UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment
(Amendment No. )
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CAESARS ENTERTAINMENT CORPORATION
Caesars Entertainment Corporation
(Name of Registrant as Specified In Itsin its Charter)
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OUR GUIDING FRAMEWORKS
Our Mission
We inspiregrown-ups to play.
Our Vision
Create memorable experiences, personalize rewards and
delight every guest, every team member, every time.
Our Values
Integrity
Service with passion
Celebrating success
Diversity & Inclusion
Caring culture
Ownership
FOUR PILLARS OF OUR CODE OF COMMITMENT | ||
EMPLOYEES A commitment to all our employees to treat them with respect and provide satisfying career opportunities. | GUESTS A commitment to all our guests to promote responsible gaming. | |
COMMUNITIES A commitment to all our communities to help make them healthy and vibrant places to live and work. | ENVIRONMENT A commitment to responsible stewardship of the environment. |
June 17, 2020
PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION
May [●], 2019
DEAR FELLOW SHAREHOLDERS,
I am pleased to invite you to our 20192020 Annual Meeting of Shareholders, which will be held on Monday, JuneFriday, July 24, 2019,2020 at 8:10:00 a.m., Pacific Time, in the Florentine I RoomBallroom at Caesars Palace, One Caesars Palace Drive, Las Vegas, Nevada 89109.
At the meeting, we will vote on proposalsa proposal to elect eight directors. We will alsoeleven directors, hold an advisory vote on the compensation of our named executive officers (the “say-on-pay”“say-on-pay” vote), hold an advisory vote on the frequency of say-on-pay votes, and ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2019 and consider two management proposals.2020.
Please promptly complete, sign, date, and return the enclosed proxy card, or grant your proxy electronically over the Internet or by telephone, so that your shares will be represented at the meeting.
If you do attend, you may vote in person, even if you have sent in your proxy card.
Thank you very much for your continued support.
Sincerely,Yours Truly,
James Hunt
Chairman, Board of Directors
PRELIMINARY2020 PROXY STATEMENT—SUBJECT TO COMPLETIONSTATEMENT 1
OF SHAREHOLDERS Friday, July 24, 10:00 a.m., Pacific Time Florentine One Caesars Palace Drive Las Vegas, Nevada 89109 WHO CAN VOTE: Shareholders of record of Caesars common stock (NASDAQ: CZR) at the close of business on HOW TO VOTE IN ADVANCE Please vote promptly. We encourage you to vote through the Internet or by telephone, as they are the most cost-effective methods for the Company. BY INTERNET: Go to www.proxyvote.com. Have your proxy card available when you access the website. You will need the control number from your proxy card to vote. Cumulative voting cannot be accepted by Internet. BY TELEPHONE: Call1-800-690-6903 toll-free (in the United States, U.S. territories and Canada) on a touch-tone telephone. Have your proxy card available when you call. You will need the control number from your proxy card to vote. Cumulative voting cannot be accepted by telephone. BY MAIL: Complete, sign and date the proxy card, and return it in the postage paid envelope provided with the proxy material. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON This proxy statement, our THE ITEMS OF BUSINESS ARE: PROPOSAL BOARDRECOMMENDATION 1. To elect eleven directors, each to serve until the 2021 annual meeting of the shareholders of the Company or until his or her respective successor is duly elected and qualified FOR each nominee FOR 3. To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020 FOR Shareholders will also consider such other business as may properly come before the annual meeting or any adjournment of the meeting. If your shares are not registered directly in your name but are held in the name of a broker or other nominee, you will receive a form from your broker or other nominee seeking instruction as to how to vote your shares. You should contact your broker or other nominee with questions about how to provide or revoke your instructions. Caesars Entertainment Corporation is providing you with this proxy statement relating to its 2020 annual meeting of shareholders. We began mailing proxy materials, including this proxy statement and a form of proxy, to shareholders on or about June 17, 2020. By Order of the Board of Directors, Michelle Bushore Executive Vice President, General Counsel, Chief Legal & Risk Officer and Corporate Secretary June 17, 2020 Las Vegas, NevadaMonday, June20198:2020I RoomBallroom at Caesars PalaceMay 6, 2019,June 8, 2020, are entitled to vote at the meeting or any adjournment of the meetingTHE ITEMS OF BUSINESS ARE:Proposal Board Recommendation1.To elect eight directors to serve until the 2020 annual meeting of the shareholders of the Company or until such director’s respective successor is duly elected and qualified✓ FOR each nominee2.To approve, on an advisory, non-binding basis, named executive officer compensation✓ FOR3.To select, on an advisory, non-binding basis, the frequency of future advisory votes on named executive officer compensation✓ FOR Every “One Year”4.To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019✓ FOR5.To approve a proposed amendment to the Company’s Charter to enable shareholders who beneficially own at least 15% of the Company’s outstanding common stock to call special meetings✓ FOR6.To approve a proposed amendment to the Company’s Charter to restrict the Company’s ability to adopt any “rights plan” or “poison pill”✓ FORShareholders will also consider such other business as may properly come before the annual meeting or any adjournment of the meeting.If your shares are not registered directly in your name but are held in the name of a broker or other nominee, you will receive a form from your broker or other nominee seeking instruction as to how to vote your shares. You should contact your broker or other nominee with questions about how to provide or revoke your instructions.Caesars Entertainment Corporation is providing you with this proxy statement relating to its 2019 annual meeting of shareholders. We began mailing proxy materials, including this proxy statement and a form of proxy, to shareholders on or about May [●], 2019.May [●], 2019Las Vegas, NevadaMichelle BushoreSenior Vice President, Deputy General Counsel,Chief Governance & Transactional Officer and Corporate Secretary JUNEJuly 24, 2019202020182019 Annual Report and the means to vote by Internet are available at www.proxyvote.com22. To approve, on an advisory,non-binding basis, named executive officer compensation
Table of ContentsOther Business
TABLE OF CONTENTS
2020 PROXY STATEMENT 3
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This summary highlights the proposals to be acted upon, which are described in detail in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
References to the “Company” or “Caesars” in this proxy statement refer to Caesars Entertainment Corporation and its consolidated subsidiaries. References to the Company’s “Charter” in this proxy statement refer to the Company’s Second Amended and Restated Certificate of Incorporation, as amended.
ABOUT CAESARS ENTERTAINMENT
Caesars Entertainment Corporation (NASDAQ: CZR) is one of the world’s most diversified casino-entertainment providers and the most geographically diverse U.S. casino-entertainment company. Since our beginning in Reno, Nevada in 1937, Caesars has grown through development of new resorts, expansions and acquisitions. Caesars’ resorts operate primarily under the Caesars®, Harrah’s® and Horseshoe® brand names and Caesars’ portfolio also includes the Caesars Entertainment UK family of casinos. Caesars Entertainment is headquartered in Las Vegas, Nevada.
On June 24, 2019, Caesars and Eldorado Resorts, Inc., a Nevada corporation (“Eldorado Resorts”) entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 15, 2019, and as it may be further amended from time to time, the “Merger Agreement”), pursuant to which Eldorado Resorts will acquire Caesars. The Merger Agreement provides for a business combination in which a wholly owned subsidiary of Eldorado Resorts will merge with and into Caesars (the “Merger”), with Caesars continuing as the surviving corporation and as a direct wholly owned subsidiary of Eldorado Resorts. Consummation of the Merger remains subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement that have not yet been satisfied, including, but not limited to, the receipt of gaming and other regulatory approvals related to the Merger. The transaction is expected to close mid-2020.
PROPOSALS
PROPOSAL 1 | To Elect
Shareholders may vote to elect Cumulative voting is permitted in the election of directors. Cumulative voting allows you to allocate among the director nominees, as you see fit, the total number of votes you have the right to cast (before cumulating votes), multiplied by the number of directors to be elected. Please see “Information about Voting and the Meeting—Is cumulative voting permitted?” for details. | |||||
PROPOSAL 2 | To Approve, on an Advisory,Non-binding Basis, Named Executive Officer Compensation
Shareholders may vote to approve, on an advisory,non-binding basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement. | |||||
4 CAESARS ENTERTAINMENT®
Table of ContentsPROXYSTATEMENTSUMMARY
PROXY STATEMENT SUMMARY
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PROPOSAL 3 | To Ratify the Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for the
Shareholders may vote to ratify the | |||||
2020 PROXY STATEMENT 5
PROPOSAL 1 - ELECTION OF DIRECTORS
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PROPOSAL 1 – ELECTIONOF DIRECTORS
To Elect
The Board has nominated all eleven directors Thomas Benninger, Jan Jones Blackhurst, Juliana Chugg, Denise Clark, Keith Cozza, John Dionne, James Hunt, Don Kornstein, Courtney Mather, James Nelson and Anthony Rodio
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OUR DIRECTOR NOMINEES | ||||||
Thomas Benninger Audit Committee, Strategy & Finance Committee, Transaction Committee Director since October 2017 | ||||||
Jan Jones Blackhurst Director since September 2019 | ||||||
Juliana Chugg Compensation & Management Development Committee, Governance & Corporate Responsibility Committee Director since December 2018 | ||||||
Denise Clark Audit Committee, Compensation & Management Development Committee (Chair) Director since October 2018 | ||||||
Keith Cozza Governance & Corporate Responsibility Committee, Strategy & Finance Committee, | ||||||
CORPORATE GOVERNANCE AND BOARD MATTERS
BOARD COMPOSITION AND NOMINATION PROCESS
DECLASSIFICATION OF THE BOARD AND CUMULATIVE VOTING
Prior to October 6, 2017, our Board was divided into three classes. The members of each class served for a staggered, three-year term. Pursuant to our Charter, our Board is undergoing declassification, beginning with our 2018 annual meeting and ending with our Board being fully declassified as of our 2020 annual meeting. Beginning in 2020, our entire Board will be elected annually.
Upon the expiration of the term of a class of directors, the terms of new directors shall be declassified (i.e., each director shall serve a one-year term). All of the nominees are current directors. Each of the director nominees, if elected, will serve a one-year term as a director until the annual meeting of shareholders in 2020 or until his or her respective successor is duly elected and qualified or until the earlier of his or her death, resignation or removal. If a nominee becomes unable or unwilling to accept nomination or election, the person or persons voting the proxy will vote for such other person as may be designated by the Board, unless the Board chooses to reduce the number of directors serving on the Board. The Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director if elected.
Our Charter provides for cumulative voting. Directors may be elected by cumulative voting of the shareholders in person or by proxy at the annual meeting. “Cumulative voting” means that each shareholder will be entitled to cast as many votes as he or she has the right to cast (before cumulating votes), multiplied by the number of directors to be elected. All such votes may be cast for a single nominee or may be distributed among the nominees to be voted for as the shareholder sees fit. The nominees receiving the greatest number of votes will be elected as directors, up to the number of directors to be chosen at the meeting. If you wish to cumulate your votes, you will need to indicate explicitly your intent to cumulate your votes among the eight persons who will be voted upon at the annual meeting. For further information about how to cumulate your votes, see “Information About Voting and the Meeting—Is cumulative voting permitted?”
SELECTION OF DIRECTORS
In recruiting and evaluating new director candidates, the Governance & Corporate Responsibility Committee considers such factors as industry background, financial and business experience, public company experience, other relevant education and experience, general reputation, independence and diversity. The Governance & Corporate Responsibility Committee maintains a list of experiences and characteristics to consider when evaluating director candidates that includes consideration of gender and ethnic/racial diversity, because having diverse backgrounds and points of view benefits our Board and the Company. The Board also adopted a policy in 2019 that requires director searches to include (but not be limited to) persons who bring diversity with respect to self-identified characteristics such as gender, race, ethnicity and sexual orientation, in the initial list of qualified candidates for every open Board seat. The policy provides that any third-party consultant or search firm hired by the Company will be asked to furnish a list of candidates who bring this expanded definition of desired qualifications to the talent pool. In addition, the Board amended the Governance & Corporate Responsibility Committee charter to incorporate a formal commitment to diversify the Board with respect to (but not limited to) such self-identified characteristics as gender, race, ethnicity and sexual orientation. We believe that each director contributes to the Board’s overall diversity by way of characteristics such as gender, race, ethnicity and sexual orientation, and also by way of each director’s unique opinions, perspectives and personal and professional experiences and backgrounds.
CORPORATE GOVERNANCE AND BOARD MATTERS
In addition to the factors discussed above, individual directors and all persons nominated to serve as directors should demonstrate high ethical standards and integrity in their personal and professional dealings and be willing to act on and remain accountable for their boardroom decisions. Each director should also be in a position to devote an adequate amount of time to the effective performance of director duties.
The Governance & Corporate Responsibility Committee considers, consistent with applicable law, the Company’s Charter and by-laws and the criteria set forth in our Corporate Governance Guidelines, any candidates proposed by any senior executive officer, director or shareholder. The Governance & Corporate Responsibility Committee evaluates candidates proposed by shareholders on the same basis as all other candidates.
Prior to nominating a person to serve as a director, the Governance & Corporate Responsibility Committee evaluates the candidate based on the criteria described above. In addition, prior to accepting re-nomination, each director should evaluate himself or herself as to whether he or she satisfies the criteria described above. To assess the effectiveness of our policies and practices, the Governance & Corporate Responsibility Committee reviews with the Board, on an annual basis, the appropriate criteria used to evaluate new director candidates and engages in the annual self-evaluation process discussed in the section below “Board Accountability and Processes—Board and Director Evaluations.”
