SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SHOWBOAT, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_________________________________________________________
(2) Aggregate number of securities to which transaction
applies:_________________________________________________________
<PAGE>
(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>
SHOWBOAT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 30, 1996
To the Shareholders of Showboat, Inc.:
The Annual Meeting of the Shareholders of Showboat, Inc.
("Company") will be held at the Mississippi Pavilion, Showboat
Casino Hotel, 801 Boardwalk, Atlantic City, New Jersey 08401, on
Thursday, May 30, 1996, at 10:00 a.m., local time, for the
following purposes:
(1) To elect two directors each to serve a three year term;
(2) To approve amendments to the Company's 1989 Directors'
Stock Option Plan ("Option Plan") to extend benefits to
all non-employee directors through the scheduled
termination of the Option Plan in 1999 and to amend the
commencement of participation in the Option Plan for
former employee directors;
(3) 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, 1996; and
(4) To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on
April 1, 1996 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 1995 Annual Report to Shareholders is
enclosed.
By order of the Board of Directors,
/s/ H. Gregory Nasky
H. GREGORY NASKY,
Secretary
DATED: April 19, 1996
<PAGE>
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 30, 1996, 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 two directors each to serve a three year
term; to approve amendments to the Company's 1989 Directors'
Stock Option Plan; to ratify the Board of Directors' selection of
KPMG Peat Marwick as the Company's independent public accountants
for the year ending December 31, 1996; 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 19, 1996. 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 1, 1996 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 1, 1996, there were outstanding
15,826,436 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 31,
1996. 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 31, 1996,
which the Company solicited and received from certain beneficial
owners listed in the following table:
2
<PAGE>
<TABLE>
<CAPTION>
Name Amount and Nature of Beneficial Ownership
_____________________________________________________________________________________________________________________________
Number of Shares Beneficially Number of Shares Subject
Owned Excluding Shares to Options Beneficially Total Number of Shares
Subject to Options<F1> Owned<F2> Beneficially Owned Percent
_____________________________________________________________________________________________
<S> <C> <C> <C> <C>
J.K. Houssels<F3> 1,144,157<F4> 36,000 1,180,157 7.4
William C. Richardson 5,000 10,000 15,000 *
John D. Gaughan 174,824<F5> 10,000 184,824 1.2
Jeanne S. Stewart 383,686 10,000 393,686 2.5
Frank A. Modica 71,169<F6> 0 71,169 *
H. Gregory Nasky 15,760<F7> 21,000 36,760 *
J. Kell Houssels, III 129,717<F8> 48,000 177,717 1.1
George A. Zettler 1,955 10,000 11,955 *
Carolyn M. Sparks 298,058<F9> 4,000 302,058 1.9
R. Craig Bird 16,350<F10> 22,000 38,350 *
Mark J. Miller<F11> 12,700 22,000 34,700 *
Herbert R. Wolfe<F12> 37,500 12,000 49,500 *
All Directors and Executive
Offiers as a Group (17 persons) 2,322,376 302,200 2,624,576 16.3
FMR Corp 2,133,950<F13> 0 2,133,950 13.5
Neuberger & Berman L.P. 1,137,900<F14> 0 1,137,900 7.2
The Capital Group
Companies, Inc. 785,000<F15> 0 785,000 5.0
Massachusetts Financial
Services Company 1,424,400<F16> 0 1,424,400 9.0
_______________
<FN>
*Beneficial ownership does not exceed 1% of the outstanding
Common Stock.
<F1> Unless otherwise specifically stated herein, each person has
sole voting power and sole investment power as to the identified
Common Stock ownership.
<F2> Shares subject to currently exercisable options or otherwise
subject to issuance within 60 days of March 31, 1996, pursuant to
either the 1989 Directors' Stock Option Plan, the 1989 Executive
Long Term Incentive Plan, or the 1994 Executive Long Term
Incentive Plan.
<F3> Mr. Houssels may be deemed to be a control person.
Mr. Houssels is the Chairman of the Board of the Company.
<F4> Mr. Houssels' shareholdings include 11,450 shares held in
his individual retirement account and 1,123,707 shares as a
trustee of the J.K. and Nancy Houssels 1992 Trust No. 1.
He disclaims beneficial ownership of 7,000 shares owned by his
wife and such shares are excluded from this table.
<F5> 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.
<F6> Mr. Modica's shareholdings include 71,169 shares held by him
as trustee of the Frank A. Modica Revocable Family Trust.
<F7> Mr. Nasky is the Executive Vice President and 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.
<F8> Mr. Houssels, III is the President and Chief Executive
Officer of the Company. Mr. Houssels, III's shareholdings include
35,700 shares as a trustee of the J.K. Houssels, Jr. 1976 Trust
Agreement.
<F9> Mrs. Sparks' shareholdings include 175,000 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.
<F10> Mr. Bird is the Chief Financial Officer and Executive Vice
President-Finance and Administration of the Company. Mr. Bird's
shareholdings include 350 shares owned by his sons.
