DEF 14A of Monarch Casino & Resort Inc
Filed Apr 21, 2025 · FY20240001558370-25-005063
Question: How much stock do Monarch’s Directors and executive officers own?
Question: How much stock do Monarch’s Directors and executive officers own? Answer: As of April 11, 2025, our current Directors and executive officers collectively beneficially owned, 4,221,105 shares of our Common Stock, excluding any shares issuable upon exercise of stock options, constituting 22.86% of the outstanding shares. It is expected that these persons will vote the shares held by them for each of the director nominees named in this Proxy Statement and in accordance with the Board of Directors’ recommendation on the other proposals contained in this Proxy Statement.
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Our Bylaws provide for a Board of Directors consisting of five persons; however, the Bylaws may be amended from time to time to permit between three and twelve directors. The Board currently has five directors, divided into two classes designated as Class A (consisting of three directors) and Class B (consisting of two directors). Members of each class serve for a two-year term. At each annual meeting, the terms of one class of directors expire. The term of office of the current Class B directors will expire at the 2025 Annual Meeting of Stockholders. The term of office of the current Class A directors will expire in 2026. Each director holds office until his or her successor has been duly elected and qualified, or the director’s earlier death, resignation or removal. Each of the nominees is a current director of the Company. If the proxy is duly executed and received in time for the 2025 annual meeting and if no contrary specification is made as provided therein, the proxy will be voted in favor of electing the nominees Bob Farahi and Yvette E. Landau as Class B Directors for terms of office expiring in 2027. If any such nominee shall decline or be unable to serve, the proxy will be voted for such person as shall be designated by the Board to replace any such nominee. The Board presently has no knowledge or reason to believe that any of the nominees will refuse or be unable to serve. Any vacancies on the Board which occur during the year will be filled, if at all, by the Board through an appointment of an individual to serve only until the next annual meeting of stockholders. If re-elected at such meeting, such director would serve until the expiration of the term applicable to the vacated position. The Company, each director and executive officer who has been required by the Nevada State Gaming Control Board and Nevada Gaming Commission (collectively, the “Nevada Gaming Authorities”) to be found suitable has been found suitable by the Nevada Gaming Authorities. Future new members of the Board, if any, may be required to be found suitable in the discretion of the Nevada Gaming Authorities and the Chair of the Audit Committee is required to be found suitable. The Colorado Division of Gaming (the “Colorado Regulatory Authorities”) also requires a finding of suitability for each director by the Colorado Regulatory Authorities. Each of our directors has been found suitable by the Colorado Regulatory Authorities. Should any director later be found not to be suitable by the Nevada Gaming Authorities or the Colorado Gaming Authorities, that person will not be eligible to continue serving on the Board and a majority of the remaining directors may appoint a qualified replacement to serve as a director until the next annual meeting of stockholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF BOB FARAHI AND YVETTE E. LANDAU TO THE BOARD OF DIRECTORS. The following information is furnished with respect to each member of the Board or nominee thereto. Similar information is provided for the Company’s executive officers who are not directors. John Farahi and Bob Farahi are brothers. There are no other family relationships between or among any directors, nominees to the Board, or executive officers of the Company.
DIRECTORS AND NOMINEES
DIRECTORS AND NOMINEES
DIRECTORS AND NOMINEES
| | | Director | | | Name | Age | Since | Position | | John Farahi | 77 | 1993 | Co-Chairman of the Board, | | (Term expiring in 2026) | | | Chief Executive Officer, Secretary and Director | | Bob Farahi | 74 | 1993 | Co-Chairman of the Board, | | (Nominee for Term expiring in 2027) | | | President and Director | | Paul Andrews | 60 | 2014 | Director | | (Term expiring in 2026) | | | | | Yvette E. Landau | 68 | 2010 | Director | | (Nominee for Term expiring in 2027) | | | | | Craig F. Sullivan | 78 | 1998 | Director | | (Term expiring in 2026) | | | |
DIRECTORS AND NOMINEES
JOHN FARAHI has been Co-Chairman of the Board and Chief Executive Officer of the Company since its inception and of Golden Road, a direct wholly owned subsidiary of the Company, since June 1993. He has served as Secretary of the Company since November 2011. From 1973 until June 1993, Mr. Farahi was President, Director, and General Manager of Golden Road. Mr. Farahi is a partner in Farahi Investment Company (“FIC”), which is engaged in real estate investment and development. Mr. Farahi served on the Washoe County Airport Authority as a Trustee from July 1997 until June 2005. Mr. Farahi is a former member of the Nevada Commission on Tourism and served as a Board Member of the Reno-Sparks Convention and Visitors’ Authority until 2017. Mr. Farahi was appointed in 2013 by President Barack Obama to the United States Holocaust Memorial Council. Mr. Farahi holds a political science degree from the California State University at Hayward. The Board believes Mr. Farahi is qualified to serve as a director due to his specific experience as a casino operator and his knowledge of the casino industry. BOB FARAHI has been Co-Chairman of the Board and President of the Company since its inception and of Golden Road, a direct wholly owned subsidiary of the Company, since 1993. From 1973 until June 1993, Mr. Farahi was Vice President and a Director of Golden