<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 Section 240.14a-11(c) or
Section 240.14a-12
MONARCH CASINO & RESORT, 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:
_____________________________________________________
[ ] 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>
MONARCH CASINO & RESORT, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 23, 1999
To the Stockholders of Monarch Casino & Resort, Inc.:
The Annual Meeting of Stockholders of Monarch Casino & Resort, Inc. (the
"Company") will be held at the Atlantis Casino Resort, 3800 South Virginia
Street, Reno, Nevada 89502, on Wednesday, June 23, 1999, at 10:00 a.m. local
time, for the following purposes:
1. To elect Ben Farahi, Bob Farahi, Craig F. Sullivan and Frank A.
Modica as directors of the Company; and
2. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 19, 1999
are entitled to notice of and to vote at the annual meeting. The stock
transfer books will not be closed.
Stockholders are cordially invited to attend the annual meeting in
person. STOCKHOLDERS DESIRING TO VOTE IN PERSON MUST REGISTER AT THE ANNUAL
MEETING WITH THE INSPECTORS OF ELECTION PRIOR TO COMMENCEMENT OF THE ANNUAL
MEETING. IF YOU WILL NOT BE ABLE TO ATTEND THE ANNUAL MEETING IN PERSON, YOU
ARE REQUESTED TO EXECUTE AND DATE THE ENCLOSED FORM OF PROXY AND TO FORWARD IT
TO THE SECRETARY OF THE COMPANY WITHOUT DELAY SO THAT YOUR SHARES MAY BE
REGULARLY VOTED AT THE ANNUAL MEETING.
A copy of the 1998 Annual Report to Stockholders, including financial
statements for the twelve months ended December 31, 1998, is enclosed.
By order of the Board of Directors,
BEN FARAHI
Secretary
Dated: April 28, 1999
<PAGE>
MONARCH CASINO & RESORT, INC.
PROXY STATEMENT
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
VOTING SECURITIES....................................................... 1
ELECTION OF DIRECTORS................................................... 3
Directors and Nominees................................................ 4
Certain Officers of Subsidiary........................................ 5
Committees of the Board............................................... 6
Board Meetings........................................................ 7
Compensation of Non-Employee Directors................................ 7
COMPENSATION OF EXECUTIVE OFFICERS...................................... 8
Summary Compensation Table............................................ 8
Aggregated Option Exercises in 1998 and Fiscal Year-End Option Values. 9
Compensation Committee Interlocks and Insider Participation........... 9
Compensation Committee and Incentive Plan
Committee Report on Executive Compensation........................... 9
Stock Performance Chart............................................... 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................... 11
Indemnification of Directors and Officers............................. 11
INDEPENDENT PUBLIC ACCOUNTANTS.......................................... 12
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.... 12
VOTING PROCEDURES....................................................... 12
2000 ANNUAL MEETING OF STOCKHOLDERS..................................... 13
OTHER BUSINESS.......................................................... 13
</TABLE>
ii<PAGE>
MONARCH CASINO & RESORT, INC.
3800 SOUTH VIRGINIA STREET
RENO, NEVADA 89509
APRIL 28, 1999
_____________________________
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Monarch Casino &
Resort, Inc. (the "Company") in connection with the annual meeting of
stockholders of the Company to be held at the Atlantis Casino Resort, 3800
South Virginia Street, Reno, Nevada, 89502, on Wednesday, June 23, 1999, at
10:00 a.m. local time, and any adjournment thereof, for the purposes indicated
in the Notice of Annual Meeting of Stockholders.
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY (THE "BOARD"). This Proxy Statement and the accompanying form of proxy
are being mailed to stockholders on or about April 28, 1999. Any stockholder
giving a proxy has the power to revoke it prospectively by giving written
notice to the Company, addressed to Ben Farahi, Secretary, at the Company's
principal address before the annual meeting, by delivering to the Company a
duly executed proxy bearing a later date, by notifying the Company at the
annual meeting prior to the commencement of the annual meeting, or by voting
in person by ballot at the annual meeting after notifying the inspectors of
election of the stockholder's intention to do so prior to the commencement of
the annual meeting. The shares represented by the enclosed proxy will be
voted if the proxy is properly executed and received by the Company prior to
the commencement of the annual meeting, or any adjournment thereof.
