<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
MIKOHN GAMING CORP.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
<PAGE>
MIKOHN GAMING CORPORATION
1045 Palms Airport Drive
Las Vegas, Nevada 89119
April 14, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of your Company, which will be held in a meeting room at the magnificent new
Mandalay Bay Resort and Casino, 3950 Las Vegas Boulevard South, Las Vegas,
Nevada, on Tuesday, May 11, 1999 at 10:00 a.m. Pacific Daylight Time. We hope
that you will be able to attend the Annual Meeting in person and we look
forward to seeing you.
At the Annual Meeting, stockholders will elect two Class 1 Directors to
serve for terms of three years and until their successors are elected and
qualified and act upon the other matters mentioned in the Notice of Annual
Meeting and in the Proxy Statement accompanying this letter. We will
appreciate your prompt attention to these matters.
You may attend the meeting and vote your shares in person if you wish. If
you choose to vote your shares in person, please see the last paragraph of the
accompanying Notice of Annual Meeting of Stockholders regarding the proxy you
will need if your shares are held in street name.
Irrespective of whether you plan to attend in person, it is important that
your shares be represented. Accordingly, after reviewing the enclosed Notice
of Annual Meeting and Proxy Statement, please complete, sign, date and return
the enclosed Proxy in the postage paid envelope at your earliest convenience.
Sincerely,
/s/ David J. Thompson
David J. Thompson
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
MIKOHN GAMING CORPORATION
1045 Palms Airport Drive
P. O. Box 98686
Las Vegas, Nevada 89193-8686
(702) 896-3890
____________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Tuesday, May 11, 1999
The 1999 Annual Meeting of Stockholders of Mikohn Gaming Corporation, a Nevada
corporation (the "Company"), will be held in a meeting room at the Mandalay Bay
Resort and Casino, 3950 Las Vegas Boulevard South, Las Vegas, Nevada on Tuesday,
May 11, 1999 commencing at 10:00 a.m. Pacific Daylight Time. The room in which
our meeting will be held will be identified by a sign in the lobby.
We will consider the following matters:
1. The election of two Class 1 directors to hold office until the 2002 Annual
Meeting of Stockholders and until their successors are elected and
qualified,
2. Approving the appointment of Deloitte & Touche LLP as the Company's
independent accountants for 1999, and
3. Acting upon such other business as may properly come before the Annual
Meeting and any adjournment or postponement of the meeting.
Only stockholders of record on the books of the Company at the close of
business on March 15, 1999 are entitled to vote at the Annual Meeting and any
adjournment or postponement of the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING,
REGARDLESS OF THE NUMBER YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE RETURN ENVELOPE,
WHICH REQUIRES NO POSTAGE IN THE UNITED STATES.
You may attend the Annual Meeting and vote your shares in person even though
the Company has received your proxy. However, if your shares are held in the
name of your stockbroker or other nominee and you already have sent in your
proxy, you must get a new proxy signed by your nominee if you decide to attend
the meeting and vote in person.
By Order of the Board of Directors
/s/ Charles H. McCrea, Jr.
Charles H. McCrea, Jr.
Secretary
Las Vegas, Nevada
April 14, 1999
<PAGE>
MIKOHN GAMING CORPORATION
1045 Palms Airport Drive
P. O. Box 98686
Las Vegas, Nevada 89193-8686
(702) 896-3890
____________________________
PROXY STATEMENT
APRIL 14, 1999
____________________________
ANNUAL MEETING OF STOCKHOLDERS
May 11, 1999
This Proxy Statement and the accompanying Proxy were mailed on or about
April 14, 1999, to all holders of record of the $.10 par value common stock
("Common Stock") of Mikohn Gaming Corporation, a Nevada corporation (the
"Company"), as of the close of business on March 15, 1999.
The enclosed Proxy is solicited by and on behalf of the Board of Directors
(the "Board") of the Company for use at the Company's 1999 Annual Meeting of
Stockholders (the "Annual Meeting") and at any and all adjournments or
postponements. You may revoke your Proxy at any time prior to its use by (i)
providing a written revocation to the Secretary of the Company, (ii) executing
and delivering a later dated Proxy or (iii) attending the Annual Meeting and
informing the Company officials that you wish to vote in person. A stockholder
who holds shares in street name and who decides to vote his shares in person at
the Annual Meeting must obtain from his broker or other nominee a proxy naming
him as the person authorized to vote the shares. Shares represented by a valid
Proxy will be voted as instructed by the stockholder. In the absence of any
contrary instructions, such shares will be voted (i) for the election of the
nominees for Directors named herein, (ii) for the retention of Deloitte & Touche
LLP as independent accountants and (iii) in the discretion of the named and
acting proxy with respect to any other matter properly presented for
consideration at the Annual Meeting.
