<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 Section240.14a-11(c) or
Section240.14a-12
ANCHOR GAMING
- --------------------------------------------------------------------------------
(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:
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(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:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ANCHOR GAMING
815 PILOT ROAD, SUITE G
LAS VEGAS, NEVADA 89119
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 24, 1997
------------------------
As a stockholder of Anchor Gaming, you are hereby given notice of and
invited to attend in person or by proxy the Annual Meeting of Stockholders of
the Company to be held at 815 Pilot Road, Suite G, Las Vegas, Nevada 89119, on
Monday, November 24, 1997, at 10:00 a.m. local time, for the following purposes:
1. To elect directors, each for a one-year term.
2. To transact such other business as may properly come before the meeting
and any adjournment thereof.
The Board of Directors has fixed the close of business on September 26, 1997
as the record date for the determination of stockholders entitled to notice of
and to vote at such meeting and any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING, TO ASSURE YOUR SHARES ARE REPRESENTED AT THE
MEETING, PLEASE DATE, EXECUTE, AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
By Order of the Board of Directors
[SIG]
Thomas J. Matthews
EXECUTIVE VICE PRESIDENT AND SECRETARY
Las Vegas, Nevada
October 3, 1997
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
<PAGE>
ANCHOR GAMING
815 PILOT ROAD, SUITE G
LAS VEGAS, NEVADA 89119
------------------------
PROXY STATEMENT
---------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 24, 1997
This Proxy Statement is furnished to stockholders of Anchor Gaming, for use
at the 1997 Annual Meeting of Stockholders to be held at the date, time, and
place and for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders, or at any adjournment of the Annual Meeting. The
enclosed proxy is solicited on behalf of the Board of Directors of the Company.
A stockholder executing the accompanying proxy has the right to revoke it at any
time prior to its being voted by notifying the Secretary of the Company in
writing, executing a subsequent proxy, or attending the meeting and voting in
person. Unless a contrary choice is indicated, all duly executed proxies
received by the Company will be voted in accordance with the instructions set
forth on the proxy card. The record date for stockholders entitled to vote at
the Annual Meeting is the close of business on September 26, 1997. The
approximate date on which this Proxy Statement and the enclosed proxy are first
being sent or given to stockholders is October 3, 1997.
VOTING PROCEDURES
The accompanying proxy card is designed to permit each stockholder of record
at the close of business on the record date, September 26, 1997, to vote in the
election of directors and on any proposals that properly come before the Annual
Meeting. The proxy card provides space for a stockholder (i) to vote in favor of
or to withhold voting for the nominees for director, (ii) to vote for or against
the proposals to be considered at the Annual Meeting, or (iii) to abstain from
voting on any proposal other than election of directors if the stockholder
chooses to do so. The election of directors will be decided by a plurality of
the votes cast. All other matters will be determined by a majority of the votes
cast. Stanley E. Fulton, Chairman of the Board and Chief Executive Officer of
the Company, has the right to vote a majority of the shares of stock entitled to
vote at the Annual Meeting.
The holders of a majority of all of the shares of stock entitled to vote at
the Annual Meeting, present in person or by proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. Stanley E. Fulton, Chairman
of the Board and Chief Executive Officer of the Company, has the right to vote a
majority of the shares of stock entitled to vote at the Annual Meeting. If a
quorum is not present, the Annual Meeting may be adjourned from time to time
without further notice, if the time and place of the adjourned meeting are
announced at the meeting, until a quorum is obtained. Shares as to which
authority to vote has been withheld with respect to the election of any nominee
for director will not be counted as a vote for such nominee. Abstentions and
broker nonvotes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders to
determine the total number of votes cast. Abstentions are not counted as votes
for or against any such proposals. Broker nonvotes are not counted as votes cast
for purposes of determining whether a proposal has been approved.
Stockholders are urged to sign the enclosed proxy and return it promptly.
When a signed proxy is returned with choices specified with respect to voting
matters, the shares represented are voted by the proxies designated on the proxy
in accordance with the stockholder's instructions. The proxies for the
stockholders are Stanley E. Fulton and Michael D. Rumbolz.
<PAGE>
If a signed proxy is returned and the stockholder has made no specifications
with respect to voting matters, the shares will be voted FOR the proposals and,
at the discretion of the proxies, on any other matter that may properly come
before the Annual Meeting or any adjournment.
The total outstanding capital stock of the Company as of September 26, 1997
consisted of 12,958,107 shares of Common Stock. Each share of Common Stock is
entitled to one vote.
MATTERS TO BE BROUGHT BEFORE THE MEETING
ELECTION OF DIRECTORS
The current number of members of the Board of Directors is seven. Members of
the Board of Directors serve for a one-year term that expires at the Annual
Meeting or when a successor is elected and qualified. The election of directors
will be decided by a plurality of the votes cast.
