<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Sodak Gaming, Inc.
---------------------------------------------------------
(Name of Registrant as Specified in its Charter)
-------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to 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:
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[ ] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF SODAK GAMING INC. APPEARS HERE]
5301 SOUTH HIGHWAY 16
RAPID CITY, SOUTH DAKOTA 57701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 6, 1997
TO THE SHAREHOLDERS OF SODAK GAMING, INC.:
The annual meeting of the shareholders of Sodak Gaming, Inc. (the "Company")
will be held on May 6, 1997, at 10:00 a.m. (MDT), at the Rushmore Plaza
Holiday Inn, 505 N. 5th Street, Rapid City, South Dakota, for the following
purposes:
1. To elect members of the Board of Directors of the Company.
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
of the Company for the fiscal year ending December 31, 1997.
3. To consider and act upon any other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 19, 1997 will
be entitled to notice of and to vote at the meeting or any adjournment
thereof.
Your attention is directed to the attached Proxy Statement. WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN, DATE, AND MAIL
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE IN ORDER
TO SAVE ANY FURTHER SOLICITATION EXPENSE. IF YOU LATER DESIRE TO REVOKE YOUR
PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors:
/s/ Michael G. Wordeman
Michael G. Wordeman,
Chairman of the Board of Directors and
Chief Executive Officer
Dated: April 4, 1997
<PAGE>
[LOGO OF SODAK GAMING INC. APPEARS HERE]
5301 South Highway 16
Rapid City, South Dakota 57701
----------------
PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS MAY 6, 1997
The enclosed proxy is solicited by the Board of Directors of Sodak Gaming,
Inc. (the "Company") in connection with the annual meeting of shareholders of
the Company to be held on May 6, 1997, and at any adjournment thereof. The
cost of solicitation, including the cost of preparing and mailing the Notice
of Annual Meeting of Shareholders and this Proxy Statement, will be paid by
the Company. Representatives of the Company may, without cost to the Company,
solicit proxies for the management of the Company by means of mail, telephone,
or personal calls. This Proxy Statement and the enclosed proxy are being
mailed to shareholders on or about April 4, 1997.
A proxy may be revoked before the meeting by giving written notice, in
person or by mail, of revocation to the Secretary of the Company or at the
meeting prior to voting in person. Unless revoked, properly executed proxies
in which choices are not specified by the shareholders will be voted "for"
each item described in this Proxy Statement for which no choice is specified;
upon all other matters, the persons named as proxies shall vote as they deem
in the best interests of the Company. In instances where choices are specified
by the shareholders in the proxy, those proxies will be voted or the vote will
be withheld in accordance with the shareholder's choice. Shares voted as
abstentions on any matter will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum at the
meeting and as unvoted, although present and entitled to vote, for purposes of
determining the approval of each matter as to which the shareholder has
abstained. If a broker submits a proxy which indicates that the broker does
not have discretionary authority as to certain shares to vote on one or more
matters, those shares will be counted as shares that are present and entitled
to vote for purposes of determining the presence of a quorum at the meeting,
but will not be considered as present and entitled to vote with respect to
such matters.
Only shareholders of record at the close of business on March 19, 1997 will
be entitled to vote at the meeting or any adjournment thereof. At the close of
business on March 19, 1997, there were issued and outstanding 22,757,688
shares of common stock of the Company, $.001 par value (the "Common Stock"),
the only outstanding class of equity securities of the Company. Each
shareholder has cumulative voting rights in the election of directors and is,
therefore, entitled to (i) give one nominee a number of votes equal to the
number of directors to be elected (six) multiplied by the number of votes to
which such shareholder is entitled, or (ii) distribute the same number of
votes among as many nominees as such shareholder deems advisable. If no
shareholder exercises its right to cumulate votes, then directors will be
elected by a majority vote with each share of Common Stock entitled to one
vote. Discretionary authority to cumulate votes is being solicited by the
Board of Directors. Unless otherwise directed by a shareholder, the proxies
named in the accompanying proxy card may elect to cumulate votes cast pursuant
to a proxy by casting all such votes for one nominee or by distributing such
votes among as many nominees as they deem desirable. If a shareholder desires
to restrict the proxies named in the accompanying proxy card in casting votes
for certain nominees, the shareholder should give such direction on the proxy
card. On all other matters other than the election of directors, each share of
Common Stock is entitled to one vote. No matter to be presented at the meeting
will entitle any shareholder of the Company to appraisal rights.