In 2018, the Board retained a third-party search firm to assist the Board in identifying potential director candidates. The search firm was instructed to seek out a diverse group of candidates, with a particular focus on recruiting female candidates. Working with members of the Governance & Corporate Responsibility Committee, the search firm identified a number of highly qualified candidates, including Mmes. Juliana Chugg and Denise Clark, with a range of experiences across a variety of industries. These efforts ultimately resulted in the Governance & Corporate Responsibility Committee recommending to the Board that it appoint both Mmes. Chugg and Clark, each of whom joined the Board in 2018.
DIRECTOR QUALIFICATIONSWhen considering whether the Board’s directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Board focused primarily on the information discussed in each Board member’s biographical information set forth below under “—Our Board of Directors.”
DIRECTOR NOMINATION AGREEMENTOn March 1, 2019, the Company entered into a definitive Director Appointment and Nomination Agreement (as amended on March 28, 2019, the “Director Nomination Agreement”) with Carl C. Icahn, Keith Cozza, Courtney Mather, High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital LP, Icahn Onshore LP, Icahn Offshore LP and Beckton Corp. (collectively, the “Icahn Group”). Each of James Nelson (“Mr. Nelson”), Courtney Mather and Keith Cozza (Messrs. Mather and Cozza, collectively, the “Icahn Designees” and each an “Icahn Designee”) were appointed to the Board pursuant to the Director Nomination Agreement, and the Icahn Designees are nominated pursuant to the Director Nomination Agreement. A summary of the terms of the Director Nomination Agreement is set forth in the section “Other Information—Certain Relationships and Related Party Transactions—Related Party Transactions Involving the Icahn Group.”
EMPLOYMENT AGREEMENTThe Company entered into an employment agreement with Anthony Rodio on April 15, 2019 pursuant to which Mr. Rodio serves as the Chief Executive Officer of the Company and Caesars Enterprise Services, LLC, effective as of May [●], 2019 (the “Effective Date”). In conjunction with the Board’s approval of Mr. Rodio’s employment agreement, Mr. Rodio was appointed to the Board effective as of the Effective Date.
Mr. Rodio’s employment agreement provides for the following, effective as of the Effective Date: (i) an annual base salary of $1,500,000; (ii) a target annual cash incentive opportunity (the “Bonus”) under the Company’s annual incentive bonus program(s) applicable to Mr. Rodio’s position of 100% of the base salary prorated from the Effective Date and, in the sole discretion of the Compensation and Management Development Committee of the Board, up to an additional 100% of the base salary if the initial threshold for the target bonus is exceeded; (iii) a one-time bonus payment in the amount of $250,000; and
CORPORATE GOVERNANCE AND BOARD MATTERS
(iv) a cash payment of $3,000,000 in the event that Mr. Rodio’s employment is terminated by the Company without cause or by Mr. Rodio for good reason within twenty-four months following a change of control of the Company (provided that Mr. Rodio executes a separation agreement and release in a form customarily used by the Company for senior executives). The employment agreement also provides that Mr. Rodio’s employment is terminable by him or the Company at any time, with or without cause, and for any reason or no particular reason.
In addition to the above, following the Effective Date, the Company will review with Mr. Rodio an appropriate grant under the Company’s long-term incentive plan. Any such grant will be at the discretion of the Compensation & Management Development Committee and the actual future value of such grant will be subject to risk based on the performance of the Company’s stock.
Subject to restrictions and requirements specified in the employment agreement (including that Mr. Rodio executes a separation agreement and release in a form customarily used by the Company for senior executives), in the event of a termination of Mr. Rodio’s employment by the Company without cause or by Mr. Rodio for good reason at any time other than within twenty-four months following a change of control of the Company, Mr. Rodio will be entitled to: (i) any unpaid base salary and other accrued obligations of the Company earned through the date of termination; and (ii) a lump-sum severance payment in an amount equal to not less than one year salary at Mr. Rodio’s annual base salary rate plus a pro-rata target Bonus for the then-current bonus year to the extent not already paid to Mr. Rodio.
In addition, Mr. Rodio will be subject to restrictions on competition and solicitation during his employment with the Company and for up to an additional twelve months thereafter. The employment agreement also contains standard confidentiality, invention assignment and non-disparagement covenants.
SHAREHOLDER NOMINEES AND RECOMMENDATIONSOur by-laws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the Corporate Secretary. In addition, the Governance & Corporate Responsibility Committee will consider any director candidates recommended by our shareholders. Shareholders seeking to recommend any director candidate should follow our by-law notice requirements for shareholder director nominees. Generally, to be timely, a shareholder’s notice must be delivered to or mailed and received at our principal executive offices, addressed to the Corporate Secretary, no earlier than 120 days and no later than 90 days prior to the first anniversary of the date of the preceding year’s annual meeting; provided, however, that, if the annual meeting is advanced by more than 30 days, or delayed by more than 70 days, from the first anniversary of the preceding year’s annual meeting, to be timely the shareholder notice must be received no earlier than 120 days before such annual meeting and no later than the later of 90 days before such annual meeting or the tenth day after the day on which public disclosure of the date of such meeting is first made. In no event shall the public announcement of an adjournment or postponement of an annual meeting of shareholders commence a new time period (or extend any time period) for the giving of the shareholder notice. You should consult our by-laws for more detailed information regarding the process by which shareholders may nominate directors. Our by-laws are posted on the Governance page of our website located at http://investor.caesars.com.
CORPORATE GOVERNANCE AND BOARD MATTERS
OUR BOARD OF DIRECTORS
As of the date of this proxy statement, our Board consists of eleven members: James Hunt, as Chairman, Thomas Benninger, Juliana Chugg, Denise Clark, Keith Cozza, John Dionne, Don Kornstein, Courtney Mather, James Nelson, Anthony Rodio and Richard Schifter.
Described below is information concerning the business experience and qualifications of each of our directors and director nominees, including their ages as of the date of this proxy statement.
NOMINEES (WHOSE TERM, IF ELECTED, WILL EXPIRE AT THE 2020 ANNUAL MEETING)
CORPORATE GOVERNANCE AND BOARD MATTERS
CORPORATE GOVERNANCE AND BOARD MATTERS
CORPORATE GOVERNANCE AND BOARD MATTERS
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CLASS III DIRECTORS (CURRENT TERM WILL EXPIRE AT THE 2020 ANNUAL MEETING)
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CORPORATE GOVERNANCE AND BOARD MATTERS
DIRECTOR INDEPENDENCE
Our Board affirmatively determines whether each director and director nominee is independent in accordance with guidelines it has adopted, which include all elements of independence set forth in the applicable NASDAQ listing standards. These guidelines are contained in our Corporate Governance Guidelines, which are posted on the Governance page of our website located at http://investor.caesars.com.
Our Board has affirmatively determined that former directors Marilyn Spiegel, Christopher Williams and David Sambur and each current director, except Mr. Rodio, is independent under the NASDAQ listing standards. Based on the NASDAQ listing standards, Mr. Rodio is not considered independent because of his position as Chief Executive Officer of the Company.
The Board has also affirmatively determined that Messrs. Benninger, Dionne and Nelson and Ms. Clark, the members of our Audit Committee, meet the audit committee independence requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that Messrs. Mather and Schifter and Ms. Clark, the members of our Compensation & Management Development Committee (as well as Ms. Spiegel and Messrs. Williams and Sambur, who were members thereof until their resignations from our Board on January 31, 2018, March 1, 2019 and April 4, 2019, respectively), meet the compensation committee requirements of Rule 10C-1 of the Exchange Act.
BOARD STRUCTURE AND RESPONSIBILITIES
BOARD LEADERSHIP STRUCTURE
We maintain an independent, non-executive Chairman of the Board. Mr. James Hunt was appointed Chairman of the Board due to his executive leadership experience in the leisure and entertainment industry, his extensive directorship experience and his accounting and financial experience. The Board believes that having a non-executive, independent Chairman of the Board is in the best interests of the Company and its shareholders because it strengthens the Board’s independence and allows the Chief Executive Officer to give greater focus to the Company’s business objectives.
EXECUTIVE SESSIONS AND ATTENDANCE
Our Corporate Governance Guidelines provide that the independent directors shall meet at least twice annually in executive session. Our independent directors met in executive sessions, without management present, at each regularly-scheduled quarterly Board meetings during 2018.
During 2018, our Board held 19 meetings, including regularly scheduled and special meetings. Each director attended at least 89% of the Board meetings and meetings of the committees of the Board on which the director served. Our directors are encouraged to attend the Company’s annual shareholder meeting. Ninety percent of our directors attended our 2018 annual meeting of shareholders.
BOARD OVERSIGHT
General.Our Board provides the ultimate oversight of the Company and oversees and advises members of management who are responsible for the day-to-day operations and management of the Company. The Board has developed a number of specific expectations of its directors, set forth in the Company’s Corporate Governance Guidelines, to promote the discharge of the Board’s responsibilities and the efficient conduct of the Board’s business.
Risk Oversight.Our Board is responsible for overseeing the Company’s processes for assessing and managing risk. The Board considers our risk profile when reviewing our annual business plan and incorporates risk assessment into its decisions impacting the Company. The Board also reviews the Company’s cybersecurity risk profile and is regularly updated by the Company’s Chief Information Officer on the cybersecurity risks and threats facing the Company. The Board is further briefed on actions and changes taken by management to mitigate the Company’s risk profile and provided with an overview of the cybersecurity strategy along with key cybersecurity initiatives and matters.
CORPORATE GOVERNANCE AND BOARD MATTERS
The Board also has delegated certain risk oversight functions to the Audit Committee. In accordance with its charter, the Audit Committee periodically reviews and discusses with senior management the Company’s policies and guidelines regarding major financial, liquidity, credit and operational risk exposures and steps management has taken to monitor and control such exposures. The Audit Committee meets regularly in executive session with senior management, including the Company’s Chief Financial Officer, Chief Accounting Officer, Chief Audit Executive, and General Counsel, and also meets with the Company’s independent auditor, to discuss and review risks that may have a material impact on the financial statements or the Company’s policies and procedures and internal controls. The Audit Committee incorporates its risk oversight function into its regular reports to the Board.
Our Compensation & Management Development Committee also annually reviews the Company’s compensation arrangements to determine whether they encourage excessive risk-taking as discussed below under “Executive Compensation Matters—Compensation Risk Assessment.”
In addition, the Company maintains a Compliance Committee composed of individuals who are appointed by the Board and who are independent from the Company. The Compliance Committee oversees the Company’s compliance program and reports directly to the Board on all matters relating to the Company’s compliance with gaming laws, including detecting and preventing violations of law, regulation, Company policy by Company insiders and agents, and enforcing special conditions imposed on the Company by any licensing authorities. The Company’s Compliance Committee also protects the Company against questionable associations and associations with unsuitable persons, reviews the practices and conduct of the Company and its employees, and protects the integrity and reputation of the Company.
Management Succession Planning.Our Board, led by our Compensation & Management Development Committee, oversees the management continuity planning process and periodically reviews the Company’s succession plans and leadership development programs. This oversight includes undertaking initiatives to strengthen the skills and qualifications of potential successor-candidates, and discussing performance, leadership development, and succession planning for other elected officers and key employees, as appropriate, during the Board’s executive sessions. This also includes addressing the policies and principles for the Company’s executive officer selection and performance review, as well as policies regarding succession in the event of emergency or retirement. Directors engage with senior management talent at Board and committee meetings and in less formal settings to enable directors to personally interact with and identify qualified successor-candidates.
Director Refreshment.The Board recognizes that refreshment brings both increased diversity and new perspectives to the Board. Accordingly, under our Corporate Governance Guidelines, a director will not be re-nominated for election by the Board if he or she would be 72 years old or older at the time of the election, although the Board maintains discretion to waive this policy in individual cases. The average age of our current directors is under 58 years old. The Board has determined not to impose term limits on directors.
Code of Ethics.We have a Code of Business Conduct and Ethics, which is applicable to all of our directors, officers and employees (the “Code of Ethics”). The Code of Ethics is available on the Governance page of our website located at http://investor.caesars.com. To the extent required pursuant to applicable SEC regulations, we intend to post amendments to or waivers from our Code of Ethics (to the extent applicable to our chief executive officer, principal financial officer or principal accounting officer) at this location on our website or to report the same on a Current Report on Form 8-K. Our Code of Ethics is available free of charge upon request to our Corporate Secretary, Caesars Entertainment Corporation, One Caesars Palace Drive, Las Vegas, Nevada 89109.
Corporate Social Responsibility.Led by our Governance & Corporate Responsibility Committee, our Board oversees the Company’s corporate social responsibility initiatives. The Committee evaluates the emergent environmental, social and governance-related risks and the Company’s social and environmental goals (including diversity and inclusion efforts), including the policies and programs instrumental in achieving short- and long-term targets, presented at least annually by management. Our corporate social responsibility framework is branded under the theme PEOPLE, PLANET, PLAY (People: supporting the wellbeing of our team members, guests and local communities. Planet: caring for our planet so our guests don’t need to worry. Play: creating memorable experiences for our guests and leading responsible gaming practices in the industry). This approach unites all our properties and business activities behind a shared framework with a common language to more effectively support sustainable, ethical and profitable business growth. Our PEOPLE, PLANET, PLAY platform builds on many years of investment across all aspects of citizenship, including responsible gaming, diversity, equity and inclusion, community impact, environmental stewardship, human capital management, and human rights. We report transparently on our citizenship performance each year in line with Global Reporting Initiative Standards, the leading global sustainability reporting standard.
CORPORATE GOVERNANCE AND BOARD MATTERS
CORPORATE GOVERNANCE GUIDELINES
The matters discussed above reflect the Board’s commitment to a system of governance that enhances corporate responsibility and accountability. The Corporate Governance Guidelines contain provisions addressing the following matters, among others:
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Learn more about governance at Caesars by visiting the Governance page of our website located at http://investor.caesars.com, where you will find our Corporate Governance Guidelines, committee charters and other important governance documents. We intend to disclose any future amendments to the Corporate Governance Guidelines on our website.