Road. Mr. Farahi divides his working time between the Company and the other private companies with which he is involved. Mr. Farahi is a partner in FIC. Mr. Farahi holds a biochemistry degree from the University of California at Berkeley. The Board believes Mr. Farahi is qualified to serve as a director due to his specific experience as a casino operator and in real estate development and his knowledge of the casino industry. PAUL ANDREWS has been a member of the Board since May 2014 and is the President and CEO of the National Western Stock Show and Complex (“NWSS”), which plays host to the National Western Stock Show each January and over 240 other events each year in Denver, Colorado. Prior to joining NWSS in November 2010, Mr. Andrews spent 20 years in various capacities with Denver-based Kroenke Sports Enterprises LLC, owner of the Denver Nuggets, the Colorado Avalanche and the Pepsi Center Arena. Mr. Andrews served in various sales, marketing and administrative capacities while at Kroenke including the position of Executive Vice President in which he was responsible for all business operations. The Board believes Mr. Andrews is qualified to serve as a director due to his significant operations, marketing and sales experience. YVETTE E. LANDAU has been a member of the Board since June 2010. Ms. Landau was general counsel and corporate secretary of Mandalay Resort Group from 1996 until 2005. Since 2005, Ms. Landau has been co-owner of W.A. Richardson Builders, LLC, a construction services firm specializing in casino resort development. Until January 2019, Ms. Landau served as a member of the Board of Directors of Bossier Casino Venture, Inc. which owned the Margaritaville Resort Casino in Bossier City, Louisiana. Ms. Landau currently serves as a member of the Board of Directors of PlayAGS, Inc. (NYSE: AGS), a designer and supplier of electronic gaming products and services. Ms. Landau is a past president of the International Association of Gaming Advisors, a worldwide organization of legal, financial and regulatory professionals in the gaming industry, and remains active with the organization as a counselor. Ms. Landau holds a bachelor’s degree from Arizona State University and a Juris Doctor degree from Northwestern University School of Law. The Board believes Ms. Landau is qualified to serve as a director due to her experience in hotel-casino management, her experience as an independent director of other casino companies and her experience in the legal and construction industries. CRAIG F. SULLIVAN has been a member of the Board since September 1998. He was Chairman of the Board of Park Cattle Company (now Edgewood Companies) from July 2006 to June 2008. Since March 1998, Mr. Sullivan has been President of Sullivan & Associates, a strategic and financial consulting firm to companies in the gaming industry. Mr. Sullivan was a director of PHL Local Gaming, LLC, which was a bidder for Philadelphia, Pennsylvania’s second casino license. From April 1995 to March 1998, Mr. Sullivan served as Chief Financial Officer and Treasurer of Primadonna Resorts, Inc., and from February 1990 to April 1995, Mr. Sullivan served as Treasurer of Aztar Corporation. Mr. Sullivan also served on the Board of New York-New York Hotel & Casino from March 1996 to June 1998. Mr. Sullivan holds a bachelor’s degree in economics from the George Washington University and holds a master’s degree in international management from the American Graduate School of International Management (now Thunderbird School of Global Management). The Board believes Mr. Sullivan is qualified to serve as a director due to his experience as a senior executive in the hotel-casino industry.
Compensation Objectives
| 1. | motivate performance in areas consistent with our short and long-term objectives, |
Compensation Elements
Compensation Elements Our NEO compensation program utilizes four primary components, which include: 1) annual salary; 2) annual cash bonus awards; 3) one-time cash or equity awards; and 4) stock option awards. Following is a discussion of each component. Annual Salary The salary element compensates each NEO for performance of the fundamental duties associated with that NEO’s position. In addition to what we believe to be the compensation practices and relative corporate financial performance of other companies in the gaming industry similar to us in asset size and target market, we consider other factors in establishing NEO annual salaries including the executive’s respective record of leadership and service to us, our growth during the NEO’s term of employment, the relative importance of the NEO in overseeing both our strategic direction and our day-to-day operations, the relative performance of our competitors and the NEO’s civic leadership. Salaries are reviewed annually and are adjusted as warranted. Annual Cash Bonus Awards To align NEO performance with our short-term operational and financial objectives, we utilize an annual cash bonus program (the “Bonus Program”) with an annual target set by the Compensation Committee as a percentage (the “Target Bonus Percentage”) of the NEO’s annual salary. The Bonus Program is comprised of quantitative and a discretionary qualitative components. The quantitative component may be awarded based on achieving our annual financial goal, as established by the Board. The qualitative component of the cash bonus program for our NEOs is awarded at the discretion of the Compensation Committee, which considers several factors of the NEO’s performance including, but not limited to, performance against specific tactical objectives as established by the Board, staff development, staff retention, operating process improvement and the implementation of programs resulting in cost reductions and efficiency. The qualitative component of the cash bonus program for the other executive officers is determined by the chief executive officer, subject to the Compensation Committee review and approval, and is based on their overall performance, as well as on completing specific projects