<PAGE> 1
===============================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BALLY ENTERTAINMENT CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CAROL S. DE PAUL, SECRETARY
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
/ / 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:
- ---------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
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<PAGE> 2
BALLY ENTERTAINMENT CORPORATION
8700 WEST BRYN MAWR AVENUE
CHICAGO, ILLINOIS 60631
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1996
To Our Stockholders:
The Annual Meeting of Stockholders of Bally Entertainment Corporation (the
"Company") will be held in Le Grand Ballroom of Hotel Sofitel, Chicago, 5550
North River Road, Rosemont, Illinois 60018, on May 21, 1996 at 9:00 a.m. (local
time) to consider and act upon the following matters which are more fully
described in the accompanying Proxy Statement:
1. The election of three directors of Class I for three-year terms
expiring in 1999;
2. The approval of an amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of Common
Stock; and
3. Such other business as may properly come before the meeting or any
adjournment thereof.
Stockholders of record as of the close of business on March 25, 1996 will
be entitled to notice of and to vote at the meeting and any adjournment thereof.
The transfer books will not be closed.
The Board of Directors of the Company desires to have the maximum
representation at the meeting and respectfully requests that you date, execute
and mail promptly the enclosed proxy card in the enclosed postage-paid envelope.
By Order of the Board of Directors,
Carol Stone DePaul, Secretary
Chicago, Illinois
April 1, 1996
YOUR VOTE IS IMPORTANT!
PLEASE EXECUTE, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE RETURN
ENVELOPE PROVIDED.
<PAGE> 3
BALLY ENTERTAINMENT CORPORATION
8700 WEST BRYN MAWR AVENUE
CHICAGO, ILLINOIS 60631
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1996
To Our Stockholders:
This Proxy Statement is furnished to stockholders of Bally Entertainment
Corporation (the "Company") for use at the Annual Meeting of Stockholders on May
21, 1996, or at any adjournment or adjournments thereof for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. The enclosed
proxy is solicited on behalf of the Board of Directors of the Company and is
subject to revocation at any time prior to the voting of the proxy by notice in
writing to the Secretary of the Company or the secretary of the meeting or by
appearing and voting in person at the meeting. Unless a contrary choice is
indicated, all duly executed proxies received by the Company will be voted:
1. for the election of the nominees for director;
2. for an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common
Stock; and
3. such other business as may properly come before the meeting or any
adjournment thereof.
Proxies, ballots and voting tabulations that identify stockholders will be
kept confidential, except in a contested proxy solicitation, when necessary to
meet applicable legal requirements, pursuant to requests by any gaming
regulatory agency with jurisdiction over the Company or at the express request
of the stockholder. Chemical Mellon Shareholder Services, L.L.C. has been
appointed as the independent inspector of election for the meeting. The
approximate date on which this Proxy Statement and the enclosed proxy card are
first being sent to stockholders is April 1, 1996.
VOTING SECURITIES
The record of stockholders entitled to notice of and to vote at the Annual
Meeting of Stockholders was taken at the close of business on March 25, 1996.
The total outstanding voting stock of the Company as of the close of business on
March 25, 1996 consisted of shares of common stock, par value 66 2/3
cents ("Common Stock") and 15,525,000 shares of 8% PRIDES[sm] Convertible
Preferred Stock, par value $1.00 ("Preferred Stock"). Each share of Common Stock
is entitled to one vote per share. Each share of Preferred Stock is entitled to
four-fifths ( 4/5) of a vote per share. Shares of Common Stock or Preferred
Stock cannot be voted at the Annual Meeting of Stockholders unless the holder is
present in person or by proxy. The presence, in person or by proxy, of a
majority of stockholders is necessary to constitute a quorum at the Annual
Meeting of Stockholders. The affirmative vote of holders of a majority of the
shares of Common Stock and Preferred Stock voting together, represented in
person or by proxy at the meeting, is required to elect directors and to approve
the amendment to the Company's Restated Certificate of Incorporation to increase
the number of authorized shares of Common Stock.
ELECTION OF DIRECTORS AND SECURITY OWNERSHIP
At the Annual Meeting of Stockholders, three directors of Class I are to be
elected for three-year terms expiring in 1999 or until their successors have
been duly elected and qualified. Set forth below are the names of, and certain
information with respect to, the persons nominated by the Board of Directors for
election as directors of Class I. It is intended that all duly executed proxies
in the accompanying form will be voted for the
<PAGE> 4
election of such nominees (or such substitute nominees as provided below),
unless such authorization has been withheld.
Authority granted to the persons named in the proxy to vote for nominees is
limited to the three nominees proposed by the Board of Directors and named
below, and proxies cannot be voted for a greater number of persons than the
number of nominees named. The Board of Directors is not aware that any of the
nominees will be unavailable for service at the date of the meeting. If, for any
reason, any of the nominees shall become unavailable for election, an event
which is not presently anticipated, discretionary authority may be exercised by
the persons named in the proxy to vote for substitute nominees proposed by the
Board of Directors.
The directors of Class II were elected at the 1994 Annual Meeting of
Stockholders for three-year terms expiring in 1997. The directors of Class III
were elected at the 1995 Annual Meeting of Stockholders for three-year terms
expiring in 1998. Information regarding the nominees for election and the
continuing directors, as well as information regarding security ownership of
certain named executive officers, furnished in part by each such person, appears
below:
NOMINEES
CLASS I
TERM EXPIRING IN 1999
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
AS OF MARCH 25, 1996
NAME, AGE, PRINCIPAL (1)(2) PERCENTAGE OWNERSHIP
OCCUPATION --------------------- --------------------- PERCENTAGE
AND ADDITIONAL HAS SERVED AS COMMON PREFERRED COMMON PREFERRED OF AGGREGATE
INFORMATION DIRECTOR SINCE STOCK STOCK STOCK STOCK VOTING POWER
- ------------------------ -------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Barrie K. Brunet, 71 1991 4,334 -- * -- *
Former Vice President of
Bally's Grand, Inc. and
former President and
Chief Operating
Officer of Bally's Reno
Casino Resort. Mr.
Brunet is a director of
Reno Air, Inc. (4)
J. Kenneth Looloian, 73 1992 13,334 -- * -- *
Executive Vice President
of Di Giorgio Corporation,
a food distributor, former
partner in Arveron
Investments L.P. and
former Executive Vice
President of
International Controls
Corporation. Mr.
Looloian is a director
of Bally's Casino
Holdings, Inc., Bally's
Park Place, Inc., GNOC,
CORP., Bally Total
Fitness Holding
Corporation and Science
Management Corporation.
James M. Rochford, 74 1981 34,334 -- * -- *
Retired Vice President
of the Company and
Retired Superintendent
of Police, City of
Chicago, Illinois.
