, Inc., Jillians Entertainment Corp., MGM Grand, Inc.,
Mirage Resorts, Inc., Pratt Hotel Corp., Resorts International,
Inc., Rio Hotel & Casino, Inc., S-K-I Ltd., Sahara Gaming
Corporation, Sands Regent and Showboat, Inc. These companies
have the Standard Industrial Code 7990 - Miscellaneous Amusement
& Recreation Services.
</FN>
</TABLE>
COMPENSATION OF DIRECTORS
REMUNERATION OF NON-EMPLOYEE DIRECTORS.
For 1994, each non-employee director received a retainer of
$3,000 per quarter plus attendance fees of $2,000 per meeting
attended. Such fees are paid by the Company and Ocean Showboat,
Inc., as applicable. In addition, non-employee members of each
committee are paid $850 for each committee meeting attended.
Only non-employee directors receive the retainer or attendance
fees. Reasonable out-of-pocket expenses incurred in attending
scheduled meetings are reimbursed as to all directors.
1989 DIRECTORS' STOCK OPTION PLAN.
The Company maintains a director stock option plan entitled
the 1989 Directors' Stock Option Plan ("Option Plan"). The
Option Plan is designed to encourage non-employee directors to
take a long-term view of the affairs of the Company; to attract
and retain new superior non-employee directors; and to aid in
compensating non-employee directors for their services to the
Company. The Company's non-employee directors are William C.
Richardson, John D. Gaughan, Jeanne S. Stewart, George A. Zettler
and Carolyn M. Sparks.
Stock options granted under the Option Plan are intended to
be designated non-qualified options or options not qualified as
incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended. Subject to adjustment by reason of
stock dividend or split or other similar capital adjustments, an
aggregate of 120,000 shares of Common Stock are reserved for
issuance under the Option Plan.
The administration of the Option Plan is carried out by a
committee ("Committee") consisting of not less than two
non-employee directors of the Company selected by and serving at
the pleasure of the Company's Board of Directors. The Committee,
unless permitted by holders of the majority of outstanding Common
Stock, shall not have any discretion to determine or vary any
matters which are fixed under the terms of the Option Plan.
Fixed matters include, but are not limited to, which non-employee
directors shall receive awards, the number of shares of the
Common Stock subject to each option award, the exercise price of
any option, and the means of acceptable payment for the exercise
of the option. The Committee shall have the authority to
otherwise interpret the Option Plan and make all determinations
necessary or advisable for its administration. All decisions of
the Committee are subject to approval of the Company's Board of
Directors. Current members of the Committee are Messrs. Zettler
and Richardson.
Under the terms of the Option Plan, each option shall be
exercisable in full one year after the date of grant. Unless
special circumstances exist, each option shall expire on the
later of the tenth anniversary of the date of its grant or two
years after the non-employee director retires. Each non-employee
director initially receives a one-time option to purchase 5,000
shares of Common Stock following his or her election to the Board
of Directors. Thereafter, each non-employee director receives a
grant to purchase 1,000 shares of Common Stock each year, for
five years following his or her election to the Board of
Directors.
The option exercise price is the greater of $7.625 or the
fair market value, as defined under the Option Plan, of the
Common Stock on the date such options are granted. The per share
exercise price of options granted during 1994 pursuant to the
Option Plan was $20.25.
As of December 31, 1994, options representing 71,000 shares
have been granted to the current five non-employee directors and
two former non-employee directors and a director who has since
become an employee. Of the outstanding options, options
representing 66,000 shares are currently exercisable. The
balance may not be exercised until May 25, 1995. As of
December 31, 1994, none of the options granted pursuant to the
Option Plan have been exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into a five-year lease agreement with
Exber, Inc. commencing on February 15, 1994, for land nearby the
Las Vegas Showboat. Exber, Inc., a Nevada corporation controlled
by John D. Gaughan, a Director of the Company, has rights to the
land pursuant to a sublease agreement dated November 5, 1966.
The Company pays monthly rent of $13,095.80 and has an option to
purchase the land and all of Exber, Inc.'s rights thereto for the
purchase price of $1,400,000.00.
The Company's subsidiary, ACSI, leases space at the Atlantic
City Showboat to R. Craig Bird for the operation of a gift shop and
certain vending machines. During 1994, Mr. Bird paid rent and vending
commissions to ACSI in the amount of $100,000.00 and $240,399.00,
respectively.
Carolyn M. Sparks, a Director of the Company, is a co-owner
of International Insurance Services, Ltd. The Company engaged
International Insurance Services, Ltd. as its insurance adjuster
for the Company's Nevada subsidiaries. During 1994, the Company
paid International Insurance Services, Ltd. $100,081.00 for
services rendered to the Company.
At all times during 1994, H. Gregory Nasky was a Director of
the Company and the Secretary of the Company and its
subsidiaries. Additionally, Mr. Nasky was a member of the law
firm of Vargas & Bartlett, previous general counsel to the
Company. On March 1, 1994, Vargas & Bartlett was reorganized
from which the law firm of Kummer Kaempfer Bonner & Renshaw was
formed and it succeeded as general counsel to the Company. Mr.