None of the proposals to be voted on at the annual meeting creates a
right of appraisal under Nevada law. A vote "FOR" or "AGAINST" any of the
proposals set forth herein will only affect the outcome of the proposal.
The expenses of making the solicitation will consist of the costs of
preparing, printing, and mailing the proxies and proxy statements and the
charges and expenses of brokerage firms, custodians, nominees or fiduciaries
for forwarding such documents to security owners. These are the only
contemplated expenses of solicitation, and they will be paid by the Company.
VOTING SECURITIES
The close of business on April 19, 1999 has been fixed by the Board as
the record date for determination of stockholders entitled to vote at the
annual meeting. The securities entitled to vote at the annual meeting consist
of shares of common stock, par value $.01 ("Common Stock"), of the Company,
with each share entitling its owner to one vote. Common Stock is the only
outstanding class of voting securities authorized by the Company's Articles of
Incorporation. The Company's Articles of Incorporation authorize the Company
to issue 10,000,000 shares of preferred stock, par value $.01 ("Preferred
Stock"). None of the Preferred Stock is issued or outstanding, and the
Company has no present plans to issue shares of Preferred Stock.
The Board is empowered to issue one or more series of Preferred Stock
with such rights, preferences, restrictions, and privileges as may be fixed by
the Board, without further action by the Company's stockholders. The issuance
1 <PAGE>
of the Preferred Stock could adversely affect the rights, including voting
rights, of the holders of the Common Stock and could impede an attempted
takeover of the Company. The Preferred Stock does not presently possess
general voting rights.
The number of outstanding shares of Common Stock at the close of business
on March 31, 1999 was 9,436,275. The number of shares outstanding may change
between such date and April 19, 1999 if any currently exercisable options to
purchase Common Stock are exercised, if the Company elects to repurchase and
cancel any shares in open market or privately negotiated transactions, or if
the Company otherwise authorizes the issuance or repurchase of any shares.
The stockholders do not possess the right to cumulate their votes for the
election of directors.
The following is a list of persons who beneficially owned more than 5% of
the outstanding Common Stock of the Company and the ownership of all executive
officers, directors, and executive officers and directors as a group at the
close of business on March 31, 1999 according to record ownership listings as
of that date, according to the Securities and Exchange Commission Forms 3, 4
and 5 and Schedules 13D and 13G of which the Company has received copies, and
according to verifications as of March 31, 1999, which the Company solicited
and received from each executive officer and director:
<TABLE>
<CAPTION>
Title of Amount and Nature Percent of
Class Beneficial Owner of Beneficial Ownership Class
<F1>,<F2>
- -------- ---------------------- ----------------------- ----------
<S> <C> <C> <C>
Common John Farahi 2,070,834 21.9%
1175 W. Moana Lane,
Suite 200
Reno, NV 89509
Common Bob Farahi 2,071,033 21.9%
1175 W. Moana Lane,
Suite 200
Reno, NV 89509
Common Ben Farahi 2,070,833 21.9%
1175 W. Moana Lane,
Suite 200
Reno, NV 89509
Common Jila Farahi 887,500 9.4%
1175 W. Moana Lane,
Suite 200
Reno, NV 89509
Common Craig F. Sullivan 3,700<F3> *
Common Frank A. Modica 7,200<F4> *
2 <PAGE>
Common Wanger Asset Management, L.P. 760,200<F5> 8.1%
227 West Monroe Street
Suite 3000
Chicago, IL 60606
Common Acorn Investment Trust, 535,000<F6> 5.7%
Series Designated Acorn Fund
227 West Monroe Street
Suite 3000
Chicago, IL 60606
Common All executive officers 6,223,600 66.0%
and directors as a group
(5 persons)
<FN>
* Less than 1%
<F1> Unless otherwise noted, the persons identified in this table have sole
voting and sole investment power with regard to the shares beneficially
owned by them.
<F2> Includes shares issuable upon exercise of options which are exercisable
within 60 days of March 31, 1999.
<F3> Includes options to purchase 3,700 shares under the 1993 Directors'
Stock Option Plan (the "Directors' Plan").
<F4> Includes options to purchase 7,200 shares under the Directors' Plan.
<F5> Wanger Asset Management, L.P. reported on a Schedule 13G dated February
23, 1999 that it has shared voting and dispositive power with respect to
all such shares.