The nominees for director are Stuart D. Beath, Michael B. Fulton, Stanley E.
Fulton, Glen J. Hettinger, Elizabeth F. Jones, and Michael D. Rumbolz. All of
the nominees are members of the present Board of Directors. The Board believes
that the nominees will be available and able to serve as directors. If any
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute as the Board may recommend, the Board
may reduce the number of directors to eliminate the vacancy, or the Board may
fill the vacancy at a later date after selecting an appropriate nominee.
Information with respect to the nominees is set forth in the section of this
Proxy Statement entitled "Management--Directors and Executive Officers."
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 26, 1997, the beneficial
ownership of each current director, each nominee for director, each executive
officer included in the Summary Compensation Table, the directors and executive
officers as a group, and each stockholder known to management to own
beneficially more than 5% of the Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER (1) OF COMMON STOCK (2) CLASS (2)
- ------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Stuart D. Beath (3).......................................... 13,000 *
FMR Corp. (4)................................................ 1,482,490 11.3%
Michael B. Fulton (5)........................................ 495,300 3.8%
Stanley E. Fulton (6)........................................ 6,887,544 52.4%
Glen J. Hettinger............................................ -- *
Elizabeth F. Jones (7)....................................... 502,500 3.8%
Thomas J. Matthews (8)....................................... 33,750 *
Joseph Murphy (9)............................................ 12,500 *
Michael D. Rumbolz (10)...................................... 87,500 *
Geoffrey A. Sage (11)........................................ 2,500 *
Garret A. Scholz (12)........................................ 15,800 *
All executive officers and directors as a group (10 persons)
(13)........................................................ 7,052,594 53.6%
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise noted, and subject to community property laws, where
applicable, the persons in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them. The address for each listed person is c/o Anchor Gaming, 815 Pilot
Road, Suite G, Las Vegas, NV 89119.
(2) The presentation does not give effect to the proposed sale of Common Stock
by certain stockholders of the Company as described in a registration
statement on Form S-3, file number 333-34755, which is on file with the
Securities and Exchange Commission. There can be no assurance that such
proposed sale will be consummated. If such sale is consummated, the number
of shares of Common Stock beneficially owned and the percent of class would
be as follows for the persons listed: FMR Corp.: 1,482,490 or 11.3%; Michael
B. Fulton: 300,000 or 2.3%; Stanley E.
2
<PAGE>
Fulton: 5,157,544 or 39.2%; Elizabeth Fulton Jones: 300,000 or 2.3%; all
executive officers and directors: 5,322,594 or 40.0%.
(3) Includes 1,000 shares with respect to which Mr. Beath shares voting and
dispositive power with his wife. Includes 12,000 shares that may be acquired
upon the exercise of options exercisable within the next 60 days.
(4) FMR Corp. is the holding company for an institutional investor, Fidelity
Management & Research Company. The information included herewith is based
upon publicly available information. FMR Corp's. address is 82 Devonshire
Street, Boston, MA 02109-3614.
(5) Includes 495,300 shares as to which Mr. Fulton's father, Stanley E. Fulton,
exercises voting power pursuant to an irrevocable proxy.
(6) Includes 2,880,300 shares owned by Stanley E. Fulton's six children and an
unaffiliated third party for which Mr. Fulton exercises voting power
pursuant to irrevocable proxies.
(7) Includes 502,500 shares as to which Ms. Jones' father, Stanley E. Fulton,
exercises voting power pursuant to an irrevocable proxy.
(8) Includes 21,250 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(9) Includes 10,000 shares with respect to which Mr. Murphy shares voting and
dispositive power with his wife. Includes 2,500 shares that may be acquired
upon the exercise of options exercisable within the next 60 days.
(10) Includes 87,500 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(11) Includes 2,500 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(12) Includes 1,000 shares held in a trust for which Mr. Scholz acts as trustee.
Includes 13,800 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(13) Includes 139,550 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
3
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about the current
directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
Stuart D. Beath......................... 38 Director
Michael B. Fulton....................... 38 Director
Chairman of the Board, Chief Executive Officer and
acting Chief Financial Officer
Stanley E. Fulton....................... 66
Glen J. Hettinger....................... 40 Director
Elizabeth F. Jones...................... 41 Director
Thomas J. Matthews...................... 31 Executive Vice President and Secretary
Joseph Murphy........................... 46 Vice President Casino Operations
Michael D. Rumbolz...................... 43 President, Chief Operating Officer and Director
Geoffrey A. Sage........................ 37 Corporate Controller
Garret A. Scholz........................ 57 Director
</TABLE>
STUART D. BEATH. Mr. Beath was elected as a director of the Company in
April 1994. Mr. Beath has been a private consultant since March 1997. Mr. Beath
served as First Vice President at Stifel, Nicolas & Company, Inc., an investment
bank, from April 1993 until March 1997. Prior to that time, Mr. Beath served in
the corporate finance department at A.G. Edwards & Sons, Inc. for six years, in
various capacities, with the most recent being as an officer of the firm.