and achieving specific goals. The financial target currently used by our Compensation Committee is “Adjusted EBITDA.” The Board sets the Adjusted EBITDA target at a level it believes is both challenging and achievable. By establishing a target that is challenging, the Board believes that NEOs performance, and, therefore, Company financial performance, is optimized. By setting a target that is also achievable, the Board believes that NEOs remain motivated to perform at the high level required to achieve the Adjusted EBITDA target. Adjusted EBITDA consists of net income plus provision for income taxes, stock based compensation expense, other one-time charges, interest expense, depreciation and amortization less interest income. Further, the Compensation Committee determined that Adjusted EBITDA is an appropriate indicator of the Company’s financial performance and that each NEO could have a direct impact on it. In 2024, the Target Bonus Percentage was set at 20% of the NEO’s annual salary, the standard Target Bonus Percentage per our Bonus Program. For 2024, the Adjusted EBITDA target was set at $178.0 million, driven by the continued ramp-up of our operation in Monarch Casino Resort Spa Black Hawk, projected increase in market share at both resorts and improvement in operational margins. For 2024, the Adjusted EBITDA achieved was 1.3% above the target, and 5.6% above 2023 Adjusted EBITDA. The Compensation Committee evaluated the financial results and considered other factors related to the performance of the NEOs in 2024, like the successful ramp-up of the Monarch Black Hawk operation, excellent cash flow management, the completion of the renovation projects at Atlantis, as well as the negative impact of the continued growth of California tribal gaming and an extremely competitive promotional environment in Reno-Sparks market on Atlantis operating results. Based on all the factors effecting Company’s performance, the Board approved a 20% bonus award to the CEO, President and CAO for 2024. This was consistent with the bonus awarded to the senior management. One-Time Cash or Equity Awards We may, from time to time, award one-time cash or equity award based on superior financial performance relative to the Board-established annual financial profit target or specific strategic projects or initiatives, when such performance is deemed to be extraordinary or in certain other exceptional circumstances. Regarding extraordinary performance, such determination is based on several factors including, but not limited to, comparison of our financial performance relative to our competitors, the general market conditions in which those financial results or other goals were reached and other operating criteria that indicate that the financial results or strategic goals achievements were abnormally strong given those market and operating conditions. By rewarding such performance with one-time cash or equity awards, we believe we are more accurately promoting sustained, superior performance by more closely linking the reward with the timing of the performance and results. No one-time cash awards were paid to our NEOs for performance in 2024. Stock Option Awards The stock option compensation component is designed with the expectation that stock options will provide the highest potential reward of the four components of the NEO compensation package. As such, the most significant driver of NEO compensation is designed to correlate directly with the financial gains of our stockholders through changes in stock prices. As our stock price increases or decreases, the value of NEO stock option awards also increases or decreases. By designing the compensation program in this way, we believe that a significant portion of NEO compensation has been directly aligned with the interests of our stockholders. NEOs receive an initial stock option grant (the “Initial Grant”) on their hire date and receive subsequent grants (the “Subsequent Grants”) in amounts equal to, and commensurate with, the portion of the Initial Grant that vests. The Initial Grant vests, assuming continued employment, in three equal tranches beginning on the third anniversary of the grant date and is fully vested on the fifth anniversary of the grant date. The Subsequent Grants vest three years after their respective grant date. Neither Initial Grants nor Subsequent Grants vest earlier than three years and in the case of Initial Grants, do not fully vest earlier than five years. Stock option awards are granted at exercise prices equal to the closing market price of our stock on the date the stock option award is granted, except for any Incentive Stock Option (“ISO”) that might be granted to Mr. John Farahi, whose exercise price would be 110% of the relevant closing market price, since he is the beneficial owner of more than 10% of our Common Stock. As such, the value of the award increases only if our stock price increases subsequent to the stock option’s grant date. Because these awards vest over time, the stock option component of NEO compensation also encourages NEO retention, as value related to unvested stock options is forfeited if an NEO ceases to be employed by us. To date, the Compensation Committee has not granted ISOs.
Compensation Elements
In 2024, the following stock option grants were made to our NEO’s, under the 2014 Plan: on December 31, 2024, John Farahi was issued an annual grant of stock options for 66,666 shares, exercisable at $78.90 per share, vesting in 3 years from the date of the grant; on December 31, 2024, Bob Farahi was also issued an annual grant of stock options for 33,334 shares, exercisable at $78.90 per share, vesting in 3 years from the date of the grant; and on June 30, 2024, Mr. Koenig received a stock option grant for 5,000 shares, exercisable at $68.13 per share, vesting in 3 years from the date of the grant.
Employment Agreements or Arrangements
Employment Agreements or Arrangements We do not currently have any written or unwritten employment agreement or arrangement with any of our NEOs.