<F6> Acorn Investment Trust, Series Designated Acorn Fund reported on a
Schedule 13G dated February 23, 1999 that it has shared voting and
dispositive power with respect to all such shares.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Board is comprised of five persons. The Bylaws of the Company
provide for a board of directors consisting of three to twelve persons who are
elected generally for a term of two years. Directors are to serve until their
successors are elected and have qualified.
If the enclosed proxy is duly executed and received in time for the
annual meeting and if no contrary specification is made as provided therein,
the proxy will be voted in favor of electing the nominees Ben Farahi, Bob
Farahi and Frank A. Modica for terms of office expiring in 2001 and to elect
nominee Craig F. Sullivan for a term of office expiring in 2000. Mr. Sullivan
was appointed to the Board in 1998 to fill a Category A director slot with a
term expiring in 2000, and is standing for election in 1999 as required by the
bylaws of the Company; however, if elected, his term will expire in 2000
rather than 2001 in order to maintain a staggered Board as required by the
Company's bylaws. If any such nominee shall decline or be unable to serve,
the proxy will be voted for such person as shall be designated by the Board to
replace any such nominee. The Board presently has no knowledge or reason to
believe that any of the nominees will refuse or be unable to serve.
3 <PAGE>
Any vacancies on the Board which occur during the year will be filled, if
at all, by the Board through an appointment of an individual to serve only
until the next annual meeting of stockholders.
The Company, through a wholly owned subsidiary, Golden Road Motor Inn,
Inc. ("Golden Road"), owns and operates the Atlantis Casino Resort (the
"Atlantis") in Reno, Nevada. The Company, each director who has been required
by the Nevada Gaming Authorities (as defined below) to be found suitable, each
executive officer, and each controlling person have been "found suitable" by
the Nevada State Gaming Control Board and Nevada Gaming Commission
(collectively, the "Nevada Gaming Authorities"). Future new members of the
Board, if any, may be required to be found suitable in the discretion of the
Nevada Gaming Authorities. Should any such new director not be found suitable
or should any director later be found not to be suitable by the Nevada Gaming
Authorities, that person will not be eligible to continue serving on the Board
and a majority of the remaining directors may appoint a qualified replacement
to serve as a director until the next annual meeting of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF MESSRS.
BEN FARAHI, BOB FARAHI, FRANK A. MODICA AND CRAIG F. SULLIVAN TO THE BOARD OF
DIRECTORS.
The following information is furnished with respect to each member of the
Board or nominee thereto. Similar information is provided for the Company's
executive officers and certain significant employees who are not directors.
John Farahi, Bob Farahi and Ben Farahi are brothers. There are no other
family relationships between or among any directors, nominees to the Board, or
executive officers of the Company. The statements as to beneficial ownership
of Common Stock of the Company as to each director or nominee to the Board are
based upon information furnished by him.
DIRECTORS AND NOMINEES
Director
Name Age Since Position
- -------------------- --- -------- -------------------------
John Farahi 51 1993 Co-Chairman of the Board,
(Term expires in 2000) Chief Executive Officer,
Chief Operating Officer
and Director
Bob Farahi 48 1993 Co-Chairman of the Board,
(Nominee for term President and Director
expiring in 2001)
Ben Farahi 46 1993 Co-Chairman of the Board,
(Nominee for term Chief Financial Officer,
expiring in 2001) Secretary, Treasurer
and Director
Craig F. Sullivan 52 1998 Director
(Nominee for term
expiring in 2000)
Frank A. Modica 71 1997 Director
(Nominee for term
expiring in 2001)
JOHN FARAHI has been Co-Chairman of the Board, Chief Executive Officer and
Chief Operating Officer of the Company since its inception, and of Golden
4 <PAGE>
Road since June 1993. From 1973 until June 1993, Mr. Farahi was President,
Director and General Manager of Golden Road. Mr. Farahi is a partner in
Farahi Investment Company ("FIC") which is engaged in real estate investment
and development in the Reno area. Mr. Farahi holds a political science degree
from the California State University, Hayward.
BOB FARAHI has been Co-Chairman of the Board and President of the Company
since its inception, and of Golden Road since 1993. From 1973 until June
1993, Mr. Farahi was Vice President and a director of Golden Road. Mr. Farahi
is a partner in FIC which is engaged in real estate investment and development
in the Reno area. Mr. Farahi holds a biochemistry degree from the University
of California at Berkeley.