MICHAEL B. FULTON. Mr. Fulton was elected as a director of the Company in
August 1995. Mr. Fulton has served as President of IllumiQuest, Inc., a
developer of educational based entertainment products, since January 1994. Prior
to that time, Mr. Fulton served as Executive Vice President and director of
Anchor Coin, a subsidiary of the Company responsible for its gaming machine
route operations and development of the Colorado Central Station Casino, from
March 1993 to December 1993. Prior to that time, Mr. Fulton was a tax attorney
with the Internal Revenue Service from December 1990 to March 1993 and an
independent consultant of tax and corporate law from January 1989 to November
1990. Mr. Fulton is the son of the Chairman of the Board of the Company.
STANLEY E. FULTON. Mr. Fulton serves as Chairman of the Board, Chief
Executive Officer and acting Chief Financial Officer of the Company. Prior to
the Company's initial public offering in January 1994, Mr. Fulton also served as
President of the Company. Mr. Fulton has also served as Chairman of the Board,
President and Chief Executive Officer of Anchor Coin, a subsidiary of the
Company responsible for the Company's gaming machine route operations and
development of the Colorado Central Station Casino, since its inception in 1988.
Immediately prior to forming Anchor Coin, Mr. Fulton was Chairman of the Board
and President of Gaming and Technology, Inc., the predecessor of Alliance
Gaming, Inc.
GLEN J. HETTINGER. Mr. Hettinger was elected as a director of the Company
in August 1997. Mr. Hettinger is a partner at the law firm of Hughes & Luce,
L.L.P., Dallas, Texas, where he has practiced corporate and securities law since
1984.
ELIZABETH F. JONES. Ms. Jones was elected as a director of the Company in
April 1994. Since November 1988, Ms. Jones has been principally engaged as a
private investor. She is the daughter of the Chairman of the Board of the
Company.
4
<PAGE>
THOMAS J. MATTHEWS. Since January 1994, Mr. Matthews has served as
Executive Vice President of the Company. In September 1994, he was elected
Secretary of the Company. Mr. Matthews served as President of Global
Distributors, Inc. from August 1992 to January 1994. Prior to that time, Mr.
Matthews was General Manager of Global Distributors, Inc. from 1990 until 1992,
and was Sales Director of Mikohn Gaming Corporation from 1987 until 1990.
JOSEPH MURPHY. Mr. Murphy has served as Vice President Casino Operations of
the Company since February 1996. Prior to that time, Mr. Murphy served as
General Manager of Gaming Operations of the Company since January 1994. Mr.
Murphy managed the gaming operations of Global Distributors from May 1993 until
January 1994. From 1990 until 1993, Mr. Murphy served as General Manager of
International Game Technology, Inc.'s ("IGT") gaming machine route operations,
which operated more than 1,800 machines. Mr. Murphy held similar positions with
Sunset Coin from 1989 to 1990, United Gaming from 1988 to 1989, and IGT from
1985 to 1988.
MICHAEL D. RUMBOLZ. Mr. Rumbolz was elected as a director of the Company in
August 1995. Mr. Rumbolz serves as the President and Chief Operating Officer of
the Company, positions he has held since August 1995. Prior to joining the
Company, Mr. Rumbolz was Director of Corporate Development for Circus Circus
Enterprises, Inc. from December 1992 to July 1995. During that time, Mr. Rumbolz
was also President of Windsor Casino Limited from January to September 1994 and
Canadian Gaming & Entertainment Corp from February to July 1995. Windsor Casino
Limited is the Circus Circus/Hilton/Caesar's consortium which opened and
operates Windsor Casino. Mr. Rumbolz also held various positions in subsidiaries
of Circus Circus. Prior to that time, Mr. Rumbolz was Executive Vice President
of Anchor Coin and DD Stud, Inc., subsidiaries of the Company, responsible for
the its gaming machine route operations, development of the Colorado Central
Station Casino and distribution of the proprietary game Double Down Stud-TM-
from July 1992 to December 1992. Prior to that time Mr. Rumbolz was a senior
executive in the Trump- organization from February 1989 to June 1992. Mr.
Rumbolz is a former Chairman and Board member of the State of Nevada Gaming
Control Board.
GEOFFREY A. SAGE. Mr. Sage, a certified public accountant, joined Anchor
Gaming in July 1989 and serves as Corporate Controller of the Company. Before
joining the Company, Mr. Sage was the Controller for Frontier Savings and Loan
Association in Las Vegas for one year. Prior to that time, Mr. Sage was a senior
auditor at Citibank (Nevada), N.A. for three and one-half years and an auditor
in the Las Vegas office of Laventhol & Horwath.