</TABLE>
2
<PAGE> 5
CONTINUING DIRECTORS
CLASS II
TERM EXPIRING IN 1997
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
AS OF MARCH 25, 1996
NAME, AGE, PRINCIPAL (1)(2) PERCENTAGE OWNERSHIP
OCCUPATION --------------------- --------------------- PERCENTAGE
AND ADDITIONAL HAS SERVED AS COMMON PREFERRED COMMON PREFERRED OF AGGREGATE
INFORMATION DIRECTOR SINCE STOCK STOCK STOCK STOCK VOTING POWER
- ------------------------ -------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
George N. Aronoff, 62 1979 98,775 -- * -- *
Partner in the Cleveland
law firm of Benesch,
Friedlander, Coplan &
Aronoff. Mr. Aronoff is
a director of
Specialty Chemical
Resources,
Inc. (5)
Patrick L. O'Malley, 85 1981 77,140 -- * -- *
Chairman of the Board of
Directors of Michigan
Avenue National Bank and
the former President and
Chief Executive Officer
and present Chairman
Emeritus of Canteen
Company. Mr. O'Malley is
a director of First Colonial
Bankshares, Inc.
Rocco J. Marano, 68 1991 13,334 -- * -- *
Former Chairman of the
Board of Directors and
Chief Executive Officer of
Bell Communications
Research, Inc. and
former Chairman of the
Board of Directors of
Blue Cross Blue Shield
of New Jersey. Mr.
Marano is a director of
Computer Horizons
Corporation.
</TABLE>
3
<PAGE> 6
CLASS III
TERM EXPIRING IN 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
AS OF MARCH 25, 1996
NAME, AGE, PRINCIPAL (1)(2) PERCENTAGE OWNERSHIP
OCCUPATION --------------------- --------------------- PERCENTAGE
AND ADDITIONAL HAS SERVED AS COMMON PREFERRED COMMON PREFERRED OF AGGREGATE
INFORMATION DIRECTOR SINCE STOCK STOCK STOCK STOCK VOTING POWER
- ------------------------ -------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Goldberg, 54 1990 2,752,968 -- 5.6% -- %
Chairman of the Board of
Directors, Chief
Executive Officer and
President of the
Company, Chairman of the
Board of Directors,
President and Chief
Executive Officer of
Bally's Casino Holdings,
Inc., Chairman of the
Board of Directors and
Chief Executive Officer
of Bally's Park Place,
Inc., GNOC, CORP. and
Bally's Grand, Inc. Mr.
Goldberg is also the
Chairman of the Board of
Directors, President and
Chief Executive Officer
of Di Giorgio
Corporation, Managing
Partner of Arveron
Investments L.P. and
Chairman of the Board of
Directors and Chief
Executive Officer of
Bally Total Fitness
Holding Corporation. Mr.
Goldberg is also a
Director of First Union
Corporation. (4)(6)
Edwin M. Halkyard, 61 1990 17,186 -- * -- *
Distinguished lecturer
in Management at the
University of South
Carolina College of
Business Administration
and former Senior Vice
President of
Allied-Signal Inc. Mr.
Halkyard is a Director
of CityFed Financial
Corp.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
AS OF MARCH 25, 1996
(1)(2) PERCENTAGE OWNERSHIP
--------------------- --------------------- PERCENTAGE
SECURITY OWNERSHIP OF NAMED COMMON PREFERRED COMMON PREFERRED OF AGGREGATE
EXECUTIVE OFFICERS STOCK STOCK STOCK STOCK VOTING POWER
- -------------------------------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Lee S. Hillman 201,668 5,000 * * *
Executive Vice President, Chief
Financial Officer and Treasurer of
the Company
Wallace R. Barr 136,636 5,000 * * *
President and Chief Operating Officer
of Bally's Park Place, Inc., and
GNOC, CORP.
Michael G. Lucci, Sr. 338,786 -- * -- *
President and Chief Operating Officer
of Bally Total Fitness Holding
Corporation
Darrell A. Luery 55,001 -- * -- *
President and Chief Operating Officer
of Bally's Grand, Inc.
All executive officers and directors 3,900,498 10,000 7.8% * %
as a group, 18 people
</TABLE>
- ---------------
* Less than one percent
(1) Includes the following numbers of shares of Common Stock that the following
persons have or had, within 60 days after March 25, 1996, the right to
acquire upon the exercise of options: Mr. Goldberg, 2,016,668; Mr. Hillman,
191,668; Mr. Barr, 120,835; Mr. Lucci, 25,001; Mr. Luery, 55,001; Mr.
Brunet, 3,334; Mr. Looloian, 3,334, Mr. Aronoff, 3,334; Mr. Marano, 3,334;
Mr. Halkyard, 3,334; and all current executive officers and directors,
including the foregoing, as a group 2,577,349.
(2) Includes, in certain instances, shares of Common Stock held in the name of
the director's or executive officer's spouse, minor children, or relatives
sharing his home, and in the case of Mr. Goldberg, shares held by Nugget
Partners, L.P., a New Jersey limited partnership, whose sole general partner
is Mr. Goldberg, the reporting of which is required by applicable rules of
the Securities and Exchange Commission, but as to which shares of Common
Stock the director or executive officer may have disclaimed beneficial
ownership.
(3) Each share of Preferred Stock is entitled to four-fifths ( 4/5) of a vote
per share.
(4) From November 1991 to August 20, 1993, Bally's Grand, Inc. ("Bally's Grand")
operated its business and managed its properties as a debtor-in-possession
under chapter 11 of title 11 of the United States Code. The chapter 11 plan
of reorganization for Bally's Grand was confirmed on September 15, 1992, and
became effective August 20, 1993, at which time Bally's Grand emerged from
bankruptcy. Mr. Goldberg is a director of Bally's Grand, and Mr. Brunet is a
former director of Bally's Grand. Mr. Luery was elected Senior Vice
President of Bally's Grand in 1989, Chief Operating Officer in 1992 and
President in 1994.
(5) Mr. Aronoff also owned, as of March 25, 1996, $13,000 principal amount of
the Company's 8% Convertible Senior Subordinated Debentures due 2000. No
other person named above owned any such debentures as of March 25, 1996.
(6) Mr. Goldberg also owned, as of March 25, 1996, 1,685,994 shares of Series A
Cumulative Exchangeable Preferred Stock, par value $1.00 per share ("Casino
Preferred") of Bally's Casino, Inc., a subsidiary of the Company. The shares
of Casino Preferred are exchangeable for Common Stock at the rate of 1.12
shares of Casino Preferred for each share of Common Stock.