BEN FARAHI has been Co-Chairman of the Board, Chief Financial Officer,
Secretary and Treasurer of the Company since its inception, and of Golden Road
since June 1993. From 1973 until June 1993, Mr. Farahi was Secretary,
Treasurer and a Director of Golden Road in charge of financial planning and
construction for the Company. Mr. Farahi is a partner in FIC which is engaged
in real estate investment and development in the Reno area. Mr. Farahi holds
a mechanical engineering degree from the University of California at Berkeley
and a M.B.A. degree in accounting from the California State University,
Hayward.
CRAIG F. SULLIVAN has been a member of the Board since 1998. Mr. Sullivan
is President of Sullivan & Associates, Las Vegas, Nevada, a strategic and
financial consulting firm geared to companies in the gaming industry. From
April 1995 to March 1998, Mr. Sullivan served as Chief Financial Officer and
Treasurer of Primadonna Resorts, Inc., and from 1990 to April 1995, Mr.
Sullivan served as Treasurer of Aztar Corporation.
FRANK A. MODICA has been a member of the Board since April 1997. Until
May 1995, Mr. Modica was Chairman of the Board of Atlantic City Showboat,
Inc., and until February 1995, Mr. Modica was Executive Vice President and
Chief Operating Officer of Showboat, Inc. and President and Chief Executive
Officer of Showboat Operating Company. Mr. Modica is a Director Emeritus of
First Security Bank in Las Vegas, Nevada and a Director of the Professional
Bowlers Association.
CERTAIN OFFICERS OF SUBSIDIARY
DARLYNE SULLIVAN, age 44, has been Vice President of Sales and Marketing
and Assistant General Manager of Golden Road since June 1993. From May 1977
through June 1993, she held positions including Assistant General
Manager/Director of Sales and Marketing, Reservations and Sales Manager, Front
Desk Manager and Hotel Manager and Assistant Hotel Manager for Golden Road.
RICHARD COOLEY, age 52, has been Vice President of Operations of Golden
Road since July 1995. From June 1993 through July 1995, Mr. Cooley was Vice
President of Finance of Golden Road, and served as Controller of Golden Road
from March 1993 through March 1994. From May 1988 to March 1993, Mr. Cooley
was President and General Manager and from 1981 to 1988 was Chief Financial
Officer and Assistant General Manager of the Reno Ramada Hotel Casino and
prior thereto he was Controller and Co-General Manager of the Shy Clown Casino
in Reno. Mr. Cooley is a CPA licensed to practice in Nevada.
The Company's Bylaws, as amended, currently provide for a staggered board
of directors divided into two categories: Category A consisting of two
5 <PAGE>
directors and Category B consisting of three directors. Each director serves
two-year terms. A staggered board of directors may have the effect of
delaying or preventing a change of control of the Company. Executive officers
serve at the pleasure of the Board.
COMMITTEES OF THE BOARD
The Board has four standing committees: the Audit Committee, the
Compensation Committee, the 1993 Long Term Incentive Plan Committee (the
"Incentive Plan Committee") and the 1993 Directors' Stock Option Plan
Committee (the "Directors' Plan Committee").
The Audit Committee, comprised of Craig F. Sullivan (Since September
1998) and Frank A. Modica, met 6 times during the fiscal year ended December
31, 1998. The Audit Committee's function is to review reports of certified
public accountants to the Company; to review Company financial practices,
internal controls and policies with officers and key employees; to review such
matters with the Company's auditors to determine scope of compliance and any
deficiencies; to consider selection of independent public accountants; to
review certain related party transactions; and to make periodic reports on
such matters to the Board.
The Compensation Committee, comprised of Craig F. Sullivan (Since
September 1998) and Frank A. Modica, met 5 times during the fiscal year ended
December 31, 1998. The Compensation Committee's function is to review and
make recommendations to the Board with respect to the salaries and bonuses of
the Company's executive officers and to administer the 1993 Employee Stock
Option Plan.