GARRET A. SCHOLZ. Mr. Scholz was elected as a director of the Company in
February 1994. Mr. Scholz, a private investor, was until September 1995, Vice
President Finance with McKesson Corporation, an international distributor of
pharmaceutical and health care products and provider of health care management
services. He previously was its Vice President and had served with McKesson
Corporation since 1973 in various financial capacities.
SECTION 16(a) BENEFICIAL OWNER REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors, and
greater than 10% stockholders are required by certain regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received by it, the Company provides the
following information: The Company believes that all officers, directors and
greater than 10% beneficial owners have complied with all applicable filing
requirements with respect to the equity securities of the Company.
5
<PAGE>
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The Board of Directors met five times during fiscal year 1997. The Board of
Directors has standing Nominating, Audit, Compensation, and Stock Option
committees. The current members of each of the Board's committees are listed
below.
NOMINATING COMMITTEE. The Nominating Committee consists of Stanley E.
Fulton (chairman), Stuart D. Beath, Elizabeth F. Jones, and Michael B. Fulton.
The Nominating Committee is responsible for nominating candidates for election
or appointment to the positions of chief executive officer and other key officer
and management positions. The Nominating Committee met once during fiscal year
1997.
AUDIT COMMITTEE. The Audit Committee consists of Garret A. Scholz
(chairman), Stuart D. Beath, and Elizabeth F. Jones. The Audit Committee is
responsible for monitoring the Company's internal audit function and its
internal accounting controls, recommending to the Board of Directors the
selection of independent auditors, considering the range of audit and non-audit
fees, and monitoring and reviewing the activities of the independent auditors.
The Audit Committee met twice during fiscal year 1997.
COMPENSATION COMMITTEE. The Compensation Committee consists of Stanley E.
Fulton (chairman), Michael D. Rumbolz, and Garret A. Scholz. The Compensation
Committee recommends salary amounts for the Company's chief executive officer
and other executive officers and makes the final determination regarding bonus
arrangements and awards of stock options to such persons. The Compensation
Committee also advises the Board of Directors regarding principles and
philosophy to be observed by the Company in compensating directors, officers and
employees. The Compensation Committee did not meet during fiscal year 1997.
STOCK OPTION COMMITTEE. The Stock Option Committee consists of Michael B.
Fulton and Elizabeth F. Jones. The Stock Option Committee is responsible for
determining the recipients and amounts of stock options granted under the Anchor
Gaming 1995 Employee Stock Option Plan (the "Plan") and (subject to the
provisions of the Plan) establishing the other terms of each option grant and
otherwise administering the Plan. The Stock Option Committee did not meet during
fiscal year 1997.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three years to the Company's chief executive
officer, each of the Company's four other most highly compensated executive
officers (based on total annual salary and bonus for the fiscal year ending June
30, 1997), at June 30, 1997, and one additional executive office who was no
longer employed by the Company at June 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF
ANNUAL COMPENSATION SECURITIES
NAME AND -------------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS GRANTED COMPENSATION
- ------------------------------------------------ --------- ------------ ------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
Stanley E. Fulton 1997 $ 245,000 $ 100,000(1) -- --
Chairman of the Board, Chief Executive Officer, 1996 245,000 100,000(2) -- --
and acting Chief Financial Officer 1995 244,346 100,000(3) -- --
Michael D. Rumbolz 1997 360,000 100,000(1) 250,000 7,890(5)
President and Chief Operating Officer 1996 334,462(4) 100,000(2) -- --
1995 -- -- --
Thomas J. Matthews 1997 150,000 150,000(6) 200,000 --
Executive Vice President and Secretary 1996 150,000 140,000(2) -- --
1995 175,000 100,000(3) -- --
Joseph Murphy 1997 150,000 150,000(6) 200,000 --
Vice President 1996 150,000 140,000(2) -- --
1995 175,000 100,000(3) -- --
Geoffrey A. Sage 1997 80,000 24,000 -- --
Corporate Controller 1996 80,000 20,000 5,000 --
1995 80,000 20,000 -- --
Salvatore T. DiMascio (7) 1997 148,269 --
1996 150,000 250,000(8)
1995 175,000
</TABLE>
- ------------------------
(1) These bonuses are payable in December 1997, but were accrued for the fiscal
year 1997, and are subject to continued employment with the Company.
(2) These bonuses were paid in December 1996, but were accrued for the fiscal
year 1996.
(3) These bonuses were paid in December 1995, but were accrued for the fiscal
year 1995.
(4) Mr. Rumbolz joined the Company in July 1995.
(5) Consists of insurance premiums paid by the Company as additional
compensation.
(6) These bonuses were paid in July 1997, but were accrued for the fiscal year
1997.
(7) Mr. DiMascio's service as Executive Vice President and Chief Financial
Officer ended June 13, 1997.