5
<PAGE> 8
As of February 27, 1996, pursuant to information supplied by FMR Corp. to
the Company on March 8, 1996, FMR Corp., through its wholly owned subsidiaries
Fidelity Management & Research Company and Fidelity Management Trust Company,
beneficially owned 4,136,115 shares of Common Stock, 8.47% of the Common Stock
outstanding as of March 25, 1996. As of such date, FMR Corp. had sole voting
power with respect to 623,050 shares and sole dispositive power with respect to
4,136,115 shares. The address of FMR Corp. is 82 Devonshire Street, Boston,
Massachusetts 02109.
The Company is required to identify any director or officer who failed to
timely file with the Securities and Exchange Commission a required report
relating to ownership and changes in ownership of the Company's equity
securities. Based on material provided to the Company, it believes that during
1995 all such filing requirements were complied with by its directors and
officers except for a delayed filing of a Form 4 for Mr. Hillman in connection
with his purchase of Preferred Stock.
INFORMATION RELATING TO THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held seven meetings during 1995. Each incumbent
director attended at least 75% of the aggregate number of meetings of the Board
of Directors and all committees on which he served during 1995.
The Board of Directors has an Executive Committee, an Audit Committee, a
Nominating Committee and a Compensation and Stock Option Committee. The general
functions of such committees, the identity of each committee member and the
number of committee meetings held by each committee during the last fiscal year
are set forth below.
EXECUTIVE COMMITTEE
The current members of the Executive Committee are Mr. Goldberg, Chairman,
and Messrs. Looloian, Marano and Aronoff. The Executive Committee may exercise
all of the powers of the Board of Directors to the extent permitted by law. The
Executive Committee did not hold any meetings during 1995.
AUDIT COMMITTEE
The current members of the Audit Committee are Mr. O'Malley, Chairman, and
Messrs. Halkyard and Looloian. The general functions of the Audit Committee
include selecting the independent auditors (or recommending such action to the
Board of Directors), evaluating the performance of the independent auditors and
their fees for services, reviewing the scope of the annual audit with the
independent auditors and the results of the audit with management and the
independent auditors, consulting with management, internal auditors and the
independent auditors as to the systems of internal accounting controls, and
reviewing the nonaudit services performed by the independent auditors and
considering the effect, if any, on their independence. The Audit Committee held
four meetings during 1995.
NOMINATING COMMITTEE
The current members of the Nominating Committee are Mr. Marano, Chairman,
and Messrs. Goldberg, Rochford and Brunet. The general functions of the
Nominating Committee include recommending to the Board of Directors nominees for
election as directors, consideration of the performance of incumbent directors
in determining whether to nominate them for reelection and making
recommendations with respect to the organization and size of the Board of
Directors and its committees. The Nominating Committee did not hold any meetings
during 1995.
The Nominating Committee will consider nominees recommended by
stockholders. Such a recommendation will be considered if submitted in writing
addressed to the Company c/o "Chairman, Nominating Committee," accompanied by a
description of the proposed nominee's qualifications and other relevant
biographical information, and a written indication of the consent of the
proposed nominee. Candidates for nomination as director are considered on the
basis of their broad business, financial and public service
6
<PAGE> 9
experience, and should not represent any particular constituency, but rather the
stockholders generally. The nominees should be highly regarded for capability
and integrity within their fields or professions. In addition, the activities or
associations of the nominees should not constitute conflicts of interest or
legal impediments that might preclude service as a Company director. Moreover,
nominees must be able, and must have expressed a willingness, to devote the time
required to serve effectively as a director and as a member of one or more
committees of the Board of Directors.
COMPENSATION AND STOCK OPTION COMMITTEE
The current members of the Compensation and Stock Option Committee (the
"Committee") are Mr. Halkyard, Chairman, and Messrs. O'Malley and Marano. The
general functions of the Committee include approval (or recommendation to the
Board of Directors) of the compensation arrangements for senior management,
directors and other key employees, review of benefit plans in which officers and
directors are eligible to participate, periodic review of the equity
compensation plans of the Company and the grants under such plans, and oversight
of management development to ensure continuity of senior management. The
Committee held four meetings during 1995.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are also employees of the Company do
not receive any additional compensation for service on the Board of Directors or
any committees of the Board of Directors. In 1995, the members of the Board of
Directors who were not employees received an annual retainer of $35,000 plus a
$2,000 stipend for each meeting attended. Non-employee directors received
additional stipends for service on committees of the Board of Directors of $500
per year for committee members and $2,500 per year for committee chairmen,
except the Chairmen of the Audit and Compensation Committees, each of whom
received annual stipends of $5,000.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to its
Chief Executive Officer and the four other most highly compensated executive
officers of the Company at the end of 1995, for services rendered in all
capacities to the Company during the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ ---------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) SARS (#) ($)
- ------------------------------------- ---- --------- --------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Goldberg 1995 2,200,000 1,000,000 476,170(2) 550,000 2,527,642(3)
Chairman of the Board of Directors, 1994 2,200,000 -- 583,708 150,000 746,577
Chief Executive Officer and 1993 2,200,000 -- 642,284 450,000 4,179,713
President of the Company
Lee S. Hillman 1995 350,000 400,000 -- 25,000 61,625(4)
Executive Vice President, 1994 350,000 300,000 -- 75,000 7,346
Chief Financial Officer 1993 350,000 250,000 -- 100,000 252,500
and Treasurer of the Company
Wallace R. Barr 1995 900,000 650,000 -- 25,000 176,562(5)
President and Chief Operating 1994 700,000 450,000 -- 75,000 41,567
Officer of Bally's Park Place, Inc. 1993 704,565 290,000 -- 100,000 16,239
and GNOC, CORP.
Michael G. Lucci, Sr. 1995 500,000 -- 95,558(7) -- 57,811(8)
President and Chief Operating 1994 500,000 -- -- 75,000 17,308
Officer of Bally Total 1993(6) 380,000 300,000 -- 75,000 --
Fitness Holding Corporation
Darrell A. Luery 1995 558,000 283,500 -- 25,000 67,468(10)
President and Chief Operating 1994(9) 540,000 270,000 -- 75,000 39,351
Officer of Bally's Grand, Inc.
</TABLE>
- ---------------
(1) Certain incidental personal benefits to executive officers of the Company
may result from expenses incurred by the Company in the interest of
attracting and retaining qualified personnel. This Proxy Statement does not
describe such incidental personal benefits made available to executive
officers during 1995, because the incremental cost to the Company of such
benefits is below the Securities and Exchange Commission disclosure
threshold.
(2) This total includes (i) $472,681 tax gross-up payment with respect to Mr.
Goldberg's retirement annuity; and (ii) $3,489 tax gross-up payment with
respect to Mr. Goldberg's split-dollar life insurance policy.
(3) This total includes (i) $464,787 paid by the Company for Mr. Goldberg's
retirement annuity; (ii) $4,260 paid by the Company for premiums on Mr.