Change in Control Vesting
Change in Control Vesting Stockholders approved the 2014 Plan on May 21, 2014 and amended it in June 2017, June 2019 and may 2024. The 2014 Plan became effective as of May 21, 2014, and the remaining two Predecessor Plans terminated on that date. Except as provided otherwise in an individual award agreement, in the event of a Corporate Transaction (as defined in the 2014 Plan), for the portion of each award that is assumed or replaced, then such portion of the award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the shares at the time represented by such assumed or replaced portion of the award, immediately upon termination of the grantee's continuous service if such continuous service is terminated by the successor company or the Company without "cause" (as defined in the 2014 Plan) or voluntarily by the grantee with "good reason" (as defined in the 2014 Plan) within twelve (12) months after the Corporate Transaction. In addition, except as provided otherwise in an individual award agreement, for the portion of each award that is neither assumed nor replaced, such portion of the award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the shares at the time represented by such portion of the award, immediately prior to the specified effective date of such Corporate Transaction, provided that the grantee's continuous service has not terminated prior to such date. Except as provided otherwise in an individual award agreement, upon a Change in Control (as defined in the 2014 Plan), other than a Change in Control which also is a Corporate Transaction, each award of such grantee which is at the time outstanding under the 2014 Plan shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the shares at the time represented by such award, immediately prior to the effective date of the Change in Control; provided that the grantee's continuous service has not terminated prior to such date. Under some award agreements, there shall be no proportionate or partial vesting in the periods prior to each Vesting Date, including in the case of a corporate transaction or change in control, and all vesting shall occur only on the appropriate Vesting Date. Upon the termination of the Grantee's Continuous Service, any unvested portion of the Award shall terminate and be null and void. Notwithstanding any other term or provision of an award, the Administrator shall be authorized, in its sole discretion, based upon its review and evaluation of the performance of the Grantee (or any class, group, division, department or all grantees of the Company, as the case may be), of the Company or a combination thereof, to accelerate the vesting of any award, at such times and upon such terms and conditions as the administrator shall deem advisable. Beginning in 2022, our Compensation Committee added a further condition to our form of award agreements issued to NEOs, which will apply to awards made in 2022 and thereafter. Under the new form of award agreement, notwithstanding any other term or provision set forth above, our Compensation Committee shall be authorized, in its sole discretion, based upon its review and evaluation of the performance of the grantee (or any class, group, division, department or all grantees of the Company, as the case may be), of the Company or a combination thereof, to accelerate the vesting of any award, at such times and upon such terms and conditions as the Administrator shall deem advisable.
Risk Assessment
Risk Assessment In establishing and reviewing our executive compensation program, we consider, among other things, whether the program properly motivates NEOs to focus on the creation of stockholder value without encouraging unnecessary or excessive risk taking. To this end, the Compensation Committee carefully reviews the principal components of NEO compensation. Base salaries are fixed in amount and represent on average 21% of a NEO’s total compensation. Annual incentive pay is focused on achievement of certain specific overall financial goals and is determined using multiple performance criteria. The other major component of our NEOs’ compensation is long-term incentives through stock options, which we believe is important to help further align NEOs’ interests with those of our stockholders. We believe that these cash and incentive awards, especially when combined with the compensation clawback policy described above, appropriately balance risk, payment for performance and align NEO compensation with stockholders interests without encouraging unnecessary or excessive risk taking.
Summary Compensation Table
Summary Compensation Table The following table presents information regarding compensation of our NEOs for services rendered during the last three completed fiscal years.
Summary Compensation Table
| | | | | Option | All Other | | | | | Salary | Bonus | Awards | Compensation | Total | | Name and Position | Year | ($) | ($) (1) | ($) (2) | ($) | ($) | | John Farahi, | 2022 | $750,000 | $150,000 | $2,573,722 | $22,391 | $3,496,113 | | Co-Chairman of the Board, | 2023 | $750,000 | $150,000 | $2,302,418 | $6,769 | $3,209,187 | | Secretary and | 2024 | $750,000 | $150,000 | $2,754,025 | $6,563(3) | $3,660,587 | | Chief Executive Officer | | | | | | | | Bob Farahi, | 2021 | $250,000 | $50,000 | $1,286,861 | $3,009 | $1,589,870 | | Co-Chairman of the Board | 2022 | $250,000 | $50,000 | $1,151,174 | $6,541 | $1,457,715 | | and President | 2024 | $250,000 | $50,000 | $1,377,054 | $6,323(3) | $1,683,376 | | Edwin S. Koenig, | 2022 | $196,943 | $39,388 | $92,323 | $4,622 | $333,276 | | Chief Accounting Officer | 2023 | $190,000 | $38,000 | $118,657 | $4,588 | $351,245 | | and Corporate Treasurer | 2024 | $194,712 | $38,942 | $172,698 | $4,654(4) | $411,006 |
Summary Compensation Table
| (1) The amounts reflect annual cash bonus awards earned in the specified year. |
Summary Compensation Table
| (2) The amounts in this column do not reflect compensation actually received by the NEO nor do they reflect the actual value that will be recognized by the NEO. Instead the amounts reflect the aggregate grant date fair value of the stock option awards computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions regarding the stock option awards, refer to Note 9 to our financial statements for the years ended December 31, 2024 and 2023, which are included in our Annual Report on Form 10-K for the year ended December 31, 2024 and to our financial statements for the years ended December 31, 2022 and 2021, which are included in our Annual Report on Form 10-K for the year ended December 31, 2022, each filed with the SEC. |
Summary Compensation Table
| (3) This amount represents the Company-owned automobile insurance and registration. The automobiles are fully depreciated. |
Summary Compensation Table
| (4) This amount represents the Company’s contribution to Mr. Koenig’s 401(k) plan. |
Grants of Plan Based Awards Made in Fiscal Year 2024
Grants of Plan Based Awards Made in Fiscal Year 2024 The following table presents information regarding the equity incentive awards granted to our NEOs for 2024.