(8) Of this amount, $125,000 was accrued for the fiscal year 1996 and paid in
August 1996.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options to
purchase Common Stock granted in the fiscal year ending June 30, 1997 to the
individuals named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL STOCK
SECURITIES % OF TOTAL OPTIONS EXERCISE APPRECIATION
UNDERLYING GRANTED TO EMPLOYEES PRICE EXPIRATION --------------------------
NAME (1) OPTIONS GRANTED IN 1997 $/SHARE (1) DATE 5% (2) 10% (2)
- ------------------------------- --------------- --------------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley E. Fulton.............. 0 0 N/A N/A N/A N/A
Michael D. Rumbolz............. 0 0 N/A N/A N/A N/A
Thomas J. Matthews............. 200,000 33% $ 31.875 7/1/07 4,009,203 10,160,108
Joseph Murphy.................. 200,000 33% $ 31.875 7/1/07 4,009,203 10,160,108
Geoffrey A. Sage............... 0 0 N/A N/A N/A N/A
Salvatore T. DiMascio.......... 0 0 N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) The exercise price in each case is the fair market value of the Common Stock
on the date of the grant.
(2) Assumed annual compounded rates of stock price appreciation of 5% (63%) and
10% (159%) over the term of the grant.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning options to
purchase Common Stock by the individuals named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT JUNE 30, 1997 JUNE 30, 1997 (1)
ACQUIRED ON VALUE -------------------------- --------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley E. Fulton...................... 0 0 0 0 0 0
Michael D. Rumbolz..................... 0 0 100,000 150,000 2,600,000 3,900,000
Thomas J. Matthews..................... 10,000 448,200 27,500 222,500 983,125 3,979,375
Joseph Murphy.......................... 10,000 437,500 10,000 215,000 357,500 3,711,250
Geoffrey A. Sage....................... 12,500 565,500 7,500 15,000 268,125 536,250
Salvatore T. DiMascio.................. 48,000 1,775,250 0 0 0 0
</TABLE>
- ------------------------
(1) The value is the amount by which the market value of the underlying stock at
June 30, 1997 ($47.75) exceeds the aggregate exercise prices of the options.
COMPENSATION OF DIRECTORS
Directors who are not employees or otherwise affiliates of the Company
receive director's fees of $1,000 for each Board meeting attended and $500 for
each committee meeting attended, as well as an annual director's fee of $1,000.
Additionally, all directors are reimbursed for certain out of pocket expenses
incurred in connection with attending Board and committee meetings.
Upon appointment to the Board of Directors Garret A. Scholz and Stuart D.
Beath each received an option to purchase 20,000 shares of Common Stock,
exercisable at the fair market value of the Common Stock on the date of the
grant. Upon appointment to the Board of Directors Glen J. Hettinger received an
option to purchase 25,000 shares of Common Stock, exercisable at the fair market
value of the Common Stock on the date of the grant.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS
Concurrent with the Company's initial public offering, the Company entered
into a five-year employment agreement with Thomas J. Matthews and Joseph Murphy.
These agreements were amended in April 1997, providing for minimum annual
compensation of $200,000. In addition, Mr. Matthews' and Mr. Murphy's agreement
provided for a one time bonus of $150,000, which bonuses were paid on July 1,
1997. Effective fiscal year 1998, Mr. Matthews and Mr. Murphy will also receive
a performance bonus of 0.6% and 0.4%, respectively, of the consolidated net
income of the Company for the fiscal year then ended, payable for any given
fiscal year on the date of the Company's public announcement of its consolidated
net income for such fiscal year. Mr. Matthews and Mr. Murphy will also receive a
bonus upon a change of control (as defined in their employment agreements) equal
to 0.6% and 0.4%, respectively, of the consolidated net income of the Company
for the period beginning with the end of the last fiscal year of the Company and
ending on the date that a change in control transaction is consummated. The
obligation of the Company to pay Mr. Matthews and Mr. Murphy a performance bonus
for fiscal years including, and subsequent to, the fiscal year for which a
change in control bonus is earned will terminate upon payment of a change in
control bonus.
In addition, upon the occurrence of certain trigger events as defined in
their employment agreements (a "Trigger Event"), Mr. Matthews and Mr. Murphy
will receive a bonus equal to 0.5% of the amount by which the fair market value
(as determined by the Board of Directors of the Company) of the consideration
received by the Company or the shareholders of the Company, as the case may be,
in
8
<PAGE>
a transaction involving such Trigger Event exceeds the Base Amount as of the
date that the transaction constituting such Trigger Event is consummated. The
"Base Amount" means an amount equal to $500,000,000 times the factor 1.1(n)
where "n" is the number of full years from the date of the employment agreement
until the date of the Trigger Event, except that in the event that the Trigger
Event giving rise to such determination arises from the sale by the Company of
its proprietary games division substantially as an entirety, then the Base
Amount will be calculated by taking the amount arrived at in the foregoing
calculation and multiplying it by a fraction the numerator of which is (x) the
net income of the portion of the proprietary games division that is so sold for
the twelve-month period prior to the consummation of such sale and the
denominator of which is (y) the consolidated net income of the Company for the
twelve-month period prior to the consummation of such sale.