Goldberg's split-dollar life insurance policy; (iii) $37,595 which is the
discount to the present value of a refund on the split-dollar life
insurance policy; (iv) $166,000 matched by the Company for Mr. Goldberg's
participation in the Company's savings plans; and (v) $1,855,000 paid to
Mr. Goldberg in lieu of certain rights he had under his employment
agreement.
(4) This amount represents amounts matched by the Company for Mr. Hillman's
participation in the Company's savings plans.
(5) This amount represents (i) $162,462 matched by Bally's Park Place, Inc. for
Mr. Barr's participation in the Company's savings plans; (ii) $10,032
matched by Bally's Park Place, Inc. for Mr. Barr's participation in its
profit sharing plan; and (iii) $4,068 for life insurance premiums paid by
Bally's Park Place, Inc.
8
<PAGE> 11
(6) Mr. Lucci's employment as an executive officer of the Company commenced as
of April 29, 1993 and terminated as of January 9, 1996 as a result of the
distribution by the Company to its stockholders of all of the outstanding
shares of common stock of its former wholly owned subsidiary, Bally Total
Fitness Holding Corporation ("BFIT"), formerly known as Bally's Health &
Tennis Corporation.
(7) This amount represents (i) $49,410 paid by BFIT with respect to Mr. Lucci's
accommodations in Chicago; (ii) a $30,057 tax gross-up payment by BFIT with
respect to Mr. Lucci's accommodation costs; and (iii) other perquisites
totalling $16,091.
(8) This amount represents (i) $56,250 matched by BFIT for Mr. Lucci's
participation in one of the Company's savings plans; and (ii) $1,561 for
life insurance premiums paid by BFIT.
(9) Mr. Luery's employment as an executive officer of the Company commenced as
of December 30, 1994.
(10) This amount represents amounts matched by Bally's Grand, Inc. for Mr.
Luery's participation in the Company's savings plans.
EMPLOYMENT AGREEMENTS
Mr. Goldberg
The Company and Mr. Goldberg entered into an employment agreement
guaranteed by Bally's Park Place, Inc. (the "Goldberg Employment Agreement")
dated as of November 1, 1990 for a three-year term. The Goldberg Employment
Agreement has been amended, among other things, to increase the base salary to
$2,200,000 and extend the term of the Goldberg Employment Agreement through
October 31, 1998, with automatic annual extensions for additional one-year
periods unless either party gives written notice to the other prior to October 1
of any year fixing the remainder of the term at three years without automatic
extension. The Goldberg Employment Agreement provides for the Company to
contribute, each year during the term of Mr. Goldberg's employment, amounts to
provide Mr. Goldberg with annual retirement benefits, if he is employed by the
Company until age 62, equal to the excess, if any, of (i) 50% of the average of
his cash compensation for any of the three highest years preceding the year in
which he attains age 62, over (ii) the sum of $258,189 and the retirement
benefit payable to Mr. Goldberg under the Company's other retirement or similar
benefit programs in which Mr. Goldberg participates, except the Company's 401(k)
program (the "Supplemental Retirement Benefit Arrangement"). The contributions
under the Supplemental Retirement Benefit Arrangement are to be paid (i)
directly to Mr. Goldberg; (ii) to the appropriate governmental taxing authority
on Mr. Goldberg's behalf; or (iii) to a supplemental retirement benefit trust,
together with a tax gross-up payment so that the net benefit received by Mr.
Goldberg, after payment of all taxes, is equal to the required contribution by
the Company. Upon termination of Mr. Goldberg's employment without cause, in
addition to other payments, the Company is required to make an additional
contribution, which would equal three times the contribution most recently made
prior thereto, provided that all retirement benefits from the Supplemental
Retirement Benefit Arrangement would not exceed the benefits described in the
second preceding sentence. Furthermore, in the event there is a change in
control of the Company (as defined in the Goldberg Employment Agreement) and
within two years thereafter Mr. Goldberg's employment is terminated by the
Company or by him voluntarily following a constructive termination without
cause, Mr. Goldberg will be entitled to a lump sum payment equal to the greater
of (i) the sum of his base salary for the remainder of his employment term, plus
the average of the semi-annual bonuses awarded to him prior to his termination
multiplied by two times the number of half-years remaining in his employment
term; or (ii) three times his base salary. In such event, he shall also be
entitled to any bonuses awarded but not yet paid, the value of his continued
participation in certain employee benefit plans of the Company (or continued
participation in such plans until the end of the employment term or the time Mr.
Goldberg receives equivalent coverage from a subsequent employer), certain
retirement trust contributions and payment by the Company of premiums on his
split-dollar life insurance policy as if Mr. Goldberg had been employed by the
Company until age 62. Mr. Goldberg would also be entitled to a tax gross-up
payment with respect to any payment made after a change in control subject to
the excise tax. If a change in control of the Company were to occur on April 1,
1996, Mr. Goldberg would be entitled to a payment of approximately $24,200,000
under the Goldberg Employment Agreement.
9
<PAGE> 12
Mr. Hillman
The Company and Mr. Hillman entered into an employment agreement effective
as of April 15, 1995 for a three-year term ending April 14, 1998 with automatic
annual extensions for additional one-year periods unless either party gives
written notice to the other prior to March 1 of any year fixing the remainder of
the term at three years without automatic extension. The agreement provides for
an annual base salary of $ , effective , 1996. In
the event of a change in control of the Company, Mr. Hillman may terminate the
agreement and receive a lump sum payment equal to six months of his base salary.
In the event of a change in control of the Company, as a result of which Mr.
Hillman is asked to leave the employ of the Company, Mr. Hillman is entitled to
receive a lump sum payment equal to 36 months base salary and two times the
average of his bonuses for the prior three years. Mr. Hillman would also be
entitled to a tax gross-up payment with respect to any payment made after a
change in control subject to the excise tax. If a change in control of the
Company were to occur on April 1, 1996 and Mr. Hillman were asked to leave the
employ of the Company, Mr. Hillman would be entitled to a payment of
$ under his employment agreement.
Mr. Barr
The Company, Bally's Park Place and Mr. Barr entered into an employment
agreement effective as of January 1, 1995 for a term expiring December 31, 1998.
The agreement provides for an annual base salary of $900,000. In the event of an
initial public offering of the common stock of either Bally's Park Place, Inc.
or GNOC, CORP. during the term of the employment agreement, Mr. Barr will
receive stock options and/or stock awards in amounts consistent with the highest
grants of these types to other employees of the Company and its subsidiaries,
other than the Chairman of the Board or President of the Company. In the event
of a change in control of the Company, Mr. Barr may terminate the agreement and
receive a lump sum payment equal to six months of his base salary. In the event
of a change in control of the Company, as a result of which Mr. Barr is asked to
leave the employ of the Company, Mr. Barr is entitled to receive a lump sum
payment equal to either 24 months base salary or an amount equal to his base
salary for the balance of the term of his employment agreement, whichever amount
is greater, and the greater of his average bonus for the prior three years or
the bonus for the prior year. Mr. Barr would also be entitled to a tax gross-up
payment with respect to any payment made after a change in control subject to
the excise tax. If a change in control of the Company were to occur on April 1,
1996 and Mr. Barr were asked to leave the employ of the Company, Mr. Barr would
be entitled to a payment of $4,600,000 under his employment agreement.