The Incentive Plan Committee, comprised of Craig F. Sullivan (Since
September 1998) and Frank A. Modica, met one time during the fiscal year ended
December 31, 1998. The Incentive Plan Committee's function is to administer
the 1993 Executive Long Term Incentive Plan (the "Incentive Plan") including
determining such matters as the persons to whom awards shall be granted, the
number of shares to be awarded, when the awards shall be granted, when the
awards shall vest, and the terms and provisions of the instruments evidencing
the awards, to interpret the Incentive Plan, and to notify the Board of all
decisions concerning awards granted to Incentive Plan participants.
The Directors' Plan Committee, comprised of John Farahi and Bob Farahi,
met one time during the fiscal year ended December 31, 1998. Neither John
Farahi nor Bob Farahi is eligible to participate in the Directors' Plan. The
Directors' Plan Committee's function is to administer the 1993 Directors'
Stock Option Plan (the "Directors' Plan"); however, it has limited discretion
to determine or vary matters that are fixed under the terms of the Directors'
Plan. The Directors' Plan Committee has the authority to interpret the
Directors' Plan and make all determinations necessary or advisable for its
administration. All decisions of the Directors' Plan Committee are subject to
approval by the Board.
Each member of the Audit, Compensation, Incentive Plan and Directors'
Plan Committees of the Board attended at least 75% of the committee meetings
held during the fiscal year ended December 31, 1998.
6 <PAGE>
BOARD MEETINGS
The Board held 6 meetings in the fiscal year ended December 31, 1998.
John Farahi, Bob Farahi, Ben Farahi, Craig F. Sullivan (subsequent to his
appointment in September 1998) and Frank A. Modica each attended at least 75%
of the meetings held.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Annual fees of $20,000 are paid to directors who are not employees of the
Company. Each non-employee director serving as the chairman of a committee of
the Board receives an additional annual fee of $5,000 for each committee
chaired. Each director may be reimbursed for certain expenses incurred in
connection with attendance at Board and committee meetings. Certain non-
employee directors have been granted options to purchase Common Stock under
the Directors' Plan.
1993 Directors' Stock Option Plan.
The Directors' Plan is designed to encourage non-employee directors to
take a long-term view of the affairs of the Company, to attract and retain new
superior non-employee directors and to aid in compensating non-employee
directors for their services to the Company. The Company's non-employee
directors are Frank A. Modica and Craig F. Sullivan.
The Directors' Plan is administered by the Directors' Plan Committee,
consisting of not less than two directors of the Company selected by, and
serving at the pleasure of the Board. An eligible director, upon his election
to the Board by the stockholders, will receive an initial grant to purchase
2,400 shares of Common Stock ("Initial Director Grant"), plus an additional
grant to purchase 650 shares of Common Stock for each committee chaired.
Thereafter, immediately following the close of the annual stockholders'
meeting, each eligible director will receive an annual option grant to
purchase 2,400 shares of Common Stock ("Annual Director Grant") plus an
additional grant to purchase 650 shares of Common Stock for each committee
chaired. The Director's Plan Committee may also recommend discretionary
grants of options on terms deemed appropriate by the Committee, subject to the
approval of the Board.
The exercise price of all director option grants is 100% of the fair
market value of the Common Stock on the date of grant. Initial Director
Grants and Annual Director Grants may not be exercised until six months and
one day after the date of the grant. All options granted under the Directors'
Plan are non-qualified options, the tax treatment of which is determined under
Section 422 of the Internal Revenue Code of 1986, as amended.
In 1998, Craig F. Sullivan received an Initial Director Grant of options
to purchase 3,700 shares of Common Stock, and Frank A. Modica received an
Annual Director Grant of options to purchase 2,400 shares of Common Stock.