In accordance with the terms of their employment agreements, Mr. Matthews
and Mr. Murphy have entered into stock option agreements with the Company,
pursuant to which Mr. Matthews and Mr. Murphy have received options to purchase
up to 200,000 shares of Common Stock at an exercise price of $31.875 per share.
The stock option agreements expire on July 1, 2007. Under the terms of the stock
option agreements, 6,250 shares will vest on March 31, June 30, September 30,
and December 31 of 1999, 2000, and 2001. An additional 125,000 shares will vest
if certain performance goals established by the Board of Directors are achieved.
Notwithstanding the foregoing, all of the shares of common stock as to which
vesting has not occurred in accordance with the previously described provisions
will vest on June 30, 2005, if and only if Mr. Matthews and Mr. Murphy have been
an employee of the Company for the entire period from the date of the stock
option agreements until June 30, 2005. Under the terms of Mr. Matthews' and Mr.
Murphy's employment agreements, during July of each year prior to the expiration
of the employment agreements, the Company has agreed to discuss the grant to Mr.
Matthews and Mr. Murphy of further options to purchase common stock.
In July 1995, the Company entered into a five-year agreement with Michael D.
Rumbolz providing for minimum annual compensation of $460,000. Each of the above
agreements provides that such officer can only be terminated for "cause" as
defined in the agreement, although the agreements with Mr. Matthews and Mr.
Murphy can be terminated by the Company at any time if the Company pays three
months' severance pay, and Mr. Rumbolz can be terminated at any time if the
Company pays one year's severance pay. The agreements contain restrictive
covenants regarding the treatment of the Company's proprietary information.
Pursuant to previously granted option agreements entered into between the
Company and each of Thomas J. Matthews, Joseph Murphy, and Geoffrey A. Sage,
each such officer's options will vest and become immediately exercisable if
Stanley E. Fulton is not the chief executive officer of the Company. Pursuant to
an option agreement between the Company and Michael D. Rumbolz, Mr. Rumbolz's
options will vest and become immediately exercisable upon a change in control as
defined in the agreement, or on December 31, 1998, in the event that Mr. Rumbolz
is not appointed as the Chief Executive Officer of the Company before such date.
In no event will the Company be required to make to any of the foregoing
executives any payment under such agreements that would result, in the opinion
of tax counsel, in an "excess parachute payment" within the meaning of section
280G of the Internal Revenue Code of 1986, and the imposition of an excise tax
under Section 4999 of the Internal Revenue Code of 1986.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
CERTAIN TRANSACTIONS OF COMPENSATION COMMITTEE MEMBERS. A relative of the
children of Stanley E. Fulton, the principal stockholder, Chairman of the Board,
Chief Executive Officer, and acting Chief Financial Officer of the Company,
loaned $2.0 million to the Company in June 1993 for use in connection with
construction of the Colorado Central Station Casino. The principal amount of
this loan was payable in a single installment in 1998 and bore interest at 12%
payable monthly. As
9
<PAGE>
additional consideration for this loan, the Company granted an option to
purchase 40,000 shares of Common Stock at the IPO price of $12.00 per share. Mr.
Fulton personally guaranteed this loan. This loan was paid in full on July 6,
1995.
At June 30, 1997, the Company had outstanding unsecured notes payable to
Stanley E. Fulton in the aggregate principal amount of $2,800,000, which is due
and payable on July 1, 1998 and bears interest at the rate of 8%. See Note 6 of
Notes to Consolidated Financial Statements.
Stanley E. Fulton owned 100% of the common stock of an Anchor slot route
location. On January 31, 1996, Stanley E. Fulton sold the location to an
unaffiliated third party. For providing the gaming machines and slot route
services, the Company received a percentage of the net win of the location
similar to other route locations. The Company held a note receivable from the
slot route operation in the amount of $284,704 at January 31, 1996 of which
$257,562 was assumed by the new owner. The remaining balance of the loan due
from Stanley E. Fulton at June 30, 1996 of $27,142 was paid in full on July 11,
1996. The slot route operation, under the ownership of Stanley E. Fulton,
accounted for $295,502 and $180,822 of gaming revenue during the years ended
June 30, 1995 and 1996, respectively and $279,059 and $145,684 of route costs
during the years ended June 30, 1995 and 1996, respectively.
In August 1996, the Company made certain payments to an entity controlled by
an employee of the Company. These funds were used to repay a debt of $500,000
owed by the employee and his affiliate to Stanley E. Fulton.