Mr. Luery
Mr. Luery and Bally's Grand, Inc. entered into an employment agreement
dated June 5, 1995, for a term expiring April 30, 1998. The employment agreement
provides for the payment of an annual base salary, subject to periodic review by
the Board of Directors of Bally's Grand, Inc. (or the Company in certain
circumstances), plus bonuses, payable at the discretion of the Board of
Directors of Bally's Grand, Inc. (or the Company in certain circumstances). Mr.
Luery's annual base salary is $567,000. Mr. Luery also received a restricted
stock award of 73,000 shares of Bally's Grand, Inc. common stock. In the event
that Mr. Luery voluntarily terminates the employment agreement or his employment
is terminated by Bally's Grand, Inc. for "cause" (as defined in the employment
agreement), Mr. Luery is subject to certain noncompetition covenants and will be
for a period of one year following the termination of his employment in certain
circumstances. In the event of a change in control (as defined in the employment
agreement) of Bally's Grand, Inc. and Mr. Luery is asked to leave the employ of
Bally's Grand, Inc., or absent cause, Mr. Luery elects to terminate his
employment because he has been constructively terminated, Mr. Luery will be
entitled to receive a lump sum payment equal to the full amount of his
then-current base salary for the remainder of the term of his employment
agreement or 24 months, whichever is greater, and the greater of the average
bonuses, if any, paid to Mr. Luery for the three previous years or the bonus
paid to Mr. Luery for the prior year. Mr. Luery would also be entitled to a tax
gross-up payment with respect to any payment made after a change in control
subject to the excise tax. If a change in control of Bally's Grand, Inc. were to
occur on April 1, 1996, and Mr. Luery
10
<PAGE> 13
were asked to leave the employ of Bally's Grand, Inc., Mr. Luery would be
entitled to payment of approximately $1,465,000 under his employment agreement.
RETIREMENT SAVINGS PLAN
On September 7, 1994, the Company adopted the Bally Entertainment
Corporation Management Retirement Savings Plan (the "Savings Plan"). The Savings
Plan is a deferred compensation plan designed to permit a select group of
management or highly compensated employees to enhance the security of themselves
and their beneficiaries following retirement or other termination of their
employment. The Savings Plan is intended to be an "employee pension benefit
plan" under the Employee Retirement Income Security Act of 1974, as amended, and
is unfunded and maintained by the Company. The Savings Plan is not intended to
be qualified under the Internal Revenue Code of 1986, as amended. The Board, in
its sole discretion, designates those members of management or highly
compensated employees who are eligible to participate in the Savings Plan.
Currently, over 150 employees are eligible to participate in the Savings Plan.
During the first half of 1995, the Company and its subsidiaries provided a
matching contribution as follows: 100% of the first 10% of eligible compensation
the participant defers, 50% of the second 10% of eligible compensation the
participant defers and 0% thereafter. Effective July 1, 1995, the Savings Plan
was amended to provide that the Company and its subsidiaries provide a matching
contribution of 50% of the first 15% of eligible compensation the participant
defers and 0% thereafter. Matching contributions are credited to a participant's
matching account and become vested as follows: after one but less than two Years
of Deferral they become 33 1/3% vested, after two but less than three Years of
Deferral they become 66 2/3% vested, and after more than three Years of Deferral
they become fully vested. For this purpose, a "Year of Deferral" is credited
with respect to a matching contribution made during a calendar year for each
completed calendar year commencing after the calendar year during which the
matching contribution was made. A participant generally may elect to receive his
benefits under the Savings Plan in a lump sum or in installments over a period
of no more than 10 years. As soon as possible (but not later than five business
days) after a change in control of the Company, as defined in the Savings Plan,
all of the participants' accounts will become 100% vested.
For 1995, the Company and its subsidiaries will contribute cash of
$2,279,354 to the accounts of all participants in the Savings Plan, of which
$589,422 was allocated to the accounts of all executive officers as a group.
Amounts allocated to the executives named in the summary compensation table were
as follows: Mr. Goldberg $165,000, Mr. Hillman $60,625, Mr. Barr $161,019, Mr.
Lucci $56,250 and Mr. Luery $62,386.
STOCK OPTION AND SAR GRANTS
The following table sets forth the information noted for all grants of
stock options made to each of the executive officers named in the Summary
Compensation Table during 1995:
OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SECURITIES PERCENT OF TOTAL EXERCISE APPRECIATION FOR OPTION
UNDERLYING OPTIONS/SARS OR BASE TERM(2)
OPTIONS/SARS GRANTED TO EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED(#)(3) IN FISCAL YEAR ($/SH)(4) DATE 5%($) 10%($)
- ----------------------- ------------- -------------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Goldberg...... 500,000 47.3% 6.30 1/19/05 1,981,018 5,020,289
50,000 4.7% 11.05 12/12/05 347,464 880,543
Lee S. Hillman.......... 25,000 2.4% 11.05 12/12/05 173,732 440,271
Wallace R. Barr......... 25,000 2.4% 11.05 12/12/05 173,732 440,271
Michael G. Lucci, Sr.... -- -- -- -- -- --
Darrell A. Luery........ 25,000 2.4% 11.05 12/12/05 173,732 440,271
</TABLE>
11
<PAGE> 14
- ---------------
(1) There were no SARs granted to any of the executive officers named in this
table in 1995. In addition, in 1995 the Company's 1989 Incentive Plan was
amended to eliminate the Company's ability to issue SARs.
(2) The potential realizable values represent future opportunity and have not
been reduced to present value in 1995 dollars. The dollar amounts included
in these columns are the result of calculations at assumed rates set by the
Securities and Exchange Commission for illustration purposes. These rates
are not intended to be a forecast of the Common Stock price and are not
necessarily indicative of the values that may be realized by the named
executive officer. The potential realizable values are based on arbitrarily
assumed annualized rates of stock price appreciation of five percent and 10
percent over the full 10-year term of the options. For example, in order for
the individuals named above who received options with an exercise price of
$11.05 per share to realize the potential values set forth in the five
percent and 10 percent columns in the table above, the price per share of
the Common Stock would have to be approximately $18.00 and $28.66,
respectively.
(3) One-third of the options granted may be exercised on the first anniversary
of the date of grant, two-thirds after two years from the date of grant and
100% after three years from the date of grant. Each grant was made on the
date which is 10 years prior to the date of expiration set forth in the
table.
