SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Rule 14a-11(c) or Rule 14a-12
Lady Luck Gaming Corporation
(Name of Registrant as Specified in its Charter)
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 (not applicable).
|_| 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>
[LOGO]
206 North Third Street
Las Vegas, Nevada 89101
June 6, 1997
TO OUR STOCKHOLDERS:
You are cordially invited to attend the annual meeting of stockholders of
Lady Luck Gaming Corporation, which will be held on July 23, 1997, at Lady Luck
Natchez in Natchez, Mississippi, 10:00 a.m. local time.
At this meeting you will be asked to vote upon proposals to elect three
Class I directors, each to serve until the 2000 Annual Meeting of Stockholders.
The accompanying Proxy Statement contains important information concerning the
proposals to be presented at the annual meeting. Please read the attached Proxy
Statement carefully.
By attending the annual meeting you will have an opportunity to hear the
plans for our Company's future, meet your officers and directors and participate
in the business of the meeting. Whether or not you expect to attend the meeting,
please sign, date and return the enclosed proxy at your earliest convenience to
ensure that your shares will be voted.
Sincerely,
Andrew H. Tompkins
Chairman of the Board and
Chief Executive Officer
<PAGE>
[LOGO]
206 North Third Street
Las Vegas, Nevada 89101
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held July 23, 1997
________________
TO THE STOCKHOLDERS OF LADY LUCK GAMING CORPORATION:
The annual meeting of the stockholders of Lady Luck Gaming Corporation, a
Delaware corporation (the "Company"), will be held on July 23, 1997, at 10:00
a.m., local time, at Lady Luck Natchez in Natchez, Mississippi, for the
following purposes:
1. To elect three Class I directors to serve until the 2000 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All stockholders of record on the Company's transfer books as of the close
of business on May 26, 1997, are entitled to notice of, and to vote, at the
annual meeting or any adjournment thereof. A complete list of stockholders
entitled to vote at the annual meeting will be available for examination by any
Company stockholder at Lady Luck Natchez in Natchez, Mississippi, for purposes
relevant to the annual meeting, during normal business hours for a period of ten
days prior to the annual meeting and at the meeting during the entire time
thereof.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY AND MAIL IT
IN THE ENCLOSED STAMPED ENVELOPE.
By the Order of the Board of Directors
Rory J. Reid
Senior Vice President, Secretary
and General Counsel
Las Vegas, Nevada
June 6, 1997
<PAGE>
______________
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
JULY 23, 1997
_______________
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lady Luck Gaming Corporation, a Delaware
corporation (the "Company"), for use at the Company's 1997 Annual Meeting of
Stockholders (the "Annual Meeting"), and at any and all adjournments of such
meeting. The Annual Meeting will be held on Wednesday, July 23, 1997 at Lady
Luck Natchez in Natchez, Mississippi. This Proxy Statement and the accompanying
proxy card are first being sent to stockholders on or about June 6, 1997. The
Annual Report of the Company for the fiscal year ended December 31, 1996, is
being mailed to stockholders with this Proxy Statement and the accompanying
proxy card.
The entire cost of preparing, assembling, printing and mailing the Notice
of Meeting, this Proxy Statement, and the accompanying proxy card, and the cost
of soliciting proxies relating to the Annual Meeting, if any, will be borne by
the Company. In addition to use of the mails, proxies may be solicited by
officers, directors, and other regular employees of the Company by telephone,
telegraph or personal solicitation, and no additional compensation will be paid
to such individuals. The Company will, if requested, reimburse banks, brokerage
houses, and other custodians, nominees and certain fiduciaries for their
reasonable expenses incurred in mailing proxy material to their principals.
The Board of Directors has fixed May 26, 1997 as the record date (the
"Record Date"), for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof. Only holders of
record of the Company's common stock, par value $.001 per share ("Common
Stock"), issued and outstanding at the close of business on May 26, 1997, will
be entitled to vote at the Annual Meeting. As of the Record Date 29,285,698
shares of Common Stock were issued and outstanding. Each share of Common Stock
is entitled to one vote on any matter which properly comes before the Annual
Meeting. There is no right to cumulative voting as to any matter. Directors will
be elected by a plurality of the shares present in person or represented by
proxy at the Annual Meeting. Andrew H. Tompkins, Chairman of the Board and Chief
Executive Officer of the Company, controls approximately 45.6% of the
outstanding Common Stock. Mr. Tompkins has indicated his intention to vote for
the election to the Board of Directors of the individuals named as nominees
herein.
