<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
LADY LUCK GAMING CORPORATION
(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)(1) 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 the Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it is 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 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>
[LADY LUCK LOGO]
206 North Third Street
Las Vegas, Nevada 89101
April 16, 1999
TO OUR STOCKHOLDERS:
You are cordially invited to attend the annual meeting of stockholders of
Lady Luck Gaming Corporation, which will be held on April 27, 1999 at Lady Luck
Bettendorf in Bettendorf, Iowa, at 10:00 a.m. local time.
At the meeting you will be asked to vote upon a proposal to elect two Class
III directors, each to serve until the 2002 Annual Meeting of Stockholders.
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. You may attend and vote in person at the
meeting even after having returned an executed proxy, and in such case, your
vote in person shall count instead of your proxy.
Sincerely,
/s/ Andrew H. Tompkins
-----------------------------
Andrew H. Tompkins
Chairman of the Board and
Chief Executive Officer
<PAGE>
[LADY LUCK LOGO]
206 North Third Street
Las Vegas, Nevada 89101
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on April 27, 1999
----------------------------
TO THE STOCKHOLDERS OF LADY LUCK GAMING CORPORATION:
The 1999 Annual Meeting of Stockholders of Lady Luck Gaming Corporation
(the "Company") will be held on April 27, 1999 at 10:00 a.m. local time at Lady
Luck Bettendorf in Bettendorf, Iowa, for the following purposes:
1. To elect two Class III directors to hold office until the 2002
Annual Meeting of Stockholders or until their successors are duly
elected and qualified;
2. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
All stockholders of record on the Company's transfer books as of the close
of business on April 16, 1999 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 Bettendorf in Bettendorf, Iowa 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 annual meeting during the entire
time thereof.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
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,
/s/ Rory J. Reid
---------------------------------------
Rory J. Reid
Senior Vice President, Secretary
and General Counsel
Las Vegas, Nevada
April 16, 1999
<PAGE>
---------------
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
APRIL 27, 1999
---------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the board of directors (the "Board of Directors") of Lady Luck Gaming
Corporation, a Delaware corporation (the "Company"), for use at the Company's
1999 Annual Meeting of Stockholders (the "Annual Meeting"), and at any and all
adjournments of such meeting. The Annual Meeting will be held on April 27, 1999.
This Proxy Statement and the accompanying proxy card are first being sent to
stockholders on or about April 16, 1999. The Annual Report of the Company for
the fiscal year ended December 31, 1998, 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 Annual Meeting of Stockholders, 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, if requested, will
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 April 16, 1999 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 $.006 per share ("Common
Stock"), issued and outstanding at the close of business on the Record Date will
be entitled to vote at the Annual Meeting. As of the Record Date, there were
4,881,003 shares of Common Stock 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 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 as compared to those proposals where broker non-votes will
have the same effect as a vote cast against such proposal.
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.
<PAGE>
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 of Andrew H. Tompkins and Norman Little as Class III directors.
The Board of Directors of the Company currently does not know of any matters,
other than the election of Class III directors that will come before the Annual
Meeting. 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 judgment.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors consists of seven members. The directors of the
Company are divided into three classes, designated as Class I, Class II and
Class III. Each class of directors serves for a three-year term, and the
election of each class of directors occurs at the annual meeting of stockholders
of the Company succeeding the annual meeting of stockholders of the Company at
which the previous class of directors had been elected. For example, Class III
directors are elected at the annual meeting succeeding the annual meeting at
which Class II directors were elected, and preceding the annual meeting at which
Class I directors will be elected. 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 current directors have received all required Gaming
Authority Approvals. Any new director nominee elected to serve as a director at
the Annual Meeting will be required to obtain all required Gaming Authority
Approvals. All directors serve until their successors are duly elected and
qualified or until an earlier resignation, removal from office or death. Rory J.
Reid, James H. Bilbray and Charles B. Brewer are presently serving as Class I
directors and their terms expire at the annual meeting of stockholders of the
Company to take place in 2000. Alain Uboldi and Minxin Pei are presently serving
as Class II directors and their terms expire at the annual meeting of
stockholders of the Company to take place in 2001. Andrew H. Tompkins and
Anthony J. Drexel Biddle III are presently serving as Class III directors and
their terms expire at the Annual Meeting.