Grants of Plan Based Awards Made in Fiscal Year 2024
| | | Option | | Grant | | | | Awards: | Exercise | Date Fair | | | | Number of | or Base | Value of | | | | Securities | Price of | Stock and | | | | Underlying | Option | Option | | | | Options | Awards | Awards | | Name | Grant Date | (#) | ($/Sh) (1) | ($) (2) | | John Farahi, | 12/31/2024 | 66,666(3) | $78.90 | $2,754,025 | | Co-Chairman of the | | | | | | Board, Secretary and | | | | | | Chief Executive Officer | | | | | | Bob Farahi, | 12/31/2024 | 33,334(3) | $78.90 | $1,377,054 | | Co-Chairman of the | | | | | | Board and President | | | | | | Edwin S. Koenig, | 6/30/2024 | 5,000(3) | $68.13 | $172,698 | | Chief Accounting Officer | | | | | | and Corporate Treasurer | | | | |
Grants of Plan Based Awards Made in Fiscal Year 2024
| (1) The Company’s policy is to set exercise prices for stock option awards equal to the closing price of the Company’s stock on the grant date. If the grant date falls on a date that the stock market is closed, the exercise price is set at the closing price on the last day that the market was open before the grant date. |
Grants of Plan Based Awards Made in Fiscal Year 2024
| (2) The amounts in this column represent the aggregate grant date fair value of equity awards granted to our NEOs during the fiscal year ended December 31, 2024, calculated in accordance with FASB ASC Topic 718. |
Grants of Plan Based Awards Made in Fiscal Year 2024
| (3) The option award vests 100% on the third anniversary of the grant date subject to continued employment on that date. |
Option Exercises in Fiscal Year 2024
Option Exercises in Fiscal Year 2024 The following table provides information for our NEOs for options that were exercised during 2024 on an aggregate basis.
Option Exercises in Fiscal Year 2024
| | Option Awards | | | | Number of Shares | Value | | | Acquired on | Realized on | | | Exercise | Exercise | | Name | (#) | ($) (1) | | John Farahi, | 66,668 | $4,417,422 | | Co-Chairman of the Board, Secretary and Chief Executive Officer | | | | Bob Farahi, | 33,333 | $578,661 | | Co-Chairman of the Board and President | | | | Edwin S. Koenig, | 3,334 | $136,927 | | Chief Accounting Officer and Corporate Treasurer | | |
Outstanding Equity Awards at Fiscal 2024 Year-End
Outstanding Equity Awards at Fiscal 2024 Year-End The following table presents information regarding the outstanding equity awards held by each of our NEOs as of December 31, 2024.
Outstanding Equity Awards at Fiscal 2024 Year-End
| | Option Awards | | | | | | Number of | Number of | | | | | Securities | Securities | | | | | Underlying | Underlying | | | | | Unexercised | Unexercised | Option | | | | Options | Options | Exercise | Option | | | Exercisable | Unexercisable | Price | Expiration | | Name | (#) | (#) | ($) | Date | | John Farahi, | 66,666 | | $17.62 | 10/21/2025 | | Co-Chairman of the | 66,666 | | $23.08 | 11/1/2026 | | Board, Secretary and | 66,668 | | $45.32 | 11/1/2027 | | Chief Executive Officer | 66,666 | | $39.82 | 11/1/2028 | | | 66,666 | | $43.24 | 11/1/2029 | | | 66,668 | | $61.22 | 12/31/2030 | | | 66,666 | | $73.95 | 12/31/2031 | | | | 66,666(1) | $76.89 | 12/31/2032 | | | | 66,668(2) | $69.15 | 12/31/2033 | | | | 66,666(3) | $78.90 | 12/31/2034 | | Bob Farahi, | 33,334 | | $73.95 | 12/31/2031 | | Co-Chairman of the | | 33,333(1) | $76.89 | 12/31/2032 | | Board and President | | 33,333(2) | $69.15 | 12/31/2033 | | | | 33,334(3) | $78.90 | 12/31/2034 | | Edwin S. Koenig, | 3,333 | | $66.17 | 6/30/2031 | | Chief Accounting Officer | 1,666 | 3,334(4) | $66.17 | 6/30/2031 | | and Corporate Treasurer | | 3,333(5) | $58.67 | 6/30/2032 | | | | 3,334(6) | $70.45 | 6/30/2033 | | | | 5,000(7) | $68.13 | 6/30/2034 |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (1) Vests in full on December 31, 2025, subject to continued employment through that date. |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (2) Vests in full on December 31, 2026, subject to continued employment through that date. |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (3) Vests in full on December 31, 2027, subject to continued employment through that date. |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (4) Vests as follows subject to continued employment through the noted dates: 1,667 shares vest on June 30, 2025; and 1,667 shares vest on June 30, 2026. |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (5) Vests in full on June 30, 2025, subject to continued employment through that date. |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (6) Vests in full on June 30, 2026, subject to continued employment through that date. |
Outstanding Equity Awards at Fiscal 2024 Year-End
| (7) Vests in full on June 30, 2027, subject to continued employment through that date. |
Potential Payments Upon Termination in Connection with Change in Control