The presence in person or by proxy of the holders of at least a majority of
the outstanding shares of Common Stock entitled to be voted at the Annual
Meeting will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes will be included
-1-
<PAGE>
in the computation of the number of shares that are present for purposes of
determining the presence of a quorum at the Annual Meeting. Abstentions will be
counted as part of the total number of votes cast on any proposal submitted to
the stockholders for their consideration in determining whether such proposal
has received the requisite number of favorable votes, whereas broker non-votes
will not be counted as part of the total number of votes cast on such proposal.
Thus, abstentions will have the same effect as a vote cast against any given
proposal, whereas broker non-votes will have no effect in determining whether
any given proposal which requires the vote of a majority of those voting has
been approved by the stockholders.
If a quorum is not present at the time the Annual Meeting is convened, or,
if for any other reason, the Company believes that additional time should be
allowed for the solicitation of proxies, a majority of the voting stock
represented in person or by proxy may adjourn or postpone the Annual Meeting. If
the Company proposes to adjourn the Annual Meeting by a vote of the
stockholders, the persons named in the enclosed proxy will vote all shares for
which they have voting authority in favor of such adjournment.
Stockholders who execute proxies retain the right to revoke them at any
time by giving written notice of revocation to the Secretary of the Company, by
executing and delivering to the Secretary a proxy bearing a later date, or by
voting in person at the Annual Meeting. Unless so revoked, the shares
represented by the proxies solicited by the Company will be voted in accordance
with the directions given therein by the stockholder. If no specific
instructions are given, the shares represented by a signed proxy will be voted
FOR the election Rory J. Reid, James H. Bilbrary and Charles B. Brewer as Class
I directors. As to any other matter which may properly come before the Annual
Meeting or any adjournments thereof, the persons named in the accompanying proxy
card will vote thereon in accordance with their judgement.
ELECTIONS OF DIRECTORS
The Board of Directors presently consists of six members. The directors of
the Company are divided into three classes, designated as Class I, Class II and
Class III, and, at each annual meeting of stockholders of the Company, the
successors of the Class of directors whose term expires at that annual meeting
are elected for a three-year term. Approval of all governing gaming authorities
("Gaming Authority Approval") is required for each director under the gaming
laws of certain jurisdictions in which the Company conducts gaming operations.
All directors have received all Gaming Authority Approvals. All directors serve
until their successors are duly elected and qualified or until an earlier
resignation, removal from office or death. Alain Uboldi and Minxin Pei are
presently serving as Class II directors and are scheduled to hold office until
the 1998 Annual Meeting. Andrew H. Tompkins and Anthony J. Drexel Biddle III are
presently serving as Class III directors and are scheduled to hold office until
the 1999 Annual Meeting. Rory J. Reid and James H. Bilbray are presently serving
as Class I directors and are scheduled to hold office until the Annual Meeting.
-2-
<PAGE>
The Company, pursuant to a Consent Solicitation Statement (the "Consent")
dated February 29, 1996, requested that the holders of the 10 1/2% First
Mortgage Notes due 2001 issued by the Company (the "Notes") consent to the
waiver of certain continuing defaults under and the amendment of certain
provisions of the Indenture (the "Indenture") relating to the Notes. The holders
of requisite outstanding principal amount of the Notes consented to the
aforementioned waivers and amendments. In connection with the foregoing, the
Indenture was amended to require the Company to appoint a director selected by
persons holding at least a majority of the Notes (the "Holder's Director").
Charles B. Brewer has been nominated to serve as the Holder's Director. The
Board of Directors has nominated Charles B. Brewer to be a Class I director.
Accordingly, the size of the Board of Directors will increase to seven members
if Mr. Brewer is elected.