COMMITTEES OF THE BOARD
Our Board has the following standing committees: The Audit Committee, the Compensation & Management Development Committee, the Governance & Corporate Responsibility Committee, and the Strategy & Finance Committee. The Board has determined that each committee member is independent as defined in the NASDAQ listing standards. The Board has adopted a written charter for each of these committees. The charter for each of these committees is available on the Governance page of our website located at http://investor.caesars.com. In addition, from time to time, the Board creates ad hoc committees for specific corporate purposes, such as the recently appointed Transaction Committee.
The chart below reflects the composition of the standing committees of our Board and the Transaction Committee as of the date of this proxy statement:
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Strategy and Finance Committee
Our Strategy & Finance Committee currently consists of Messrs. Kornstein, as Chair, Benninger, Cozza and Mather. The Strategy & Finance Committee assists the Board in the oversight of certain strategic transactions and financial matters.
Transaction Committee
Our TransactionDirector since March 2019
John Dionne
Audit Committee consists(Chair)
Director since October 2017
James Hunt
Chairman, Board of Messrs.Directors
Director since October 2017
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PROPOSAL 1 - ELECTIONOFDIRECTORS
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CORPORATE GOVERNANCE AND BOARD MATTERS
BOARD COMPOSITION AND NOMINATION PROCESS
DECLASSIFICATION OF THE BOARD AND CUMULATIVE VOTING
Prior to October 6, 2017, our Board was divided into three classes with members of each class serving for staggered, three-year terms. Pursuant to our Charter, our entire Board is now declassified, and directors will be elected annually. All of the nominees are current directors. Each of the director nominees, if elected, will serve aone-year term as a director until the annual meeting of shareholders in 2021 or until his or her respective successor is duly elected and qualified or until the earlier of his or her death, resignation or removal. If a nominee becomes unable or unwilling to accept nomination or election, the person or persons voting the proxy will vote for such other person as may be designated by the Board, unless the Board chooses to reduce the number of directors serving on the Board. The Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director if elected.
Our Charter provides for cumulative voting. Directors may be elected by cumulative voting of the shareholders in person or by proxy at the annual meeting. “Cumulative voting” means that each shareholder will be entitled to cast as many votes as he or she has the right to cast (before cumulating votes), multiplied by the number of directors to be elected. All such votes may be cast for a single nominee or may be distributed among the nominees to be voted for as the shareholder sees fit. The nominees receiving the greatest number of votes will be elected as directors, up to the number of directors to be chosen at the meeting. If you wish to cumulate your votes, you will need to indicate explicitly your intent to cumulate your votes among the eleven persons who will be voted upon at the annual meeting. For further information about how to cumulate your votes, see “Information About Voting and the Meeting—Is cumulative voting permitted?”
SELECTION OF DIRECTORS
DIRECTOR NOMINATIONS
The Board seeks members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. Our Governance & Corporate Responsibility Committee identifies and recommends to the Board persons to be nominated to serve as directors of the Company.
In recruiting and evaluating new director candidates, the Governance & Corporate Responsibility Committee considers such factors as industry background, financial and business experience, public company experience, other relevant education and experience, general reputation, independence and diversity. The Governance & Corporate Responsibility Committee maintains a list of experiences and characteristics to consider when evaluating director candidates that includes consideration of gender and ethnic/racial diversity, because having diverse backgrounds and points of view benefits our Board and the Company. Searches for director candidates include persons who bring diversity with respect to self-identified characteristics such as gender, race, ethnicity and sexual orientation in the initial list of qualified candidates. We believe that each director contributes to the Board’s overall diversity by way of characteristics, and also by way of each director’s unique opinions, perspectives and personal and professional experiences and backgrounds.
In addition to the factors discussed above, individual directors and all persons nominated to serve as directors should demonstrate high ethical standards and integrity in their personal and professional dealings and be willing to act on and remain accountable for their boardroom decisions. Each director should also be in a position to devote an adequate amount of time to the effective performance of director duties.
The Governance & Corporate Responsibility Committee considers, consistent with applicable law, the Company’s Charter andby-laws and the criteria set forth in our Corporate Governance Guidelines, any candidates proposed by any senior executive officer, director or shareholder. The Governance & Corporate Responsibility Committee evaluates candidates proposed by shareholders on the same basis as all other candidates.
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Prior to nominating a person to serve as a director, the Governance & Corporate Responsibility Committee evaluates the candidate based on the criteria described above. In addition, prior to acceptingre-nomination, each director should evaluate himself or herself as to whether he or she satisfies the criteria described above. To assess the effectiveness of our policies and practices, the Governance & Corporate Responsibility Committee periodically reviews with the Board the appropriate criteria used to evaluate new director candidates and engages in a self-evaluation process discussed in the section below.
DIRECTOR QUALIFICATIONS
When considering whether the Board’s directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Board focused primarily on the information discussed in each Board member’s biographical information set forth below under “—Our Board of Directors.”
DIRECTOR NOMINATION AGREEMENT
On March 1, 2019, the Company entered into a definitive Director Appointment and Nomination Agreement (as amended on March 28, 2019, the “Director Nomination Agreement”) with Carl C. Icahn, Keith Cozza, Courtney Mather, High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital LP, Icahn Onshore LP, Icahn Offshore LP and Beckton Corp. (collectively, the “Icahn Group”). Each of James Nelson (“Mr. Nelson”), Courtney Mather and Keith Cozza (Messrs. Mather and Cozza, collectively, the “Icahn Designees” and each an “Icahn Designee”) were appointed to the Board pursuant to the Director Nomination Agreement, and the Icahn Designees are nominated pursuant to the Director Nomination Agreement. A summary of the terms of the Director Nomination Agreement is set forth in the section “Other Information—Certain Relationships and Related Party Transactions—Related Party Transactions Involving the Icahn Group.”
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Anthony Rodio on April 15, 2019, pursuant to which Mr. Rodio serves as the Chief Executive Officer of the Company and Caesars Enterprise Services, LLC, effective as of May 6, 2019. In conjunction with the Board’s approval of Mr. Rodio’s employment agreement, Mr. Rodio was appointed to the Board effective as of May 6, 2019. A summary of the terms of Mr. Rodio’s employment agreement is set forth in the section “—Discussion of the Summary Compensation Table—Chief Executive Officer.”
SHAREHOLDER NOMINEES AND RECOMMENDATIONS
Ourby-laws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the Corporate Secretary. In addition, the Governance & Corporate Responsibility Committee will consider any director candidates recommended by our shareholders. Shareholders seeking to recommend any director candidate should follow ourby-law notice requirements for shareholder director nominees. Generally, to be timely, a shareholder’s notice must be delivered to or mailed and received at our principal executive offices, addressed to the Corporate Secretary, no earlier than 120 days and no later than 90 days prior to the first anniversary of the date of the preceding year’s annual meeting; provided, however, that, if the annual meeting is advanced by more than 30 days, or delayed by more than 70 days, from the first anniversary of the preceding year’s annual meeting, to be timely the shareholder notice must be received no earlier than 120 days before such annual meeting and no later than the later of 90 days before such annual meeting or the tenth day after the day on which public disclosure of the date of such meeting is first made. In no event shall the public announcement of an adjournment or postponement of an annual meeting of shareholders commence a new time period (or extend any time period) for the giving of the shareholder notice. You should consult ourby-laws for more detailed information regarding the process by which shareholders may nominate directors. Ourby-laws are posted on the Governance page of our website located at http://investor.caesars.com.
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As of the date of this proxy statement, our Board consists of eleven members: Thomas Benninger, Jan Jones Blackhurst, Juliana Chugg, Denise Clark, Keith Cozza, John Dionne, James Hunt (Chairman), Don Kornstein, Courtney Mather, James Nelson, and Anthony Rodio.
Below is information concerning the business experience and qualifications of each of our director nominees whose term, if elected, will expire at the 2021 annual meeting.
DIRECTOR NOMINEES
Thomas Benninger
Age:62 Director Since: October 2017 Committees: Audit Strategy & Finance Transaction | Mr. Benninger founded and has been a Managing General Partner of Global Leveraged Capital, LLC, a private investment advisory firm, since 2006. Mr. Benninger has served on the | |
QUALIFICATIONS Mr. Benninger brings to the Board |
Jan Jones Blackhurst
Age:71 Director Since: September 2019 | Ms. Jones Blackhurst previously served as our Executive Vice President, Public Policy and Corporate Responsibility from May 2017 through September 2019. Ms. Jones Blackhurst also served as our Executive Vice President of Communications and Government Relations from November 2011 until May 2017 and as our Senior Vice President of Communications and Government Relations from November 1999 to November 2011. Ms. Jones Blackhurst has over 20 years of experience in the gaming industry and has played a key role in innovating responsible gaming programs that are now used throughout the industry. Ms. Jones Blackhurst serves as the Chairwoman of the Public Education Foundation and as ChiefExecutive-In-Residence of the UNLV International Gaming Institute. Prior to joining Caesars, Ms. Jones Blackhurst served two terms as Mayor of Las Vegas, from 1991 until 1999. | |
QUALIFICATIONS Ms. Blackhurst brings to the Board significant gaming industry and government relations experience. |
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Juliana Chugg | ||
Age:52 Director Since: December 2018 Committees: Compensation & Management Development Governance & Corporate Responsibility | Ms. Chugg served as the Chief Brand Officer of Mattel Inc., a world-wide leader in the design, manufacture and marketing of toys and family products, from 2015 until 2018. She served as a Senior Vice President and divisional President of General Mills, Inc., a company engaged in the global production and distribution of food products, and Divisional President from 2004 until 2014, and previously held a progression of leadership roles with General Mills, Inc. and Pillsbury since 1996. Since 2009, Ms. Chugg has served on the Board of Directors of VF Corporation, a worldwide apparel and | |
QUALIFICATIONS Ms. Chugg brings to |
Denise Clark | ||
Age:62 Director Since: October 2018 Committees: Audit Compensation & Management Development (Chair) | Ms. Clark served as Senior Vice President and Chief Information Officer for The | |
QUALIFICATIONS Ms. Clark brings to the Board her over 20 years of experience in information technology, executive experience and |
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Keith Cozza | ||
Age:41 Director Since: March 2019 Committees: Governance & Corporate Responsibility Strategy & Finance Transaction | Keith Cozza is the President and | |
QUALIFICATIONS Mr. Cozza brings to the Board expertise gained from his extensive corporate, finance, accounting and investment experience and significant experience in leadership roles as a director on various public company boards of directors. | ||
John Dionne | ||
Age:56 Director Since: October 2017 Committees: Audit (Chair) | Mr. Dionne has been a Senior Advisor of the Blackstone Group L.P., an investment firm, since July 2013 and a Senior Lecturer in the Finance Unit of the Harvard Business School since January 2014. Until he retired from his position as a Senior Managing Director at Blackstone in June 2013, Mr. Dionne was Global Head of Blackstone’s Private Equity Business Development and Investor Relations Groups and served as a member of Blackstone’s Private Equity Global Investment and Valuation Committees. Mr. Dionne originally joined Blackstone in 2004 as the Founder and Chief Investment Officer of the Blackstone Distressed Securities Fund. Before joining Blackstone, Mr. Dionne was for several years a Partner and Portfolio Manager for Bennett Restructuring Funds, specializing in financially troubled companies, during which time he also served on several official and ad hoc creditor committees. He is a Chartered Financial Analyst and Certified Public Accountant (inactive). Mr. Dionne currently serves as a member of the Boards of Directors of Cengage Learning Holdings II, Inc., Clear Channel Outdoor Holdings, Inc. and Pelmorex Media, Inc. He previously served as a member of the Boards of Directors of Momentive Performance Materials, Inc. and several other companies andnot-for-profit organizations. He is deemed a “financial expert” for purposes of serving on the audit committees of publicly-held companies. | |
QUALIFICATIONS Mr. Dionne brings to the Board his significant financial experience. |
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James Hunt,Chairman of the Board | ||
Age:65 Director Since: October 2017 | James Hunt served The | |
QUALIFICATIONS Mr. Hunt was elected as Chairman of the Board because of his executive leadership experience in the leisure and entertainment industry, his extensive directorship experience and his accounting and financial expertise. | ||
Don Kornstein | ||
Age:68 Director Since: October 2017 Committees: Governance & Corporate Responsibility Strategy & Finance (Chair) Transaction (Chair) | Mr. Kornstein founded and has served as the managing member of the strategic, management and financial consulting firm Alpine Advisors LLC, an advisory firm engaged in the business of mergers and acquisitions and capital raising for entrepreneurs and companies. Mr. Kornstein served on the Board of Directors of Caesars Acquisition Company from January 2014 until the merger with the Company. He previously served as anon-executive Director on the Board of Gala Coral Group, Ltd., a diversified gaming company based in the United Kingdom, from June 2010 until its merger with Ladbrokes PLC in November 2016. He has served as Chairman of the Board of Directors of Affinity Gaming, Inc., a casino gaming company, from March 2010 until January 2014, and Chief Restructuring Officer and Chairman of the Board of Directors of Bally Total Fitness Corporation. Mr. Kornstein has also served as a member of the Boards of Directors of Circuit City Stores, Inc., Cash Systems, Inc., Shuffle Master, Inc. and Varsity Brands, Inc. Mr. Kornstein served as Chief Executive Officer, President and Director of Jackpot Enterprises, Inc., which was a NYSE-listed gaming company until its sale, and was an investment banker and Senior Managing Director of Bear, Stearns & Co. Inc. | |