Only holders of record of the Company's Common Stock at the close of
business on the record date, March 15, 1999 are entitled to notice of and to
vote at the Annual Meeting. On the record date there were outstanding 10,680,075
shares of Common Stock not including 19,113 treasury shares which can be neither
voted nor counted for any purpose at the Annual Meeting. The presence, either in
person or by proxy, of persons entitled to vote a majority of the Company's
outstanding Common Stock is necessary to constitute a quorum for the transaction
of business at the Annual Meeting. Each share is entitled to one vote in
connection with the election of each Director and each matter submitted for
stockholder approval. The two candidates for Director who receive the most votes
will be elected, and a majority of a quorum is sufficient to approve or
disapprove any other item on the agenda. All shares represented at the Annual
Meeting are counted for the purpose of ascertaining the presence of a quorum. It
follows that shares present but not voted in respect of any matter except the
election of Directors have the effect of being voted against, and may result in
disapproval of, such matter.
The Directors and executive officers of the Company, who among them own
beneficially and/or have voting power with respect to approximately 54.7 percent
of the Company's outstanding Common Stock (see "PRINCIPAL STOCKHOLDERS" below),
intend to vote their shares for both of the Class 1 candidates for Director
named below and in favor of the retention of Deloitte & Touche LLP.
1
<PAGE>
ELECTION OF DIRECTORS
The Board is comprised of seven directors divided among three classes, as
follows:
Class 1 - David J. Thompson and John K. Campbell. Nominal terms of Class 1
-------
Directors expire at the 1999 Annual Meeting. Nominal terms of
Class 1 Directors elected at the 1999 Annual Meeting will expire
at the 2002 annual meeting and every three years thereafter.
Class 2 - James E. Meyer and Douglas M. Todoroff. Nominal terms of Class 2
-------
Directors expire at the 2000 annual meeting and every three years
thereafter.
Class 3 - Terrance W. Oliver, Dennis A. Garcia and Bruce E. Peterson.
-------
Nominal terms of Class 3 Directors expire at the 2001 annual
meeting and every three years thereafter.
Except in cases of death, disability or resignation, directors serve until
the end of their nominal terms and until their respective successors are elected
and qualified, whichever is later.
In September 1998, Class 1 Director Richard H. Irvine resigned, resulting in
the three classes of Directors having 1, 2 and 3 Directors, respectively. To
correct this inequality in class size to comply with state law and to restore
the Board to its authorized complement of seven Directors, on February 9, 1999
Mr. Thompson resigned as a Class 3 Director and was immediately appointed to
fill the vacancy in Class 1 resulting from Mr. Irvine's resignation; Mr. Oliver
resigned as a Class 2 Director and was immediately appointed to fill the vacancy
in Class 3 created by Mr. Thompson's resignation; and James E. Meyer was
appointed to fill the vacancy in Class 2 created by Mr. Oliver's resignation.
At the Annual Meeting on May 11, 1999, only the Class 1 Directors Mr.
Thompson and Mr. Campbell will stand for election. Each has served on the
Board for more than five years.
The Board recommends a vote for each Director nominated. Should a vacancy
occur for any reason (none is anticipated), the persons named as proxies will
vote for a substitute nominee designated by the Board.
Following is a list of the current Directors and executive officers of the
Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
David J. Thompson 55 Chairman of the Board, President and Chief Executive Officer
John K. Campbell (1) 69 Director and Chairman of Audit Committee
Dennis A. Garcia 53 Director and Executive Vice President - Proprietary Games
Terrance W. Oliver 49 Director
Bruce E. Peterson 51 Director
Douglas M. Todoroff (1) 52 Director and Chairman of Compensation Committee
James E. Meyer 44 Director
Charles H. McCrea, Jr. 49 Executive Vice President, General Counsel and Secretary
Donald W. Stevens 58 Executive Vice President, Chief Financial Officer and Treasurer
Louie D. Peyton 49 Executive Vice President - Operations
Robert Smyth 45 Executive Vice President - Marketing and Sales
</TABLE>
(1) Member of the Audit and Compensation Committees
2
<PAGE>
Nominees for Election to a Three Year Term
David J. Thompson has been Chief Executive Officer of the Company since 1988,
-----------------
was appointed Chairman of the Board of the Company in September 1993 and was
appointed President in September 1998. He served as chief Financial Officer of
the Company from 1988 to September 1993, and from August 1995 to June 1996.
From 1977 to 1988, Mr. Thompson was in private practice as a certified public
accountant in Reno and Las Vegas, Nevada, serving a number of clients involved
in the gaming industry. From 1973 to 1976, Mr. Thompson served as a consultant
to various gaming industry clients in Las Vegas and Reno. He was an executive
with Harrah's (predecessor to Harrah's Entertainment, Inc.) from 1969 to 1973.