<PAGE>
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Company, the Board of Directors has
established the number of directors at six. Each director elected at an annual
meeting shall hold office until his or her successor is elected and qualified.
The following table sets forth information, including business experience
during the past five years, as to the nominees for election as director.
The Board of Directors recommends that the shareholders vote "FOR" the
nominees.
NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
<CAPTION>
NOMINEE BUSINESS
FOR TERM EXPERIENCE DURING
NAME, POSITIONS, AND DIRECTOR EXPIRING THE PAST FIVE YEARS
OFFICES WITH THE COMPANY SINCE IN AGE AND OTHER DIRECTORSHIPS
----------------------------- -------- -------- ------- ------------------------
<C> <C> <C> <C> <S>
Michael G. Wordeman 1989 1998 48 Chairman and Chief
Chairman of the Board and Executive Officer of
Chief Executive Officer the Company since 1989.
Roland W. Gentner 1990 1998 53 President and Chief
President, Chief Operating Operating Officer of
Officer and Director the Company since 1993;
Vice President of the
Company from
1991 to 1993.
Thomas Celani 1990 1998 41 Chief Executive Officer
Director and owner of Action
Distributing Company
since 1982.
Colin V. Reed 1992 1998 49 Executive Vice President
Director of Harrah's
Entertainment, Inc.
(formerly The Promus
Companies Incorporated)
since June 1995; Senior
Vice President of
Corporate Development
for The Promus
Companies Incorporated
from 1990 to 1995; Vice
President of Corporate
Development for The
Promus Companies
Incorporated from
1989 to 1990.
Manuel Lujan, Jr. 1993 1998 68 United States Secretary
Director of the Department of
the Interior from
1989 to 1993; United
States Congressman for
New Mexico from 1969 to
1989; member of the
Board of Directors of
Public Service Company
of New Mexico and First
State Bank,
Albuquerque, New
Mexico.
Ronnie Lopez 1993 1998 50 President of Phoenix
Director International
Consultants since 1987;
Director of Bank
America--Arizona since
1991; member of the
Hispanic Congressional
Caucus Institute Board
of Directors.
</TABLE>
2
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors held four regular meetings and two
special meetings. The Board has established an Audit Committee and a
Compensation Committee. During the past year, the Audit Committee met three
times and the Compensation Committee met two times. Each incumbent member of
the Board of Directors attended at least 75% of the meetings of the Board of
Directors and of the Committees of which such director was a member.
The members of the Audit Committee are directors Gentner, Reed and Lujan.
The Audit Committee is charged with the responsibility for reviewing the
Company's auditing systems, monitoring accounting and financial reporting
practices throughout the Company, determining the adequacy of administrative
and internal accounting controls, monitoring compliance with the Company's
prescribed procedures and codes of conduct, and reviewing certain publicly
disseminated financial information. The Audit Committee functions include
supervision of the independent auditors, including recommendation of the
engagement or discharge of such auditors, and review with the independent
auditors of the audit plan and results of the auditing engagement.
The members of the Compensation Committee are directors Celani and Lujan.
The Compensation Committee is charged with the oversight responsibility for
adequacy and effectiveness of compensation and benefit plans. In addition, the
Compensation Committee makes recommendations to the Board of Directors
regarding remuneration arrangements for senior management and directors,
adoption of employee compensation and benefit plans, and the administration of
such plans, including the granting of stock options and other benefits.
The Board of Directors has no standing nomination committee.
3
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME, POSITIONS, AND OFFICES BUSINESS EXPERIENCE DURING
WITH THE COMPANY AGE THE PAST FIVE YEARS
----------------------------- --------- --------------------------------------
<C> <C> <S>
Michael G. Wordeman 48 Chairman of the Board of Directors and
Chairman of the Board of Chief Executive Officer of the
Directors and Chief Company since 1989.