Mr. Hettinger is a director of the Company and a partner at Hughes & Luce,
L.L.P., which has rendered legal services to the Company in the past and is
expected to continue to do so in the future.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for recommending to the full Board
of Directors salary amounts for the Company's chief executive officer and other
executive officers, as well as making the final determination regarding bonus
arrangements and awards of stock options to such persons.
Management believes that the gaming industry is increasing in
competitiveness, making the attraction and retention of qualified executives
more important to the overall success of the business. Compensation to
executives is designed to attract and retain talent, as well as to motivate the
performance of executives. Compensation also rewards performance that
demonstrably meets the Company's strategic, financial and operating objectives.
In the last fiscal year, executive compensation comprised the following
elements:
BASE SALARY. The base salary for the chief executive officer and the
other executive officers of the Company was determined by an evaluation of
the credentials of such officers as well as a review of publicly available
information concerning the base salaries of executives with similar
responsibilities in companies engaged in similar businesses, including, but
not limited to, the gaming and leisure industries. The responsibilities of
each executive officer as well as the subjective evaluation of such
officer's contribution to the business were also factors in the
determination of executive compensation.
ANNUAL INCENTIVE COMPENSATION. Year-end cash bonuses are designed to
motivate the chief executive officer and the other executive officers to
achieve specific annual financial goals. At the end of each fiscal year the
Compensation Committee will assess each executive's contributions to the
Company as well as the degree to which specific annual financial, strategic,
and operating objectives were met by the Company.
10
<PAGE>
STOCK OPTIONS. The Board and the Stock Option Committee believe that a
significant portion of executive compensation should be dependent on value
created for stockholders. Additionally, the Board and the Compensation
Committee believe that part of retention of superior talent is to foster a
sense of ownership in the Company. In keeping with this philosophy, from
time to time the Committee will recommend that stock options be granted to
particular officers. In the last fiscal year, certain options were granted
at fair market value on the date of the grant. A portion of these options
become exercisable quarterly over three years beginning March 31, 1999, the
remainder become exercisable over five years beginning December 31, 1997
based upon achievement of certain performance goals, or if not achieved on
June 30, 2005 if the employees who hold such options have remained
continuously employed by the Company through such date. In selecting
recipients for option grants and in determining the size of such grants, the
Board considers various factors such as the earnings levels of the Company
and the contributions of the individual recipient to the Company. In
addition, stock options were awarded just after the Company's initial public
offering in order to encourage management stability over the next several
years.
Executives also receive benefits typically offered to executives by
companies engaged in businesses similar to the Company, such as life and health
insurance.
1997 COMPENSATION OF CHIEF EXECUTIVE OFFICER
The base salary of Stanley E. Fulton remained the same during fiscal year
1997 as compared to fiscal year 1996. Mr. Fulton's compensation was based upon
analysis of (1) the level and value of the contribution that the Board of
Directors believes Mr. Fulton, as founder of the Company, has made and can make
in the future, (2) the prominence of Mr. Fulton in the Nevada business community
in general and the gaming community in particular, (3) the annual compensation
received by chief executive officers in similar businesses, (4) the annual base
salaries currently being paid to the other executive officers and (5) the fact
that Mr. Fulton maintains a substantial ownership position in the Company.
<TABLE>
<S> <C>
Stuart D. Beath Elizabeth F. Jones
Michael B. Fulton Michael D. Rumbolz
Stanley E. Fulton Garret A. Scholz
Glen J. Hettinger
</TABLE>
11
<PAGE>
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the cumulative total return of the Common Stock
during the period commencing January 28, 1994, the date public trading of the
Common Stock began following the Company's initial public equity offering, to
June 30, 1997, with the S&P 500 Index and the Dow Jones Industry Group
CNO-Casinos (which include 42 companies). The S&P 500 Index includes 500 United
States companies in the industrial, transportation, utilities and financial
sectors and is weighted by market capitalization.
The graph depicts the results of investing $100 in the Common Stock of the
Company (at the initial public offering price of $12.00 per share), the S&P 500
Index and the Dow Jones Industry Group CNO-Casinos at their closing prices on
January 28, 1994. The graph assumes that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS ANCHOR GAMING DOW JONES GROUP CNO S&P 500 INDEX
<S> <C> <C> <C>
1/28/94 $100.00 $100.00 $100.00
3/31/94 110.71 87.35 93.04
6/30/94 85.71 64.97 93.44
9/30/94 128.57 72.54 98.00
12/30/94 108.93 64.72 97.99
3/31/95 116.07 79.79 107.53
6/30/95 158.93 87.14 117.79
9/29/95 180.36 81.88 127.15
12/29/95 162.50 74.71 134.82
3/29/96 230.36 89.98 142.05
6/28/96 430.36 104.89 148.43
9/30/96 444.64 88.53 153.01
12/31/96 287.50 78.27 165.77
3/31/97 199.11 71.11 170.21
6/30/97 341.07 76.85 199.93
</TABLE>
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with applicable
rules and regulations for presentation at the Company's 1998 annual meeting that
is received at the Company's principal executive office by May 30, 1998, will be
included in the Company's proxy statement and form of proxy for that meeting.