John K. Campbell has served as a director of the Company since December 1993.
----------------
From 1986 until February 1995, Mr. Campbell served as a director of Sahara
Gaming Corporation (formerly Sahara Resorts) and of various Sahara subsidiary
corporations. He is president of Sportco Sporting Goods, Inc., a retail sporting
goods store. Mr. Campbell was self employed as a consultant from 1986 to 1989
and was vice president/finance and treasurer of the MGM Grand Hotel from 1972
until 1986. He is chairman of the Audit Committee of the Board.
Directors Continuing in Office Until the 2000 Annual Meeting
Douglas M. Todoroff has served as a Director of the Company since December
-------------------
1993. He has been president of Mercier Management Company since November 1993,
was senior vice president-manager of commercial lending with Bank of America
Nevada from 1992 to 1993 and was executive vice president and senior credit
officer of its predecessor, Valley Bank of Nevada, from 1981 to 1992. He is
chairman of the Compensation Committee of the Board.
James E. Meyer was appointed on February 9, 1999 to fill a Class 2 vacancy on
--------------
the Board. Since January 1997 he has served as executive vice president of
Thomson Consumer Electronics, the world's fourth largest manufacturer of
consumer electronic products. Mr. Meyer has served Thomson and its predecessor,
General Electric Company, in numerous and successively more responsible
capacities since 1985. Thomson, based in Indianapolis, IN, has 30 production
facilities in 17 countries and has more than 50,000 employees worldwide. Mr.
Meyer oversees the development and management of product lines generating annual
revenues in excess of $4.5 billion. He also is a director of Gemstar
Development Corporation (NASDAQ:GMST) located in Pasadena, CA.
----
Directors Continuing in Office Until the 2001 Annual Meeting
Dennis A. Garcia has been a Director since December 1993, and was Vice
----------------
President-Sales, Casino Signs Division of the Company, from November 1993 to
March 1996. From March 1996 to May 1996, Mr. Garcia served as Executive Vice
President-Sales. Since May 1996, Mr. Garcia has served as Executive Vice
President-Proprietary Games. From 1985 until joining the Company in 1993, Mr.
Garcia was president and director of sales of Casino Signs North, Inc. ("CSN"),
and from 1990 until joining the Company he also was president of A&D Sign
Manufacturing, Inc. ("A&D"). Both CSN and A&D served as distributors of the
Company's products and were merged into the Company in November 1993. Mr. Garcia
was a founder of both CSN and A&D and served as a director of both corporations
from their inception.
Bruce E. Peterson has been a Director of the Company since December 1993, and
-----------------
was Vice President-Production from November 1993 (Executive Vice President since
March 1996) until his retirement as an officer effective December 31, 1996.
Prior to joining the Company, Mr. Peterson was president and a director of
Peterson Sign Art, Inc. and a general partner of its predecessor since 1979.
Peterson Sign Art, Inc. was a distributor of the Company's products and was
merged into the Company in November 1993.
3
<PAGE>
Terrance W. Oliver has been a Director of the Company since 1988, and served
------------------
as Chairman of the Board of Directors of the Company from 1988 to September
1993. From 1986 to 1995, he was a director and president of The Nevada Club,
Inc., a casino in Reno, Nevada. That company was rolled-up in 1995 as part of
Fitzgerald's Gaming Corporation, in which Mr. Oliver now serves as a director,
and he served as executive vice-president and chief operating officer until his
retirement in June 1996. Because of Mr. Oliver's extensive experience in casino
management, in 1996 the Company retained him as a consultant to assist it in new
product development. In 1998 the Company paid Mr. Oliver $60,097 for his
services as a consultant, which was in addition to all amounts paid to him in
connection with his services as an outside director.
Executive Officers of the Company
Biographical information on the executive officers of the Company who are not
Directors is set forth below. There are no family relationships between any
Director or executive officer and any other Director or executive officer. All
executive officers serve at the pleasure of the Board; however, the Company has
an employment contract with each of them.
Charles H. McCrea, Jr., Executive Vice President - General Counsel and
----------------------
Secretary since 1996, has served as an executive officer of the Company since
1994. For more than ten years prior to his employment by the Company in 1994,
he was a partner in Lionel, Sawyer & Collins, a Nevada law firm with offices in
Las Vegas and Reno. He is admitted to practice law in Nevada and California.
Donald W. Stevens has been Executive Vice President, Chief Financial Officer
-----------------
and Treasurer since June 1996. From 1981 to 1996 Mr. Stevens was the owner and
president of Orange Torpedo Trips Inc., Grants Pass, Oregon. From 1971 to 1981
he held several positions with Harrah's, and was serving as Treasurer and
Controller at the time he resigned to establish his excursion business.