QUALIFICATIONS Mr. Kornstein brings to the Board his experience in the gaming and entertainment industry, experience as a chairman, president and chief executive officer, financial expertise and experience serving on several boards of directors. |
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Courtney Mather | ||
Age:43 Director Since: March 2019 Committees: Compensation & Management Development Strategy & Finance Transaction | Courtney R. Mather, CAIA, CFA, FRM served as Portfolio Manager of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, from December 2016 to February 2020, and was previously Managing Director of Icahn Capital LP from April 2014 to November 2016. Mr. Mather is responsible for identifying, analyzing, and monitoring investment opportunities and portfolio companies for Icahn Capital LP. Prior to joining Icahn Capital LP, Mr. Mather was at Goldman Sachs & Co. from 1998 to 2012, most recently as Managing Director responsible for Private Distressed Trading and Investing, where he focused on identifying and analyzing investment opportunities for both Goldman Sachs and clients. Mr. Mather has served as a director of: Cheniere Energy Inc., an international energy company engaged in the production and marketing of liquefied natural gas, since May 2018; Newell Brands Inc., a manufacturer and distributor of a broad range of consumer products, since March 2018; Conduent Incorporated, a provider of business process outsourcing services, since December 2016, and as Chairman as of July 2019; and TER Holdings I, Inc., formerly known as Trump Entertainment Resorts, Inc., a company engaged in real estate holdings, since February 2016. Mr. Mather was previously a director of: Herc Holdings Inc. from June 2016 to August 2019; Ferrous Resources Limited from June 2015 to July 2019; Freeport-McMoRan Inc. from October 2015 to March 2019; Federal-Mogul Holdings Corporation from May 2015 to January 2017; Viskase Companies, Inc. from June 2015 to March 2016; American Railcar Industries, Inc. from July 2014 to March 2016; CVR Refining, L.P. from May 2014 to March 2016; and CVR Energy, Inc. from May 2014 to March 2016. TER Holdings I, Inc., Ferrous Resources Limited, Federal-Mogul Holdings Corporation, American Railcar Industries, Inc., CVR Refining, L.P., CVR Energy, Inc., and Viskase Companies, Inc. are | |
QUALIFICATIONS Mr. Mather brings to | ||
James Nelson | ||
Age:70 Director Since: March 2019 Committees: Audit | James Nelson is the Chief Executive Officer of Global Net Lease, Inc., a publicly traded real estate investment trust. Mr. Nelson previously served as Chairman and Chief Executive Officer of Eaglescliff Corporation, a specialty investment banking, consulting and wealth management company, from 1986 until 2009 and as Chief Executive Officer andCo-Chairman of Orbitex Management, an investment company in the mutual fund sector, from 1995 until 1999. Mr. Nelson currently serves on the boards of Global Net Lease and Herbalife Nutrition Ltd. He has served as a director on the Herbalife Nutrition Ltd. Board of Directors since 2014 and, as of July 2019, was elected as Lead Director. He has previously served on the boards of New York REIT, Inc., Viskase Companies, Inc., American Entertainment Properties Corporation, Tropicana Entertainment, Inc., Icahn Enterprises, L.P., Orbitex Financial Services Group, Pacific Energy Resources Ltd., Cequel Communications, Take Two Interactive Software, Inc., Voltari Corporation, and Shuffle Master, Inc. | |
QUALIFICATIONS Mr. Nelson brings to the Board his significant experience and leadership roles serving as chief executive officer, director and chairman of the audit committee of various companies. |
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Anthony Rodio | ||
Age:61 Director Since: May 2019 | Anthony Rodio serves as our Chief Executive Officer and became a member of our Board in May 2019. Mr. Rodio served as Chief Executive Officer of Affinity Gaming from October 2018 to May 2019 and has over 39 years of experience in the casino industry. Before leading the Affinity team, Mr. Rodio served as Chief Executive Officer, President and a member of the Board of Directors of Tropicana Entertainment Inc. for over seven years, where he was responsible for the operation of eight casino properties in seven different jurisdictions. Mr. Rodio started his gaming career in 1980 as an accounting clerk and transitioned into the | |
QUALIFICATIONS Mr. Rodio brings to the Board |
DIRECTOR INDEPENDENCE
Our Board affirmatively determines whether each director and director nominee is independent in accordance with guidelines it has adopted, which include all elements of independence set forth in the applicable NASDAQ listing standards. These guidelines are contained in our Corporate Governance Guidelines, which are posted on the Governance page of our website located at http://investor.caesars.com.
Our Board has affirmatively determined that each current director, except Mr. Rodio and Ms. Jones Blackhurst, is independent under the NASDAQ listing standards. Based on the NASDAQ listing standards, Mr. Rodio and Ms. Blackhurst are not considered independent because of Mr. Rodio’s current position as Chief Executive Officer of the Company and Ms. Jones Blackhurst’s previous role as the Company’s Executive Vice President, Public Policy and Corporate Responsibility from May 2017 through September 2019. In addition, our former directors who served during the year 2019, John Boushy, Matthew Ferko, David Sambur, Richard Schifter and Christopher Williams, were also affirmatively determined to be independent.
The Board has also affirmatively determined that Messrs. Benninger, Dionne and Nelson and Ms. Clark, the members of our Audit Committee (as well as Mr. Ferko who was a member thereof until his resignation from our Board on March 1, 2019), meet the audit committee independence requirements of Rule10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that Mr. Mather and Mmes. Chugg and Clark, the members of our Compensation & Management Development Committee (as well as Messrs. Sambur, Schifter and Williams, who were members thereof until their resignations from our Board on March 1, 2019, April 4, 2019, and September 5, 2019, respectively), meet the compensation committee requirements of Rule10C-1 of the Exchange Act.
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BOARD STRUCTURE AND RESPONSIBILITIES
BOARD LEADERSHIP STRUCTURE
We maintain an independent,non-executive Chairman of the Board. Mr. James Hunt was appointed Chairman of the Board due to his executive leadership experience in the leisure and entertainment industry, his extensive directorship experience and his accounting and financial experience. The Board believes that having anon-executive, independent Chairman of the Board is in the best interests of the Company and its shareholders because it strengthens the Board’s independence and allows the Chief Executive Officer to give greater focus to the Company’s business objectives.
EXECUTIVE SESSIONS AND ATTENDANCE
Our Corporate Governance Guidelines provide that the independent directors shall meet at least twice annually in executive session. Our independent directors met in executive sessions, without management present, at each regularly scheduled quarterly Board meeting during 2019.
During 2019, our Board held 22 meetings, including regularly scheduled and special meetings. Each director attended at least 87% of the Board meetings and meetings of the committees of the Board on which the director served. Forty five percent of our directors then in office attended our 2019 annual meeting of shareholders.
BOARD OVERSIGHT
General.Our Board provides the ultimate oversight of the Company and oversees and advises members of management who are responsible for theday-to-day operations and management of the Company. The Board has developed a number of specific expectations of its directors, set forth in the Company’s Corporate Governance Guidelines, to promote the discharge of the Board’s responsibilities and the efficient conduct of the Board’s business.
Risk Oversight.Our Board is responsible for overseeing the Company’s processes for assessing and managing risk. The Board considers our risk profile when reviewing our annual business plan and incorporates risk assessment into its decisions impacting the Company. The Board also reviews the Company’s cybersecurity risk profile and is regularly updated by the Company’s Chief Information Officer on the cybersecurity risks and threats facing the Company. The Board is further briefed on actions and changes taken by management to mitigate the Company’s risk profile and provided with an overview of the cybersecurity strategy along with key cybersecurity initiatives and matters.
The Board also has delegated certain risk oversight functions to the Audit Committee. In accordance with its charter, the Audit Committee periodically reviews and discusses with senior management the Company’s policies and guidelines regarding major financial, liquidity, credit and operational risk exposures and steps management has taken to monitor and control such exposures. The Audit Committee meets regularly in executive session with senior management, including the Company’s Chief Financial Officer, Chief Accounting Officer, Chief Audit Executive, and General Counsel, and also meets with the Company’s independent auditor, to discuss and review risks that may have a material impact on the financial statements or the Company’s policies and procedures and internal controls. The Audit Committee incorporates its risk oversight function into its regular reports to the Board.
Our Compensation & Management Development Committee also annually reviews the Company’s compensation arrangements to determine whether they encourage excessive risk-taking as discussed below under “Executive Compensation Matters—Compensation Risk Assessment.”
In addition, the Company maintains a Compliance Committee composed of individuals who are appointed by the Board and who are independent from the Company. The Compliance Committee oversees the Company’s compliance program and reports directly to the Board on all matters relating to the Company’s compliance with gaming laws, including detecting and preventing violations of law, regulation, Company policy by Company insiders and agents, and enforcing special conditions imposed on the Company by any licensing authorities. The Company’s Compliance Committee also protects the Company against questionable associations and associations with unsuitable persons, reviews the practices and conduct of the Company and its employees, and protects the integrity and reputation of the Company.
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Management Succession Planning.Our Board, led by our Compensation & Management Development Committee, oversees the management continuity planning process and periodically reviews the Company’s succession plans and leadership development programs. This oversight includes undertaking initiatives to strengthen the skills and qualifications of potential successor-candidates, and discussing performance, leadership development, and succession planning for other elected officers and key employees, as appropriate, during the Board’s executive sessions. This also includes addressing the policies and principles for the Company’s executive officer selection and performance review, as well as policies regarding succession in the event of emergency or retirement. Directors engage with senior management talent at Board and committee meetings and in less formal settings to enable directors to personally interact with and identify qualified successor-candidates.
Director Refreshment.The Board recognizes that refreshment brings both increased diversity and new perspectives to the Board. Accordingly, under our Corporate Governance Guidelines, a director will not bere-nominated for election by the Board if he or she would be 72 years old or older at the time of the election, although the Board maintains discretion to waive this policy in individual cases. The average age of our current directors is under 60 years old. The Board has determined not to impose term limits on directors.
Code of Ethics.We have a Code of Business Conduct and Ethics, which is applicable to all of our directors, officers and employees (the “Code of Ethics”). The Code of Ethics is available on the Governance page of our website located at http://investor.caesars.com. To the extent required pursuant to applicable Securities and Exchange Commission (“SEC”) regulations, we intend to post amendments to or waivers from our Code of Ethics (to the extent applicable to our chief executive officer, principal financial officer or principal accounting officer) at this location on our website or to report the same on a Current Report on Form8-K. Our Code of Ethics is available free of charge upon request to our Corporate Secretary, Caesars Entertainment Corporation, One Caesars Palace Drive, Las Vegas, Nevada 89109.
Corporate Social Responsibility.Led by our Governance & Corporate Responsibility Committee, our Board oversees the Company’s corporate social responsibility initiatives. The Governance & Corporate Responsibility Committee evaluates the emergent environmental, social and governance-related risks and the Company’s social and environmental goals (including diversity and inclusion efforts), including the policies and programs instrumental in achieving short- and long-term targets, presented at least annually by management. Our corporate social responsibility framework is branded under the theme PEOPLE, PLANET, PLAY (People: supporting the wellbeing of our team members, guests and local communities. Planet: caring for our planet so our guests don’t need to worry. Play: creating memorable experiences for our guests and leading responsible gaming practices in the industry). This approach unites all our properties and business activities behind a shared framework with a common language to more effectively support sustainable, ethical and profitable business growth. Our PEOPLE, PLANET, PLAY platform builds on many years of investment across all aspects of citizenship, including responsible gaming, diversity, equity and inclusion, community impact, environmental stewardship, human capital management, and human rights. We report transparently on our citizenship performance each year in line with Global Reporting Initiative Standards, the leading global sustainability reporting standard.
CORPORATE GOVERNANCE GUIDELINES
The matters discussed above reflect the Board’s commitment to a system of governance that enhances corporate responsibility and accountability. The Corporate Governance Guidelines contain provisions addressing the following matters, among others:
Board size;
Director qualifications;
Director independence;
Director retirement policy and changes in anon-employee director’s primary employment;
Director responsibilities, including director access to officers and employees;
Board meetings and attendance and participation at those meetings;
Board committees;
Executive sessions;
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Director orientation and continuing education;
Chief Executive Officer evaluation and compensation;
Director compensation;
Management succession planning;
Performance evaluation of the Board and its committees; and
Public interactions.
Learn more about governance at Caesars by visiting the Governance page of our website located at http://investor.caesars.com, where you will find our Corporate Governance Guidelines, committee charters and other important governance documents. We intend to disclose any future amendments to the Corporate Governance Guidelines on our website.
COMMITTEES OF THE BOARD
Our Board has the following standing committees: The Audit Committee, the Compensation & Management Development Committee, the Governance & Corporate Responsibility Committee, and the Strategy & Finance Committee. The Board has determined that each committee member is independent as defined in the NASDAQ listing standards. The Board has adopted a written charter for each of these committees. The charter for each of these committees is available on the Governance page of our website located at http://investor.caesars.com. In addition, from time to time, the Board creates ad hoc committees for specific corporate purposes, such as the Transaction Committee.