The Board of Directors has nominated Andrew H. Tompkins and Norman Little
to serve as Class III directors until the annual meeting of stockholders of the
Company to take place in 2002 or until their successors are duly elected and
qualified.
Each nominee to serve as a Class III director 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 April 16, 1999.
Directors
- - ---------
Andrew H. Tompkins, age 67, has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since February 1993. Mr. Tompkins has
been the sole shareholder, President and Chief Executive Officer of Gemini,
Inc., the operator of the Lady Luck Casino/Hotel in Las Vegas, Nevada ("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 developed the casino and hotel into its current state. Mr. Tompkins has been
a director of the Company since February 1993 and is standing for election as a
Class III director at the Annual Meeting.
Alain Uboldi, age 52, 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.
2
<PAGE>
Rory J. Reid, age 36, 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 has been a director of the Company since January 1994.
Anthony J. Drexel Biddle III, age 50, has been Managing Director of Zolfo
Cooper Capital, L.L.C. ("Zolfo Cooper") since December 1997. As Managing
Director, he is responsible for project and corporate financing for
environmental technologies of Zolfo Cooper. From 1988 to 1997, Mr. Biddle was a
Vice President of Chase Manhattan Bank. From 1990 to 1997, Mr. Biddle was
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. Mr. Biddle has been a director of the Company since
October 1994. Mr. Biddle's term expires at the Annual Meeting, and he is not
standing for election as a Class III director at the Annual Meeting.
James H. Bilbray, age 61, has been an attorney and lobbyist with Alcalde &
Fay, government and public affairs consultants, since 1995. From 1987 to 1995,
he represented the State of Nevada in the U.S. House of Representatives. Mr.
Bilbray has been a director of the Company since June 1996.
Charles B. Brewer, age 50, has been employed by Southmark Corporation
("Southmark") since July 1989 and currently serves as its President and
Chairman. Prior to being promoted to his current position with Southmark in
August of 1996, he served as its Executive Vice President, Chief Operating
Officer and General Counsel. Southmark Investment Group, Inc., a wholly-owned
subsidiary of Southmark, filed a voluntary petition for relief under Chapter 7
of the United States Bankruptcy Code with the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division, on December 20, 1996, and this
"noasset" case has subsequently been closed. Mr. Brewer also serves as Chairman
and President of Northwest Senior Housing Corporation, January 1998 to present;
Litigation Trustee, Value Added Communications Litigation Trust, September 1996
to present; and Chairman and Director of Capital Gaming International, August
1998 to present. Mr. Brewer has been a director of the Company since July 1997.
Minxin Pei, age 41, is a senior associate in the Carnegie Endowment for
International Peace in Washington, D.C. He was on the faculty of Princeton
University between 1992 and 1998. He has also been a fellow of the Hoover
Institution at Stanford University. Dr Pei has been a director of the Company
since October 1994.
Nominee for Director
- - --------------------
Norman Little, age 77, has more than 40 years experience in the gaming
industry. Since his retirement in 1991, Mr. Little has been a consultant to
various gaming companies. From 1985 to 1991, Mr. Little was the Slot Manager for
Vegas World Hotel and Casino in Las Vegas. Prior to 1985, Mr. Little developed
and operated the following small casinos in Las Vegas, Coin Castle, Golden
Goose, Little Ceasars, Mr. Sys and Sassy Sally's.
Executive Officers
- - ------------------
Lawrence P. Tombari, age 40, has been Chief Financial Officer of the
Company since February 1996. 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 37, has been Vice President of Finance for the Company
since April 1995. From January 1995 to April 1995, Mr. Bowen was Corporate
Director of Finance and Accounting for the Company. 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.
Meetings and Committees of the Board of Directors
- - -------------------------------------------------
The Board of Directors has two standing committees, the audit committee
(the "Audit Committee") and the compensation committee (the "Compensation
Committee"). The Company does not have a nominating committee.
The Audit Committee has three members, Mr. Biddle (until the Annual
Meeting), Mr. 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.
3
<PAGE>
The Compensation Committee has three members, Mr. Tompkins, Mr. Biddle
(until the Annual Meeting) 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 1993 Employee Stock Option Plan (the "Plan"), the Director Stock
Option Plan (the "Director Plan") and any bonus plans.