(4) Pursuant to the terms of the Company's stock option plans, the Compensation
Committee made an adjustment to the exercise price of all outstanding
options in connection with the distribution of the shares of BFIT to the
Company's stockholders. The adjustment was equal to one quarter of the
average closing price for the shares of BFIT for the first 20 days of
trading, reflecting the distribution of one quarter of a share of BFIT for
each share of Common Stock. This adjustment resulted in a reduction of all
exercise prices by $1.20 per share.
STOCK OPTION AND SAR EXERCISES
The following table sets forth certain information concerning exercises of
stock options and SARs by each of the executive officers named in the Summary
Compensation Table during 1995 and their stock options and SARs outstanding as
of December 31, 1995:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)(2)
SHARES VALUE ------------------ ---------------------
ACQUIRED ON RECEIVED EXERCISABLE(E)/ EXERCISABLE(E)/
NAME EXERCISE(#) ($) UNEXERCISABLE(U) UNEXERCISABLE(U)
- -------------------------- ------------ --------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Arthur M. Goldberg(3)...... -- -- 1,850,001 E 22,020,008 E
799,999 U 5,678,742 U
Lee S. Hillman............. -- -- 191,668 E 1,614,177 E
108,332 U 682,073 U
Wallace R. Barr............ -- -- 104,169 E 792,018 E
108,331 U 729,982 U
Michael G. Lucci, Sr.(4)... -- -- 75,001 E 490,008 E
74,999 U 561,867 U
Darrell A. Luery........... -- -- 55,001 E 436,008 E
84,999 U 551,992 U
</TABLE>
- ---------------
(1) Pursuant to the terms of the Company's stock option plans, the Compensation
Committee made an adjustment to the exercise price of all outstanding
options in connection with the distribution of the shares of BFIT to the
Company's stockholders. The adjustment was equal to one quarter of the
average closing price for the shares of BFIT for the first 20 days of
trading, reflecting the distribution of one quarter of a share of BFIT for
each share of Common Stock. This adjustment resulted in a reduction of all
exercise prices by $1.20 per share.
(2) Value is based on the closing price of a share of Common Stock as of
December 31, 1995 ($14.00) minus the exercise or base price.
12
<PAGE> 15
(3) Shares under option at December 31, 1995 include an award to purchase
500,000 shares of Common Stock that can be deemed SARs at Mr. Goldberg's
election.
(4) Mr. Lucci's options to purchase Common Stock terminate on April 9, 1996 as a
result of the Company's distribution of the shares of BFIT to the Company's
stockholders.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") is composed of three non-employee directors. The Committee is
responsible for approval (or recommendation to the Board of Directors) of the
compensation arrangements for senior management, directors and other key
employees; review of benefit plans in which officers and directors are eligible
to participate; periodic review of the equity compensation plans of the Company
and grants under such plans; and oversight of management development to ensure
continuity of senior management.
In October 1990, the Board of Directors commenced a significant
restructuring effort relating to the Company's financial condition and
operations. As part of the restructuring, the Committee sought to establish
executive compensation programs intended to attract and retain executives
capable of enhancing stockholder value through the restructuring and the
operation of the Company's core businesses. Because of the uncertainty then
surrounding the Company's future and the necessity of having dynamic and
long-term leadership to guide the Company through the restructuring and beyond,
the Committee determined that in order to attract and retain executives with
these qualities, it was necessary to offer executive officers significant base
salaries, multi-year contracts and, to provide further incentive for increasing
stockholder value, significant stock option awards. Further, given the complex
and ongoing nature of the restructuring, the Committee concluded that creation
of compensation arrangements linked to specific operating results or more
traditional criteria was inappropriate. Since 1990, the volatility of the
Company's results and stock price because of the implementation of the various
steps in the restructuring has continued to make it problematic to link
compensation to traditional criteria. In addition, the Committee believes that
compensation plans that provide appropriate incentive to management do not, at
this time, meet the requirements of Section 162(m) of the Internal Revenue Code
and, consequently, the Committee has determined that the Company's performance
standards will not comply with that Section.
It was the Board of Director's view in October 1990, and it remains the
view of the Committee today, that the use of stock option awards aligns the
interests of the Company's executive officers with the long-term interests of
the Company's stockholders. The object of these awards is to provide incentive
to management to reinforce and advance the long-term interests of the Company
and its stockholders. Stock option awards provide rewards to executives for the
creation of incremental stockholder value and have the potential of providing
significant benefit to the executives without requiring the Company to make
significant cash payments. Stock options only produce value to executives as the
price of the Company's stock appreciates, thereby directly linking the interests
of executives with those of the stockholders. During the latter part of 1995,
the Board determined to provide further incentive for management to stay with
the Company by granting options in a triennial cycle with one year of
significant grants being followed by two years of smaller grants.
The Company's goals for 1995 were to increase profitability at its Las
Vegas and Atlantic City locations, open new facilities in New Orleans and
Mississippi and complete the spin-off of the health club business. In its
compensation decisions during 1995, the Committee considered current
quantitative measures including earnings and the price of the Common Stock and
qualitative achievements in the context of strengthening the gaming business in
both mature and newer markets and positioning it for further growth. The
Committee recognized qualitative factors such as contributions of executive
officers to the achievement of the Company's goals in a volatile business
environment, the implementation of policies and measures that will benefit the
Company's long-term performance and thus ultimately benefit the Company's
stockholders, and the managerial vision, decision-making responsibilities,
effectiveness and teamwork of individual executive officers. The Committee
believes that the Company achieved all its goals as evidenced by earnings at its
13
<PAGE> 16
mature properties, successful openings in new markets and completion of the
spin-off and consequently rewarded management with significant cash bonuses.
The compensation of the Company's Chief Executive Officer has been designed
to reward him for his efforts in connection with the restructuring and enhancing
the long-term performance of the Company and ultimately increasing stockholder
value. Prior to 1995, the Chief Executive Officer's total compensation package,
comprised of his original base compensation and stock option grants, had been
approved by the Committee in order to compensate him in his continuing efforts
to improve the Company's performance and to provide further incentive to
increase the short and long-term interests of the Company and its stockholders.
The Company's success in 1995, which was reflected in the increase in the stock
price throughout the year, caused the Committee to grant the Chief Executive
Officer a significant cash bonus for 1995.
The Committee believes that the cumulative total returns to the Company's
stockholders of 559% (measured as of December 31, 1995) and 653% (measured as of
March 1, 1996) since December 31, 1990 support the success of the Company's
approach to compensation. The cumulative total return to the Company's
stockholders since December 31, 1990 is set forth in the graph below.