The chart below reflects the composition of the standing committees of our Board and the Transaction Committee as of the date of this proxy statement:
NAMEOFDIRECTOR | AUDIT COMMITTEE | COMPENSATION & MANAGEMENT DEVELOPMENT COMMITTEE | GOVERNANCE & CORPORATE RESPONSIBILITY COMMITTEE | STRATEGY & FINANCE COMMITTEE | TRANSACTION COMMITTEE | |||||
Thomas Benninger | ||||||||||
Juliana Chugg | ||||||||||
Denise Clark | Chair | |||||||||
Keith Cozza | ||||||||||
John Dionne | Chair | |||||||||
Don Kornstein | Chair | Chair | ||||||||
Courtney Mather | ||||||||||
James Nelson |
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Audit Committee
7 MEETINGS IN 2019 | ||
MEMBERS Benninger Clark Dionne(Chair) Nelson | INDEPENDENCE Messrs. Dionne, Benninger and Nelson and Ms. Clark are independent as independence is defined in Rule10A-3 of the Exchange Act and under the NASDAQ listing standards. AUDIT COMMITTEE FINANCIAL EXPERT Our Board has determined that Messrs. Dionne and Benninger each qualify as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of RegulationS-K. |
The purpose of the Audit Committee is to oversee our accounting and financial reporting processes and the audits of our financial statements; provide an avenue of communication among our independent auditors, management, our internal auditors and our Board; and prepare the Audit Committee Report required by the SEC to be included in our annual proxy statement or annual report on Form10-K. The principal duties and responsibilities of our Audit Committee are to oversee and monitor the following:
Preparation of the annual Audit Committee Report to be included in our annual proxy statement;
Our financial reporting process and internal control system;
The integrity of our financial statements;
The independence, qualifications and performance of our independent auditor;
The performance of our internal audit function;
Our compliance with legal, ethical and regulatory matters; and
Risks that may have a material impact on the financial statements or the Company’s policies and procedures and internal controls.
The Audit Committee investigates any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
Compensation & Management Development Committee
12MEETINGS IN 2019 | ||
MEMBERS Chugg Clark(Chair) Mather | INDEPENDENCE Mmes. Clark and Chugg and Mr. Mather are independent as independence is defined in Rule10C-1 of the Exchange Act and under the NASDAQ listing standards. | |
Our Compensation & Management Development Committee (the “Compensation Committee”) serves as our compensation committee with the specific purpose of designing, approving and evaluating the administration of our compensation plans, policies and programs. The Compensation Committee’s role is to design compensation programs that encourage high performance, promote accountability and align employee interests with the interests of our shareholders. The Compensation Committee is also charged with reviewing and approving the compensation of the Chief Executive Officer and our other senior executives, including all the named executive officers. Our Compensation Committee is entitled to delegate any or all of its Each year the Compensation Committee reviews whether the work of the Company’s compensation consultants raises any conflicts of interest. |
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Governance & Corporate Responsibility Committee
9MEETINGS IN 2019 | ||||
MEMBERS Chugg Cozza Kornstein | INDEPENDENCE Messrs. Kornstein and Cozza and Ms. Chugg are independent as independence is defined under the NASDAQ listing standards. | |||
The
• To identify individuals qualified to become Board members consistent with criteria approved by the Board for • To make recommendations regarding proposals submitted by our • To provide strategic oversight of the
• To make recommendations to our Board regarding board governance matters and practices. |
Strategy & Finance Committee
Our Strategy & Finance Committee currently consists of Messrs. Kornstein, as Chair, Benninger, Cozza and Mather. The Strategy & Finance Committee assists the Board in the oversight of certain strategic transactions and financial matters.
Transaction Committee
Our Transaction Committee consists of Messrs. Kornstein, as Chair, Benninger, Cozza, and Mather. The Transaction Committee considers and evaluates various paths for enhancing shareholder value.
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BOARD ACCOUNTABILITY AND PROCESSES
SHAREHOLDER ENGAGEMENT
During the past year, members of our Board and management reached out to 23 of our largest shareholders (representing approximately 78% of our outstanding share ownership) and engaged in substantive dialogue with a majority of such shareholders. Our engagement efforts were designed to seek input and provide perspective as to management decisions, strategy, and executive compensation, among other things. We use shareholder engagement as part of our efforts to be a prudent steward of shareholder capital and to address the interests of the Company and its shareholders.
COMMUNICATIONS WITH THE BOARD
Shareholders and other interested parties may contact the Board as a group or any individual director by sending a letter to: c/o Corporate Secretary, Caesars Entertainment Corporation, One Caesars Palace Drive, Las Vegas, Nevada 89109. We will forward all such communications to the applicable Board member(s), except for material that is unduly hostile, threatening, illegal or similarly unsuitable. In addition, the Board has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded, including product complaints, suggestions, resumes and other forms of job inquiries, surveys and business solicitations or advertisements. The Company’s legal department will review the communication, and concerns will be addressed through our regular procedures for addressing such matters. Depending on the nature of the concern, management also may refer matters to our internal audit, legal, finance or other appropriate department. If the volume of communication becomes such that the Board adopts a process for determining which communications will be relayed to Board members, that process will appear on the Governance page of our website located at http://investor.caesars.com.
BOARD AND DIRECTOR EVALUATIONS
The Board recognizes that a robust self-evaluation process promotes Board effectiveness. Our Governance & Corporate Responsibility Committee oversees the self-evaluation process of the Board and its committees. Our evaluation process consists of a written survey completed by each director evaluating the Board and each committee on which a director serves. These self-evaluations are designed to help assess the skills, qualifications, and experience represented on the Board and its committees and to assess whether they are functioning effectively.
The written survey is followed by a confidential live interview with each Board and committee member by our Governance & Corporate Responsibility Committee Chair and General Counsel in coordination with our Chairman of the Board. The live interviews are designed to solicit additional insights into the contributions of other directors and to obtain more targeted feedback regarding the Board, committee and individual director effectiveness. Each committee chair participates in the live interviews of its committee members.
The results of this process may be considered by the Board and Governance & Corporate Responsibility Committee, together with other factors, in directorre-nomination decisions.
The Governance & Corporate Responsibility Committee periodically reviews the self-evaluation process to consider any changes or improvements to the process, so that the solicited feedback remains relevant and appropriate.
DIRECTOR EDUCATION
In accordance with our Corporate Governance Guidelines, our management, working with the Governance & Corporate Responsibility Committee, provides an orientation process for new directors on the Board. As part of this process, each new director receivesin-person briefings provided by our corporate officers on our business, operations, significant financial, accounting and risk management matters, corporate governance and key policies and practices. New directors also receive briefings on the responsibilities, duties and activities of the committees on which the director will initially serve. In addition, our management periodically holds additional educational sessions for directors on matters relevant to the Company’s operations and plans.
Our new directors are provided the opportunity to visit and receivein-person briefings from senior managers at our properties, which allows them to gain a first-hand view of our business.
2020 PROXY STATEMENT 21
CORPORATEGOVERNANCEANDBOARDMATTERS
Our directors are encouraged to participate in director continuing education programs sponsored by universities and other third-party organizations.
For their service, each of ournon-employee directors receives annual cash compensation paid monthly in arrears as well as an annual equity grant generally awarded concurrent with the time of the annual meeting of shareholders. For 2019, director compensation consisted of the following components:
COMPONENT | PAYABLETO | ANNUALAMOUNT ($) | ||||
Annual retainer | Eachnon-employee Director | 100,000 | ||||
Audit Committee service | Each Audit Committee member | 25,000 | ||||
Compensation Committee service | Each Compensation Committee member | 15,000 | ||||
Governance & Corporate Responsibility Committee service | Each Governance & Corporate Responsibility Committee member | 15,000 | ||||
Strategy & Finance Committee service | Each Strategy & Finance Committee member | 25,000 | ||||
Transaction Committee service | Each Transaction Committee member(non-chair) | 50,000 | ||||
Chairman service | Chairman of the Board | 100,000 | ||||
Chair of Transaction Committee | 100,000 | |||||
Chair of each Board Committee | 15,000 | |||||
Annual equity grant | Chairman of the Board | 205,000 | ||||
Each othernon-employee Director | 155,000 |
In addition, after six meetings of any of our standing committees have been held in a single year, then for each subsequent, additional meeting held in the calendar year, each member of the committee receives additional compensation as follows:
FORIN-PERSON MEETINGS:
Chairman of the Board or Committee: $2,500
Member of the Board or Committee: $1,500
FOR TELEPHONIC MEETINGS:
Chairman of the Board or Committee: $2,000
Member of the Board or Committee: $1,000
A meeting is counted toward this total only if it is formal and minutes are kept. Informal meetings where minutes are not kept are not eligible for additional compensation. If meetings of both the full Board as well as Committees occur at the same time (e.g., regularly scheduled quarterly meeting), this will only count as one meeting for the purposes of this annual total. Annual compensation earned as a result of these additional meetings is capped at $15,000 per Board member.
All of our directors are reimbursed for expenses incurred in connection with their service on the Board. In addition, as a casino-entertainment and hospitality services provider, we are able to provide perquisites relating to food and beverage, hotel, entertainment and related offerings at little or no additional cost to us. These offerings allow members of our Board and management the opportunity to better understand and experience our products and services. In no case did the total value of such perquisites, computed based on the aggregate incremental cost to us, exceed $10,000 pernon-employee director in 2019.
22 CAESARS ENTERTAINMENT®
CORPORATEGOVERNANCEANDBOARDMATTERS
The following table sets forth the compensation provided by the Company tonon-employee directors during 2019:
NAME | FEES EARNED OR PAIDINCASH ($) | STOCK AWARD ORUNIT(1) ($) | ALLOTHER COMPENSATION ($) | TOTAL ($) | ||||||||||||
Thomas Benninger |
| 215,000 |
|
| 155,006 |
|
| 436 |
|
| 370,442 |
| ||||
John Boushy(2) |
| 22,167 |
|
| 25,484 |
|
| — |
|
| 47,651 |
| ||||
Juliana Chugg |
| 140,000 |
|
| 103,200 |
|
| 5,263 |
|
| 248,463 |
| ||||
Denise Clark |
| 162,083 |
|
| 103,200 |
|
| 4,003 |
|
| 269,286 |
| ||||
Keith Cozza(3) |
| 181,667 |
|
| 129,954 |
|
| — |
|
| 311,621 |
| ||||
John Dionne |
| 155,000 |
|
| 155,006 |
|
| 243 |
|
| 310,249 |
| ||||
Matthew Ferko(2) |
| 25,333 |
|
| 25,484 |
|
| — |
|
| 50,817 |
| ||||
James Hunt |
| 215,000 |
|
| 205,010 |
|
| 2,071 |
|
| 422,081 |
| ||||
Don Kornstein |
| 259,792 |
|
| 155,006 |
|
| 492 |
|
| 415,290 |
| ||||
Jan Jones Blackhurst(4) |
| 25,000 |
|
| 39,073 |
|
| 3,552 |
|
| 67,625 |
| ||||
Courtney Mather(3) |
| 181,667 |
|
| 129,954 |
|
| 1,168 |
|
| 312,789 |
| ||||
James Nelson(3) |
| 116,167 |
|
| 129,954 |
|
| 1,198 |
|
| 247,319 |
| ||||
David Sambur(5) |
| 52,472 |
|
| — |
|
| — |
|
| 52,472 |
| ||||
Richard Schifter(6) |
| 113,681 |
|
| 155,006 |
|
| 2,885 |
|
| 271,572 |
| ||||
Christopher Williams(2)(7) |
| 19,167 |
|
| 25,484 |
|
| — |
|
| 44,651 |
|
(1) | Includes (1) an equity grant in consideration of Board service for the period of January through February 2019 with the number of shares granted determined by dividing the grant date value of the award ($25,479) by $8.97, the closing price of the Company’s common stock on March 1, 2019, the date of grant, rounded up to the nearest whole share for Messrs. Boushy, Ferko and Williams; (2) an equity grant in consideration of Board service for the period of March through June of 2019 with the number of shares granted determined by dividing the grant date value of the award ($49,260) by $9.13, the closing price of the Company’s common stock on June 6, 2019, the date of grant, rounded up to the nearest whole share for Messrs. Cozza, Mather and Nelson; (3) an equity grant for Ms. Blackhurst in consideration of Board service for the period of October through December of 2019 with the number of shares granted determined by dividing the grant date value of the award ($39,068) by $11.73, the closing price of the Company’s common stock on October 1, 2019, the date of grant, rounded up to the nearest whole share; and (4) the annual equity grant
|
(2) | Messrs. John Boushy, Matthew Ferko, and Christopher Williams resigned from the Board effective March 1,
|
| |
|
A meeting is counted toward this total only if it is formal and minutes are kept. Informal meetings where minutes are not kept are not eligible for additional compensation. Annual compensation earned as a result of these additional meetings is capped at $15,000 per Board member.
All of our directors are reimbursed for expenses incurred in connection with their service on the Board.