Louie D. Peyton has served as Executive Vice President - Operations since
---------------
March 1999 (Vice President since January, 1997). Prior to his employment by the
Company, he served as a consultant to Aura Systems of El Segundo, CA in 1996.
From 1992 to 1996 he was employed by Harman Manufacturing, Northridge
Manufacturing Group, Northridge, CA where he advanced to the position of vice
president - operations. From 1989 to 1992 he served as director of quality
assurance at TRW Vehicle Safety Systems, Inc. in Mesa, AZ; from 1985 to 1989 as
director of quality assurance at ITT Corporation, ITT Automotive, Inc. in
Southfield, MI; and from 1981 to 1985 successively as reliability/quality
manager and manufacturing engineering manager at Rockwell International in
Ashtabula, OH.
Robert Smyth has served as Executive Vice President Marketing and Sales since
------------
March 1999 (Vice President Product Development and Marketing since November
1998). Prior to his employment by the Company, he served as managing director of
Centron International based in the United Kingdom from 1996 until 1998. From
1983 to 1996 he was employed by Network Systems Corporation where he advanced to
the position of director of European marketing and development. While in
Johannesburg, South Africa he served from 1980 to 1983 as customer engineering
manager at Corporate Management Services; from 1978 to 1980 as a customer
engineer and data communications specialist at International Computers Limited;
and from 1971 to 1978 as a telecommunications engineer at the South African Post
Office - Telecommunications Division.
4
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Board of Directors held six meetings in 1998. Except for one
meeting which one Director was unable to attend, all meetings were attended by
all Directors. Other business was handled from time to time by unanimous
written consent of the Directors.
The Board has an Audit Committee and a Compensation Committee. There is no
nominating committee. Committee members are appointed by the full Board. Both
the Audit Committee and the Compensation Committee are comprised of Directors
Campbell and Todoroff, both of whom are outside directors.
The Audit Committee, chaired by Director Campbell, is charged with reviewing
the audited financial statements of the Company and making recommendations to
the full Board on matters concerning the Company's audits, the selection of the
Company's independent public accountant and such other matters relating to the
Company's financial and accounting affairs as the Audit Committee may in its
discretion choose to address. The Audit Committee met twice during 1998 and all
members attended both meetings.
The Compensation Committee, chaired by Director Todoroff, is responsible for
monitoring the performance of the Company's executive officers, passing upon
salaries, bonuses and other compensation for the Company's executive officers,
and administering the Company's Stock Option Plan. The Compensation Committee
met twice in 1998 with all members in attendance, and routine matters were
handled on two additional occasions by unanimous written consent.
Each director who is not an employee of the Company receives a monthly
stipend of $1,000, a fee of $2,000 for each Board and Board committee meeting
attended and reimbursement for reasonable expenses. In addition, each such
director receives each year, immediately following the Annual Meeting, a ten
year option (vesting as to one-third of the optioned shares, cumulatively, on
each of the first three anniversaries) to purchase at 100% of the fair market
value at the date of grant 5,000 shares of Company Common Stock plus 1,000
shares for each year he has served as a director. Directors who are not
employees of the Company may participate in the Company's executive medical
plan. Directors who are employees of the Company do not receive additional
compensation for their services as Directors.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The Summary Compensation Table below sets forth for the fiscal years ended
December 31, 1998, 1997 and 1996 information regarding compensation paid to the
Chief Executive Officer and each of the five other most highly compensated
executive officers of the Company in fiscal 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards /
Number of
Annual Compensation Shares All Other
----------------------- Underlying Compemsation
Name and Principal Position Year Salary ($)(1) Bonus($)(1) Option (2) ($)(3)
- --------------------------- ---- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David J. Thompson 1998 $ 388,132 $ 20,974 (8) $ 1,184
Chairman, President and CEO 1997 377,796 156,767 (4) 80,000 2,206
1996 335,846 1,592
Dennis A. Garcia 1998 259,229 106,000 (8) 1,333
Executive Vice President - 1997 263,336 40,000 1.235
Proprietary Games 1996 242,216 20,000 1,137
Charles H. McCrea, Jr. 1998 277,363 20,000 3,849
Executive Vice President 1997 267,310 5,000 60,000 1,089
General Counsel and Secretary 1996 235,667 20,000 20,000 1,088
Donald W. Stevens 1998 180,173 2,996 (8) 2,552
Executive Vice President, 1997 192,594 22,367 40,000 744
Treasurer and CFO 1996 87,115 50,000 (5) 50,000
Louie D. Peyton (6) 1998 161,285 32,200 (9) 832
Executive Vice President - 1997 136,829 22,500 (7) 60,000
Operations
Richard H. Irvine (8) 1998 265,776 8,989 (8) 1,584
Director, President and COO 1997 320,682 67,100 60,000 3,140
(Resigned September, 1998) 1996 87,115 50,000 20,000 1,427
</TABLE>
(1) The amounts in the Salary and Bonus columns include gross compensation
earned for each named executive for each year shown. The amounts in the
Salary column (i) exclude the bonuses shown in the Bonus column, (ii)
include certain Company paid personal benefits such as automobile
allowances, memberships and dues in various organizations and family
medical expenses (but in no case did the amount paid to or on behalf of any
named executive officer in respect of such personal benefits exceed $50,000
of compensation for any year shown) and (iii) include the Company matching
contributions under the Employees' Investment Plan.