COMPENSATION COMMITTEE
E.M. HALKYARD, CHAIRMAN
P.L. O'MALLEY
R.J. MARANO
14
<PAGE> 17
PERFORMANCE GRAPH
CUMULATIVE TOTAL RETURN JANUARY 1, 1990 THROUGH MARCH 1, 1996*
BALLY ENTERTAINMENT CORPORATION, S&P 500, DOW JONES CASINO INDUSTRY GROUP
AND DOW JONES ENTERTAINMENT & LEISURE INDUSTRY GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DJ ENTERTAINMENT
(FISCAL YEAR COVERED) BALLY DJ CASINOS & LEISURE S&P 500
<S> <C> <C> <C> <C>
12/31/90 100 100 100 100
12/31/91 247 153 124 130
12/31/92 371 237 155 140
12/31/93 400 362 195 153
12/31/94 288 278 178 155
12/31/95 659 368 235 212
3/1/96 753 442 259 222
</TABLE>
* Assumes $100 invested on January 1, 1990 in Bally Common Stock, the S&P 500,
the Dow Jones Casino Industry Group and the Dow Jones Entertainment & Leisure
Industry Group. Total return assumes reinvestment of dividends.
On November 6, 1995, the Company's Board of Directors declared a spin-off
distribution of the Company's fitness center segment operated by BFIT. With
the disposition of the fitness center operations, the Company's continuing
operations comprise one industry segment, with all significant revenue arising
from its casino operations and, where applicable, supporting hotel operations.
Given this change, management believes that a comparison to the Dow Jones
Casino Industry Group is more appropriate than a comparison to the Dow Jones
Entertainment & Leisure Industry Group which was presented in the Performance
Graph in the prior year's Proxy Statement. A comparison to both industry
groups is presented above.
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 80,000,000 TO 120,000,000
The Board of Directors has unanimously approved the amendment of Article
Fourth of the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 80,000,000 to 120,000,000. The
Board of Directors recommends that the Company's stockholders approve this
amendment at the Annual Meeting.
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock in order to have
additional authorized shares available for issuance to meet business needs as
they arise. The Board of Directors believes that the availability of such
additional shares will provide the Company with the flexibility to issue Common
Stock for proper corporate purposes which may be identified by the Board of
Directors in the future, such as the granting of stock options and other
stock-based incentives, and issuances in connection with financings and/or
acquisitions. No such transaction is currently contemplated by the Company.
15
<PAGE> 18
Substantially all of the 80,000,000 shares of Common Stock currently
authorized for issuance are either issued or reserved for issuance. If the
proposed amendment to the Restated Certificate of Incorporation is approved, the
authorized shares of Common Stock in excess of those issued and reserved will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable without further action by the Company's
stockholders, except as may be required by applicable laws or the rules of any
stock exchange or national securities association trading system on which the
Company's securities may be listed or traded. The Board of Directors does not
intend to issue any Common Stock except on terms which the Board deems to be in
the best interests of the Company and its stockholders. The Company has no
arrangements, agreements, understandings or plans at the present time for the
issuance or use of the additional shares of Common Stock proposed to be
authorized. Because holders of Common Stock do not have preemptive rights, any
future issuances of Common Stock will have a dilutive effect on present
stockholders.
The full text of Article FOURTH, Section A, as such Article and Section are
proposed to be amended, is as follows:
FOURTH:
A. General Authorization.
The aggregate number of shares of capital stock which the
Corporation is authorized to issue is 150,000,000 shares, consisting of:
(i) 120,000,000 shares of common stock, having a par value of
66 2/3 cents per share; and
(ii) 30,000,000 shares of preferred stock, having a par value of
$1.00 per share.
The affirmative vote of the holders of a majority of the voting power
represented by the outstanding shares of Common Stock and Preferred Stock voting
as a class is required to approve this proposal. If approved by the
stockholders, the proposed amendment to the Certificate of Incorporation will
become effective upon the filing of a certificate of amendment with the
Secretary of State of Delaware, which is expected to be accomplished on May 23,
1996, or as soon thereafter as practicable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND ARTICLE
FOURTH OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
LEGAL PROCEEDINGS
Several purported derivative actions against the Company and certain of its
current and former directors, originally filed in December 1990 and January
1991, have been consolidated under the caption In re: Bally Entertainment
Corporation Shareholders Litigation in the Court of Chancery of the State of
Delaware, New Castle County. The consolidated complaint alleges, among other
things, breach of fiduciary duty, corporate mismanagement, and waste of
corporate assets in connection with certain actions including, among other
things, payment of compensation, certain acquisitions by the Company, the
dissemination of allegedly materially false and misleading information, the
proposed restructuring of the Company's debt, and a subsidiary's allegedly
discriminatory practices. The plaintiffs seek, among other things, (i)
injunctions against payment of certain termination compensation benefits and
implementation of the proposed restructuring plan; (ii) rescission of
consummated transactions and a declaration that the complained-of transactions
are null and void; (iii) an accounting by individual defendants of damages to
the Company and benefits received by such defendants; (iv) the appointment of a
representative to negotiate on behalf of the stockholders in connection with any
proposed restructuring; and (v) costs and disbursements, including a reasonable
allowance for the fees and expenses of plaintiffs' attorneys, accountants and
experts.
TRANSACTIONS WITH MANAGEMENT
In 1995, the Company reimbursed Di Giorgio Corporation approximately
$165,000 for certain indirect administrative expenses. The amount of the
reimbursement is intended to replace the portion of such expenses directly
benefiting the Company. Mr. Goldberg is the beneficial owner of approximately
50% of the voting
16
<PAGE> 19
securities of Di Giorgio Corporation. In 1995, a subsidiary of the Company paid
$250,000 to a partnership of which Mr. Goldberg owns 57% for services provided
in connection with the subsidiary's investments in publicly traded securities
and for research. A partnership in which Messrs. Goldberg and Lucci are each 20%
limited partners purchased a facility in Texas from the Federal Deposit
Insurance Corporation. BFIT leases this facility for one of its fitness centers.
The rent did not change as a result of this transfer pursuant to the lease for
this facility. Rent is approximately $67,000 per month and is subject to
additional 15% increases at five and ten-year intervals. The proportionate share
of the 1995 rent payments for each of Messrs. Goldberg and Lucci was
approximately $161,000. Mr. Lucci has interests in real estate, or entities
owning real estate, that are leased to BFIT for fitness centers. Mr. Lucci's
interests range from approximately 17% to 25% in four locations. These
arrangements were created prior to the Company's acquisition of the business of
BFIT. The Company believes that the terms of these leases are at least as
favorable to BFIT as those which could be obtained from unrelated parties. In
1995, payments by BFIT under these leases totalled approximately $1,185,000, of
which $257,000 constituted Mr. Lucci's proportionate share. During 1995, BFIT
paid approximately $1,200,000 for goods and services from a company which
employed a relative of Mr. Hillman. Based on BFIT's receipt of competitive bids
for similar items, BFIT believes that the terms of these arrangements are at
least as favorable to BFIT as those which could be obtained from unrelated
parties. During 1995, the law firm of Benesch, Friedlander, Coplan & Aronoff
rendered legal services to the Company and its subsidiaries. Mr. Aronoff, a
director of the Company, is a partner in this law firm. The Company plans to
retain this firm during the current year. On December 29, 1995, Bally's Grand,
Inc. purchased 24,300 shares of its common stock from Mr. Luery for $16.00 per
share, the closing price for that stock on that date.
AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
approved the selection of Ernst & Young LLP as the Company's independent
auditors for 1996. Representatives of Ernst & Young LLP will be present at the
meeting with the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
OTHER BUSINESS
In addition to the matters described above, there will be an address by the
Chairman of the Board of Directors and a general discussion period during which
stockholders will have an opportunity to ask questions.
Management knows of no other business to be presented for action at the
meeting. If other matters properly come before the meeting or any adjournment
thereof, the persons named as proxies will vote upon them in accordance with
their best judgment.
EXPENSE OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
the use of the mail, proxy solicitation may be made by telephone, telegraph and
personal interviews by regular employees of the Company. The Company has
retained MacKenzie Partners, Inc., 156 Fifth Avenue, New York, New York 10010,
to assist in the soliciting of proxies and will pay that firm a fee of $10,000,
plus out-of-pocket expenses for such services. The Company will also reimburse
brokerage houses and others for forwarding proxy material to beneficial owners
of Common Stock.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
The date by which stockholder proposals for inclusion in the proxy
materials relating to the next Annual Meeting of Stockholders must be received
by the Company at its principal executive offices, Attention: Carol Stone
DePaul, Secretary, Bally Entertainment Corporation, 8700 West Bryn Mawr Avenue,
Chicago, Illinois 60631, is December 9, 1996.
17
<PAGE> 20
ANNUAL REPORT
A copy of the Company's Annual Report to stockholders for the year 1995,
which contains consolidated financial statements of the Company accompanies this
proxy statement. The Company will provide to any stockholder as of the record
date who so requests in writing, copies of its Annual Report on Form 10-K, and,
if specifically requested, the financial statement schedules and exhibits
thereto. Requests for such copies should be directed to Carol Stone DePaul,
Secretary, Bally Entertainment Corporation, 8700 West Bryn Mawr Avenue, Chicago,
Illinois 60631.
By Order of the Board of Directors,
CAROL STONE DE PAUL
Secretary
Chicago, Illinois
April 1, 1996
PLEASE DATE AND SIGN YOUR PROXY CARD AND RETURN IT PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE.
BALLY ENTERTAINMENT CORPORATION
8700 WEST BRYN MAWR AVENUE
CHICAGO, ILLINOIS 60631
18
<PAGE> 21
BALLY ENTERTAINMENT CORPORATION
8700 West Bryn Mawr Avenue, Chicago, Illinois 60631
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James S. Montana, Jr. and Carol
R Stone DePaul, or either of them, proxies of the undersigned with full
power of substitution, to vote all shares of the undersigned at the
Annual Meeting of Stockholders of Bally Entertainment Corporation
(the "Company") to be held on May 21, 1996, at 9:00 a.m.
O (local time), in Le Grand Ballroom of Hotel Sofitel, Chicago, 5550
North River Road, Rosemont, Illinois 60018, or at any
adjournment(s) thereof.
X THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
PROPOSALS NUMBER (1) AND (2).
PLEASE DATE, SIGN EXACTLY AS NAME APPEARS ON THE REVERSE,
Y AND RETURN THIS PROXY IN THE ENCLOSED POSTPAID ENVELOPE.
COMMENTS/ADDRESS CHANGE: PLEASE MARK
COMMENTS/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
<PAGE> 22
<TABLE>
<CAPTION>
/X/ PLEASE MARK
EACH VOTE
LIKE THIS
-------------------
PREFERRED
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS NUMBER (1) AND (2).
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD
ALL FOR ALL FOR AGAINST ABSTAIN
1. Election of Class / / / / 2. Approval of an / / / / / / 3. In their discretion on all
I Directors for amendment to the other matters that may
three-year terms Company's Restated properly come before the
expiring in 1999. Certificate of meeting.
JAMES M. ROCHFORD Incorporation to
BARRIE K. BRUNET increase the number
J. KENNETH LOOLOIAN of authorized shares
of Common Stock.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE
LINE BELOW.)
------------------------------
<S> <C> <C>
COMMENTS/ADDRESS CHANGE
Please mark this box if you have / /
written comments/address change
on the reverse side.
<S> <C>
Signature(s) ____________________________________________________________________ Date ______________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator,trustee or guardian, please
give full title as such.
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<PAGE> 23
BALLY ENTERTAINMENT CORPORATION
8700 West Bryn Mawr Avenue, Chicago, Illinois 60631
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James S. Montana, Jr. and Carol
R Stone DePaul, or either of them, proxies of the undersigned with full
power of substitution, to vote all shares of the undersigned at the
Annual Meeting of Stockholders of Bally Entertainment Corporation
(the "Company") to be held on May 21, 1996, at 9:00 a.m.
O (local time), in Le Grand Ballroom of Hotel Sofitel, Chicago, 5550
North River Road, Rosemont, Illinois 60018, or at any
adjournment(s) thereof.
X THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
PROPOSALS NUMBER (1) AND (2).
PLEASE DATE, SIGN EXACTLY AS NAME APPEARS ON THE REVERSE,
Y AND RETURN THIS PROXY IN THE ENCLOSED POSTPAID ENVELOPE.
COMMENTS/ADDRESS CHANGE: PLEASE MARK
COMMENTS/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
<PAGE> 24
<TABLE>
<S> <C> <C>
/X/ PLEASE MARK
EACH VOTE
LIKE THIS
-------------------
COMMON
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS NUMBER (1) AND (2).
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD
ALL FOR ALL FOR AGAINST ABSTAIN
1. Election of Class / / / / 2. Approval of an / / / / / / 3. In their discretion on all
I Directors for amendment to the other matters that may
three-year terms Company's Restated properly come before the
expiring in 1999. Certificate of meeting.
JAMES M. ROCHFORD Incorporation to
BARRIE K. BRUNET increase the number
J. KENNETH LOOLOIAN of authorized shares
of Common Stock.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE
LINE BELOW.)
------------------------------
<S> <C> <C>
COMMENTS/ADDRESS CHANGE
Please mark this box if you have / /
written comments/address change
on the reverse side.
<S> <C>
Signature(s) ____________________________________________________________________ Date ______________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator,trustee or guardian, please
give full title as such.
</TABLE>