Stockholders wanting to present proposals for action at the 1997 Annual
Meeting of Stockholders must give written notice, in accordance with Article II,
Section 9 of the Amended and Restated Bylaws of the Company, to the Secretary of
the Company at the address set forth on the cover page of this Proxy Statement
(i) not later than 60 days following the end of the Company's fiscal year 1997
or (ii) at the close of the business day on the earlier of (a) the fifth
business day following the day on which notice of a special meeting was mailed
or (b) the fifth business day following the day public disclosure was made of
the date of the Annual Meeting. Stockholder proposals may also be presented to
the Annual Meeting
12
<PAGE>
in person by the stockholder submitting such proposal or a representative who is
qualified under Nevada law to present the proposal on the stockholder's behalf.
The chairman presiding at any meeting of the stockholders may, in his sole
discretion, refuse to allow a stockholder or the stockholder's representative to
present any proposal that the Company would not be required to include in a
proxy statement pursuant to any rule promulgated by the Securities and Exchange
Commission.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The cost of soliciting proxies on the accompanying form will be paid by
the Company. Officers or employees of the Company may solicit proxies by mail,
telephone, or telegraph. Upon request, the Company will reimburse brokers,
dealers, banks and trustees, or their nominees, for reasonable expenses incurred
by them in forwarding proxy material to beneficial owners of shares of the
Common Stock.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, independent certified public accountants, has been
selected by the Board of Directors as the Company's independent auditor for the
fiscal year 1998. Representatives of Deloitte & Touche, who were also the
Company's independent auditors for the fiscal year 1997, are expected to be
present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action
at the meeting other than the matters set forth herein. Should any other matter
requiring a vote of stockholders arise, the proxies in the enclosed form confer
upon the person or persons entitled to vote the shares represented by such
proxies discretionary authority to vote in accordance with their best judgment
in the interest of the Company.
FINANCIAL STATEMENTS
A copy of the 1997 Annual Report of the Company containing audited financial
statements accompanies this Proxy Statement. The consolidated balance sheets of
Anchor Gaming and subsidiaries as of June 30, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended June 30, 1997 contained on pages 24
through 39 of the 1997 Annual Report to Stockholders of Anchor Gaming and the
Selected Financial Data and Management's Discussion and Analysis of Financial
Condition and Results of Operations contained on pages 17 through 23 of such
Annual Report are incorporated by this reference in this Proxy Statement. The
remainder of the Annual Report does not constitute a part of the proxy
solicitation material.
The Company will provide, without charge, to each person to whom a copy of
this Proxy Statement is delivered, upon the written or oral request of such
person and by first class mail or other equally prompt means within one business
day of receipt of such request, a copy of the annual report on Form 10-K of the
Company. Requests should be directed to Geoffrey A. Sage, Corporate Controller,
c/o Anchor Gaming, 815 Pilot Road, Suite G, Las Vegas, Nevada 89119.
By Order of the Board of Directors,
[SIG]
Thomas J. Matthews
EXECUTIVE VICE PRESIDENT AND SECRETARY
October 3, 1997
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<PAGE>
Please mark your votes as indicated in this example /X/
FOR all nominees listed below (except as provided to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees below / /
1. Election of Directors.
Stuart D. Beath, Michael B. Fulton, Stanley E. Fulton, Glen J. Hettinger,
Elizabeth F. Jones and Michael D. Rumbolz.
(INSTRUCTION: To withhold authority to vote for any individual nominee(s), write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. On any other business that may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE. IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEM (1) THIS PROXY WILL BE VOTED "FOR" EACH OF THE
NOMINEES LISTED. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY
MATTER REFERRED TO IN ITEM (2). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
RECEIPT HEREWITH OF THE COMPANY'S ANNUAL REPORT AND NOTICE OF MEETING AND PROXY
STATEMENT, DATED SEPTEMBER 30, 1997, IS HEREBY ACKNOWLEDGED.
PLEASE SIGN, DATE AND MAIL TODAY.
(Signature of Stockholder(s)) _______________________________ Dated______, 1997
(Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title.)
s FOLD AND DETACH HERE s
<PAGE>
ANCHOR GAMING
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
AT 10:00 A.M., MONDAY, NOVEMBER 24, 1997
815 PILOT ROAD, SUITE G
LAS VEGAS, NEVADA 89119
The undersigned stockholder of Anchor Gaming (the "Company") hereby
revokes any proxy or proxies previously granted and appoints Stanley E. Fulton
and Michael D. Rumbolz or either of them, as proxies, each with full powers of
substitution and resubstitution, to vote the shares of the undersigned at the
above-stated Annual Meeting and at any adjournments thereof:
s FOLD AND DETACH HERE s