7 <PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------
Name and Other Annual
Principal Position Year Salary($) Bonus($) Compensation
- ------------------------ ---- --------- -------- ------------
<S> <C> <C> <C> <C>
John Farahi, Co- 1998 180,000 -0- -0-
Chairman of the 1997 180,000 -0- -0-
Board and Chief 1996 180,000 -0- -0-
Executive Officer
Bob Farahi, Co-Chairman 1998 140,000 -0- -0-
of the Board and 1997 140,000 -0- -0-
President 1996 140,000 -0- -0-
Ben Farahi, Co-Chairman 1998 163,423 -0- -0-
of the Board, Chief 1997 140,000 -0- -0-
Financial Officer, 1996 140,000 -0- -0-
Secretary and Treasurer
Richard Cooley, Vice 1998 113,846 22,500 -0-
President-Operations of 1997 108,846 18,000 -0-
Golden Road 1996 103,461 12,000 -0-
Darlyne Sullivan, Vice 1998 108,654 25,500 -0-
President-Marketing of 1997 99,230 21,000 -0-
Golden Road 1996 95,615 13,000 -0-
</TABLE>
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------------
Awards Payouts
----------------------- ----------
Restricted
Name and Stock Options LTIP All Other
Principal Position Year Awards($) SARs(#) Payouts($) Compensation<F1>
- ------------------------ ---- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John Farahi, Co- 1998 -0- -0- -0- 5,441
Chairman of the 1997 -0- -0- -0- -0-
Board and Chief 1996 -0- -0- -0- -0-
Executive Officer
Bob Farahi, Co-Chairman 1998 -0- -0- -0- 3,335
of the Board and 1997 -0- -0- -0- -0-
President 1996 -0- -0- -0- -0-
Ben Farahi, Co-Chairman 1998 -0- -0- -0- 7,517
of the Board, Chief 1997 -0- -0- -0- -0-
Financial Officer, 1996 -0- -0- -0- -0-
Secretary and Treasurer
Richard Cooley, Vice 1998 -0- -0- -0- 1,363
President-Operations of 1997 -0- 30,000 -0- 1,268
Golden Road 1996 -0- -0- -0- 1,155
Darlyne Sullivan, Vice 1998 -0- -0- -0- 1,342
President-Marketing of 1997 -0- 50,000 -0- 1,202
Golden Road 1996 -0- -0- -0- 995
<FN>
<F1> Amounts for John Farahi, Bob Farahi and Ben Farahi represent the lease value of automobiles
paid for by the Company. Amounts for Richard Cooley and Darlyne Sullivan represent the Company's
contribution to 401(k) plans.
</FN>
</TABLE>
8 <PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of securities
underlying unexercised Value of unexercised
Shares options at fiscal in-the-money options
acquired on Value year end(#) at fiscal year-end($)
Name exercise(#) realized($) Exercisable/unexercisable Exercisable/unexercisable(1)
- ----------------- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
John Farahi 0 $ -- 0/0 $ --/--
Bob Farahi 0 -- 0/0 --/--
Ben Farahi 0 -- 0/0 --/--
Richard Cooley 0 -- 0/30,000 --/71,100
Darlyne Sullivan 0 -- 50,000/0 143,500/--
</TABLE>
- ---------------
(1) Represents the difference between the last reported sale price of the
Common Stock reported on The Nasdaq Stock Market(SM) on December 31, 1998
and the exercise price of the options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's executive compensation is determined by the Compensation
Committee of the Board. The Compensation Committee is composed of directors
Craig F. Sullivan and Frank A. Modica, neither of whom has ever served as an
employee or officer of the Company.
NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT ON EXECUTIVE
COMPENSATION AND THE STOCK PERFORMANCE CHART PRESENTED SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee and Incentive Plan Committee (collectively,
the "Committees"), which are composed entirely of directors who have never
served as executive officers of the Company, determine and administer the
compensation of the Company's executive officers.
Compensation Philosophy
The Committees seek to compensate the Company's executive officers in
such a fashion that will attract and retain individuals who are responsible
for the management, growth and success of the Company. The Committees believe
that executive compensation should be designed to reward those individuals for
their services to the Company and encourage them to continue in its employ.
The Committees' actions related to compensation of the Company's executive
officers are submitted to the full Board of Directors for ratification and
approval.
Although the Committees believe that the Company's overall financial
performance is an important factor in the total compensation of the Company's
executive officers, the Committees do not apply any specific quantitative
formula in making compensation decisions. The Committees also recognize
9 <PAGE>
qualitative factors such as successful supervision of the Company's
operations, development of corporate projects, promotion of the Company's
corporate image and participation in industry and community activities.
The Committees also evaluate the total compensation of the Company's
executive officers in light of the compensation practices and relative
corporate financial performance of other companies in the gaming industry
similar to the Company in terms of asset size and target market. The
Committees' goal is that the base salaries for the Chief Executive Officer and
other executive officers should be established at levels considered
appropriate in light of the duties and scope of responsibilities of each
officer's position. Salaries are reviewed annually and are warranted to
reflect sustained individual officer performance. The Chief Executive Officer
and other executive officers are also eligible to receive incentive
compensation in the form of stock options under the Incentive Plan; however,
no options were granted to executive officers during 1998.