<F11> Mr. Miller is the Executive Vice President-Operations of
the Company.
<F12> Mr. Wolfe is the President and Chief Executive Officer of
Atlantic City Showboat, Inc.
<F13> FMR Corp. ("FMR"), the parent holding company of Fidelity
Management and Research Company, reported on a Schedule 13D dated
March 1, 1996, that it has sole investment discretion with
respect to all of such shares and sole voting discretion with
respect to 45,900 of such shares. FMR's address is 82 Devonshire
Street, Boston, Massachusetts 02109.
<F14> Neuberger & Berman L.P. ("Neuberger") reported on a
Schedule 13G dated February 12, 1996, that it has sole voting
power as to 35,000 of the 1,137,900 shares beneficially owned by
it and Neuberger disclaims beneficial ownership as to 16,500
shares owned by partners of Neuberger and such shares are
excluded from this table. Neuberger's address is 605 Third
Avenue, New York, New York 10158-3698.
<F15> The Capital Group Companies, Inc. ("CGC"), the parent
holding company of Capital Research and Management Company,
reported on a Schedule 13G dated February 9, 1996, that it
disclaims beneficial ownership to all such shares. CGC further
set forth that it had no power to vote the shares and that
although it shared investment discretion with respect to all such
shares, the shares were owned by various institutional investors.
CGC's address is 333 South Hope Street, Los Angeles, California
90071.
<F16> Massachusetts Financial Services Company ("MFSC") reported
on a Schedule 13G dated February 12, 1996, 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>
3
<PAGE>
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. Two directors' terms expire at this meeting;
four in 1997; and three in 1998. 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 to serve as a director by the gaming regulatory
authorities in jurisdictions in which the Company does business.
All present directors of the Company who were required to be
found suitable or qualified have been found suitable or qualified
by the applicable gaming regulatory authority. Should any
director no longer be found suitable or qualified by any gaming
regulatory authority having jurisdiction over the Company, that
director 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, George A. Zettler and Carolyn M. Sparks, 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 MR. ZETTLER AND MRS. SPARKS.
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.
4
<PAGE>
<TABLE>
<CAPTION>
IDENTIFICATION OF DIRECTORS AND NOMINEES
NAME AND POSITION WITH DIRECTOR
THE COMPANY<F1> AGE SINCE BACKGROUND INFORMATION<F1>
<S> <C> <C> <C>
J.K. HOUSSELS 73 1960 Until May 1994, President
(Term expires in 1998) and Chief Executive
Chairman of the Board of Officer of the Company;
the Company, Showboat Vice Chairman of the
Operating Company and Board of Directors of
Ocean Showboat, Inc.; Union Plaza Hotel and
Director of the Company Casino, Inc., Las Vegas,
and all subsidiaries. Nevada; until July 1991,
Director of First Western
Financial Corporation
(savings and loan
association), Las Vegas,
Nevada.
WILLIAM C. RICHARDSON 69 1972 Independent financial
(Term expires in 1998) consultant, Los Angeles,
Director of the Company California; since January
and Ocean Showboat, Inc. 1986, 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 75 1978 Chairman of the Board and
(Term expires in 1997) President of Exber, Inc.,
Director of the Company doing business as the El
and all subsidiaries. Cortez Hotel and the
Western Hotel and Casino,
Las Vegas, Nevada;
Chairman of the Board of
Union Plaza Hotel and
Casino, Inc., Las Vegas,
Nevada.<F2>
JEANNE S. STEWART 73 1979 Retired attorney, Las
(Term expires in 1998) Vegas, Nevada.
Director of the Company
and Ocean Showboat, Inc.
FRANK A. MODICA 68 1980 Until May 1995, Chairman
(Term expires in 1997) of the Board of Atlantic
Director of the Company City Showboat, Inc.;
and all subsidiaries. until February 1995,
Executive Vice President
and Chief Operating
Officer of the Company
and President and Chief
Executive Officer of
Showboat Operating
Company; Director of
First Security Bank
(formerly Continental
National Bank), Las
Vegas, Nevada.
H. GREGORY NASKY 53 1983 From March 1994 to
(Term expires in 1997) February 1995, Chief
Executive Vice President Executive Officer and
of the Company; President Managing Director of
and Chief Executive Showboat Australia Pty
Officer of Showboat Limited and Sydney
Development Company; Harbour Casino; since
Secretary and Director of March 1994, of counsel to
the Company and all the law firm Kummer
subsidiaries. Kaempfer Bonner &
Renshaw, Las Vegas,
Nevada, outside legal
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.
5
<PAGE>
J. KELL HOUSSELS, III 46 1983 From May 1993 to May
(Term expires in 1997) 1995, President and Chief
President and Chief Executive Officer of
Executive Officer of the Showboat Development
Company and Ocean Company; from May 1993 to
Showboat, Inc.; Director June 1994, President and
of Showboat, Inc. and Chief Executive Officer
all subsidiaries; Chair- of Atlantic City
man of the Board of Showboat, Inc.; from
Atlantic City Showboat, January 1990 to May 1994,
Inc. and Showboat Vice President of the
Development Company. Company; from November
1990 to May 1995,
Executive Vice President
of Ocean Showboat, Inc.;
from January 1990 to May
1993, President and Chief
Operating Officer of
Atlantic City Showboat,
Inc.