Executive Officer
Roland W. Gentner 53 President and Chief Operating Officer
President, Chief Operating of the Company since 1993; Vice
Officer and Director President of the Company from 1991 to
1993.
David R. Johnson 47 Chief Financial Officer of the Company
Chief Financial Officer since February 1996; business
consultant from 1992 to February
1996; President and Chief Financial
Officer of Zentec Corporation from
1990 to 1992.
Michael G. Diedrich 42 Vice President and Secretary of the
Vice President, General Company since 1993; General Counsel
Counsel and Secretary of the Company since 1991.
Knute Knudson, Jr. 48 Vice President of the Company since
Vice President--Corporate 1993; Deputy Chief of Staff to the
Strategic Planning United States Secretary of the
Interior from 1989 to 1993.
Kevin Buntrock 39 Vice President of the Company since
Vice President--Corporate 1993; General Manager of the Rushmore
Development Plaza Civic Center in Rapid City,
South Dakota from
1985 to 1993.
Kerry L. Reppert 49 Senior Vice President of the Company
Senior Vice President-- since September 1996; Vice President
Operations from 1994 to September 1996; National
Sales Representative for
International Game Technology from
1986 to 1994.
Clayton R. Trulson 52 Vice President and Treasurer of the
Vice President of Finance Company since 1993; Chief Financial
and Treasurer Officer of the Company from 1992 to
February 1996; partner in the
accounting firm of McGladrey & Pullen
from 1982 to 1992.
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for the
last three years awarded to or earned by the Chief Executive Officer of the
Company and the four highest paid executive officers of the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- ---------------------
SECURITIES RESTRICTED
NAME AND UNDERLYING STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS AWARDS COMPENSATION(2)
------------------ ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Wordeman .... 1996 $380,308 $ 0 80,000 $ 0 $12,666
Chairman and Chief 1995 $278,613 $161,141 50,000 $ 0 $12,390
Executive Officer 1994 $232,864 $135,944 41,032 $ 0 $12,220
Roland W. Gentner....... 1996 $293,538 $ 0 60,000 $ 0 $ 9,500
President, Chief 1995 $224,670 $130,934 34,000 $ 0 $ 9,240
Operating Officer 1994 $205,178 $ 68,220 21,688 $ 0 $ 9,240
and Director
Knute Knudson, Jr....... 1996 $137,415 $ 0 20,000 $ 0 $ 8,580
Vice President-- 1995 $103,081 $ 38,272 16,000 $ 0 $ 7,055
Corporate Strategic 1994 $ 87,794 $ 35,448 4,024 $ 5,056 $ 2,850
Planning
Kevin Buntrock.......... 1996 $146,769 $ 0 40,000 $ 0 $ 9,118
Vice President-- 1995 $106,308 $ 40,853 24,000 $ 0 $ 7,250
Corporate Development 1994 $ 85,755 $ 38,399 4,024 $ 5,056 $ 0
David R. Johnson........ 1996 $157,106 $ 0 32,000 $ 0 $ 0
Chief Financial
Officer
</TABLE>
- --------
(1) Includes cash bonuses paid in the following year with respect to services
performed in the years indicated.
(2) The amounts shown in this column include Company contributions to the
Company's 401(k) plan and, for Mr. Wordeman, benefits of $2,980, $3,150
and $3,166 for 1994, 1995 and 1996 attributable to an employee-owned life
insurance policy.
EMPLOYMENT AGREEMENTS
Mr. Wordeman and Mr. Gentner each entered into an employment agreement with
the Company on June 30, 1993 (individually an "employment agreement," and
collectively the "employment agreements"). The employment agreements have five
year terms. Pursuant to the employment agreements, annual salaries paid to Mr.
Wordeman and Mr. Gentner are mutually agreed upon by the Company and Mr.
Wordeman and Mr. Gentner each year. Messrs. Wordeman and Gentner have agreed
not to compete with the Company while employed by the Company and for a two-
year period thereafter. However, if either executive is terminated for any
reason other than for "cause" or for "disability," the noncompetition period
is limited to the period of the term of each employment agreement, but only
for so long as the Company continues to fulfill its obligation to pay the
compensation required to be paid over the entire term of the employment
agreement.