6
<PAGE>
(2) No stock appreciation rights (SARs) ever have been granted by the Company.
All stock options granted to the named executive officers were granted at
exercise prices not lower than the fair market value of the shares on the
dates the grants were made. None of the named executive officers exercised
any stock options in 1998.
(3) Amounts in the All Other Compensation column represent the employer
contributions under the Company's 401(k) plan, which amounts are not
included in any other column.
(4) The 1997 bonus paid to Mr. Thompson pursuant to his employment contract was
based on the Company's 1996 results, accrued in 1966 and paid in 1997.
Starting in 1997, the Company accrued and paid bonuses on a quarterly
basis.
(5) Signing bonus paid pursuant to Mr. Stevens' employment contract.
(6) Mr. Peyton was hired in January 1997.
(7) Signing bonus paid pursuant to Mr. Peyton's employment contract.
(8) Bonus paid in 1998 was earned in last quarter of 1997.
(9) Discretionary bonus award based on job performance.
Employment Agreements and Change in Control Arrangements
In February 1999, the Company and Mr. Thompson entered into an amendment to
his 1988 employment agreement extending it through December 31, 2002 and
providing for a base salary of $375,000 for 1999. His base salary increases by
$20,000 each succeeding year. Under his employment agreement Mr. Thompson
receives a bonus equal to 5% of net pretax income (but in no case greater than
$1 million) for each year, multiplied by a fraction the numerator of which is
9,802,611 and the denominator of which is the weighted average number of shares
of Common Stock and common stock equivalents outstanding (as reported by the
basic formula) for such year, as reflected in the Company's audited financial
statements. In the event of termination of Mr. Thompson's employment without
good cause (as defined in his employment agreement), he will be entitled to a
lump-sum termination payment equal to any unpaid base salary through the end of
2002 plus $1,000,000.
In November 1993, the Company entered into an employment agreement with Mr.
Garcia extending through December 31, 1999. Since June 1, 1996, Mr. Garcia has
served as Executive Vice President Proprietary Games. His employment agreement
as amended provides for a base salary of $260,000 in 1999. Mr. Garcia will be
eligible to receive a performance bonus in 1999 if pre-tax income from
proprietary games exceeds certain budgeted levels. A graduated bonus will be
earned ranging from 1.75% of net income from proprietary games at the first
level in excess of budget to a maximum of 90% of 5% of all pre-tax net income
from proprietary games in excess of 166.67% of budget. No bonus will be paid
unless the proprietary games budget is realized.
In May 1994, the Company and Mr. McCrea entered into a four year employment
agreement which has since been amended, among other things extending it through
2000. Mr. McCrea, Executive Vice President General Counsel and Secretary of
the Company, will be paid a base salary of $275,000 in 1999, increasing by
$20,000 on January 1 of 2000. The Company is obligated to review Mr. McCrea's
base salary annually (but is not obligated to increase it beyond the
requirements of Mr. McCrea's employment agreement) and to consider cash bonuses.
In the event Mr. McCrea is terminated without good cause (as defined in his
employment agreement), he will be entitled to a lump-sum termination payment
equal to his base salary for the most recent calendar year, and his stock option
rights will remain in full force and effect.
The Company has entered into an employment agreement with Mr. Stevens,
Executive Vice President, Treasurer and Chief Financial Officer, dated June 10,
1996, amended August 15, 1997. This agreement provides for a base salary of
$180,000 annually effective June 10, 1998, plus a cash bonus in each year equal
to one-half of one percent of the net pre-tax income of the Company multiplied
by a fraction, the numerator of which is 9,831,531 and the
7
<PAGE>
denominator of which is the weighted average number of shares of Common Stock
and equivalents (on a primary basis) outstanding for such year as reflected in
the Company's financial statements, but in no case may the bonus in any year
exceed $1 million.
The Company has entered into an employment agreement with Mr. Peyton dated
January 27, 1997. The agreement provides for a base salary of not less than
$140,000 annually, a signing bonus of $22,500 (which was paid in 1997) and such
additional bonuses as the Company may award based on performance. Mr. Peyton
was paid a performance bonus of $32,200 in 1998.
Any termination of employment without good cause of Mr. Thompson or Mr.