GEORGE A. ZETTLER 68 1986 Since February 1994,
(Nominee for term President of Zimex,
expiring in 1999) Redondo Beach,
Director of the Company California; until January
and Ocean Showboat, Inc. 1994, President World
Trade Services Group,
Long Beach, California;
until January 1991,
President, United Export
Trading Company, Los
Angeles, California.
CAROLYN M. SPARKS 54 1991 Co-owner of International
(Nominee for term Insurance Services, Las
expiring in 1999) Vegas, Nevada; until
Director of the Company January 1991, Vice
and Ocean Showboat, Inc. President, Secretary and
Treasurer of
International 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>
<F1> Positions held with the Company and any other business
experience since 1991 and other directorships in companies with a
class of securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended ("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.
<F2> 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>
6
<PAGE>
NON-DIRECTOR EXECUTIVE OFFICERS
R. Craig Bird, 49, has been the Chief Financial Officer of
the Company since January 1996; the Executive Vice President-
Finance and Administration of the Company since June 1994; and
the Executive Vice President-Finance 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, 39, has been Executive Vice President-
Operations of the Company since June 1995; Vice President-Finance
of Ocean Showboat, Inc. since April 1988; and Vice President-
Finance and Chief Financial Officer of Ocean Showboat, Inc. since
April 1991. From July 1994 to June 1995, Mr. Miller served as
President and Chief Executive Officer of Atlantic City Showboat,
Inc. From October 1993 to July 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 1995; Executive Vice President of
Showboat Development Company since April 1993; Acting Managing
Director of Showboat Australia Pty Limited since March 1996;
Chairman of Sydney Casino Management Company Pty Limited since
May 1995; and Alternate Director of Sydney Harbour Casino
Holdings Limited since July 1994. Mr. Tatzin has been a
consultant with Arthur D. Little, Inc., San Francisco, California
since June 1976. He serves at the pleasure of the respective
boards of directors.
Paul S. Harris, 59, has been Executive Vice President-Human
Resources of the Company since May 1995; and Senior Vice
President-Human Resources of the Company from June 1994 to May
1995. Mr. Harris served as Vice President-Organization and
Development of Atlantic City Showboat, Inc. from July 1988 to
June 1994. He serves at the pleasure of the respective boards of
directors.
Herbert R. Wolfe, 55, has been President and Chief Executive
Officer of Atlantic City Showboat, Inc. since June 1995;
Executive Vice President and Chief Operating Officer of Atlantic
City Showboat, Inc. from July 1994 to May 1995; Senior Vice
President of Marketing of Atlantic City Showboat, Inc. from April
1991 to July 1994; Vice President of Marketing of Atlantic City
Showboat, Inc. from January 1989 to April 1991; and Director of
Marketing of Atlantic City Showboat, Inc. from March 1988 to
January 1989. He serves at the pleasure of the respective boards
of directors.
Leann Schneider, 42, has been President and Chief Executive
Officer of the Las Vegas Showboat since January 1996; Chief
Financial Officer and Treasurer of Showboat Development Company
since May 1993; and Treasurer of Showboat Indiana, Inc. since
September 1993. From March 1995 to January 1996, she served as
Treasurer of the Company. From May 1990 until January 1996, she
served as Vice President-Finance and Chief Financial Officer of
the Company and Showboat Operating Company. She serves at the
pleasure of the respective boards of directors.
J. Keith Wallace, age 54, has been the President and Chief
Executive Officer of Showboat Marina Casino Partnership and
Showboat Indiana, Inc. since January 1996; and Director of
Showboat Marina Finance Corporation since March 1996. From
February 1995 to January 1996, Mr. Wallace was the President and
Chief Executive Officer of Showboat Operating Company. From May
1993 to February 1995, he was the President and Chief Executive
Officer of Lake Pontchartrain Showboat, Inc. and Showboat
Louisiana, Inc. From June 1993 to February 1995, Mr. Wallace
served as Executive Vice President and Chief Operating Officer of
Showboat Louisiana, Inc. and Lake Pontchartrain Showboat, Inc.,
respectively. From August 1990 to April 1993, Mr. Wallace was
the Vice President and General Manager of Showboat Operating
Company. He serves at the pleasure of the respective boards of
directors.
Mark A. Clayton, 30, has been Vice President and General
Counsel of the Company and Assistant Secretary of the Company and
its subsidiaries since July 1995. Mr. Clayton served as Chief of
Corporate Securities Division of the Nevada State Gaming Control
Board from October 1993 to June 1995; and as Deputy Chief from
May 1993 to October 1993. From October 1990 to April 1993,
Mr. Clayton was an associate of the law firm of Vargas &
Bartlett, the previous general counsel to the Company. He serves
at the pleasure of the respective boards of directors.