5
<PAGE>
Mr. Wordeman and the Company have agreed that Mr. Wordeman shall be in
breach of his employment agreement if Mr. Wordeman's voluntary termination
without cause shall result in the termination by International Game Technology
of the Company's exclusive distributorship agreement on grounds that Mr.
Wordeman has failed to maintain his substantial involvement in the operation
of the Company.
STOCK OPTIONS
The Company maintains a 1993 Long-Term Incentive and Stock Option Plan (the
"1993 Option Plan"). The Company may grant stock options and other stock-based
awards to executive officers and other employees and consultants of the
Company under the 1993 Option Plan. The following table sets forth information
with respect to options granted to the named executive officers in 1996:
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
% OF AT ASSUMED ANNUAL
TOTAL RATES OF STOCK
OPTIONS PRICE
GRANTED EXERCISE APPRECIATION FOR
NUMBER OF TO PRICE OPTION TERM(2)
OPTIONS EMPLOYEES PER EXPIRATION -----------------
NAME GRANTED(1) IN 1996 SHARE DATE 5% 10%
---- ---------- --------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mr. Wordeman........ 80,000 25.2% $13.96 2/26/01 $280,426 $619,668
Mr. Gentner......... 60,000 18.9% $13.96 2/26/01 $210,319 $464,751
Mr. Buntrock........ 40,000 12.6% $12.69 2/26/06 $319,164 $808,824
Mr. Johnson......... 32,000 10.1% $12.69 2/26/06 $255,331 $647,060
Mr. Knudson......... 20,000 6.3% $12.69 2/26/06 $159,582 $404,412
</TABLE>
- --------
(1) The options vest in four equal annual installments beginning February 26,
1997.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market conditions. The
amounts reflected in this table may not necessarily be achieved.
The following table sets forth information with respect to the exercise of
options and the value of options held by executive officers as of December 31,
1996:
AGGREGATED YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT END OF 1996(1) IN-THE-MONEY OPTIONS(2)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Wordeman............ 0 0 33,016 138,016 $246,299 $582,611
Mr. Gentner............. 0 0 19,344 96,344 $147,056 $383,693
Mr. Buntrock............ 8,012 $92,643 0 60,012 $ 0 $293,339
Mr. Johnson............. 0 0 0 32,000 $ 0 $ 86,000
Mr. Knudson............. 6,012 $41,903 0 34,012 $ 0 $182,589
</TABLE>
- --------
(1) All of the options held by Messrs. Wordeman and Gentner are exercisable at
prices ranging from $6.46 to $13.96 per share, which prices were equal to
110% of the fair market value of the common stock on the respective dates
of each grant. All of the options held by Messrs. Knudson and Buntrock are
exercisable at prices ranging from $5.88 to $12.69 per share, and the
options held by Mr. Johnson are exercisable at a price of $12.69 per
share, which prices were the fair market values of the common stock on the
respective dates of each grant.
6
<PAGE>
(2) The closing price of the Company's Common Stock as reported on the NASDAQ
National Market on December 31, 1996 was $15.375.
LONG-TERM INCENTIVE PLAN AWARDS
Other than its 1993 Option Plan, the Company does not maintain any long-term
incentive plans.
DIRECTOR COMPENSATION
The non-employee directors of the Company are currently compensated through
an annual grant of options to purchase 10,000 shares of the Company's Common
Stock at the fair market price of the Common Stock on the date of the option
grant. Non-employee directors are also paid $1,500 per month and $2,000 for
each board meeting they attend during the term for which they serve on the
Company's Board of Directors. In addition, board members are reimbursed for
travel and other expenses incurred in attending board meetings.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
The Securities and Exchange Commission has implemented a rule which requires
a company to disclose information with respect to reports that are required to
be filed under Section 16 of the Securities Exchange Act of 1934, as amended,
by directors, officers and 10% shareholders of such company, if any of such
reports are not filed timely. Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to the Company during the year ended December 31,
1996 and Forms 5 and amendments thereto with respect to such year, the Company
has determined that all required filings were made in a timely manner.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Compensation Committee of the Board of Directors (the
"Compensation Committee") reviews and establishes compensation strategies and
programs to ensure that the Company attracts, retains, properly compensates and
motivates qualified executives and other key employees. The Compensation
Committee consists of three non-employee directors. The Compensation Committee
typically meets each year in February or March, primarily to review and
determine bonuses for executives and other key personnel, and otherwise meets
on an as-needed basis. In the year ended December 31, 1996, the Compensation
Committee met twice.