The Board of Directors has nominated Rory J. Reid, James H. Bilbray and
Charles B. Brewer to serve as Class I directors until the 2000 Annual Meeting of
Stockholders or until their successors are duly elected and qualified. The
following lists the current Class I, Class II and Class III directors:
Class I - term expires in 1997:
Rory J. Reid (Current Director standing for election at the Annual Meeting)
James H. Bilbray (Current Director standing for election at the Annual Meeting)
Charles Brewer (Director Nominee standing for election at the Annual Meeting)
Class II - term expires in 1998:
Alain Uboldi (Current Director)
Minxin Pei (Current Director)
Class III - terms expire in 1999:
Andrew H. Tompkins (Current Director)
Anthony J. Drexel Biddle III (Current Director)
Each nominee has agreed to serve if elected at the Annual Meeting. In the
event one or more of the nominees should become unable to serve as a director
for any reason at the time of the Annual Meeting, votes will be cast for a
substitute nominee, if any, designated by the Board of Directors, or, if none,
the size of the Board will be reduced. The Company knows of no reason why any of
the nominees will be unavailable or unable to serve at the time of the Annual
Meeting.
The following sets forth certain biographical information, present
occupation, and business experience for the past five years for each director,
nominee for director and executive officer of the Company as of March 31, 1997.
-3-
<PAGE>
Directors:
Andrew H. Tompkins, age 65, has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since February 1993. Mr. Tompkins has
been sole shareholder, President and Chief Executive Officer of Gemini, Inc.,
the operator of Lady Luck Casino Hotel in Las Vegas ("Lady Luck Nevada"), since
1964. Mr. Tompkins purchased the original location of Lady Luck Nevada, which
consisted of a newsstand and smokeshop with 17 slot machines, and has developed
the casino and hotel into its current state. Mr. Tompkins has been a director of
the Company since February 1993.
Alain Uboldi, age 50, has been President and Chief Operating Officer of the
Company since June 1993. Mr. Uboldi was the General Manager of Lady Luck Nevada
from 1982 until June 1993. Mr. Uboldi has been a director of the Company since
January 1994.
Rory J. Reid, age 34, has been Senior Vice President, Secretary and General
Counsel of the Company since December 1994. From June 1993 to December 1994, he
was Vice President, Secretary and General Counsel of the Company. From January
1993 to June 1993, Mr. Reid served as General Counsel of Lady Luck Nevada. Mr.
Reid was with the administrative and gaming law department of the law firm of
Lionel Sawyer & Collins in Las Vegas from May 1988 to January 1993. Mr. Reid has
been a director of the Company since January 1994 and is standing for election
as a Class I director at the Annual Meeting.
Minxin Pei, age 38, has been an Assistant Professor in the Politics
Department of Princeton University since September 1992. From September 1994 to
September 1995, he was also a fellow of the Hoover Institute at Stanford
University. From August 1991 to July 1992, Dr. Pei was the MacArthur Visiting
Assistant Professor of Political Science at Davidson College. From September
1988 until June 1991, Dr. Pei was a teaching fellow at Harvard University. Dr.
Pei has been a director of the Company since October 1994.
Anthony J. Drexel Biddle, III, age 47, has been a Vice President of Chase
Manhattan Bank since 1988. From 1990 to the present, Mr. Biddle has been
responsible for Chase Manhattan's Global Power Division, which provides project
financing for sovereignties and their agencies in the Middle East, Africa and in
the former Soviet Union. From 1988 until 1990, his responsibilities included
overseeing Chase Manhattan's mid-market banking operations in the Delaware
Valley region. Mr. Biddle has been a director of the Company since October 1994.
James H. Bilbray, age 59, has been an attorney and lobbyist with Alcalde
and Fay since 1995. From 1987 to 1995 he represented the State of Nevada in the
United States House of Representatives. Mr. Bilbray has been a director of the
Company since June 1996 and is standing for election as a Class I director at
the Annual Meeting.
Charles B. Brewer, age 47, has been nominated to be a director of the
Company and is standing for election at the Annual Meeting. He has been employed
by Southmark Corporation
-4-
<PAGE>
("Southmark") since July 1989 and currently serves as a director, and its Chief
Excecutive Officer and President. Prior to being promoted to his current
position with Southmark, he served as Executive Vice President, Chief Operating
Officer and General Counsel.
Executive Officers
Lawrence P. Tombari, age 39, is Chief Financial Officer of the Company. He
was Senior Vice President of Development of the Company from July 1993 to
February 1996. From 1985 to July 1993, Mr. Tombari was Senior Manager and the
Western Region Director of Real Estate Valuation at Ernst & Young.