CORPORATE GOVERNANCE AND BOARD MATTERS
The following table sets forth the compensation provided by the Company to non-employee directors during 2018:
NAME | FEES EARNED OR PAID IN CASH ($) | STOCK AWARD OR UNIT(4) ($) | TOTAL ($) | |||
James Hunt | 215,000 | 256,267 | 471,267 | |||
Thomas Benninger | 165,000 | 193,755 | 358,755 | |||
John Boushy(6) | 130,000 | 193,755 | 323,755 | |||
Juliana Chugg(1) | 4,792 | 60,304 | 65,096 | |||
Denise Clark(1) | 23,690 | 84,089 | 107,779 | |||
Keith Cozza(5) | — | — | — | |||
John Dionne | 155,000 | 193,755 | 348,755 | |||
Matthew Ferko(6) | 155,000 | 193,755 | 348,755 | |||
Don Kornstein | 155,000 | 193,755 | 348,755 | |||
Courtney Mather(5) | — | — | — | |||
James Nelson(5) | — | — | — | |||
David Sambur(2) | 170,000 | — | 170,000 | |||
Richard Schifter | 157,500 | 193,755 | 351,255 | |||
Marilyn Spiegel(7) | 9,583 | — | 9,583 | |||
Christopher Williams(3)(6) | 130,000 | 193,755 | 323,755 |
| |
| |
(3) |
|
| |
Messrs. Keith Cozza, Courtney Mather, and James Nelson were appointed to the Board on March 1, 2019. | |
|
(4) | Ms. Jones Blackhurst was appointed to the Board to fill the vacancy resulting from Mr. Schifter’s resignation, effective as of September 5, 2019. Ms. Jones Blackhurst continued her role as Executive Vice President, Public Policy & Corporate Responsibility of the Company until October 1, 2019, at which time her employment with the Company ceased. In addition to the compensation received by Ms. Jones Blackhurst as a member of the Board, she also received $2,928,271, which included $1,296,880, pursuant to her Separation and General Release Agreement with the Company. Ms. Jones Blackhurst separation payments consisted of (i) $665,738 in cash severance payments, (ii) $282,161 related to PSUs granted during 2019 (with the value for the PSUs calculated based on target attainment of the goals and the closing price of our common stock of $11.66 as of her last day of employment at the Company on September 30, 2019; this includes only the acceleration of those equity awards for which the performance goals had not been established and so the grant date fair value was not determined during her active employment), (iii) $250,000 in accelerated vesting of cash awards, and (iv) $98,981 in estimated lifetime medical and welfare benefits. |
(5) | Mr. Sambur is an employee of Apollo (as defined in this Amendment). Pursuant to Apollo Management Group’s internal policies, Mr. Sambur assigned the right to receive compensation as a director in favor of an affiliate designated by Apollo. Mr. Sambur resigned from the Board effective April 4, 2019. |
(6) | Mr. Schifter resigned from the Board effective September 5, 2019. |
(7) | Mr. Williams had a total of 14,453 options on March 1, 2019 all of which were exercisable. |
Pursuant to the Caesars Entertainment Corporation Outside Director Deferred Compensation Plan (“Director Deferred Compensation Plan”), effective January 1, 2019,non-employee directors have an opportunity to defer their Board compensation and equity grants, as further described below. In 2019, each of Ms. Clark and Messrs. Cozza and Mather elected to defer their
2020 PROXY STATEMENT 23
CORPORATEGOVERNANCEANDBOARDMATTERS
cash and equity compensation under the Director Deferred Compensation Plan. Mr. Hunt elected to defer a portion of his equity compensation. Mr. Schifter elected to defer all of his equity compensation under the Director Deferred Compensation Plan.
In May 2019, the Board approved compensation for service on the Transaction Committee of $50,000 for each member and $100,000 for the Chair of the committee, with 50% of that compensation to be paid upon Board approval of the compensation and 50% to be paid 90 days after the Transaction Committee was formed on March 28, 2019 if the committee is still in existence on that date.
CAESARS ENTERTAINMENT CORPORATION OUTSIDE DIRECTOR DEFERRED COMPENSATION PLAN
On January 1, 2019, the Company adopted the Director Deferred Compensation Plan, pursuant to which thenon-employee directors of the Company are eligible to voluntarily defer a portion of their annual compensation. Participants may elect to defer up to 100% of their cash-based director fees and up to 100% of their equity grants with respect to Company common stock. Any equity grants so deferred by anon-employee director will be subject to the same vesting and forfeiture restrictions as the underlying equity grant and will be payable in shares of Company common stock (or cash for the value of any fractional shares subject thereto).
Under the Director Deferred Compensation Plan, participants may direct the manner in which amounts deferred under the plan are invested by choosing from among investment options designated from time to time by the Compensation Committee. Each participant’s account is periodically credited with any deemed earnings and losses as a result of the investment. In addition, prior to any deferral period, each participant may elect to have any deferred amounts (including any earnings credited to such participant’s account under the plan) distributed at (i) such participant’s separation from service with the Company; (ii) the participant’s death; or (iii) at a fixed date selected by the participant. Distributions under the Director Deferred Compensation Plan may, at the participant’s election, be made in either alump-sum payment or in monthly installments over a period not to exceed 15 years.
DIRECTOR STOCK OWNERSHIP GUIDELINES
Stock ownership guidelines fornon-employee directors are five times the annual retainer.Non-employee directors are allowed five years to achieve the minimum stock ownership level. Equity deferred bynon-employee directors under the Caesars Entertainment Corporation Outside Director Deferred Compensation Plan counts toward the achievement of the minimum stock ownership guidelines. The Compensation Committee will monitor thenon-employee directors’ achievement towards the guidelines annually and evaluate, where necessary, consequences for not meeting the guidelines. Please refer to “-Stock Ownership Requirements” for additional details regarding ournon-employee directors’ compliance with thenon-employee director stock ownership guidelines.
24 CAESARS ENTERTAINMENT®
PROPOSAL 2 - ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
|
In addition, in December 2018, we adopted the Caesars Entertainment Corporation Outside Director Deferred Compensation Plan, effective January 1, 2019. This plan allows non-employee directors an opportunity to defer their Board compensation and equity grants.
DIRECTOR STOCK OWNERSHIP GUIDELINES
Stock ownership guidelinesfor non-employee directors are 5X the annual retainer. Non-employee directors are allowed five years to achieve the minimum stock ownership level. Equity deferred by non-employee directors under the Caesars Entertainment Corporation Outside Director Deferred Compensation Plan counts toward the achievement of the minimum stock ownership guidelines. The Compensation Committee will monitor the non-employee directors’ achievement towards the guidelines annually and evaluate, where necessary, consequences for not meeting the guidelines.
Table of ContentsPROPOSAL
2
To Approve, on an Advisory,PROPOSAL 2 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATIONNon-binding Basis, Named Executive Officer Compensation
| |||
Our executive compensation program is designed to align executive and shareholder interests through a program that rewards loyalty and encourages retention, results-driven individual performance and dedication to the organization’s overall success. Our compensation program is also designed such that a substantial portion of executives’ compensation opportunities are a result of pay-for-performance. These principles align our compensation programs with our business objectives, including enhancing shareholder value and customer satisfaction.
The Company is presenting this Proposal 2, which gives shareholders the opportunity to approve or not approve, on an advisory, non-binding basis, the compensation of our named executive officers by voting for or against the following resolution (a “say-on-pay” vote).
“RESOLVED, that the compensation paid to the named executive officers, as disclosed in this proxy statement, pursuanton an advisory,non-binding basis.
We are providing shareholders with the opportunity to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables), is hereby approved.”
Ascast an advisory,non-binding vote this proposal is not binding on the Company, the Board or the Compensation Committee, and will not be construed as overruling a decision by the Company, the Board or the Compensation Committee or creating or implying any additional fiduciary duty for the Company, the Board or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by the Company’s shareholders in their votes on this proposal and will consider the outcome of the say-on-pay vote when making future decisions regarding the compensation of the Company’sour named executive officers.officers as disclosed in this proxy statement, in accordance with Section 14A of the Exchange Act.
Our executive compensation program is designed to align executive and shareholder interests through a program that supports the organization’s strategy and overall success, encourages our executives’ retention, and rewards for results-driven individual performance. Our compensation program is also designed such that a substantial portion of executives’ compensation opportunities are a result ofpay-for-performance. These principles align our compensation programs with our business objectives, including enhancing shareholder value and customer satisfaction.
At the 2019 annual meeting of shareholders, our shareholders approved, on an advisory,non-binding basis, the Company’s named executive officer compensation for 2018. Approximately 76% of the votes cast on the 2019say-on-pay vote were in favor of our named executive officer compensation.
In order to better understand our largest shareholders’ views on our executive compensation program, in 2019 we initiated a shareholder outreach program. We reached out to 23 of our largest shareholders (representing approximately 78% of our outstanding share ownership) to solicit their feedback on our executive compensation program. We had conversations with a majority of such shareholders. Our shareholders noted that they were supportive of the executive compensation changes we had made since 2018. Specifically, they expressed support for the following:
The addition of free cash flow (a key measure of cash generation) as a measure for determining performance under the 2019 Bonus Plan.
The addition of Relative Total Shareholder Return (rTSR) as a performance measure for 50% of the PSU dollar amount granted to individuals.
Our new Chief Executive Officer being compensated at a significantly lower rate than was his predecessor. His total direct compensation for 2019 and 2020 is also less than the median as compared to our peer group.
Following the say-on-pay vote to be conducted at this annual meeting, we expect our next say-on-pay vote will be conducted at our annual meeting in 2021.
The Company is presenting this Proposal 2, which gives shareholders the opportunity to approve or not approve, on an advisory,non-binding basis, the compensation of our named executive officers by voting for or against the following resolution (a“say-on-pay” vote).
“RESOLVED, that the compensation paid to the named executive officers, as disclosed in this proxy statement pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables), is hereby approved.”
2020 PROXY STATEMENT 25
PROPOSAL 2 -ADVISORYVOTETOAPPROVENAMEDEXECUTIVEOFFICERCOMPENSATION
As an advisory vote, this proposal is not binding on the Company, the Board or the Compensation Committee, and will not be construed as overruling a decision by the Company, the Board or the Compensation Committee or creating or implying any additional fiduciary duty for the Company, the Board or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by the Company’s shareholders in their votes on this proposal and will consider the outcome of thesay-on-pay vote when making future decisions regarding the compensation of the Company’s named executive officers.
26 CAESARS ENTERTAINMENT®
EXECUTIVE COMPENSATION MATTERS
Executive officers are elected annually, serve at the discretion of our Board and hold office until their successors are duly elected and qualified or until their earlier resignation or removal. There are no family relationships among any of our directors, director nominees or executive officers. Our executive officers and their ages as of the date of this proxy statement are:
Ms. Jones BlackhurstNAME
POSITION
Richard D. Broome
Executive Vice President, Communications and Government Relations from November 2011 to May 2017. She served as our Senior Vice President of Communications and Government Relations from November 1999 to November 2011. Prior to joining Caesars, Ms. Blackhurst served as Mayor of Las Vegas from 1991 to 1999.
Mr. Broomebecame our Michelle Bushore
Executive Vice President, CommunicationsGeneral Counsel, Chief Legal & Risk Officer, and Government Relations in September 2017. Prior to his current role, he served as Executive Vice President of Public Affairs and Communications from January 2016 to August 2017. Prior to joining the Company, Mr. Broome served as the Executive Vice President, Corporate Affairs and Communications of Hertz Holdings and Hertz from March 2013 through July 2015. Previously, Mr. Broome served as Senior Vice President, Corporate Affairs and Communications of Hertz Holdings and Hertz from March 2008 to March 2013, and as Vice President, Corporate Affairs and Communications from August 2000 to March 2008.Secretary
Ms.Monica Digiliobecame our
Executive Vice President and Chief Human Resources Officer in September 2018. Prior to joining Caesars, she spent six years as the
Eric Hession
Executive Vice President and Chief Financial Officer
Christopher Holdren
Executive Vice President and Chief Marketing Officer
Thomas Jenkin
Global President of GlobalDestination Markets
Christian Stuart
Executive Vice President, Gaming and Interactive Entertainment
Mr. Broomebecame our Executive Vice President, Communications and Government Relations in September 2017. Prior to his current role, he served as Executive Vice President of Public Affairs and Communications from January 2016 to August 2017. Prior to joining the Company, Mr. Broome served as the Executive Vice President, Corporate Affairs and Communications of Hertz Holdings and Hertz from March 2013 through July 2015. Previously, Mr. Broome served as Senior Vice President, Corporate Affairs and Communications of Hertz Holdings and Hertz from March 2008 to March 2013, and as Vice President, Corporate Affairs and Communications from August 2000 to March 2008.
Ms. Bushorebecame our Executive Vice President, General Counsel, Chief Legal & Risk Officer in June 2019. Prior to her current role, she was our Senior Vice President, Chief Governance & Transactional Officer, Corporate Secretary and Deputy General Counsel beginning in October 2018. Prior to joining Caesars, she held various roles at Monsanto Company, a global provider of agricultural products for farmers, from November 2013 to September 2018, most recently serving as Deputy General Counsel and Corporate Secretary and Chief Legal Officer of The Climate Corporation. Earlier, she was in private practice as Counsel at the Silicon Valley office of Latham & Watkins LLP.
Ms. Digiliobecame our Executive Vice President and Chief Human Resources Officer in September 2018. Prior to joining Caesars, she spent six years as the Executive Vice President, Chief Human Resources Officer for Montage International, an operator of luxury hotels and resorts. Ms. Digilio also spent 12 years as the Executive Vice President of Global Human Resources for Kerzner International, developer and operator of the Atlantis and One & Only destination and luxury resorts brands. Ms. Digilio also spent 12 years as the Executive Vice President of Global Human Resources for Kerzner International and 10 years in leadership positions with ITT Sheraton Corporation. Ms. Digilio is an Advisory Board Member for Cornell University’s Leland C. and Mary M. Pillsbury Institute for Hospitality Entrepreneurship.
EXECUTIVE COMPENSATION MATTERS
Mr. Donovan
Mr. Hessionbecame our Executive Vice President and Chief Financial Officer in January 2015 and was our Senior Vice President and Treasurer starting in November 2011. Mr. Hession joined the Company in December of 2002 and held many roles in both operations and corporate finance over his tenure with the Company. Prior to his employment with the Company, Mr. Hession spent five years with Merck and Company working in various capacities in Pennsylvania and North Carolina and at its New Jersey corporate headquarters.