Potential Payments Upon Termination in Connection with Change in Control Effects of Change in Control under awards granted under our 2014 Plan are described above in “Compensation Discussion and Analysis—Change in Control Vesting.”. Other than as described above, we have no contract, agreement, plan or arrangement, whether written or unwritten, that would provide for payments to our NEOs at, following, or in connection with any termination, including resignation, severance, retirement or a change in control of the Company. Under our 2014 Plan: “Good Reason” means (absent a definition in a written agreement) the occurrence after a Corporate Transaction or Change in Control of any of the following events or conditions unless consented to by the grantee: (i) a material and substantial diminution in the grantee’s responsibilities or duties; (ii) a reduction in the grantee's base salary to a level below that in effect at any time within six (6) months preceding the consummation of a Corporate Transaction or Change in Control or at any time thereafter; provided that an across-the-board reduction in the salary level of substantially all other individuals in positions similar to the grantee's by the same percentage amount will not constitute a salary reduction; or (iii) requiring the grantee to be based at any place outside a 50 mile radius from the grantee's job location as a result of a Corporate Transaction or Change in Control except for reasonably required travel on business which is not materially greater than such travel requirements prior to the Corporate Transaction or Change in Control. “Cause” means (absent a definition in a written agreement) if the NEO: (i) performs or fails to perform any act in bad faith and to the detriment of the Company or a related entity; (ii) materially breaches any agreement with the Company or a related entity; (iii) engages in any material act or omission constituting dishonesty, wrongdoing or malfeasance; (iv) engages in conduct which violates our Company’s or any related entity’s code of conduct policy; (v) is denied or fails to be issued any gaming license, finding of suitability or other similar regulatory approval, or the subsequent revocation, suspension or non-renewal of the same; or (vi) commits a crime involving dishonesty, breach of trust, or physical or emotional harm to any person; provided, however, that with regard to any agreement that defines "Cause" on the occurrence of or in connection with a Corporate Transaction or a Change in Control, such definition of "Cause" shall not apply until a Corporate Transaction or a Change in Control actually occurs. “Change in Control” means a change in ownership or control of the Company that occurs when (i) a person or group acquires the Company (other than an acquisition from or by the Company, any of our employee benefit plans or any of our affiliates) and becomes the beneficial owner of 50% or more of the total combined voting power of our then outstanding voting securities pursuant to a tender or exchange offer made directly to our stockholders which a majority of the Continuing Directors who are not affiliates or associates of the offeror do not recommend such stockholders accept or (ii) the Board composition changes over a period of twelve (12) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors. Continuing Directors means Board members who either (a) have been Board members continuously for at least twelve (12) months or (b) have been Board members for less than twelve (12) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (a) who were still in office at the time such election or nomination was approved by the Board. “Corporate Transaction” means (i) a merger or consolidation in which the Company is not the surviving entity; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) the complete liquidation or dissolution of the Company; (iv) any reverse merger or series of related transactions culminating in a reverse merger in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger; or (v) acquisition in a single or series of related transactions by any person or group of persons (other than the Company or by one of our employee benefit plans) of beneficial ownership of 50% or more of the total combined voting power of our outstanding securities but excluding any such transaction or series of related transactions that the plan administrator determines shall not be a Corporate Transaction. The estimated payments that would be provided to each of our NEOs as a result of a termination for Good Reason or without Cause in connection with a Corporate Transaction or Change in Control as described above are set forth in the table below. Calculations for this table are based on the assumption that the termination for Good Reason or without Cause took place on December 31, 2024.