The Compensation Committee believes that the Company's success depends
greatly on the efforts of its officers and other key personnel. The
Compensation Committee also believes the Company must compete with a number of
other businesses for qualified personnel. For these reasons, the Company seeks
to attract, retain and motivate its key employees with compensation that is
competitive within the overall business community and the gaming industry,
provided that performance of the Company and the individual warrant such
compensation.
Executive Compensation Program. As a person's level of responsibility
increases, greater portions of total compensation are based on performance (as
opposed to base salaries and benefits), competitive considerations give way to
performance considerations in justifying the absolute pay levels and the mix of
total compensation shifts toward stock, which aligns the long-term interests of
executives with those of shareholders.
7
<PAGE>
At the senior executive levels, base salaries are average by industry
standards and are adjusted annually. The focus is on total compensation, which
consists of base salaries and "incentive compensation," the latter of which is
comprised of both cash and stock options. The total amount of incentive
compensation which the Board of Directors authorizes to be distributed each
year is a function of the executive population covered and the profit
performance of the Company as a whole in relation to the prior year. In
determining the size of the annual incentive compensation pool the Board takes
into consideration both absolute results and peer company comparisons of
return on shareholders equity, growth in earnings per share and market share.
Accordingly, the intent is to have the incentive compensation pool for each
year go up or down on a leveraged basis tied to performance measures.
Compensation of Chief Executive Officer. The compensation of the Company's
Chief Executive Officer is based on an employment agreement entered into on
June 30, 1993, which expires on June 30, 1998. The employment agreement
provides that Mr. Wordeman's annual salary shall be mutually agreed upon each
year. The agreement also entitles Mr. Wordeman to participate in any incentive
compensation plans which may be established by the Board of Directors of the
Company from time to time.
The Compensation Committee believes that the compensation arrangements with
Mr. Wordeman are consistent with the Company's overall approach to executive
compensation and serve to meet the Company's goal of retaining and motivating
a highly qualified Chief Executive Officer. The Compensation Committee
believes that the cash and equity incentives provide Mr. Wordeman with a long-
term incentive to remain with the Company, to contribute actively to the
Company's continued growth and development, and to manage the Company
consistent with the interests of its shareholders. As a long-term incentive,
the Compensation Committee believes Mr. Wordeman's current equity holdings
will motivate performance even if, in any particular year, pretax earnings
decline from prior years' levels.
Section 162(m) of the Internal Revenue Code. Recently enacted Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), generally
limits the corporate deduction for compensation paid to executive officers
named in the proxy to one million dollars, unless the compensation is
performance-based. The Compensation Committee's policy concerning the tax
deductibility of executive compensation is that generally all such
compensation will be designed to be tax deductible under Section 162(m) of the
Code. However, the Compensation Committee reserves the right to pay
nondeductible compensation where the Compensation Committee believes it would
be in the best interests of the Company, such as to attract or retain a key
executive.
THOMAS CELANI and MANUEL LUJAN, JR.,
The Members of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Celani, a member of the Compensation Committee, was formerly an officer
of the Company.
8
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return of (a) the Nasdaq
Stock Market Index (U.S. companies only) and (b) a peer group index comprised
of gaming companies that have Standard Industrial Classification Codes within
Group 799 (the "Peer Group"). The graph assumes that $100 was invested in the
Company's Common Stock and the index at the close of trading on June 30, 1993,
and that dividends, if any, were reinvested.