7
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act 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, 1995, all Section 16(a) filing
requirements were complied with, except that one report of
ownership for one transaction, reporting a sale of 1,500 shares,
was inadvertently filed late by Paul S. Harris.
INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
The entire Board of Directors met eleven times during the
year ended December 31, 1995 and each incumbent director attended
at least 75% of the board meetings held and committee meetings
held for committees of which each was a member, with the
exception of Mr. Gaughan who attended eight of the eleven board
meetings. Mr. Houssels, Mr. Houssels, III and Mr. Nasky are the
only directors who are employees of the Company.
The NOMINATING COMMITTEE did not meet during the twelve
months ended December 31, 1995. The Nominating Committee's
responsibilities include: making recommendations regarding the
size and composition of the Board of Directors; 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 1995, the Nominating Committee
consisted of Mrs. Stewart and Mr. Zettler.
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
Exchange Act, 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 nine times during the twelve
months ended December 31, 1995. 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 1995, the Compensation Committee consisted of two
individuals: Mr. Zettler served as Chairman; and Mr. Richardson
served as a member.
The AUDIT COMMITTEE met eight times during the twelve months
ended December 31, 1995. 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 1995, the Audit Committee consisted of three individuals:
Mr. Gaughan served as a member; Mr. Zettler served as Chairman;
and Mrs. Sparks served as a member.
8
<PAGE>
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 EXCHANGE ACT 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 13 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") reviews the performance of
the Company's officers and recommends to the Board of Directors
the 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 each
executive officer is rewarded for achieving his or her operating
objectives identified in a business plan, which objectives
include, among other things, operating profit performance and
improvements in industry ratings.
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 Company's
key executives also participate in a non-qualified supplemental
executive retirement plan which is designed to provide a
supplemental level of retirement income, taking into account all
other sources of income from the Company.
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 1995, the bonus compensation represented the
incentive-based compensation.
9
<PAGE>
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's salary was increased from $291,808 to $327,640
for the 1995 fiscal year based upon a review of compensation of
similarly sized gaming companies. Mr. Houssels, III's 1995 annual
incentive award was based on pre-established management
objectives which included both financial and non-financial
objectives. Mr. Houssels, III's financial objectives included a
corporate net income objective and a stock performance measure
objective. Mr. Houssels, III's non-financial objectives
included: (i) continual improvement of customer experience and
employee satisfaction at all Showboat properties; (ii)
identifying development projects and negotiating and signing of
definitive documents relating to such development projects all
within specified budget criteria; (iii) opening development
projects on time and within budget, including the successful
opening of the interim Sydney Harbour Casino in Sydney,
Australia; and (iv) providing value to the corporate organization
and creating systems for the development and training of
executives. Additionally, Mr. Houssels, III is included in the
supplemental executive retirement plan.
February 23, 1996 COMPENSATION COMMITTEE
William C. Richardson
George A. Zettler, Chairman
10
<PAGE>
The following tables set forth compensation received by
J. Kell Houssels, III, the Company's President and Chief
Executive Officer, and the four other highest paid executive
officers of the Company during the last fiscal year, for each
year of the three-year period ended December 31, 1995 for
services rendered in all capacities to the Company and its
subsidiaries:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Other Annual
______________________ Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($)
_________________________________________________________________________________
<S> <C> <C> <C> <C>
J. Kell Houssels, III 1995 327,640 239,891 -0-
President and Chief Executive 1994 291,808 235,494 -0-
Officer 1993 275,000 172,585 -0-
H. Gregory Nasky 1995 325,000 174,875 -0-
Executive Vice President 1994 325,000 191,178 109,142<F8>
1993 -0- -0- -0-
Herbert R. Wolfe 1995 244,536 224,712 -0-
President and Chief Executive 1994 215,749 94,877 -0-
Officer of Atlantic City 1993 192,020 80,737 -0-
Showboat, Inc.
Mark J. Miller 1995 239,155 177,580 -0-
Executive Vice President - 1994 217,146 180,284 -0-
Operations 1993 165,499 82,192 -0-
R. Craig Bird 1995 229,169 178,661 -0-
Executive Vice President - 1994 207,246 167,213 -0-
Finance and Administration 1993 171,096 79,788 -0-
and Chief Financial Officer
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (continued)
Long-Term Compensation
______________________________________________________
Awards Payouts<FN>1
__________________________________ _____________
Restricted Securities Long-Term All Other
Stock Underlying Incentive Compensation
Name and Principal Position Year Awards ($)<F2> Options/SARs(#)<F3> Payouts($) ($)
___________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
J. Kell Houssels, III 1995 -0- -0- 30,000<F4> 20,860<F7>
President and Chief Executive 1994 167,500 40,000 109,600<F5> 25,290
Officer 1993 -0- -0- 110,400<F6> 19,513
H. Gregory Nasky 1995 -0- -0- 22,500<F9>9 24,575<F10>
Executive Vice President 1994 125,625 30,000 -0- 13,640
1993 -0- -0- -0- 27,900
Herbert R. Wolfe 1995 -0- -0- 22,500<F9> 16,077<F13>
President and Chief Executive 1994 125,625 30,000 68,500<F11> 7,151
Officer of Atlantic City 1993 -0- -0- 69,000<F12> 8,090
Showboat, Inc.