Potential Payments Upon Termination in Connection with Change in Control
| | Payment Upon Termination | | | for Good Reason or Without Cause | | | in Connection With a Corporate Transaction | | Name | or Change in Control ($) (1) | | John Farahi, | $784,012 | | Co-Chairman of the Board, Secretary and Chief Executive Officer | | | Bob Farahi, | $391,996 | | Co-Chairman of the Board and President | | | Edwin S. Koenig, | $191,891 | | Chief Accounting Officer and Corporate Treasurer | |
Potential Payments Upon Termination in Connection with Change in Control
| (1) Represents the value of accelerated stocks options which reflects the excess of the market price of our Common Stock on December 31, 2024 ($78.90) over the per share exercise price of any stock option which was unvested as of December 31, 2024. All options granted are subject to double-trigger accelerated vesting upon a Corporate Transaction or Change in Control (which is also a Corporate Transaction), as described above. |
Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, the Company is providing the following information about the relationship of the median annual total compensation of its employees and the annual total compensation of the Company’s CEO. In 2024, the total annual compensation for John Farahi, the Company’s CEO, including, in addition to the compensation categories required per Item 402(c)(2)(x) of Regulation S-K, the personal benefits (employer’s portion of medical insurance and employer match of 401(k) contribution), was $3,654,031. We selected December 31, 2024, the last day of our fiscal year, as the determination date for identifying the median employee, excluding our Chief Executive Officer. We determined the median employee based on 2024 payroll records. Such median employee’s 2024 total annual compensation was $54,739. Consequently, the resulting pay ratio of total annual compensation of Mr. Farahi to the median employee for 2024 was 67:1. We used the following methodologies to identify the median employee and calculate total annual compensation:
Chief Executive Officer Pay Ratio
| ● | We used the Company’s 2024 payroll records for all full-time and part-time active employees as of December 31, 2024, which consisted of 2,418 employees (excluding our Chief Executive Officer). |
Chief Executive Officer Pay Ratio
| ● | We annualized the basic cash compensation for all employees hired during 2024, excluding our Chief Executive Officer. Basic cash compensation includes: regular pay, actual tips, distribution tips and commission. |
Chief Executive Officer Pay Ratio
| ● | We used 2024 total annual compensation to determine the median employee, excluding our Chief Executive Officer. Total compensation includes: basic cash compensation, overtime pay, holiday pay, bonus, any additional pay (meetings and training, upsell pay, etc.), grant date fair value of stock and stock options awarded, employer portion of medical insurance expense and employer match of 401(k) contribution. |
Chief Executive Officer Pay Ratio
| ● | We used 2024 total annual compensation to measure the compensation for the CEO and for the median employee. |
Chief Executive Officer Pay Ratio
| ● | CEO pay ratio was calculated by dividing the CEO’s total compensation by the median employee’s total compensation. |
Chief Executive Officer Pay Ratio
Because the SEC rules for identifying the median of the annual total compensation of a company’s employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have employees in other countries, have different employee populations and compensation practices, and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
Pay Versus Performance
Pay Versus Performance As required by Item 402(v) of Regulation S-K, the Company is providing the following information about the relationship between executive officers” compensation and Company’s financial performance.
Pay Versus Performance Table
Pay Versus Performance Table The following table presents information regarding compensation of our principal executive officer (“PEO”) and the average compensation of the non-PEO NEOs for services rendered during the last five completed fiscal years, and certain financial metrics (total shareholder return, net income and net revenue) for the same period.
Pay Versus Performance Table
| | | | Average | Average | Value of Initial Fixed $100 | | | | | | Summary | Compensation | Summary | Compensation | Investment Based on: | | | | | | Compensation | Actually | Compensation | Actually | | Peer Group | | | | | Table Total | Paid | Table Total for | Paid to | Total | Total | | | | | for | to | non-PEO | non-PEO | Shareholder | Shareholder | | Adjusted | | Year | PEO (1)(3) | PEO (1)(5) | NEO (2)(3) | NEO (2)(5) | Return (6) | Return (6)(7) | Net Income | EBITDA (8) | | 2020 | $2,253,287 | $6,047,734 | $638,818 | $1,673,016 | $126.10 | $115.48 | $23,678,675 | $43,161,156 | | 2021 | $5,442,917(4) | $10,571,794(4) | $1,192,276(4) | $2,730,885(4) | $152.32 | $113.77 | $68,487,227 | $137,294,593 | | 2022 | $3,496,113 | $6,859,004 | $961,573 | $1,892,490 | $158.37 | $90.05 | $87,478,678 | $167,085,251 | | 2023 | $3,209,187 | $3,968,861 | $904,480 | $1,080,524 | $154.22 | $104.02 | $82,448,188 | $170,832,406 | | 2024 | $3,660,587 | $8,116,510 | $1,047,191 | $2,318,297 | $178.88 | $97.42 | $72,769,403 | $180,394,138 |
Pay Versus Performance Table
| (1) During the period 2020-2024, our PEO was our CEO, John Farahi. |
Pay Versus Performance Table
| (2) During the period 2020-2024, our non-PEO NEOs were our President, Bob Farahi, and our CAO, Edwin S. Koenig. |
Pay Versus Performance Table
| (3) Amounts derived directly from the “Summary Compensation Table”. |
Pay Versus Performance Table
| (4) The amount includes a one-time stock bonus awards granted to the CEO and the President for successful completion of the 5-year expansion project. |
Pay Versus Performance Table