The Incentive Plan Committee recommends to the Board the persons to whom
awards will be granted and in doing so, the Incentive Plan Committee considers
the quantitative and qualitative factors and industry peer group comparisons
discussed above. The number of options previously awarded to and held by
executive officers is reviewed, but is not an important factor in determining
the size of current option grants.
Chief Executive Officer Compensation
Following the recommendation of the Compensation Committee, the Board has
established the Chief Executive Officer's salary at $180,000. The
Compensation Committee's recommendation was made on a subjective basis and did
not bear a specific relationship to any particular measure of the Company's
performance in 1998 or any prior period. In determining the Chief Executive
Officer's salary, the Compensation Committee considered (a) the Chief
Executive Officer's record of leadership and service to the Company since its
inception, (b) the growth of the Company during the Chief Executive Officer's
tenure, (c) the Chief Executive Officer's pivotal role in overseeing the day
to day operations of the Company and (d) the Chief Executive Officer's civic
leadership in the Reno area.
COMPENSATION COMMITTEE AND INCENTIVE PLAN COMMITTEE
By: Craig F. Sullivan
Frank A. Modica
10 <PAGE>
STOCK PERFORMANCE CHART
The following chart reflects the cumulative total return (change in stock
price plus reinvested dividends) of a $100 investment in the Company's Common
Stock for the five year period from January 1, 1994 through December 31, 1998
in comparison to the Standard & Poor's 500 Composite Stock Index and an
industry peer group index. The comparisons are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
<TABLE>
<CAPTION>
MONARCH CASINO & RESORT, INC.
Total Return
January 1, 1994 - December 31, 1998
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Monarch Casino & Resort, Inc. 100 68.75 43.75 25.00 68.75 65.63
S&P 500 Index 100 101.32 139.40 171.40 228.59 293.91
Self Determined Peer Group(1) 100 70.78 89.21 96.49 85.73 58.07
</TABLE>
- ---------------
(1) The Companies included in the peer group are as follows: Alliance Gaming
Corp.; Argosy Gaming Corp.; Aztar Corp.; Bally Entertainment Corp. (Acquired
by Hilton); Black Hawk Gaming & Development Corp.; Boomtown Inc. (Acquired by
Hollywood Park); Caesars World, Inc. (Acquired by ITT); Capital Gaming
International, Inc.; Casino Magic Corp. (Acquired by Hollywood Park); Circus
Circus Enterprises, Inc.; Gaming Corp. of America (Acquired by Grand Casinos);
Grand Casinos, Inc. (Acquired by Hilton); Griffin Gaming & Entertainment, Inc.
(Acquired by Sun International); Harrah's Entertainment, Inc.; Hollywood
Casino Corp.; International Gaming Management, Inc. (No longer files with the
SEC); Jackpot Enterprises, Inc.; Lady Luck Gaming Corp.; LS Capital Corp.
(Formerly Lone Star Casino Corp.); Mirage Resorts, Inc.; President Casinos,
Inc.; Sands Regent; Santa Fe Gaming Corp.; Showboat, Inc. (Acquired by
Harrah's); and Station Casinos, Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of Chapter 78 of the Nevada Revised Statutes ("NRS"),
Article IX of the Company's Articles of Incorporation, and Article VII of the
Company's Bylaws contain provisions for indemnification of officers and
directors of the Company. The Articles of Incorporation require the Company
to indemnify such persons to the full extent permitted by Nevada law. Each
person will be indemnified in any proceeding provided that such person's acts
or omissions did not involve intentional misconduct, fraud or knowing
violation of law or the payment of dividends in violation of NRS 78.300.
Indemnification would cover expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement.
The Company's Articles of Incorporation also provide that the Board may
cause the Company to purchase and maintain insurance on behalf of any present
or past director or officer insuring against any liability asserted against
such person incurred in the capacity of director or officer or arising out of
such status, whether or not the corporation would have the power to indemnify
such person. The Company has obtained and maintains such insurance.
11 <PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission (the "SEC") such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
****
The Company requires that the Audit Committee of the Board review certain
related party transactions.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent accountants are Grant Thornton LLP. Grant
Thornton LLP has audited the Company's financial statements since its
inception, and is expected to have a representative present at the annual
meeting who will have the opportunity to make a statement if such
representative desires to do so and is expected to be available to respond to
appropriate questions.