The Peer Group index used in the performance graph below was developed using
stock performance data from all gaming companies trading on a national stock
exchange and on the Nasdaq Stock Market as of December 31, 1996 that have
Standard Industrial Classification Codes within Group 799. As of December 31,
1996, there were 56 distinct issues trading on national exchanges or on the
Nasdaq Stock Market identified by Standard Industrial Codes within Group 799.
Group 799 includes companies engaged in gaming operations or the distribution
of gaming equipment.
The Company will provide shareholders with a list of all companies that
comprise the Peer Group index upon a written request made to the Company at
its principal place of business in Rapid City, South Dakota.
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------
6/93 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Sodak Gaming Inc SODAK 100 138 70 95 141
PEER GROUP PPEER1 100 112 82 95 99
NASDAQ STOCK MARKET-US INAS 100 111 108 153 188
</TABLE>
9
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of Common Stock as of March 19, 1997 by: (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
each director of the Company, (iii) each officer of the Company named in the
Summary Compensation Table and (iv) by all executive officers and directors as
a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME(1) BENEFICIALLY OWNED(2) OUTSTANDING SHARES(2)
- ------- --------------------- ---------------------
<S> <C> <C>
Michael G. Wordeman(3)............. 3,391,774 14.7%
Roland W. Gentner(4)............... 2,139,606 9.3%
Thomas Celani(5)................... 2,778,000 12.1%
Harrah's Operating Company,
Inc.(7)........................... 3,192,488 13.9%
Colin V. Reed(5)(7)................ 35,000 *
Manuel Lujan, Jr.(6)............... 21,000 *
Ronnie Lopez(5).................... 24,400 *
Kevin Buntrock(8) ................. 17,638 *
Knute Knudson, Jr.(9) ............. 10,638 *
David R. Johnson(10)............... 8,000 *
All executive officers and direc-
tors
as a group (12 persons)(11)....... 11,680,658 50.7%
</TABLE>
- --------
* Less than 1%
(1) The address of each person who is the beneficial owner of more than 5% of
the Company's Common Stock is: c/o Sodak Gaming, Inc., 5301 South Highway
16, Rapid City, South Dakota 57701, other than Thomas Celani and Harrah's
Club, whose addresses are c/o Action Distributing Company, 35601
Veronica, Livonia, Michigan 48510, and 206 North Virginia Street, Reno,
Nevada 89501, respectively.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common
Stock subject to options or warrants currently exercisable or exercisable
within the next 60 days are deemed outstanding for computing the
percentage of the person holding such options but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by footnote, the persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(3) Includes 75,774 shares of Common Stock issuable upon exercise of
outstanding options.
(4) Includes 48,266 shares of Common Stock issuable upon exercise of
outstanding options.
(5) Includes 24,000 shares of Common Stock issuable upon exercise of
outstanding options.
(6) Includes 10,000 shares of Common Stock issuable upon exercise of
outstanding options.
10
<PAGE>
(7) Harrah's Entertainment, Inc. is the beneficial owner of Harrah's
Operating Company's interest in the Common Stock. Colin V. Reed is
Harrah's designee on the Company's Board of Directors and may be deemed
to be the beneficial owner of the Common Stock.
(8) Includes 17,638 shares of Common Stock issuable upon exercise of
outstanding options.
(9) Includes 10,638 shares of Common Stock issuable upon exercise of
outstanding options.
(10) Includes 8,000 shares of Common Stock issuable upon exercise of
outstanding options.
(11) See notes (3) through (10) above. Also includes 42,626 shares of Common
Stock issuable upon exercise of outstanding options and warrants in
addition to the options referred to in the preceding notes.
PROPOSAL TO RATIFY APPOINTMENT OF AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as independent
auditors for the Company for the fiscal year ending December 31, 1997. A
proposal to ratify that appointment will be presented at the 1997 Annual
Meeting. KPMG Peat Marwick LLP has served as the Company's auditors since
January 1, 1991. Representatives of KPMG Peat Marwick LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate
questions from shareholders. The affirmative vote of a majority of the
outstanding shares of the Company's Common Stock represented at the 1997
Annual Meeting is necessary to approve the proposal.