Mark J. Miller 1995 -0- -0- 22,500<F9> 11,981<F16>
Executive Vice President - 1994 125,625 30,000 34,250<F14> 14,982
Operations 1993 -0- -0- 34,500<F15> 19,110
R. Craig Bird 1995 -0- -0- 22,500<F9> 11,374<F17>
Executive Vice President - 1994 125,625 30,000 34,250<F14> 12,147
Finance and Administration 1993 -0- -0- 34,500<F15> 17,814
and Chief Financial Officer
<FN>
<F1> Amounts represented in this column were received by the
named individuals under either the Company's 1989 Executive Long
Term Incentive Plan ("1989 Plan") or the Company's 1994 Executive
Long Term Incentive Plan ("1994 Plan"). The restricted shares
granted under the 1989 Plan vested over a five-year period, with
the last of the restricted shares of Common Stock vesting in
March 1994. The restricted shares granted under the 1994 Plan
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.
<F2> Amounts represented in this column equal the number of
restricted shares of Common Stock granted to the named
individuals under the 1994 Plan, multiplied by the closing bid
price of the Company's Common Stock on the New York Stock
Exchange on the date of grant, or $16.750 per share. The number
and dollar value of unvested restricted shares held on
December 31, 1995, based on the closing bid price of the
Company's Common Stock of $26.375 per share on December 29, 1995,
the last trading day in 1995, was: J. Kell Houssels, III - 8,000
shares ($211,000); Herbert R. Wolfe - 6,000 shares ($158,250);
H. Gregory Nasky - 6,000 shares ($158,250); Mark A. Miller -
6,000 shares ($158,250) and R. Craig Bird - 6,000 ($158,250).
This valuation does not take into account the diminution in value
attributable to the restrictions applicable to the restricted
shares. Dividends are paid on all restricted shares at the same
rate as on unrestricted shares.
<F3> 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.
<F4> This amount represents the vesting of 2,000 shares under the
1994 Plan.
<F5> This amount represents the vesting of 6,400 shares under the
1989 Plan.
<F6> This amount represents the vesting of 4,800 shares under the
1989 Plan.
<F7> Of this amount, $5,544 represents excess coverage life
insurance and medical reimbursement costs and $15,316 represents
the Company's contribution to Mr. Houssels, III's 401(k) and
Restoration Plan account.
<F8> 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.
<F9> This amount represents the vesting of 1,500 shares under the
1994 Plan.
<F10> Of this amount, $9,225 represents excess coverage life
insurance and medical reimbursement costs and $15,359 represents
the Company's contribution to Mr. Nasky's 401(k) and Restoration
Plan account.
<F11> This amount represents the vesting of 4,000 shares under
the 1989 Plan.
<F12> This amount represents the vesting of 3,000 shares under
the 1989 Plan.
<F13> Of this amount, $7,312 represents excess coverage life
insurance and medical reimbursement costs and $8,765 represents
the Company's contribution to Mr. Wolfe's 401(k) and Restoration
Plan account.
<F14> This amount represents the vesting of 2,000 shares under
the 1989 Plan.
<F15> This amount represents the vesting of 1,500 shares under
the 1989 Plan.
<F16> Of this amount, $3,862 represents excess coverage life
insurance and medical reimbursement costs and $8,119 represents
the Company's contributions to Mr. Miller's 401(k) and
Restoration Plan account.
<F17> Of this amount, $6,874 represents excess coverage life
insurance and medical reimbursement costs and $4,500 represents
the Company's contribution to Mr. Bird's 401(k) and Restoration
Plan account.
</FN>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS/SARS AT
DECEMBER 31, 1995(#)
_________________________
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE
__________________________________________________________________________
<S> <C> <C> <C> <C>
J. Kell Houssels,III -0- -0- 40,000 32,000
H. Gregory Nasky -0- -0- 15,000 24,000
Herbert R. Wolfe 20,000 381,350 6,000 24,000
Mark J. Miller -0- -0- 16,000 24,000
R. Craig Bird -0- -0- 16,000 24,000
__________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES (CONTINUED)
VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT
DECEMBER 31, 1995 ($)
___________________________________
NAME EXERCISABLE<F1> UNEXERCISABLE<F1>
_________________________________________________________________
<S> <C> <C>
J. Kell Houssels, III 649,000 196,000
H. Gregory Nasky 127,245 147,000
Herbert R. Wolfe 48,250 193,000
Mark J. Miller 224,250 147,000
R. Craig Bird 224,250 147,000
________________________________________________________________
<FN>
<F1> Based on the closing bid price of the Company's Common Stock
of $26.375 per share on December 29, 1995, the last trading day
in 1995, minus the exercise price of "in-the-money" options.