Garcia must be approved by a five-sevenths vote of the Board. The employment
agreements with Messrs. Thompson, Garcia, McCrea and Stevens provide that their
employment agreements will not be prematurely terminated by any merger,
consolidation, asset sale, dissolution or change in ownership of the Company.
Each of these officers has agreed not to compete with the Company for a period
of two years following the termination of his employment relationship with the
Company. The employment agreement with Mr. Thompson also provides in case of
disability for the continuation of salary payments for six months following
termination of employment owing to such disability and payments thereafter of
$100,000 annually through December 31, 2002.
8
<PAGE>
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS IN 1998
The table below sets forth the only grant of stock options under the Plan to
any executive officer named in the Summary Compensation Table during the fiscal
year ended December 31, 1998. No stock appreciation rights (SARs) ever have
been granted by the Company. The amounts shown for the named executive officer
as the potential realizable value of his options are based on arbitrarily
assumed annualized rates of stock price appreciation of five percent and ten
percent over the per share exercise price of the optioned shares during the full
term of the options. No gain in the value of the optioned shares is possible
without a corresponding increase in the stock price that will benefit all
stockholders in proportion to their holdings. These potential realizable values
are based solely on arbitrarily assumed rates of appreciation required by
applicable Securities and Exchange Commission regulations. Actual gains, if
any, are dependent on the future performance of the Common Stock. There can be
no assurance that any potentially realizable values will be achieved.
Option / SAR Grants in Fiscal 1998
Individual Grants
<TABLE>
<CAPTION>
Potential
Realizable Value
(Net of Cost) at
Assumed Annual
Number of % of Total Rates of Stock
Shares Options Exercise Price Appreciation
Underlying Granted to Price for Option Term
Options Employees in Expiration Expiration ------------------
Name Granted Fiscal Year(1) $/Share(2) Date 5% 10%
- ---- ------- -------------- ---------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Charles H. McCrea, Jr. 20,000 6.7% $4.375 12/31/2008 $ 55,028 $ 139,452
</TABLE>
(1) Options granted under the Plan to all grantees totaled 299,200 in 1998.
(2) The exercise price is the fair market value of the Common Stock on the date
of the grant.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION AND STOCK OPTIONS
Introduction
It is the responsibility of the Compensation Committee to establish and
review the Company's executive compensation plans, programs and policies, to
administer the Company's Stock Option Plan, to monitor the performance and
compensation of executive officers and to make recommendations to the Board with
respect to executive compensation. The Compensation Committee, established in
January 1994, is comprised of Directors Todoroff, who is Chairman, and Campbell.
Both are outside directors and neither has ever served as an officer or employee
of the Company. The Compensation Committee held two formal meetings during 1998
and handled additional matters by unanimous written consent.
Compensation Policies
The Compensation Committee has adopted certain principles and policies
regarding compensation for executive officers and other key employees. The
Company strives to offer competitive compensation opportunities for all
employees based on each individual's contribution and performance. The
Compensation Committee recognizes that a successful executive compensation
policy must provide competitive levels of compensation that integrate pay with
personal and Company performance, reward excellence, recognize individual
initiative and achievement and assist the Company in attracting and retaining
qualified executives. The Compensation Committee believes that an executive
compensation program should include three primary elements: annual base salary,
annual incentive compensation and, particularly in the case of executive
officers who are not large stockholders, long-term incentive compensation.
Certain Agreements
The compensation arrangements for each of the executive officers named in the
Summary Compensation Table are subject to employment agreements. Employment
agreements covering the services of Mr. Thompson were entered into prior to, and
disclosed in connection with, the Company's initial public offering in November
1993, and antedated the creation of the Compensation Committee. Details of
individual employment agreements between the Company and each of its executive
officers are set forth in the Proxy Statement under Executive Compensation and
Other Information, sub-caption "Employment Agreements and Change in Control
Arrangements".
The principal role of the Compensation Committee in connection with
discretionary incentive compensation payable to all executive officers under
their respective employment agreements generally is to monitor performance and
measure it against the terms of their agreements and the Company's performance.
The Compensation Committee is satisfied that the Company's employment agreements
with its CEO and other executive officers provide them with base compensation
that is not excessive plus ample incentive to achieve, to the Company's and
their mutual benefit.
The Compensation Committee has not established a policy with respect to
qualifying compensation paid to the Company's executive officers for
deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended because there has been no need for such a policy and no immediate need
is seen. The Company has advised the Compensation Committee that it believes
all compensation payable under the existing employment agreements with executive
officers will qualify for deduction under such Section.