MANAGEMENT RECOMMENDS A VOTE FOR THIS PROPOSAL.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Colin V. Reed, a director of the Company, is an executive officer of
Harrah's Entertainment, Inc., which, through its wholly owned subsidiary,
Harrah's Operating Company, Inc., currently manages the Harrah's Phoenix Ak-
Chin casino and entertainment complex near Phoenix, Arizona. Harrah's
Operating Company, Inc. owns approximately 13.9% of the Company's Common
Stock. Harrah's Operating Company, Inc. is required to pay to the Company 13
1/3% of Harrah's management fee from the Harrah's Phoenix Ak-Chin pursuant to
the terms of a Stockholders Agreement dated October 30, 1992.
OTHER MATTERS
The Board of Directors does not intend to present any business to the
meeting not mentioned in this Proxy Statement and currently knows of no other
business to be presented. If any other matters are brought before the meeting,
the persons named as proxies will vote on such matters in accordance with
their judgment of the best interests of the Company and the shareholders.
PROPOSALS OF COMPANY SHAREHOLDERS
Proposals of Company shareholders intended to be presented at the Company's
1998 annual meeting of shareholders must be received by the Company not less
than 90 days prior to the meeting
11
<PAGE>
for inclusion in the Company's proxy statement and form of proxy for that
meeting. Any proposal submitted must be in compliance with Rule 14a-8 as
promulgated under the Securities Exchange Act of 1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael G. Wordeman
Michael G. Wordeman,
Chairman of the Board of Directors and
Chief Executive Officer
Dated: April 4, 1997
12
<PAGE>
SODAK GAMING, INC.
5301 SOUTH HIGHWAY 16
RAPID CITY, SOUTH DAKOTA 57701
MAY 6, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Michael G. Wordeman, Roland W. Gentner, David R.
Johnson and Clayton R. Trulson, and each of them, with power to act without the
other and with all the right of substitution in each, the proxies of the
undersigned to vote all shares of Sodak Gaming, Inc. (the "Company") held by
the undersigned on March 19, 1997, at the Annual Meeting of Shareholders of the
Company, to be held on May 6, 1997, at 10:00 A.M., at the Rushmore Plaza
Holiday Inn, 505 North 5th Street, Rapid City, South Dakota, and all
adjournments thereof, with all powers the undersigned would possess if present
in person. All previous proxies given with respect to the meeting are revoked.
Receipt of Notice of Annual Meeting of Shareholders and Proxy Statement is
acknowledged by your execution of this proxy. Complete, sign, date, and return
this proxy in the addressed envelope--no postage required. Please mail promptly
to save further solicitation expenses.
PROXY
1. ELECTION OF DIRECTORS: Nominees: Michael G. Wordeman, Roland W. Gentner,
Thomas Celani, Colin V. Reed, Manuel Lujan, Jr. and Ronnie Lopez
[_] VOTE FOR all nominees [_] WITHHOLD AUTHORITY to
listed above (except vote for all nominees
vote withheld for the listed above.
following nominees, if
any, whose names are
written below).
- --------------------------------------------------------------------------------
NOTE: The proxies named above may choose to exercise cumulative voting in the
manner described in the accompanying Proxy Statement.
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors of
the Company for the fiscal year ending December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
(continued, and to be dated and signed, on other side)
P
R
O
X
Y
<PAGE>
3. To vote with discretionary authority upon such other matters as may come
before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS PROVIDED BY THE
UNDERSIGNED SHAREHOLDER, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL
NOMINEES FOR DIRECTOR NAMED IN ITEM 1 AND FOR PROPOSAL 2 LISTED HEREIN. UPON
ALL OTHER MATTERS, THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS OF
THE COMPANY.
SIGNATURE(S)
------------------------------------
------------------------------------
Dated: _______________________, 1997
INSTRUCTION: When shares are held
by joint tenants, all joint tenants
should sign. When signing as attor-
ney, executor, administrator,
trustee, custodian, or guardian,
please give full title as such. If
shares are held by a corporation,
this proxy should be signed in full
corporate name by its president or
other authorized officer. If a
partnership holds the shares sub-
ject to this proxy, an authorized
person should sign in the name of
such partnership.