</FN>
</TABLE>
PENSION PLAN TABLE
The Company maintains the Supplemental Executive Retirement
Plan (the "SERP"), a nonqualified plan for highly compensated
employees whose retirement benefits are restricted by limitations
of the Internal Revenue Code of 1986, as amended (the "Code")
concerning qualified plans such as the 401(k) Plan. In general,
a participant will receive a retirement benefit under the SERP
equal to a percentage of his final average pay times such
participant's years of service up to 15 years, less any benefits
payable to such participant under the federal Social Security
Act, the 401(k) Plan, or under any stock plan of the Company,
with final average compensation being the average of such
participant's annual compensation (base salary plus bonus) for
his last three consecutive years of service. A participant
becomes vested in his benefits under the SERP upon the
participant's 65th birthday or upon the participant's completion
of 10 years of service if the participant is at least 55 years of
age.
The following table shows, as of December 31, 1995, the
approximate annual retirement benefits under the SERP to eligible
employees in specified compensation and years of service
categories, assuming retirement occurs at age 65 and that
benefits are payable only during the employee's lifetime. The
estimated retirement benefits provided in the table have not been
reduced by the amount of benefits payable to an individual
participant under the federal Social Security Act, the 401(k)
Plan, or any stock plan of the Company.
<TABLE>
<CAPTION>
3-YEARS FINAL
AVERAGE ESTIMATED ANNUAL BENEFIT ($)
COMPENSATION YEARS OF SERVICE AT AGE 65
_______________ ____________________________________________________
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, 1995, are as follows: Mr. Houssels III, 10 years; Mr. Nasky,
2 years; Mr. Wolfe, 7 years; Mr. Miller, 10 years; and Mr. Bird,
10 years. No benefits have vested under the SERP with respect
to any of the five named executive officers.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements (the "Agreements")
with each of the five 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
Mr. Houssels, III. Each Agreement provides that, in the event of
a Potential
12
<PAGE>
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 Mr. Houssels, III, 300% of his 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 Mr. Houssels, III, 300% of his average bonus for the
three fiscal years preceding his 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, 1995,
assuming a Change in Control of the Company, each of Messrs.
Houssels, III, Nasky, Wolfe, Miller and Bird would be entitled to
receive a maximum lump-sum payment of $1,630,890, $1,016,053,
$775,956, $771,681 and $742,113, respectively, under the
Agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's executive compensation is determined by the
Board of Directors upon the recommendation of the Compensation
Committee. No current member of the Compensation Committee in
1995 was an officer of the Company. Throughout 1995, the
Compensation Committee consisted of Mr. Richardson and
Mr. Zettler.
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 Composite Stock Index and an Industry Peer Group
Index.1 The graph assumes that $100 is invested at December 31,
1990 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.
TOTAL SHAREHOLDER RETURNS
[PERFORMANCE GRAPH OMITTED]
<TABLE>
<CAPTION>
COMPANY/INDEX NAME 1991 1992 1993 1994 1995
_________________________________________________________________
<S> <C> <C> <C> <C> <C>
Showboat, Inc. 221.19 429.97 412.77 373.60 683.05
S&P 500 Index 130.47 140.41 154.56 156.60 215.45
Industry Peer Group Index 120.62 180.85 194.72 191.28 251.67
_________________________________________________________________
</TABLE>
1 The Industry Peer Group Index includes the following
companies: Alliance Gaming Corp., American Gaming &
Entertainment Ltd., Aztar Corp., Bally Entertainment 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., Griffin Gaming & Entertainment
(f/k/a Resorts International, Inc.), Jackpot Enterprises, Inc.,
Jillians Entertainment Corp., MGM Grand, Inc., Mirage Resorts,
Inc., Pratt Hotel Corp., 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.
13
<PAGE>
COMPENSATION OF NON-EMPLOYEE DIRECTORS
REMUNERATION OF NON-EMPLOYEE DIRECTORS
For 1995, 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, Frank A. Modica,
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 Mr. Richardson
and Mr. Zettler.
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 1995 pursuant to the
Option Plan was $17.00.
The Board of Directors has recommended certain amendments to
the Option Plan. If approved by the shareholders of the Company,
the number of shares issuable upon exercise of options granted to
non-employee directors will increase. See "Approval of
Amendments to 1989 Directors' Stock Option Plan" below.
As of December 31, 1995, options representing 72,000 shares
of Common Stock have been granted to the current six non-employee
directors and two former non-employee directors and a director
who has since become an employee. Of the outstanding options,
options representing 71,000 shares of Common Stock are currently
exercisable. The balance may not be exercised until May 31,
1996. As of December 31, 1995, 11,000 options granted pursuant
to the Option Plan had been exercised.