Nasky is of counsel to Kummer Kaempfer Bonner & Renshaw. During
1994, the law firm of Vargas & Bartlett was paid $13,435.50 by
the Company's Nevada gaming subsidiary, $2,275.00 by the
Company's New Jersey subsidiaries, $75,727.50 by the Company in
connection with its expansion opportunities, and $37,369.00 by
the Company for other parent company matters. During 1994, the
law firm of Kummer Kaempfer Bonner & Renshaw was paid $64,128.50
by the Company's Nevada gaming subsidiary, $46,582.55 by the
Company's New Jersey subsidiaries, $141,853.49 by the Company in
connection with its expansion opportunities, $165,095.50 by the
Company in connection with a public offering, and $174,229.00 by
the Company for other parent company matters.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The principal accountant nominated by the Audit Committee
and selected by the Board of Directors for the current year is
KPMG Peat Marwick. KPMG Peat Marwick and its predecessors have
audited the Company's books since 1972. The Board directed that
its selection of KPMG Peat Marwick be submitted to the
shareholders for their approval. A representative of KPMG Peat
Marwick is expected to be present at the Annual Meeting to
respond to appropriate questions and to make a statement, if the
representative deems it appropriate. The Board of Directors
recommends a vote in favor of the ratification of KPMG Peat
Marwick to be the Company's independent public accountant, to
examine and report on the Company's financial statements for the
year ending December 31, 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK.
VOTING PROCEDURES
A majority of a quorum of shareholders present in person or
represented by proxy voting "For" the election of the nominees to
the Board of Directors; and voting "For" the ratification of the
selection of independent public accountants is sufficient to
approve the matters being voted on at the meeting. A quorum of
shareholders exists when 50% of the Company's issued and
outstanding Common Stock is present and represented at the
meeting. Abstentions are treated as votes "Against" the election
of the nominees or the selection of the independent public
accountants. Neither the Company's Articles of Incorporation,
Bylaws nor Nevada corporate statutes address the treatment and
effect of abstentions and broker non-votes. The rules of the New
York Stock Exchange provide, in certain situations, brokerage
firms and member organizations the discretion to vote the shares
held of record by them if the beneficial owner does not provide
voting instructions for the shares within the requisite time
period.
The Company will appoint an Independent Inspector of
Elections to tabulate the votes at the Annual Meeting of
Shareholders, The Inspector of Elections shall then prepare a
report indicating: (a) the number of "For" votes and "Against"
votes for each nominee to the Board of Directors; and (b) the
number of "For" votes, "Against" votes and "Abstain" votes for
the ratification and selection of the Company's independent
public accountants.
1996 ANNUAL MEETING OF SHAREHOLDERS
According to the Company's Restated Bylaws, the next annual
meeting of shareholders is expected to be held on or about
April 25, 1996. Shareholders desiring to present proper
proposals at that meeting and to have their proposals included in
the Company's proxy statement and form of proxy for that meeting
must submit the proposal to the Company, and it must be received
by the Company at its executive offices at 2800 Fremont Street,
Las Vegas, Nevada 89104 no later than December 17, 1995. The
proposal must comply with Securities and Exchange Commission
Regulation 14a-8.
EXPENSES OF SOLICITATION OF PROXIES
The expenses of making the solicitation of proxies for the
1995 Annual Meeting will consist of the costs of preparing,
printing and mailing the proxies and proxy statements and the
charges and expenses of brokerage houses, custodians, nominees or
fiduciaries for forwarding documents to security owners. These
are the only contemplated expenses of solicitation and will be
paid by the Company.
OTHER BUSINESS
The Board of Directors does not know of any other business
which will be presented for action by the shareholders at this
annual meeting. However, if any business other than that set
forth in the Notice of Annual Meeting of Shareholders should be
presented at the meeting, the proxy committee named in the
enclosed proxy intends to take such action as will be in harmony
with the policies of the Board of Directors of the Company, and
in that connection will use their discretion and vote all proxies
in accordance with their judgment.
The proxy materials and annual report are being mailed to
shareholders of the Company who were shareholders at the close of
business on April 3, 1995. Shareholders who cannot be present at
the Annual Meeting of Shareholders are requested to fill out,
date, sign and promptly return the accompanying form of proxy
card in the enclosed postage prepaid envelope.
By order of the Board of Directors,
/s/ H. Gregory Nasky
H. GREGORY NASKY,
Secretary
DATED: April 28, 1995
SHOWBOAT, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS,MAY 31, 1995
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Showboat, Inc. ("Company")
hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, Proxy Statement and the 1995 Annual Report of the
Company in connection with the annual meeting of shareholders of
the Company to be held at the Memphis Room, Showboat Hotel &
Casino, 2800 Fremont Street, Las Vegas, Nevada, 89104, on
Wednesday, May 31, 1995, at 10:00 a.m., Pacific Daylight Time,
and hereby appoints George A. Zettler and Carolyn M. Sparks, and
each or any of them, proxies, with power of substitution, to
attend and to vote all shares the undersigned would be entitled
to vote if personally present at said annual meeting and at any
adjournment thereof. The proxies are instructed to vote as
follows:
(To be Signed on Reverse Side)
X Please mark your
votes as in this
example.
1. Election of FOR WITHHELD Nominees: J.K. Houssels
Directors William C. Richardson
_____ _____ Jeanne S. Stewart
For, except vote withheld from the following nominees(s):
______________________________
2. Approval of KPMG Peat Marwick as Independent Public Accountants.
FOR AGAINST ABSTAIN
__________ __________ __________
3. In their discretion, upon such other business as may properly
come before the annual meeting.
FOR AGAINST ABSTAIN
__________ __________ __________
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. (If no direction is
made, this proxy will be voted for Proposals 1 and 2, and in the
discretion of the proxies on such other business that may properly
come before the meeting).
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
SIGNATURE(S):__________________________________ DATE:_________
NOTE: Please sign exactly as name appears herein. Joint owners
should each sign. If shares are held in the name of two or
more persons, all must sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If signor is a corporation, sign full corporate name by
duly authorized officer.