James Bowen, age 35, has been Vice President of Finance for the Company
since April 1995. Mr. Bowen was Corporate Director of Finance and Accounting for
the Company from January 1995 to April 1995. From July 1991 until January 1995,
Mr. Bowen served as Director of International Gaming Consulting and Senior Audit
Manager for KPMG Peat Marwick in Las Vegas. From September 1989 until July 1991,
Mr. Bowen served as Controller and Director of Internal Audit of the Dunes
Hotel, Casino and Country Club. From July of 1984 until September of 1989, Mr.
Bowen worked for Arthur Young & Co. and later Arthur Andersen & Co. primarily
performing audits of various gaming industry clients.
The Board of Directors recommends a vote FOR the election of Rory J. Reid,
James H. Bilbray and Charles B. Brewer as Class I directors. Stockholders may
(a) vote in favor of all three nominees, (b) withhold their vote as to all three
nominees, or (c) withhold their vote as to specific nominees by so indicating in
the appropriate space on the enclosed proxy card. Unless marked to the contrary,
proxies received will be voted in accordance with the Board of Directors'
recommendation.
Remuneration of Directors
Directors who are also employees of the Company are not currently paid
director's fees, but are reimbursed for travel expenses incurred in connection
with attending board meetings. Generally, outside directors are paid $5,000 per
meeting, and if they attend more than four meetings, they will be paid $3,000
for each such meeting. In the year ended December 31, 1996, Dr. Pei, Mr. Biddle
and Mr. Bilbray each received $15,000, $15,000 and $20,000, respectively, as
compensation for their services as directors as well as reimbursement of certain
expenses incurred in connection with attending board meetings. A portion of the
total compensation that Mr. Bilbray received ($5,000) was for a meeting he
attended in December 1995.
Pursuant to the Company's Director Stock Option Plan (the "Plan"), each
member of the Board of Directors who is not an employee or officer of the
Company, and who has served on the Board of Directors for one year, may
participate in the Plan (an "Eligible Director"). The Plan
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<PAGE>
provides for the grant of options to purchase 5,000 shares of Common Stock of
the Company to each Eligible Director. The Plan also sets forth the price,
vesting period, and expiration of such options. Pursuant to the Plan, Mr. Biddle
and Dr. Pei were each granted options to purchase 5,000 shares of Common Stock
on June 26, 1996 at an exercise price of $3.00 per share.
Committees of the Board of Directors
The Board of Directors has two standing committees, the Audit Committee and
the Compensation Committee. The Company does not have a nominating committee.
The Audit Committee has three members, Messrs. Biddle and Uboldi and Dr.
Pei. Mr. Biddle and Dr. Pei are independent directors. The functions of the
Audit Committee are to review and approve the selection of, and all services
performed by, the Company's independent accountants, to meet and consult with,
and to receive reports from, the Company's independent accountants, and to
review and act or report to the Board of Directors with respect to the scope of
audit procedures, accounting practices, and internal accounting and financial
controls of the Company.
The Compensation Committee consists of Mr. Tompkins, Mr. Biddle and Dr.
Pei. The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all executive officers and review, approve and
recommend to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto and administer the Plan and bonus plan, if any.
During the fiscal year ended December 31, 1996, the Board of Directors of
the Company held six meetings, four of which were in person and two of which
were by telephone conference. In 1996, the Audit Committee held two meetings and
the Compensation Committee met on three occasions. Each director attended more
than 75% of all meetings of the Board and the committees on which he served.