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, to file with
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 stockholders holding more than 10% of the class of stock are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors, and
greater than 10% beneficial owners were satisfied.
VOTING PROCEDURES
A majority of a quorum of stockholders present in person or represented
by proxy voting "FOR" the election of the nominees to the Board is sufficient
to approve the matters being voted on at the meeting. A quorum of
stockholders exists when a majority of the stock issued and outstanding and
entitled to vote at a meeting is present, in person or represented by proxy,
at the meeting. Abstentions are effectively treated as votes "AGAINST" a
matter presented. Neither the Company's Articles of Incorporation, Bylaws,
nor Nevada corporate statutes address the treatment and effect of abstentions
and broker non-votes.
The Company will appoint three inspectors of election to: determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity,
12 <PAGE>
validity, and effect of a proxy; receive votes, ballots, or consents; hear and
determine all challenges and questions in any way arising in connection with
the right to vote; count and tabulate all votes or consents; determine when
the polls shall close; determine the results; and do any other acts which may
be proper to conduct the election or vote with fairness to all stockholders.
2000 ANNUAL MEETING OF STOCKHOLDERS
The next annual meeting of stockholders will be held on or about June 14,
2000. Stockholders desiring to present proper proposals at that meeting and
to have their proposals included in the Company's Proxy Statement and form of
proxy for that meeting must meet the eligibility and other criteria under Rule
14a-8 of the Securities Exchange Act of 1934 and must submit the proposal to
the Company and such proposal must be received no later than December 28,
1999.
OTHER BUSINESS
The Board does not know of any other business which will be presented for
action by the stockholders at this annual meeting. However, if any business
other than that set forth in the Notice of Annual Meeting of Stockholders
should be presented at the annual meeting, the proxy committee named in the
enclosed proxy intends to take such action as will be in harmony with the
policies of the Board and in that connection will use their discretion and
vote all proxies in accordance with their judgment.
The Company's 1998 Annual Report to Stockholders, including financial
statements for the twelve months ended December 31, 1998, accompanies these
proxy materials, which are being mailed on or about April 28, 1999 to all
stockholders of record of the Company as of April 19, 1999.
By order of the Board,
/s/Ben Farahi
Ben Farahi
Secretary
DATED: April 28, 1999
13 <PAGE>
MONARCH CASINO & RESORT, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 23, 1999
SOLICITED BY THE BOARD
The undersigned stockholder of Monarch Casino & Resort, Inc. (the
"Company") hereby acknowledges receipt of the Notice of Meeting of
Stockholders, Proxy Statement, and Annual Report to Stockholders in connection
with the Annual Meeting of Stockholders of the Company to be held at the
Atlantis Casino Resort, Reno, Nevada, on Wednesday, June 23, 1999, at 10:00
o'clock in the morning, local time, and hereby appoints John Farahi and Bob
Farahi, and each or any of them, proxies, with power of substitution, to
attend and to vote all shares the undersigned would be entitled to vote if
personally present at said annual meeting and at any adjournment thereof. The
proxies are instructed to vote as follows:
(To be signed on reverse side)
15 <PAGE>
[X] Please mark your votes as in this example.
(1) Election of Directors: FOR WITHHELD
[ ] [ ]
NOMINEES: Ben Farahi, Bob Farahi, Craig F. Sullivan and Frank A. Modica.
(INSTRUCTION: to withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below):
__________________________________
(2) In their discretion, act upon such other matters as may properly come
before this meeting.
FOR [ ] AGAINST [ ] WITHHELD [ ]
The shares represented by this proxy will be voted as specified. If no
specification is made, the shares represented by this proxy will be voted in
favor of all nominees listed and in the discretion of the proxies on other
matters that may properly come before the annual meeting.
SIGNATURE(S)__________________________ DATE_____________________
NOTE: PLEASE SIGN PROXY EXACTLY AS YOUR NAME APPEARS. Date the Proxy in the
space provided. If shares are held in the name of two or more persons, all
must sign. When signing as attorney, executor, administrator, trustee, or
guardian, give full title as such. If signer is a corporation, sign full
corporate name by duly authorized officer.
16