Mr. Holdrenbecame our Executive Vice President and Chief Marketing Officer in November 2017. Prior to joining Caesars, Mr. Holdren served as Chief Marketing Officer of Handy, a high-growth technology startup. Prior to Handy, Mr. Holdren
2020 PROXY STATEMENT 27
EXECUTIVECOMPENSATIONMATTERS
served as Senior Vice President of Digital, Loyalty & Partnerships at Starwood Hotels & Resorts Worldwide Inc., a global hotel and resort company. Overall, Mr. Holdren spent more than 15 years at Starwood, where he oversaw the award-winning Starwood Preferred Guest program. He previously held marketing roles at The Walt Disney Company and Saban Entertainment.
Mr. Jenkinbecame our Global President of Destination Markets in May 2013. Prior to his current role, he served as our President of Operations from November 2011 through May 2013. He served as Western Division President from January 2004 through November 2011. He served as our Senior Vice President Southern Nevada from November 2002 to December 2003 and Senior Vice President and GeneralManager-Rio from July 2001 to November 2002. Mr. Jenkin began his career with Caesars in 1975.
Mr. Stuartbecame our Executive Vice President, Gaming and Interactive Entertainment in March 2017. Prior to his current role, he served as Senior Vice President and the Chief of Staff to the former Chief Executive Officer from June 2015 through March 2017. He served in various marketing, operations and finance roles since 2005, including as Regional Chief Marketing Officer overseeing Caesars’ resorts in Las Vegas, General Manager of the Cromwell, Flamingo and LINQ Resorts, Regional Vice President of Finance, Gulf Coast Region, and various finance and operations leadership positions at Caesars’ U.K. headquarters in London.
We have a fully independent compensation committee of our Board of Directors, the Compensation & Management Development Committee, which is also referred to in this proxy statement as the “Compensation Committee.”
On an annual basis, our management reviews our compensation policies and practices to determine whether there are any risks arising from our compensation policies and practices for employees, includingnon-executive officers, that are reasonably likely to have a material adverse effect on the Company and presents its findings to the Compensation Committee. Based on this assessment and review for 2019, the Compensation Committee has determined that our compensation policies and practices do not present risks that are reasonably likely to have a material adverse effect on the Company. In evaluating our compensation policies and practices, we considered the following elements of our compensation programs from the perspective of enterprise risk management and the terms of the Company’s compensation policies generally.
The Company’s executive compensation practices are intended to compensate executives primarily on performance, with a large portion of potential compensation at risk. The Compensation Committee sets senior executive compensation with three driving principles in mind: (1) delivering financial results to stockholders, (2) rewarding and motivating top executives in a manner that is aligned with stockholders’ interests while enhancing our ability to retain top executive talent and (3) incentivizing high performance and promoting accountability so that our customers receive a great experience when visiting our properties. In addition, the Compensation Committee has the authority to claw back any bonuses or other awards paid pursuant to our incentive plans generally, including the Caesars Entertainment Corporation 2012 Performance Incentive Plan (the “2012 PIP”) and the Caesars Entertainment Corporation 2017 Performance Incentive Plan (the “2017 PIP”), each as further described below, in the event of a termination for cause or material noncompliance resulting in financial restatement by a plan participant. The Company is also subject to many restrictions due to gaming, compliance and other regulations that mitigate the risk that employees will take actions that would put our business at risk and that the compensation programs incentivize them to do so. As a result, the Compensation Committee does not believe that the Company’s compensation policies and practices provide incentives to take inappropriate business risks.
28 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
COMPENSATION DISCUSSION AND ANALYSIS
Our executive compensation philosophy provides the foundation upon which all of our compensation programs are built. Our executive compensation philosophy, and our compensation policies, plans and programs, are under the supervision of the Compensation Committee. For a description of the composition, authority and responsibilities of the Compensation Committee, see “-Compensation Process-Compensation Committee” below.
EXECUTIVE SUMMARY
OUR 2019 NAMED EXECUTIVE OFFICERS
The following employees represented our named executive officers for 2019.
Anthony Rodio(1) | Chief Executive Officer | |
Mark Frissora(2) | Former President and Chief Executive Officer | |
Eric Hession | Executive Vice President | |
Thomas Jenkin | Global President of Destination Markets | |
Christopher Holdren | Executive Vice President and Chief Marketing Officer | |
Monica Digilio | Executive Vice President and Chief Human Resources Officer | |
Timothy Donovan(3) | Former Executive Vice President, General Counsel, | |
Les Ottolenghi(4) |
|
(1) | Mr. Rodio joined the Company effective on May 6, 2019, as discussed in
|
(2) | The Company and |
(3) | Mr. Donovan’s employment terminated as of June 6, 2019, as discussed in
|
(4) | The Company and |
SIGNIFICANT 2019 EVENTS
At our 2019 annual meeting, approximately 76% of votes cast were voted in favor of our pay programs. In response to investor outreach during 2018 through 2019, we made the following changes to our executive compensation program:
Introduced free cash flow as a financial performance metric of our 2019 Bonus Plan to supplement Adjusted EBITDA and customer satisfaction score in rewarding named executive officers for a combination of not only profitability and customer experience, but also cash flow management.
Included Adjusted EBITDA as a performance metric in the 2018 performance stock units and Adjusted EBITDAR in the 2019 performance stock units as well as introduced performance stock units based on relative total stockholder return (“rTSR”) in 2019, with payouts to be determined based on our three-year total shareholder return in relation to that of the S&P 500 index, to further align named executive officers’ long-term compensation with shareholder interests.
Made 50% of our named executive officers’ equity grants performance based, substantially increasing the proportion of total compensation that is at risk.
Compensated our new Chief Executive Officer at a significantly lower rate than his predecessor.
2020 PROXY STATEMENT 29
EXECUTIVECOMPENSATIONMATTERS
The following summarizes key actions that we took in 2019, which are described in more detail in this section of the proxy statement.
1 | We added rTSR as a metric to our long-term incentive (“LTI”) program, to further enhance alignment with stockholder interests
| 3 | We introduced a new deferred compensation plan, the Executive Supplemental Savings Plan III, as a means for named executive officers to defer receipt and taxation of a portion of current compensation
| |||
2 | We granted cash retention bonuses to key executives to minimize disruption and encourage the continued availability of top talent through the completion of pending merger activity
|
KEY EXECUTIVE COMPENSATION DECISIONS FOR 2019
The following summarizes the key executive compensation decisions that were made or became effective in 2019:
In August 2018, the Compensation Committee approved increases in base salaries for Messrs. Hession, Jenkin, Holdren, and Ottolenghi, effective January 1, 2019, which ranged from 2.5% to 10.8%.
In December 2018, the Compensation Committee determined that free cash flow should supplement Adjusted EBITDA and customer satisfaction score for the 2019 Bonus Plan, to reward the named executive officers for a combination of profitability, customer experience and cash flow management.
In January 2019, the Compensation Committee approved vesting of the first-year tranche of 2018 Performance Share Units (“PSUs”) at 95% of target, given that the 2018 Adjusted EBITDA result was at 99.5% of the target goal.
In January 2019, the Compensation Committee approved the vesting of 150,000non-qualified performance-based stock options that had been granted to Mr. Frissora in February 2015, for which performance criteria as outlined in the award agreement had been achieved.
In March 2019, the Compensation Committee approved an annual LTI grant to our named executive officers that placed 50% weighting on PSUs tied to Adjusted EBITDAR performance goals and rTSR and 50% weighting on time-vesting Restricted Stock Units (“RSUs”).
In January 2020, annual cash bonuses were determined at 95% of target based on 2019 results for the performance criteria, including Adjusted EBITDA, free cash flow, overall customer service and enterprise Net Promoter Score with an additional 5% adjustment to reflect employees’ efforts with respect to and to continue to incentivize employees to close the Merger with ERI.
30 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
The mix of the key elements of compensation awarded to our named executive officers in 2019 was as follows (excluding compensation of the type that would fall under “All Other Compensation” in our Summary Compensation Table):
| EARNED BASE SALARY ($) | ANNUAL CASH BONUS AWARD (AT TARGET) ($) | PERFORMANCE- BASEDSTOCK UNITAWARD (ADJUSTED EBITDAR) (2019-2021) (AT TARGET) ($) | PERFORMANCE- BASEDSTOCK UNITAWARD (rTSR) (2019-2021) (AT TARGET) ($) | FAIR VALUE OF TIME-VESTED RESTRICTED STOCKUNITS GRANTED ($) | |||||||||||||||
Mr. Rodio | 946,154 | 1,972,602 | — | — | — | |||||||||||||||
Mr. Frissora | 715,385 | 1,430,769(1) | 1,750,004 | 1,750,000 | 3,500,000 | |||||||||||||||
Mr. Hession | 812,596 | 812,596 | 407,506 | 407,507 | 815,003 | |||||||||||||||
Mr. Jenkin | 1,291,317 | 968,488 | 484,607 | 484,613 | 969,205 | |||||||||||||||
Mr. Holdren | 691,365 | 518,524 | 302,699 | 302,703 | 605,397 | |||||||||||||||
Ms. Digilio | 590,000 | 442,500 | 225,005 | 225,003 | 450,002 | |||||||||||||||
Mr. Donovan | 392,308 | 294,231(2) | 325,005 | 325,008 | 650,001 | |||||||||||||||
Mr. Ottolenghi | 561,179 | 420,885(2) | 271,308 | 271,305 | 542,616 |
(1) |
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(2) | Target award values for Messrs. Donovan and Ottolenghi have also been prorated based on their actual base salary earnings in 2019 for the time that each executive
OUR COMPENSATION PHILOSOPHY The Compensation Committee sets senior executive compensation with three driving principles in mind: (1) delivering financial results to shareholders, (2) rewarding and motivating top executives in a manner that is aligned with shareholders’ interests while enhancing our ability to retain top executive talent, and (3) incentivizing high performance and promoting accountability so that our customers receive a great experience when visiting our properties. The Compensation Committee monitors market trends and as we move further from our restructuring and being a controlled company, we anticipate that we will continue to modify elements of our compensation program to reflect the best practices of our industry and peers.