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<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of April 25, 1997, by (i) each person who is
known by the Company to own beneficially 5% or more of the Common Stock, (ii)
all directors and Named Executive Officers (as hereinafter defined) and (iii)
all directors and executive officers of the Company as a group. Unless otherwise
indicated, all persons listed have sole voting power and investment power with
respect to such shares. The address of the Equitable Companies Incorporated is
787 Seventh Avenue, New York, New York 10019 and the address of State of
Wisconsin Investment Board is P.O. Box 7842, Madison, Wisconsin 53707. The
address of each of the remaining individuals listed is 206 North Third Street,
Las Vegas, Nevada 89101.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Beneficial Percentage of Class
Ownership
Andrew H. Tompkins................................. 13,358,455 1/ 45.6%
Alain Uboldi....................................... 140,436 1/2/ *
Rory Reid.......................................... 49,000 3/ *
Michael A. Hlavsa.................................. 1,500 *
Lawrence P. Tombari................................ 41,000 4/ *
Anthony J. Drexel Biddle III....................... 5,000 *
Minxin Pei......................................... -- 0.0%
James H. Bilbray................................... 34,885 *
Charles Brewer..................................... -- 0.0%
The Equitable Companies Incorporated............... 2,578,877 5/ 8.8%
State of Wisconsin Investment Board................ 2,505,000 6/ 8.6%
All directors and executive officers as a group
(10 persons)....................................... 13,568,340 46.3%
</TABLE>
- --------
* Less than 1%
1/ Mr. Tompkins has agreed to transfer to Mr. Uboldi 70,436 shares
of Common Stock, which shares will be subject to an agreement
between Messrs. Uboldi and Tompkins whereby Mr. Tompkins has the
right to vote such shares, and under certain circumstances,
reacquire such shares. Accordingly, the amount listed for each of
Messrs. Tompkins and Uboldi includes such 70,436 shares.
2/ Includes 70,000 shares of Common Stock which Mr. Uboldi has the
right to acquire, pursuant to currently exercisable options,
within the next 60 days.
3/ Consists of 49,000 shares of Common Stock which Mr. Reid has the
right to acquire, pursuant to currently exercisable options,
within the next 60 days.
4/ Consists of 34,000 shares of Common Stock which Mr. Tombari has
the right to acquire, pursuant to currently exercisable options,
within the next 60 days.
5/ Based on a Schedule 13-G filed February 14, 1997.
6/ Based on a Schedule 13-G filed on January 24, 1997.
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<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities (collectively, "Reporting
Persons"), to file with the Securities Exchange Commission ("SEC") initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than ten
percent stockholders also are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms that are filed with the SEC. Based solely
on a review of the copies of such reports furnished to the Company and
representations that no other reports were required, the Company believes that
all Reporting Persons complied with all Section 16(a) filing requirements for
the fiscal year ended December 31, 1996, except that Mr. Bilbray inadvertently
neglected to file timely Forms 4 upon the purchase of Common Stock in five
separate transactions on December 1, 1995, April 4, 1996, July 24, 1996,
November 15, 1996 and November 21, 1996, respectively (such transactions were
reported by Mr. Bilbray on a Form 5 filed on April 30, 1997 and Mr. Uboldi and
Mr. Reid inadvertently neglected to file timely Forms 5 with respect to grants
of stock options they each received on March 30, 1996 (such transactions were
reported by Mr. Uboldi and Mr. Reid on Forms 5 filed on April 30, 1997).
-8-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation of Andrew Tompkins,
Chairman of the Board and Chief Executive Officer of the Company, and the four
most highly compensated executive officers of the Company other than the Chief
Executive Officer (collectively, the "Named Executive Officers") for each of the
Company's last three completed fiscal years.
<TABLE>
<CAPTION>
Summary Compensation Table
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Compensation
Annual Compensation Awards
Securities
Underlying
Other Annual Stock All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation Options(#) (a) Compensation(b)
Andrew H. Tompkins, 1994 $661,269(c) $100,000 - - $1,908
Chairman and Chief 1995 660,005(c) - - - 4,287
Executive Officer 1996 676,926(c) 100,000 - - 2,405
Alain Uboldi, 1994 500,961 75,000 - 100,000 1,536
President and Chief 1995 538,451 - - - 3,462
Operating Officer 1996 553,263 50,000 - 50,000 1,909
Rory J. Reid, 1994 210,403 30,000 - 70,000 794
Senior Vice President, 1995 226,536 - - - 3,853
Secretary and General 1996 249,962 25,000 - 35,000 2,775
Counsel
Michael A. Hlavsa, 1994 186,365 10,000 - 60,000 744
Vice President Midwest 1995 200,970 - - - 3,725
Region 1996 204,624 30,000 - - 3,150
Lawrence P. Tombari, 1994 182,561 10,000 - 50,000 680
Chief Financial Officer 1995 201,154 - - - 3,654
1996 226,846 5,000 - 20,000 3,228
</TABLE>
____________________
(a) The options granted in 1994 and 1996 are Non-Statutory Options.