14
<PAGE>
APPROVAL OF AMENDMENTS TO
1989 DIRECTORS' STOCK OPTION PLAN
DESCRIPTION OF THE AMENDMENTS
Under the Option Plan, each non-employee director received
an initial option to purchase 5,000 shares of Common Stock upon
the shareholders' approval of the Option Plan or upon his or her
election to the Board of Directors, as applicable, and, for the
next five years, an annual option to purchase 1,000 shares of
Common Stock. On January 30, 1996, the Board of Directors
recommended the following amendments to the Option Plan
(collectively, the "Amendments") for shareholder approval, which
Amendments require the approval of the holders of a majority of
the outstanding shares of Common Stock. If the Amendments are
approved, the Option Plan will be amended to provide that:
1. all employee directors who become non-employee directors
upon retirement as an employee will receive the initial
option to purchase 5,000 shares of Common Stock at the
next special or annual shareholders' meeting, even if
the non-employee director is not then a candidate for
re-election to the Board of Directors;
2. all non-employee directors will receive an annual option
to purchase 1,000 shares of Common Stock until the
shares reserved for the Option Plan are exhausted or
until the Option Plan otherwise expires, thereby
extending the period of eligibility to receive stock
options under the Option Plan beyond five years after
the non-employee director's year of election to the
Board of Directors;
3. all employee directors who became non-employee directors
in 1995, but who did not receive an option under the
Option Plan in 1995, will receive the initial option to
purchase 5,000 shares of Common Stock immediately
following the close of the 1996 Annual Meeting of
Shareholders; and
4. all directors who served as non-employee directors in
1995, but who did not receive an annual option grant in
1995 due to the limitation which only permitted grants
of options for five years, will receive an additional
annual option to purchase 1,000 shares of Common Stock
immediately following the close of the 1996 Annual
Meeting of Shareholders.
EFFECT OF THE AMENDMENTS
The Amendments do not increase the number of shares of
Common Stock reserved for issuance under the Option Plan. Only
120,000 shares of Common Stock are reserved for issuance under
the Option Plan. The Amendments: (i) will permit non-employee
directors to receive an annual option to purchase 1,000 shares of
Common Stock until the number of shares of Common Stock reserved
for issuance pursuant to the Option Plan is exhausted or the
Option Plan otherwise expires; (ii) provide that for those
non-employee directors who did not receive an annual option in
1995 due to the five year limitation under the Option Plan, such
non-employee directors will receive an additional annual option
to purchase 1,000 shares of Common Stock; and (iii) provide that
former employee directors who become non-employee directors will
participate in the Option Plan commencing at the next special or
annual meeting of shareholders following their termination of
employment rather than upon their re-election to the Board of
Directors.
Assuming the composition of the Board of Directors does not
change and giving effect to the Amendments, a total of 105,000
shares of Common Stock of the 120,000 shares of Common Stock
reserved for issuance under the Option Plan will be granted to
non-employee directors pursuant to the Option Plan. If the
Amendments are not approved by the shareholders and assuming that
the composition of the Board of Directors does not change, only
73,000 shares of Common Stock will be the subject of options
under the Option Plan. Therefore, the Amendments will only
increase the number of shares of Common Stock issued under the
Option Plan by a total of 32,000 shares of Common Stock should
the Amendments be approved by the Company's shareholders at the
Annual Meeting and assuming that the composition of the Board of
Directors does not change. The Option Plan is still scheduled to
terminate on August 21, 1999, and cannot be extended without
approval by the holders of a majority of the outstanding shares
of Common Stock.
At present, six of the nine directors are non-employee
directors and are eligible to benefit from the Amendments. Four
of the non-employee directors, Mr. Richardson, Mr. Gaughan,
Mrs. Stewart and Mr. Zettler, each received their fifth and final
annual option in 1994 and were no longer eligible to receive
options under the Option Plan. Mrs. Sparks' right to receive the
annual option to purchase 1,000 shares expires after the 1996
distribution. Because Mr. Modica was a former employee director
of the Company, he was not eligible to receive any non-employee
director benefits under the Option Plan (i.e., the initial 5,000
share option or the annual 1,000 share option) when he retired as
an officer of the Company in 1995. The table below summarizes
the increased benefits to the non-employee directors under the
Amendments to the Option Plan in the 1996 calendar year only.
15
<PAGE>
<TABLE>
<CAPTION>
OPTION PLAN BENEFITS IN 1996
Shares Underlying Options Granted
_________________________________ Increase in Shares Issuable
Without With Upon Exercise of
Non-employee director Amendments Amendments Options Due to Amendments
___________________________________________________________________________________________
<S> <C> <C> <C>
William C. Richardson -0- 2,000 2,000
John D. Gaughan -0- 2,000 2,000
Jeanne S. Stewart -0- 2,000 2,000
Frank A. Modica -0- 6,000<F1> 6,000
George A. Zettler -0- 2,000 2,000
Carolyn M. Sparks 1,000 1,000 -0-
_____ _____ _____
Total 1,000 15,000 14,000
<FN>
<F1> Includes the initial grant of an option to purchase 5,000
shares of Common Stock as a non-employee director, and one annual
option to purchase 1,000 shares of Common Stock for service as a
non-employee director.