At the annual meeting of the Board of Directors to be held after the Annual
Meeting, the Board of Directors will appoint an independent director to replace
Mr. Biddle as a member of the Audit Committee and the Compensation Committee.
During the fiscal year ended December 31, 1998, the Board of Directors held
six meetings. In 1998, the Audit Committee held three meetings and the
Compensation Committee held one meeting. Each director attended more than 75% of
all meetings of the Board of Directors and the committees on which he served.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 25, 1999 by (i) each person who is known
by the Company to beneficially own 5% or more of the Common Stock, (ii) each
director, nominee for director and Named Executive Officer (as hereinafter
defined) of the Company 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
all persons other than the State of Wisconsin Investment Board is Lady Luck
Gaming Corporation, 206 North Third Street, Las Vegas, Nevada 89101. The address
of the State of Wisconsin Investment Board is P.O. Box 7842, Madison, Wisconsin
53707.
Amount and
Nature of
Beneficial Percent
Ownership of Class
---------------- --------
Andrew H. Tompkins.............................. 2,226,409(a) 45.6%
Alain Uboldi.................................... 33,406(a)(b) *
Rory J. Reid.................................... 15,167(c) *
Lawrence P. Tombari............................. 13,433(d) *
James Bowen..................................... 3,417(e) *
Anthony J. Drexel Biddle III.................... 1,166(f) *
James H. Bilbray................................ 6,464 *
Charles Brewer.................................. 8,333 *
Minxin Pei...................................... 333(g) *
Norman Little................................... 1,000 *
State of Wisconsin Investment Board............. 417,500(h) 8.6
All executive officers and directors
as a group (9persons).......................... 2,296,389 47.0
- - ------------
* Less than 1%
(a) Including 11,739 shares of Common Stock which Mr. Tompkins has agreed to
transfer to Mr. Uboldi and which shares will be subject to an agreement
between Mr. Uboldi and Mr. Tompkins whereby Mr. Tompkins has the right to
vote such shares, and under certain circumstances, reacquire such shares.
(b) Includes 21,667 shares of Common Stock which Mr. Uboldi has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 3,333 shares of Common Stock are subject to options held by Mr.
Uboldi which are not exercisable currently or within the next 60 days.
(c) Includes 15,167 shares of Common Stock which Mr. Reid has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 2,333 shares of Common Stock are subject to options held by Mr.
Reid which are not exercisable currently or within the next 60 days.
(d) Includes 10,333 shares of Common Stock which Mr. Tombari has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 1,333 shares of Common Stock are subject to options held by Mr.
Tombari which are not exercisable currently or within the next 60 days.
4
<PAGE>
(e) Includes 2,834 shares of Common Stock which Mr. Bowen has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 1,333 shares of Common Stock are subject to options held by Mr.
Bowen which are not exercisable currently or within the next 60 days.
(f) Includes 333 shares of Common Stock which Mr. Biddle has the right to
acquire pursuant to either currently exercisable options or within the next
60 days. 500 shares of Common Stock are subject to options held by Mr.
Biddle which are not exercisable currently or within the next 60 days.
(g) Includes 333 shares of Common Stock which Mr. Pei has the right to acquire
pursuant to either currently exercisable options or within the next 60
days. 500 shares of Common Stock are subject to options held by Mr. Pei
which are not exercisable currently or within the next 60 days.
(h) Based solely upon a Schedule 13G/A dated February 1, 1999.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation of Andrew H. 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 fiscal years:
Summary Compensation Table
Long-Term
Compensation
------------
Awards
------------
Securities
Annual Compensation Underlying
------------------------ Options/ All Other
Year Salary Bonus SARs Compensation
---- -------- -------- ----------- ------------
Andrew H. Tompkins.......... 1998 $700,000 $ 70,000 -- $ 5,785(b)
Chairman and Chief 1997 700,000 45,000 -- 4,474
Executive Officer 1996 676,926 100,000 -- 1,900
Alain Uboldi................ 1998 576,154 53,500 -- 5,785(c)
President and Chief 1997 576,154 37,000 -- 4,474
Operating Officer 1996 553,263 50,000 8,333 1,909
Rory J. Reid................ 1998 264,424 25,000 -- 5,060(d)
Senior Vice President, 1997 263,461 20,000 -- 4,315
Secretary and General 1996 249,962 25,000 5,833 2,068
Counsel
Lawrence P. Tombari......... 1998 237,981 22,500 -- 4,990(e)
Chief Financial Officer 1997 237,115 15,000 -- 4,235
1996 226,846 5,000 3,333 2,239
James Bowen................. 1998 147,000 14,000 -- 4,355(f)
Vice President 1997 145,292 7,800 -- 2,867
of Finance 1996 134,681 5,000 2,500 1,978
- - ------------
(a) The options granted in 1995 and 1996 are options which do not qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and which are not designated as an incentive stock option by the Committee
(each, a "Non-Statutory Option").