(b) The amounts disclosed in this column consist of premiums paid by
the Company for long-term disability and life insurance policies
on behalf of the Named Executive Officers, as well as
contributions by the Company to its 401(k) plan on behalf of the
Named Executive Officers.
(c) Pursuant to the former management agreements between the Company
and Lady Luck Casino, Inc., a corporation owned and controlled by
Andrew Tompkins, Chairman of the Board and Chief Executive
Officer of the Company, in partial consideration of the payment
of a management fee under such agreements, has been reimbursed by
Lady Luck Casino, Inc. for Mr. Tompkins' salary and benefits and
employer's costs associated with such salary and benefits (taxes
and insurance) incurred in 1994 and 1995.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following options were granted to the Named Executive Officers and
Directors during fiscal year 1996:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable Value at
Assumed Annual Rates of
Number of % of Total Stock Price Appreciation for
Securities Options Granted Option Term
Underlying to Employees in Date Exercise Price per
Name Options Fiscal Year Granted Share Expiration Date
5% 10%
Alain Uboldi 50,000 28.25% 3/30/96 $2.50 3/29/06 162,889 259,374
Rory J. Reid 35,000 19.77% 3/30/96 $2.50 3/29/06 114,023 181,562
Lawrence P. Tombari 20,000 11.30% 3/30/96 $2.50 3/29/06 65,156 103,750
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides option values and option exercises by the
Named Executive Officers and Directors during fiscal year 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Value Options at FY-End (#) at FY-End ($)
Shares Acquired on Realized
Name Exercise(#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
Andrew H. Tompkins -- N/A --/-- *
Alain Uboldi -- N/A 40,000/110,000 *
Rory J. Reid -- N/A 28,000/77,000 *
Michael A. Hlavsa -- N/A 24,000/36,000 *
Lawrence P. Tombari -- N/A 20,000/50,000 *
</TABLE>
* No options were in-the-money at the end of the Company's 1996 fiscal
year.
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<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's Compensation Committee consists of Mr. Tompkins, Mr. Biddle
and Dr. Pei.
General. The Company's compensation program is designed to attract and
retain high quality executive management, to give management incentives that
motivate superior performance on behalf of the Company and to align the interest
of management with those of the Company's stockholders. Executive compensation
is composed of base salary, incentive bonuses and long-term incentives in the
form of stock options. The objective of the Compensation Committee is to
establish executive compensation levels which are competitive with other similar
companies in the gaming industry, but which are also linked to the Company's
performance and stockholder return. The Compensation Committee believes that the
compensation level of its executive officers are typically comparable to those
for other comparable positions within the gaming industry. The compensation of
each executive officer is based upon an annual review of such officer's
performance by the Chief Executive Officer and his recommendations to the
Compensation Committee. In establishing and administering the variable elements
in the compensation of the Company's executive officers, the Compensation
Committee tries to recognize individual contributions, as well as overall
business results.
1996 Executive Officer Compensation. Among the factors considered by the
Compensation Committee in determining 1996 compensation were (a) the Company's
goal of attracting and retaining qualified executives, (b) compensation levels
of executives in the gaming industry holding similar responsibilities, and (c)
the financial condition of the Company. The 1996 compensation of the Company's
executive officers, including Mr. Tompkins, was determined subjectively by the
Compensation Committee and was not based upon objective performance targets. In
addition to base salary, certain of the executive officers of the Company were
awarded cash bonuses for the fiscal year ended December 31, 1996. Although such
bonuses were not based upon objective performance targets, one of the factors
considered by the Committee in awarding such bonuses was the successful
completion of the consent solicitation in connection with certain amendments to
and waivers of the Company's Indenture (the "Consent Solicitation").
Additionally, stock options were awarded pursuant to the Company's 1993 Employee
Stock Option Plan to certain of the executives by the Compensation Committee
during 1996. In determining the size of option awards for such executive
officers, the Compensation Committee considered the amount of stock options
previously awarded to other executive officers in a like position in addition to
the other compensation considerations discussed above. In general, the higher
the level of an executive's responsibility, the larger this stock-based
component of his compensation will be.