</FN>
</TABLE>
Assuming that there are no changes in the Board of
Directors, the number of shares of Common Stock issuable upon
exercise of options granted under the Option Plan will increase
by 1,000 shares per non-employee director, or 6,000 shares per
year, for 1997 through 1999.
The purpose for allowing continuous annual option grants
under the Amendments is to attract, retain and reward
non-employee directors. The directors believe that non-employee
directors should have a meaningful investment in the Company
because, as shareholders themselves, non-employee directors are
more likely to represent the viewpoint of other shareholders
whose interests they are charged with protecting. Similarly,
the directors believe that the continuous annual grant of options
cause non-employee directors to take a long-term view of the
Company's affairs.
Because the option exercise price is 100% of the fair market
value of the Common Stock on the date of grant, the non-employee
directors will not realize any benefit unless the market price of
Common Stock increases. If the non-employee directors exercise
the options at some time in the future, the holders of Common
Stock will realize a small amount of dilution. With 15,826,436
shares of Common Stock outstanding on April 1, 1996, however,
the directors believe that the benefits of an increased allotment
of options to non-employee directors exceed any dilutive effects.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
AMENDMENTS TO THE 1989 DIRECTORS' STOCK OPTION PLAN.
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, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK.
16
<PAGE>
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 $13,096 and has an option to
purchase the land and all of Exber, Inc.'s rights thereto for the
purchase price of $1,400,000.
The Company' subsidiary, Atlantic City Showboat, Inc.,
leases space at the Atlantic City Showboat to R. Craig Bird,
Executive Vice President-Finance and Administration and Chief
Financial Officer of the Company, for the operation of a gift
shop and certain vending machines. During 1995, Mr. Bird paid
rent and vending commissions to Atlantic City Showboat, Inc. in
the amount of $100,000 and $41,736, respectively.
The spouse of Carolyn M. Sparks, a Director of the Company,
is a co-owner of International Insurance Services, Ltd. The
Company has retained International Insurance Services, Ltd. as a
third-party claims administrator for the Company's Nevada
subsidiaries. During 1995, the Company paid International
Insurance Services, Ltd. $59,107 for services rendered to the
Company.
At all times during 1995, H. Gregory Nasky was a Director
and Executive Vice President of the Company and the Secretary of
the Company and its subsidiaries. Additionally, Mr. Nasky was of
counsel to the law firm of Kummer Kaempfer Bonner & Renshaw,
outside legal counsel to the Company. During 1995, the law firm
of Kummer Kaempfer Bonner & Renshaw was paid $69,004 by the
Company's Nevada gaming subsidiary, $10,112 by the Company's New
Jersey subsidiaries, $89,123 by the Company's Australia
subsidiary, $72,813 by the Company's Louisiana subsidiaries,
$646,181 by the Company in connection with its expansion
opportunities and $244,341 by the Company for other parent
company matters.
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. The Amendments to the Option Plan must be approved by
the holders of a majority of the outstanding shares of Common
Stock. 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 1996 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; (b) the number
of "For" votes, "Against" votes and "Abstain" votes for approval
of the Amendments to the Option Plan; and (c) the number of "For"
votes, "Against" votes and "Abstain" votes for the ratification
of the selection of the Company's independent public accountants.
1997 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 22, 1997. 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, 1996. The
proposal must comply with Securities and Exchange Commission
Regulation 14a-8.
17
<PAGE>
EXPENSES OF SOLICITATION OF PROXIES
The expenses of making the solicitation of proxies for the
1996 Annual Meeting of Shareholders 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 1, 1996. Shareholders who cannot be present at
the 1996 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 19, 1996
18
<PAGE>
SHOWBOAT, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 30, 1996
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Showboat, Inc. ("Company")
hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, the 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 Mississippi Pavilion, Showboat
Casino Hotel, 801 Boardwalk, Atlantic City, New Jersey, 08401, on
Thursday, May 30, 1996, at 10:00 a.m., local time, and hereby
appoints William C. Richardson, John D. Gaughan, and Jeanne S.
Stewart, 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)
19
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
1. Election of FOR WITHHELD Nominees: George A. Zettler
Directors. [ ] [ ] Carolyn M. Sparks
For, except vote withheld from the following nominee(s):
___________________________________________________________
2. Approval of Amendments to the FOR AGAINST ABSTAIN
1989 Director's Stock Option Plan. [ ] [ ] [ ]
3. Approval of KMPG Peat Marwick FOR AGAINST ABSTAIN
as Independent Public Accountants. [ ] [ ] [ ]
4. In their discretion, upon such other
business as may properly come before
the annual meeting.
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, 2, and 3, 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 signer is a corporation, sign full corporate name by
duly authorized officer.
20
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