Compensation Committee of the
Board of Directors
Douglas M. Todoroff, Chairman
John K. Campbell, Member
10
<PAGE>
PERFORMANCE GRAPH AND TABLE
The graph and table below provide a comparison of the Company's cumulative
total stockholder return (which in the Company's case includes only the price of
the Common Stock because the Company has paid no dividends) with (i) Standard &
Poor's 500 Composite Stock Index and (ii) the industry manufacturing peer group
used in the Company's 1999 Proxy Statement. The dates on which comparisons are
made are November 18, 1993 (immediately following the Company's initial public
offering), and December 31, 1993 through December 31, 1998 inclusive. The peer
group includes companies that management selected because it believes they are
comparable to the Company in the lines of business they are engaged in and
because they include the Company's principal competitors. *
This graph and table assume the investment of $100 on November 18, 1993 in (i)
the Company's Common Stock and (ii) collectively, the common stocks of the
companies comprising the peer group, with reinvestment of any dividends. The
comparisons in the graph and table are based on historical data covering the
performance of the Company's Common Stock over the years shown. They are not
intended to forecast, and management believes they are not indicative of, the
future performance of the Company's Common Stock.
[GRAPH APPEARS HERE]
** All returns reflect reinvestment of dividends
<TABLE>
<CAPTION>
Index Index Index Index Index Index Index
at at at at at at at
11/18/93 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> <C>
Mikohn Gaming Corp. $ 100 $ 92 $ 52 $ 23 $ 32 $ 43 $ 26
S&P 500 Index 100 100 102 140 173 231 293
Peer Group 100 88 50 43 66 77 73
</TABLE>
* The companies included in the peer group in addition to the Company are Acres
Gaming Inc.; Alliance Gaming Corporation; Autotote Corporation; Casino Data
Systems; GTECH Holdings Corp.; International Game Technology; Paul-Son Gaming
Corp.; Sodak Gaming Inc.; Powerhouse Technologies and WMS Industries Inc.
11
<PAGE>
CERTAIN TRANSACTIONS
Transactions among the Company and its affiliates involving in excess of
$250,000, other than transactions entered into in the ordinary course of
business on terms generally made available to third parties, are reviewed by the
Board and passed upon by a majority of disinterested directors. There were no
such transactions in 1998.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 15, 1999, by (i) each person
who is known by the Company to own beneficially more than five percent of the
Company's outstanding Common Stock, (ii) each of the Company's directors and
(iii) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Beneficial
Ownership of
Common Stock
-------------------
Name of Beneficial Owner (1) Number Percent
--------------------------- ------ -------
<S> <C> <C>
David J. Thompson (2) 1,560,172 14.6%
Dennis A. Garcia (3) 1,628,292 15.3%
Bruce E. Peterson (4) 1,603,983 15.0%
Terrance W. Oliver (5) 675,682 6.3%
John K. Campbell (6) 28,333 0.3%
James E. Meyer - -
Douglas M. Todoroff (7) 49,333 0.5%
All directors and executive officers as a group (10 persons) (8) 5,844,069 54.7%
</TABLE>
(1) The mailing address of each person named in this table is c/o Mikohn Gaming
Corporation, 1045 Palms Airport Drive, P. O. Box 98686, Las Vegas, Nevada
89193-8686.
(2) Total includes 134,000 shares that Mr. Thompson has the right to purchase
within 60 days (regardless of exercise price) through exercise of vested
stock options and 50,000 shares held in trusts for the benefit of Mr.
Thompson's children and stepchildren. Mr. Thompson disclaims beneficial
ownership of shares held in his children's trusts.
(3) Total includes 42,000 shares that Mr. Garcia has the right to purchase
within 60 days (regardless of exercise price) through exercise of vested
stock options.
(4) Total includes 35,733 shares that Mr. Peterson has the right to purchase
within 60 days (regardless of exercise price) through exercise of vested
stock options.
(5) Total includes 15,332 shares that Mr. Oliver has the right to purchase
within 60 days (regardless of exercise price) through exercise of vested
stock options, 369,250 shares held of record by the Oliver Special Trust of
which Mr. Oliver is sole trustee and beneficiary, and 291,000 shares held
by the Oliver Charitable Remainder Unitrust, of which Mr. Oliver and his
wife, Linda J. Oliver, are the only trustees.
(6) Total includes 23,333 shares that Mr. Campbell has the right to purchase
within 60 days (regardless of exercise price) through exercise of vested
stock options.
(7) Total includes 26,333 shares that Mr. Todoroff has the right to purchase
within 60 days (regardless of exercise price) through exercise of vested
stock options.
(8) Includes 491,331 shares that the directors and three executive officers who
are not directors have the right to purchase within 60 days (regardless of
exercise price) through exercise of vested stock options.
12
<PAGE>
APPOINTMENT OF INDEPENDENT ACCOUNTANTS (Item 2 on Proxy)
The Board has appointed Deloitte & Touche LLP to serve as independent
accountants for the Company for the fiscal year ending December 31, 1999.