1996 Chief Executive Officer Compensation. The Compensation Committee
applied the same subjective standards in establishing the 1996 compensation of
the Company's Chief Executive Officer as were used for other executives. During
the 1996 fiscal year the Compensation Committee granted a bonus to the Chief
Executive Officer based, among other things, on the successful completion of the
Consent Solicitation.
THE COMPENSATION COMMITTEE
Andrew H. Tompkins
Anthony J. Drexel Biddle, III
Minxin Pei
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PERFORMANCE GRAPH
Company Stock Price Performance
The following graph shows comparison of cumulative total return (equal to
dividends plus stock appreciation) for the Company's Common Stock, Selected
Comparable Casino Companies Index (including Argosy Gaming Company, Casino
America, Inc., Casino Magic Corp., Players International, Inc., and President
Riverboat Casinos, Inc.), the Standard & Poor's 500 Stock Index and the Nasdaq
Industrial Index for the interim period beginning October 1, 1993 and ending on
December 31, 1993, and the three full years ending December 31, 1994, 1995 and
1996, respectively, assuming the investment of $100 in the Company's Common
Stock, the Selected Comparable Casino Companies Index, the Standard & Poor's 500
Stock Index and the Nasdaq Industrial Index, and the reinvestment of all
dividends. Total stockholder returns for prior periods are not an indication of
future investment returns.
Comparison of Cumulative Total Stockholder Return
[GRAPH NOT INCLUDED]
09/29/93 12/30/94 12/29/95 12/31/96
A Lady Luck 100 16 10 11
B Selected Casino Index 100 47 25 14
C Standard & Poor's Index 100 100 134 161
D NASDAQ Industrial Index 100 97 135 165
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TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
On October 24, 1994, the Company entered into Letter Agreements (the
"Agreements") with Alain J. Uboldi, President, Chief Operating Officer and a
director of the Company, and Rory J. Reid, Senior Vice President, General
Counsel, Secretary and a director of the Company. The Agreements provide that in
the event of a Change of Control, as defined in the Agreements, and the
subsequent termination of the employment of Mr. Uboldi or Mr. Reid, as the case
may be, under certain circumstances, the Company would be required to pay to Mr.
Uboldi or Mr. Reid, as the case may be, a lump sum severance payment equal to
2.99 times the sum of their respective annual base salary plus the amount of any
bonus paid in the year preceding such termination. In the event of such
termination, Mr. Uboldi or Mr. Reid, as the case may be, would also receive in
cash an amount equal to the product of the difference between subtracting the
exercise price of each option held by Mr. Uboldi or Mr. Reid (whether or not
fully exercisable) from the current price of the Common Stock. Further, Mr.
Uboldi or Mr. Reid, as the case may be, would receive life, disability, accident
and health insurance benefits substantially similar to those they are receiving
immediately prior to their termination for a 36-month period after such
termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Entities Controlled by Mr. Tompkins
Effective January 1, 1996, the Company entered into marketing agreements
(the "Marketing Agreements") with entities controlled by Mr. Tompkins. Under the
Marketing Agreements, the Company will pay an annual licensing fee with respect
to the Lady Luck name and the mailing list developed by Gemini, Inc., a
wholly-owned corporation of Mr. Tompkins which does business as Lady Luck
Casino/Hotel in Las Vegas, Nevada ("Gemini"). The licensing fee is equal to the
greater of (a) 9% of the Company's EBITDA (calculated as EBITDA of the Company
and all its subsidiaries and joint ventures (multiplied, in the case of the
Company's Bettendorf, Iowa joint venture (the "Bettendorf Joint Venture") and
the Kimmswick, Missouri joint venture (the "Kimmswick Joint Venture") by the
interest owned by the Company in such joint ventures), excluding, among other
things, all revenues and expenses arising from any casino or casino/hotel for
which the Company is not the operator and which does not utilize the mailing
list or Lady Luck name and excluding revenues from the lease of equipment owned
by the Company to third parties and (b) $1,700,000 per year (as adjusted based
on the Consumer Price Index). The Company has agreed to use the "Lady Luck" name
on all existing and future casinos which it operates. With respect to the
Bettendorf Joint Venture, Lady Luck Casino, Inc., a wholly-owned corporation of
Mr. Tompkins ("LLCI") will assign to the Company its rights to receive a
management fee and its obligation to pay part of that fee to its joint venture
partner. During any default in the payment of principal of or interest on the
Company's 11 7/8% First Mortgage Notes due 2001, the Company will not pay (but
will accrue on its books) any licensing fee to LLCI. In addition, the Company
will pay Gemini the sum of $300,000 per year as adjusted based on the Consumer
Price Index for corporate office facilities and certain services with respect to
such corporate office facilities.