(b) Includes $1,477 of premiums paid by the Company for long term disability
insurance policies, $1,140 of premiums paid by the Company for life
insurance policies and $3,168 of contributions by the Company to its 401(k)
plan on behalf of Mr. Tompkins for the last completed fiscal year.
(c) Includes $1,477 of premiums paid by the Company for long term disability
insurance policies, $1,140 of premiums paid by the Company for life
insurance policies and $3,168 of contributions by the Company to its 401(k)
plan on behalf of Mr. Uboldi for the last completed fiscal year.
(d) Includes $738 of premiums paid by the Company for long term disability
insurance policies, $1,140 of premiums paid by the Company for life
insurance policies and $3,182 of contributions by the Company to its 401(k)
plan on behalf of Mr. Reid for the last completed fiscal year.
(e) Includes $664 of premiums paid by the Company for long term disability
insurance policies, $1,140 of premiums paid by the Company for life
insurance policies and $3,186 of contributions by the Company to its 401(k)
plan on behalf of Mr. Tombari for the last completed fiscal year.
6
<PAGE>
(f) Includes $413 of premiums paid by the Company for long term disability
insurance policies, $798 of premiums paid by the Company for life insurance
policies and $3,144 of contributions by the Company to its 401(k) plan on
behalf of Mr. Bowen for the last completed fiscal year.
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 $20,000
annually, and, if they attend more than four meetings, they will be paid $3,000
for each such meeting following the fourth meeting. In the year ended December
31, 1998, Mr. Bilbray received $20,000, Mr. Brewer received $22,000 and Mr.
Biddle and Dr. Pei each received $25,000 as compensation for their services as
directors, as well as reimbursement of certain expenses incurred in connection
with attending board meetings.
Pursuant to the Director Plan, each member of the Board of Directors who is
not an employee of the Company, and who has served on the Board of Directors for
one year (an "Eligible Director"), may participate in the Director Plan. The
Director Plan provides for the grant of options to purchase a total of 5,000
shares of Common Stock of the Company to each Eligible Director. The Director
Plan also sets forth the price, vesting period and expiration of such options.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's Compensation Committee has three members, 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.
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
interests 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 generally
comparable to those for similar positions at other companies 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.
1998 EXECUTIVE OFFICER COMPENSATION. Among the factors considered by the
Compensation Committee in determining 1998 compensation were (a) the Company's
goal of attracting and retaining qualified executives, (b) compensation levels
of executives at other companies in the gaming industry with similar
responsibilities and (c) the financial condition of the Company. The 1998
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.
1998 CHIEF EXECUTIVE OFFICER COMPENSATION. The Compensation Committee
applied the same subjective standards in establishing the 1998 compensation of
the Company's Chief Executive Officer as were used for other executives.
THE COMPENSATION COMMITTEE
Andrew H. Tompkins
Anthony J. Drexel Biddle III
Minxin Pei
8
<PAGE>
EMPLOYMENT CONTRACTS AND 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 were for an
initial term of three years, and on each October 24, beginning October 24, 1995,
the Agreements are automatically extended for one additional year, unless
terminated by the Company on or before July 24 of the preceding year. 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 immediately preceding such
termination. In the event of such termination, Mr. Uboldi or Mr. Reid, as the
case may be, also would be entitled to receive, in cash, an amount equal to the
difference between the exercise price of each option held by Mr. Uboldi or Mr.