The firm of Deloitte & Touche LLP has served as independent accountants for
the Company since 1990. The Board, although it is not required to do so, is
submitting its appointment of Deloitte & Touche LLP for ratification at the
Annual Meeting in order to solicit the views of stockholders concerning the
appointment. The Board recommends that the Company's stockholders vote for the
ratification of the appointment of Deloitte & Touche LLP to audit the financial
statements of the Company for the fiscal year ending December 31, 1999. If the
appointment is not ratified, the Board will reconsider.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting, will be given the opportunity to make a statement if so inclined, and
will be available to respond to appropriate questions.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31, 1998,
which includes the Company's annual report on Form 10-K to the Securities and
Exchange Commission (without exhibits), is being mailed contemporaneously with
this Proxy Statement to stockholders of record at the close of business on March
15, 1999. The Company will provide a copy of the exhibits to its annual report
on Form 10-K for the fiscal year ended December 31, 1998, upon receipt of a
written request from any beneficial owner of the Company's securities as of
March 15, 1999 and reimbursement of the Company's reasonable expenses. Such
request should be addressed to Charles H. McCrea, Jr., Executive Vice President,
Mikohn Gaming Corporation, 1045 Palms Airport Drive, P. O. Box 98686, Las Vegas,
NV 89193-8686.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any eligible stockholder (as defined below) of the Company who wishes to have
a proposal considered for inclusion in the Company's 2000 proxy solicitation
material must set forth such proposal in writing and file it with the Secretary
of the Company on or before February 25, 2000. The Board will review any
proposals from eligible stockholders which it receives by that date and will
determine whether any such proposals will be included in its 2000 proxy
solicitation materials. An eligible stockholder is one who is the record or
beneficial owner of at least $1,000 in market value of securities entitled to be
voted on the proposal at the 2000 Annual Meeting, who has held such securities
for at least one year and who continues to own such securities through the date
on which the 2000 Annual Meeting is held.
SOLICITATION OF PROXIES
The cost of this solicitation is borne by the Company. Proxies may be
solicited by mail, telephone, telegraph, or personally by directors, officers
and regular employees of the Company, none of whom will receive any special
compensation for such services. The Company will reimburse persons holding
stock in their names or in the names of their nominees for reasonable expenses
incurred in forwarding proxy materials to their principals.
13
<PAGE>
OTHER BUSINESS
The Board does not know of any other business which may be presented for
consideration at the Annual Meeting. If any other business properly comes before
the Annual Meeting or any adjournment or postponement thereof, the proxy holders
will vote according to their discretion insofar as such proxies are not limited
to the contrary.
By Order of the Board of Directors
/s/ Charles H. McCrea, Jr.
Charles H. McCrea, Jr.
Secretary
Las Vegas, Nevada
April 14, 1999
14
<PAGE>
PROXY MIKOHN GAMING CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 11, 1999
The undersigned constitutes and appoints DAVID J. THOMPSON, CHARLES H.
McCREA, JR. and DONALD W. STEVENS Proxy, First Alternate Proxy and Second
Alternate Proxy, respectively, to represent the undersigned and to vote all
shares of Common Stock, $.10 par value, of Mikohn Gaming Corporation (the
"Company") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Stockholders to be held at 10:00 a.m. (Pacific
Daylight Time) on Tuesday, May 11, 1999, at the Mandalay Bay Resort and Casino,
Las Vegas, Nevada, and at any adjournment or postponement thereof. If the Proxy
is unable to act, the authority conferred hereby shall devolve on the First
Alternate Proxy, and if he also is unable to act, on the Second Alternate
Proxy. All proxies will be voted as instructed, and in the absence of
instruction on any particular matter, FOR the nominees to the Board of
Directors, FOR the continued retention of Deloitte & Touche LLP as independent
accountants and in the discretion of the Proxy or acting Alternate Proxy as to
any other matter properly before the meeting.
1. Election of Directors
[_] FOR the Board of Directors nominees who are listed below for election
as directors
[_] AGAINST all nominees listed below
Nominees: David J. Thompson and John K. Campbell
Instructions: To withhold authority to vote for any candidate, cross
out that candidate's name above.
2. Retention of Deloitte & Touche LLP as Independent Accountants.
[_] FOR [_] AGAINST
3. In the discretion of the proxy holder, with respect to any other
matter that may properly come before the 1999 Annual Meeting and any adjournment
or postponement thereof. The Board of Directors is not aware of any other matter
that may properly be considered at the meeting.
[_] VOTE [_] DO NOT VOTE
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MIKOHN GAMING CORPORATION.
Please date and sign exactly as your name or names appear hereon. If there
are more than one registered owner, all should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should indicate their
fiduciary capacity or full title when signing.
Dated: _______________________
______________________________
Signature
______________________________
Signature
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