| (5) Reconciliation of Compensation Actually Paid to Summary Compensation Total. |
Pay Versus Performance Table
| Year | Summary Compensation Table Total | Fair Value at Grant Date of Stock Awards Granted in the Covered Fiscal Year (deduct) | Fair Value at Grant Date of Option Awards Granted in the Covered Fiscal Year (deduct) | Fair Value at Fiscal Year-End of Stock Awards Granted in the Covered Fiscal Year (add) | Fair Value at Fiscal Year-End of Option Awards Granted in the Covered Fiscal Year (add) | Change in Fair Value at Fiscal Year-End from that at Prior Year-End of any Outstanding and Unvested at Year-End Option Awards Granted in Prior Years (add) | Change in Fair Value at Vesting Date from that at Prior Year-End of any Option Awards Vested During the Current Year and Granted in Prior Years (add) | Compensation Actually Paid | | PEO | | | | | | | | | | 2020 | $2,253,287 | $— | $1,632,278 | $— | $4,081,415 | $1,689,316 | $(344,007) | $6,047,734 | | 2021 | $5,442,917 | $1,272,900 | $2,114,758 | $1,109,250 | $4,929,951 | $1,697,342 | $779,992 | $10,571,794 | | 2022 | $3,496,113 | $— | $2,573,722 | $— | $5,125,949 | $392,002 | $418,662 | $6,859,004 | | 2023 | $3,209,187 | $— | $2,302,418 | $— | $4,610,092 | $(1,031,990) | $(516,010) | $3,968,861 | | 2024 | $3,660,587 | $— | $2,754,025 | $— | $5,259,947 | $1,300,007 | $649,994 | $8,116,510 | | Average Non-PEO NEO | | | | | | | | | | 2020 | $638,818 | $— | $436,721 | $— | $1,122,377 | $464,565 | $(116,022) | $1,673,016 | | 2021 | $1,192,276 | $318,225 | $641,983 | $277,313 | $1,540,637 | $466,765 | $214,102 | $2,730,885 | | 2022 | $961,573 | $— | $689,592 | $— | $1,409,624 | $115,151 | $95,733 | $1,892,490 | | 2023 | $904,480 | $— | $634,916 | $— | $1,267,762 | $(303,149) | $(153,654) | $1,080,524 | | 2024 | $1,047,191 | $— | $774,876 | $— | $1,512,276 | $373,752 | $159,954 | $2,318,297 |
Pay Versus Performance Table
| (6) Amounts derived from the performance graph presented in Company’s Annual Report on SEC Form 10-K for the Year Ended December 31, 2024, filed on March 2, 2025. |
Pay Versus Performance Table
| (7) Peer group is S&P 1500 Casino & Gaming Index. |
Pay Versus Performance Table
| (8) Adjusted EBITDA, a non-GAAP financial measure, consists of net income plus loss on disposal of assets, provision for income taxes, stock-based compensation expense, other one-time charges, pre-opening expenses, construction litigation expenses, acquisition expenses, interest expense, depreciation and amortization less interest income, any benefit for income taxes and gain on disposal of assets. Adjusted EBITDA should not be construed as an alternative to operating income (as determined in accordance with US Generally Accepted Accounting Principles), as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities (as determined in accordance with US GAAP) or as a measure of liquidity. This measure enables comparison of the Company's performance over multiple periods, as well as against the performance of other companies in our industry that report Adjusted EBITDA, although some companies do not calculate this measure in the same manner and, therefore, the measure as presented may not be comparable to similarly titled measures presented by other companies. |
DIRECTORS COMPENSATION
DIRECTORS COMPENSATION Directors who are not employees of the Company are paid an annual cash fee for Board service of $50,000. The Audit Committee Chair receives additional annual fees of $25,000. Each non-employee director serving as the chair of any other standing committee of the Board receives an additional annual cash fee of $10,000. In addition, non-employee director compensation consists of a stock option grant to purchase 6,100 shares comprised of 4,800 shares for service as a director and 1,300 shares for service as a committee chair. The options vest on the six-month anniversary of the grant date. The following table presents information regarding compensation of our directors for services rendered during the 2024 fiscal year.
DIRECTORS COMPENSATION
| | Fees Paid in | Grant Date Fair Value of | | | | Cash | Stock Option Awards | Total | | Name | ($) | ($) (3) (4) | ($) | | Yvette E. Landau | $60,000(1) | $202,575 | $262,574 | | Craig F. Sullivan | $75,000(2) | $202,575 | $277,573 | | Paul Andrews | $60,000(1) | $202,575 | $262,574 |
DIRECTORS COMPENSATION
| (1) The amounts in this column include $50,000 of fees for services as a director and $10,000 of fees for committee chair, earned and paid in cash in 2024. |
DIRECTORS COMPENSATION
| (2) The amounts in this column include $50,000 of fees for services as a director and $25,000 of fees for Audit committee chair, earned and paid in cash in 2024. |
DIRECTORS COMPENSATION
| (3) The amounts in this column reflect the aggregate grant date fair value of awards for the fiscal year ended December 31, 2024 computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions regarding the fiscal 2024 grants, refer to Note 9 in our financial statements for the year ended December 31, 2024, which is included in our Annual Report on Form 10-K for the Year Ended December 31, 2024, as filed with the SEC. |
DIRECTORS COMPENSATION
| (4) On June 30, 2024, each non-employee director received a stock option grant to purchase 6,100 shares comprised of 4,800 shares for service as a director and 1,300 shares for service as a committee chair. The options were issued at exercise prices equal to the closing price of the Company’s stock on the grant date. The options vested on the six-month anniversary of the grant date. |
DIRECTORS COMPENSATION
The following table sets forth the aggregate number of unexercised stock options outstanding at December 31, 2024 for each of our non-employee directors.
DIRECTORS COMPENSATION
| | Aggregate Number of | | | Unexercised Stock Options | | | Outstanding at | | Name | December 31, 2024 (#) | | Yvette E. Landau | 61,000 | | Craig F. Sullivan | 42,700 | | Paul Andrews | 54,900 |