Reid (whether or not fully exercisable) and the current price of the Common
Stock. Further, Mr. Uboldi or Mr. Reid, as the case may be, would be entitled to
receive, for a 36-month period after such termination, life, disability,
accident and health insurance benefits substantially similar to those they are
receiving immediately prior to their termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company currently consists of Mr.
Tompkins, Mr. Biddle and Dr. Pei. Mr. Tompkins is the Company's Chief Executive
Officer and Chairman of the Board. Mr. Tompkins is the sole director and sole
shareholder of Gemini, Inc., the operator of Lady Luck Nevada and the sole
director and sole stockholder of International Marco Polo Services, Inc., the
entity from which the Company licenses the Lady Luck name and a mailing list
("Marco Polo Services"). See "Certain Relationships and Related Transactions."
RECOMMENDATION AND VOTE
The Board of Directors recommends a vote FOR the election of Andrew H.
Tompkins and Norman Little as Class III directors, which is included as Item 1
on the accompanying proxy card. Stockholders may (a) vote in favor of both
nominees, (b) withhold their vote as to both nominees or (c) withhold their vote
as to a specific nominee 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.
9
<PAGE>
PERFORMANCE GRAPH
Company Stock Price Performance
- - -------------------------------
The following graph shows a comparison of the cumulative total return (equal
to dividends plus stock appreciation) for the Common Stock, the Selected Casino
Companies Index (including Argosy Gaming Company, Casino America, Inc., Players
International, Inc. and President Riverboat Casinos, Inc.), the S&P 500 Index
and the Nasdaq Industrial Index for each of the last five fiscal years, assuming
the investment of $100 on December 31, 1993 in the Common Stock, the Selected
Casino Companies Index, the S&P 500 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]
- - --------------------------------------------------------------------------------
Dec. Dec. Dec. Dec. Dec. Dec.
31, 30, 29, 31, 31, 31,
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Lady Luck Gaming Corporation....... 100 24 15 17 9 6
Selected Casino Companies Index.... 100 58 30 16 11 16
S&P 500 Index...................... 100 98 132 159 208 264
Nasdaq Industrial Index............ 100 97 135 166 202 282
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 1, 1996, the Company entered into several agreements with
entities controlled by Andrew H. Tompkins, Chairman of the Board and Chief
Executive Officer of the Company. Under a licensing agreement (the "Licensing
Agreement") with Marco Polo Services, a corporation owned and controlled by Mr.
Tompkins and for which Alain Uboldi, President and Chief Operating Officer of
the Company, is its Vice President, the Company pays an annual licensing fee to
Marco Polo Services in connection with the Lady Luck name and the mailing list
developed by Gemini, Inc. ("Gemini"), a subchapter S corporation wholly owned by
Mr. Tompkins which does business as Lady Luck Nevada. 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 joint ventures 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
10
<PAGE>
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 U.S. Consumer Price Index
Urban Annual Percent Change as published by the U.S. Department of Labor Bureau
of Labor and Statistics from year to year (the "Consumer Price Index")). The
Company has agreed to use the Lady Luck name on all existing and future casinos
which it operates. The Licensing Agreement provides that during any period of
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 fees to Marco Polo Services. During the year ended December
31, 1998, the Company paid approximately $3.4 million in licensing fees to Marco
Polo Services. In addition, the Company paid $304,000 for marketing and other
expenses in 1998, for which the Company was reimbursed by Gemini.
Under a services agreement, the Company receives marketing services from
Marco Polo Services. In 1998, the Company paid Marco Polo Services $870,000 for
services including allocated payroll, overhead, direct advertising and
marketing. The Company also incurred $405,000 of expenses in 1998 related to
other marketing and services, but for which the Company was reimbursed by Marco
Polo Services.
The Company's lease with Gemini for the use of the Company's corporate
facilities and related services in Las Vegas, Nevada provides for an annual rent
of $300,000, as adjusted based on the Consumer Price Index. The Company also
reimburses Gemini for the approximate retail value of rooms, food and beverages,
and other items provided to the Company by Gemini. In 1998, the Company's net
rent expense paid to Gemini was $315,000, and the Company paid $104,000 for
items reimbursable to Gemini.