During the year ended December 31, 1996, the management fees payable to
LLCI by the Company were approximately $3,440,000. The Company also reimburses
Marco Polo International Marketing, Inc., a wholly- owned corporation of Mr.
Tompkins ("MPIM"), which performs marketing services on the Company's behalf,
for certain allocated payroll and overhead costs, which for 1996 totaled
approximately $659,000.
The Company reimbursed Gemini $129,000 during the year ended December 31,
1996 for the approximate
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retail value of rooms, food and beverages, and other items provided to the
Company by Gemini.
Transactions with Donaldson, Lujkin & Jenrette
Equitable Companies, Inc. ("Equitable") owns a controlling interest in
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"). During 1995, the
Company entered into an agreement with DLJ to assist the Company in negotiating
the Consents with the Bondholders. During 1996, prior to Equitable acquiring its
greater than 5% beneficial interest in the Company, the Company paid DLJ
$165,000 pursuant to this agreement.
OTHER MATTERS
The Board of Directors knows of no business other than that described
herein that will be presented for consideration at the Annual Meeting. If,
however, other business shall properly come before the Annual Meeting, the
persons named in the enclosed form of proxy intend to vote the shares
represented by said proxies on such matters in accordance with their judgement.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1996, FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, WILL BE FURNISHED WITHOUT EXHIBITS, TO ANY PERSON REQUESTING A COPY
THEREOF IN WRITING AND STATING THAT SUCH PERSON IS A BENEFICIAL HOLDER OF SHARES
OF COMMON STOCK OF THE COMPANY ON THE RECORD DATE FOR THE ANNUAL MEETING OF
STOCKHOLDERS. REQUESTS AND INQUIRIES SHOULD BE ADDRESSED TO LADY LUCK GAMING
CORPORATION AT 220 STEWART AVENUE, LAS VEGAS, NEVADA 89101; ATTENTION: INVESTOR
RELATIONS.
STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's
1998 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statement and form of proxy for that meeting no later
than February 6, 1998.
By Order of the Board of Directors,
Rory J. Reid
Senior Vice President, Secretary
and General Counsel
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PROXY
LADY LUCK GAMING CORPORATION
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders to be held at the Lady Luck Natchez in Natchez,
Mississippi on July 23, 1997 at 10:00 a.m. local time, and the Proxy Statement
related thereto, each dated June 6, 1997, and constitutes and appoints Andrew
H. Tompkins, Alain Uboldi, Rory J. Reid and Lawrence P. Tombari, and each of
them, with the power of substitution as proxy or proxies, to represent and to
vote on behalf of the undersigned all of the shares of common stock, par value
$.001 per share, of Lady Luck Gaming Corporation (the "Company") which the
undersigned held of record on May 26, 1997, hereby revoking all proxies
heretofore given with respect to such shares, upon the following proposals more
fully described in the Notice of the Proxy Statement for the meeting and related
proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL (1)
1. ELECTION OF RORY J. REID, JAMES H. BILBRAY AND CHARLES BREWER AS A CLASS I
DIRECTOR-TERM EXPIRING AT 2000 ANNUAL MEETING.
|_|FOR election of Rory J. Reid, James H. Bilbray, Charles Brewer
|_|WITHHOLD AUTHORITY to vote for all directors listed below:
Class I: Rory J. Reid
Class I: James H. Bilbray
Class I: Charles Brewer
(INSTRUCTION: To withhold authority to vote for one or more than one individual
director, write that director's name(s) in the space provided below.)
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2. IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
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This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR the election of Rory J. Reid, James H. Bilbray and Charles Brewer.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Please date and sign this Proxy exactly as your name appear on this Proxy.
Joint owners should each sing. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATED:__________________________________________
__________________________________________
Signature
DATED:__________________________________________
__________________________________________
Signature if held jointly