The Company sold to the Bettendorf joint venture the gaming equipment it
had been leasing from the Company since April 1995. The Company also leases a
gaming vessel to the Bettendorf joint venture. The Company received the
negotiated sale price of $712,000 in cash for that equipment. The Company
manages Lady Luck Bettendorf pursuant to a management agreement for a fee equal
to 2% of gross revenues (as defined in the agreement) plus 7% of EBITDA (as
defined in the agreement) not to exceed 4% of annual casino gross revenues
generated by lady Luck Bettendorf, less $37,500 per month, with up to $325,000
paid to the Company's joint venture partner as consultants. Marco Polo Services
assigned to the Company the management agreement, effective January 1, 1996.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of any class of the Company's equity securities
registered under the Exchange Act (collectively, "Reporting Persons"), to file
with the Securities and Exchange Commission (the "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 10% 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, representations that no other
reports were required and director and officer questionnaires furnished to the
Company, the Company believes that all Reporting Persons complied with all
Section 16(a) filing requirements for the fiscal year ended December 31, 1998.
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, 1998, filed by the Company with the SEC, 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. Requests and inquiries should be
addressed to Lady Luck Gaming Corporation at 220 Stewart Avenue, Las Vegas,
Nevada 89101; Attention: Investor Relations.
11
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP served as the Company's independent public
accountants for fiscal 1998 and has been selected by the Board of Directors to
continue in such capacity during fiscal 1999. Representatives of Arthur Andersen
LLP are not expected to be present at the Annual Meeting.
OTHER MATTERS
The Board of Directors knows of no business other than as 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 judgment.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the 2000 Annual
Meeting of Stockholders (the "2000 Annual Meeting") must be received by the
Company at the address appearing on the first page of this proxy statement by
December 18, 1999, in order to be considered for inclusion in the Company's
proxy statement and form of proxy relating to that meeting.
In addition, in accordance with Article II, Section 2 of the By-Laws, in
order to be properly brought before the 2000 Annual Meeting, a matter must have
been (i) specified in the notice of annual meeting (or any supplement or
amendment thereto) given by or at the direction of the Board of Directors, (ii)
otherwise brought before the annual meeting by or at the direction of the Board
of Directors, or (iii) otherwise properly brought before the annual meeting by a
stockholder. To be timely, the stockholder must give notice of any proposed
matter to the Secretary of the Company not less than 50 days nor more than 75
days prior to the meeting; provided, however, that in the event that less than
65 days' notice or prior public disclosure of the date of the annual meeting is
given or made to stockholders, notice by stockholders to be timely must be
received not later than the close of business on the 15th day following the day
on which such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. Accordingly, any written notice
given by a stockholder pursuant to the foregoing clause (iii), provided the 2000
Annual Meeting is held on the same date as the Annual Meeting, must be received
between February 12, 2000 and March 8, 2000.
By Order of the Board of Directors,
/s/ Rory J. Reid
------------------------------------
Rory J.Reid
Senior Vice President, Secretary
and General Counsel
12
<PAGE>
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 Annual Meeting
of Stockholders to be held at Lady Luck Bettendorf in Bettendorf, Iowa on April
27, 1999 at 10:00 a.m. local time, and the Proxy Statement related thereto, each
dated April 16, 1999, 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 $.006 per share, of
Lady Luck Gaming Corporation (the "Company") which the undersigned held of
record on April 16, 1999, hereby revoking all proxies heretofore given with
respect to such shares, upon the following proposals more fully described in the
Notice of Annual Meeting of Stockholders, the Proxy Statement for the meeting
and this Proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. Election of Andrew H. Tompkins and Norman Little as Class III Directors--Term
expiring at 2002 Annual Meeting.
[ ] FOR election of Andrew H. Tompkins and Norman Little.
[ ] WITHHOLD AUTHORITY to vote for both director nominees listed below:
Class III Andrew H. Tompkins Class III Norman Little.
(INSTRUCTION: To withhold authority for an individual director nominee,
write the name of such director nominee in the space provided below.)
2. The authority of the proxies, in their discretion, upon such other matters as
may properly come before the Annual Meeting, or any adjournments or
postponements thereof.
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 Andrew H. Tompkins and Norman Little as Class III
Directors. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
Please date and sign this Proxy exactly as your name appears on this Proxy.
Joint owners each should sign. When signing as attorney, 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