In accordance with these principles, we have implemented the following designs and policies that support our commitment to paying for performance and maintaining good governance practices:
aligning our incentive compensation strategy with business objectives, including enhancing shareholder value and customer satisfaction; supporting a culture of strong performance and accountability by rewarding employees for results; attracting, retaining and motivating talented and experienced executives; and fostering a shared commitment among our senior executives by aligning company and individual goals. Based on the guiding principles of our compensation philosophy, our executive compensation programs provide competitive levels of compensation that come in many forms, including salaries, annual cash incentive bonuses, and LTI and equity-ownership opportunities in the form of both performance and time-vested awards. We also offer other benefits typically offered to executives in large public companies, including defined contribution retirement plans (includingnon-qualified
2020 PROXY STATEMENT 31 EXECUTIVECOMPENSATIONMATTERS IMPLEMENTING THE PHILOSOPHY
Competitive Pay for Market:We target our compensation
AdvisorySay-on-Pay Vote:We have implemented a policy pursuant to which we will request asay-on-pay vote annually in order to obtain
Robust Stock Ownership Guidelines:We have established robust stock ownership guidelines for the CEO and named executive officers as well as for our directors. Insider Trading and Anti-Hedging Policies: We maintain policies that prohibit our directors, officers and other employees from engaging in “insider trading” in our stock, short selling or purchasing our stock on margin, or entering into transactions that are designed to hedge the risks and rewards of owning our stock. Annual Pay Evaluations:The
We WHATWEDON’TDO No Guaranteed Bonuses: We do not provide guaranteed bonuses for our officers. No Automatic Salary Increases or Incentive Grants:We do not provide automatic or minimum salary increases for our officers or employees generally and we No Excise TaxGross-ups: We do not provide excise taxgross-ups for any officer (other than related to No Single Trigger Change in COMPENSATION PROCESS COMPENSATION COMMITTEE The Compensation Committee has the sole authority to set the material compensation of our senior executives, including base pay, incentive pay and equity awards. The Compensation Committee receives information and input from our senior executives and outside consultants (as described below) to help establish these material compensation determinations, but the Compensation Committee is the final arbiter of these decisions. The Compensation Committee designs, approves, and evaluates the administration of our compensation plans, policies and programs. The Compensation Committee’s role is to design compensation programs that encourage high performance, promote accountability and align employee interests with the interests of our shareholders. The Compensation Committee is also charged with reviewing and approving the compensation of the Chief Executive Officer and our other senior executives, including the named executive officers. The Compensation Committee operates under our Compensation & Management Development Committee charter. It is reviewed at least once per year, and any recommended changes are presented to our Board for approval. The charter for our Compensation Committee specifically outlines its duties and responsibilities in shaping and maintaining our compensation philosophy. Our Compensation Committee currently consists of Ms. Clark, as Chair, Ms. Chugg and Mr. Mather. Former director Mr. Williams was a member of the Compensation Committee through the date of his resignation on March 1, 2019; former 32 CAESARS ENTERTAINMENT® EXECUTIVECOMPENSATIONMATTERS director Mr. Sambur was a member of the Compensation Committee through the date of his resignation on April 4, 2019; and former director Richard Schifter was a member of the Compensation Committee through the date of his resignation on September 5, 2019. The qualifications of the Compensation Committee members stem from their roles as corporate leaders, private investors and board members of several large corporations. Their knowledge, intelligence and experience in company operations, financial analytics, business operations and understanding of human capital management enable the members to carry out the objectives of the Compensation Committee. In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the Compensation Committee or to specified Caesars executives, except that it may not delegate its responsibilities for any matters where it has determined such compensation is intended to comply with the exemptions under Section 16(b) of the Exchange Act. 2019 COMPENSATION COMMITTEE ACTIVITIES In 2019, the Compensation Committee performed various tasks as described in its charter and in accordance with its assigned duties and responsibilities, including: Chief Executive Officer Compensation:Reviewed and approved corporate goals and objectives relating to the compensation of the Chief Executive Officer, evaluated the performance of the Chief Executive Officer in light of these goals and objectives and relative to peer group, and evaluated and awarded the annual bonus of the Chief Executive Officer based on such evaluation. Other Senior Executive Officer Compensation:Set base compensation and annual bonus compensation and awarded equity compensation for all senior executives, which included an analysis relative to our competition peer group. Director Compensation:Reviewed base compensation and awarded equity compensation fornon-employee directors, which included a review of our practices against peers both within and outside the gaming and hospitality industry. Executive Compensation Plans:Reviewed the status of our various executive compensation plans, programs and incentives, including our deferred compensation plans, our equity plans and amendments to plans and, where appropriate, approved new plans and arrangements. Equity Compensation Plans:Approved awards of equity (including making grants of performance-based restricted stock units). COMPENSATION COMMITTEE CONSULTANT RELATIONSHIPS The Compensation Committee has the authority to engage services of independent legal counsel, consultants and subject matter experts to analyze, review, recommend and approve actions with regard to compensation of members of our Board, executive officer compensation, and general compensation and plan provisions. We provide for appropriate funding for any such services commissioned by the Compensation Committee. These consultants are used by the Compensation Committee for purposes of executive compensation review, analysis and recommendations. The Compensation Committee has engaged and expects to continue to engage external consultants for the purpose of determining Chief Executive Officer and other senior executive compensation. See “—Role of Outside Consultants in Establishing Compensation” below. ROLE OF COMPANY EXECUTIVES IN ESTABLISHING COMPENSATION When determining the pay levels for the Chief Executive Officer and our other senior executives, the Compensation Committee solicits advice and counsel from internal and external Company resources. Internal resources have included the Chief Executive Officer, the Executive Vice President & Chief Human Resources Officer, and the Senior Vice President of Compensation & HR Analytics. The Executive Vice President & Chief Human Resources Officer is responsible for developing and implementing our business plans and strategies for all company-wide human resource functions, as well asday-to-day human resources operations. The Senior Vice President of Compensation & HR Analytics is responsible for the design, execution and daily administration of our compensation operations. Both of these human resources executives attend the Compensation Committee meetings, at the request of the Compensation Committee, and act as informational resources serving in an advisory capacity. In 2019, the Compensation Committee communicated directly with our Chief Executive Officer, our human resources executives and with compensation consultants in order to obtain external market data, industry data, internal pay information, 2020 PROXY STATEMENT 33 EXECUTIVECOMPENSATIONMATTERS individual and Company performance results, and updates on regulatory issues. The Compensation Committee also delegated specific tasks to our human resources executives to facilitate the decision-making process and to assist in finalizing meeting agendas, documentation and compensation data for Compensation Committee review and approval. Our Chief Executive Officer annually reviews the performance of our senior executives and, based on these reviews, makes compensation recommendations to the Compensation Committee for all senior executives other than himself. The Compensation Committee, however, makes the final decisions regarding material compensation to senior executives, including base pay, incentive pay and equity awards. ROLE OF OUTSIDE CONSULTANTS IN ESTABLISHING COMPENSATION Our Compensation Committee regularly engages outside consultants to provide advice related to our compensation policies. We have standing consulting relationships with several global consulting firms specializing in executive compensation, human capital management and board of directors pay practices. During 2019, the services performed by consultants that resulted in information provided to the Compensation Committee are set forth below: Willis Towers Watson served as the Compensation Committee’s advisor in 2019 and provided advice and market-practice information on a variety of topics, including executivepay-level benchmarking, incentive design considerations,non-employee director compensation, govern and transaction-related pay considerations. Mercer Investment Consulting was retained by the Executive Deferred Compensation Plan Investment Committee to advise this committee on investment management performance, monitoring, investment policy development and investment manager searches relating to our executive deferred compensation plans. The consultants provided the information described above to our human resources executives to help formulate information that was then provided to the Compensation Committee. The fees paid to Willis Towers Watson in 2019 for these services were $142,528. For the Company’s executive deferred compensation plans, the fees paid to Mercer Investment Consulting in 2019 were $163,116. The Compensation Committee has determined that the work of Willis Towers Watson and Mercer Investment Consulting did not raise any conflicts of interest in fiscal year 2019. In making this assessment, the Compensation Committee considered that neither Willis Towers Watson nor Mercer Investment Consulting provided any other services to the Company unrelated to executive compensation, except for certain work performed by Willis Towers Watson related to employee benefits that we do not believe raises any potential conflicts under the factors enumerated in Rule10C-1(b) under the Exchange Act. OUR COMPENSATION PROGRAMS OVERVIEW As described below, various Company policies are in place to shape our executive pay plans, including: Salaries are linked to competitive factors and internal equity and can be (but are not required to be) increased as a result of successful job performance. Our annual bonus programs are competitively based and provide incentive compensation based on our financial performance and customer service scores. Long-term incentives are tied to our financial performance and enhancing shareholder value. COMPENSATION PROGRAM DESIGN EMPHASIZES VARIABLE ANDAT-RISK COMPENSATION Our executive compensation program is structured to reward our executives for their contributions in achieving our mission of providing outstanding customer service and attaining strong financial results and to align the interests of our executives with those of our shareholders, as discussed in more detail below. Our executive compensation program is designed with our executive compensation objectives in mind and is composed of fixed and variable pay plans, cash andnon-cash plans, and short- and long-term payment structures in order to recognize and reward executives for their contributions today and in the future. In 34 CAESARS ENTERTAINMENT® EXECUTIVECOMPENSATIONMATTERS particular, the impact of individual performance on compensation is reflected in base pay merit increases, setting the Annual Management Bonus Plan (the “Bonus Plan”) payout percentages as compared to base pay, and the value of equity awards granted. The impact of our financial performance and customer satisfaction is reflected in the calculation of the annual bonus payment and the intrinsic value of equity awards. Supporting a performance-based culture and providing compensation that is directly linked to outstanding individual and overall financial results is at the core of our compensation philosophy and human capital management strategy. The table below reflects our short-term and long-term executive compensation programs during 2019: SHORT-TERM
Fixed and Variable Pay Fixed and Variable Pay Base salary Long-term cash incentive awards Senior Executive Incentive Plan
MARKET REVIEW AND COMPETITIVENESS We periodically assess and evaluate the internal and external competitiveness of all components of our executive compensation program. Internally, we look at critical and key positions that are directly linked to our profitability and viability. We review our compensation structure to determine whether the appropriate hierarchy of jobs is in place. Internal equity is based on both quantitative and qualitative job evaluation methods, including span of control, required skills and abilities, and long-term career growth opportunities, as well as relevant comparative financial andnon-financial job metrics. Externally, benchmarks are used to provide guidance and to improve our ability to attract, retain and recruit talented senior executives. Due to the highly competitive nature of the gaming and hospitality industry, as well as the competitiveness across industries for talented senior executives, it is important that our compensation programs provide us the ability to internally develop executive talent, as well as to recruit highly qualified senior executives. The overall design of the executive compensation program and the elements thereof are evolving following our restructuring, the required incentives relating thereto, and years of being a controlled company, and to some extent still reflect incentives granted during that time. Each year, the plans are reviewed for effectiveness, competitiveness and legislative compliance. The current plans have been implemented with the approval of the Compensation Committee and in support of the principles of the compensation philosophy and objectives of our pay practices and policies. Our human resources department conducts an annual review of compensation practices of competitors in the gaming and hospitality industry. The review covers a range of senior roles, including those of our named executive officers and members of our Board, and competitive practices relating to cash compensation. The findings of the peer group analysis are presented by the human resources department to the Compensation Committee, which takes the findings into account when reviewing the form and type of compensation for our executives (subject to certain situations where adjustments are necessary to reflect alignment with market levels). As a result of this review, the Compensation Committee believes that the current compensation program adequately compensates and provides incentives to our executives. The companies comprising our 2019 peer group were:
2020 PROXY STATEMENT 35 EXECUTIVECOMPENSATIONMATTERS ELEMENTS OF EXECUTIVE COMPENSATION AND BENEFITS FOR 2019 The Compensation Committee designed our 2019 compensation program so that a significant portion of our named executive officers’ compensation wasat-risk and linked directly to corporate financial performance. For example, each named executive officer’s annual performance-based cash bonus was primarily based on the achievement of Adjusted EBITDAR and free cash flow targets. In 2019, each named executive officer (excluding Mr. Rodio) was also issued PSUs that are subject to vesting based on attaining certain annual Adjusted EBITDAR targets and relative total stockholder return. Each compensation element is considered both individually and as a component within the total compensation package. In reviewing each element of our senior executives’ compensation, the Compensation Committee reviews peer data, internal and external benchmarks, our performance over the calendar year (as compared to our internal plan, as well as compared to members of our peer group), and each executive’s individual performance. Prior compensation and wealth accumulation are considered when making decisions regarding current and future compensation but are not used to cap any particular compensation element.
The named executive officers andnon-employee directors have five years to achieve the minimum stock ownership levels. The Compensation Committee monitors achievement towards the guidelines annually and evaluates, where necessary, consequences for not meeting the guidelines. As of December 31, 2019, Messrs. Hession, Jenkin, Benninger and Kornstein and Ms. Jones 42 CAESARS ENTERTAINMENT® EXECUTIVECOMPENSATIONMATTERS Blackhurst each met their share ownership requirements under our ownership guidelines. As they have been with the Company for less than five years, Messrs. Rodio, Holdren, Cozza, Dionne, Hunt, Mather and Nelson and Mses. Digilio, Chugg and Clark are each continuing to grow their equity positions in the Company. CHIEF EXECUTIVE OFFICER’S COMPENSATION The objectives of our Chief Executive Officer compensation are typically approved annually by the Compensation Committee. The Compensation Committee’s assessment of the Chief Executive Officer’s performance is generally based on a subjective or objective review (as applicable) of performance against certain objectives. Specific weights may be assigned to particular objectives at the discretion of the Compensation Committee, and those weightings, or more focused objectives, are communicated to the Chief Executive Officer at the time the goals are set. Anthony Rodio The Company entered into an employment agreement with Anthony Rodio, on April 15, 2019, pursuant to which Mr. Rodio began serving as the Chief Executive Officer of the Company and Caesars Enterprise Services, LLC, effective as of May 6, 2019 (the date on which he became contractually available to perform services under the employment agreement, the “Effective Date”). In conjunction with the Board’s approval of Mr. Rodio’s employment agreement, Mr. Rodio was appointed to the Board effective as of the Effective Date. Mr. Rodio’s employment agreement provides for the following: (i) an annual base salary of $1,500,000; (ii) a target annual cash incentive opportunity (the “Bonus”) under the Company’s annual incentive bonus programs applicable to Mr. Rodio’s position equal to 100% of his base salary, prorated from the Effective Date, and, in the sole discretion of the Compensation Committee, up to an additional 100% of his base salary if the initial threshold for the target Bonus is exceeded;(iii) a one-timesign-on bonus payment in the amount of $250,000; (iv) eligibility to receive LTI grants at the discretion of the Compensation Committee and (v) a cash payment of $3,000,000 in the event that Mr. Rodio’s employment is terminated by the Company without cause or by Mr. Rodio for good reason within twenty-four months following a “change of control” (as defined in the LTI Program) of the Company (provided that Mr. Rodio executes a separation agreement and release in a form customarily used by the Company for senior executives). The base salary, bonus opportunity and other benefits provided for under Mr. Rodio’s employment agreement were negotiated by the parties thereto. Subsequently, in February 2020, the Compensation Committee approved an annual target for equity grants equal to 350% of Mr. Rodio’s base salary. The employment agreement also provides that Mr. Rodio’s employment is terminable by him or the Company at any time, with or without cause, and for any reason or no particular reason. Mr. Rodio’s compensation objectives for 2020 were approved by the Compensation Committee in October 2019. Subject to restrictions and requirements specified in the employment agreement (including that Mr. Rodio executes a separation agreement and release in a form customarily used by the Company for senior executives), in the event of a termination of Mr. Rodio’s employment by the Company without “cause” or by Mr. Rodio for “good reason” (each such term as defined in Mr. Rodio’s employment agreement) at any time other than within twenty-four months following a change of control of the Company, Mr. Rodio will be entitled to: (i) any unpaid base salary and other accrued obligations of the Company earned through the date of termination; and(ii) a lump-sum severance payment in an amount equal to not less than one year salary at Mr. Rodio’s annual base salary rate, plusa pro-rata target Bonus for the then-current bonus year to the extent not already paid to Mr. Rodio. In addition, Mr. Rodio is subject to restrictions on competition and employee and client solicitation during his employment with the Company and for up to an additional twelve months thereafter. The employment agreement also contains standard confidentiality, invention assignmentand non-disparagement covenants. For additional details on Mr. Rodio’s employment agreement, see “—Discussion of the Summary Compensation Table.” Mark Frissora Mr. Frissora’s base salary was determined based on his performance, his responsibilities, and the compensation levels for comparable positions in other companies in the hospitality, gaming, entertainment, restaurant and retail industries. Merit increases in his salary were a subjective determination made by the Compensation Committee, which based its decision upon his 2020 PROXY STATEMENT 43 EXECUTIVECOMPENSATIONMATTERS prior year’s performance versus his objectives, as well as upon an analysis of competitive salaries. Although base salary increases were subjective, the Compensation Committee reviewed Mr. Frissora’s base salary against peer groups, his roles and responsibilities within the Company, his contribution to our success, and his individual performance against his stated objective criteria. Mr. Frissora’s salary, bonus and equity awards differed from those of our other named executive officers in order to (a) keep Mr. Frissora’s compensation in line with chief executive officers of other hospitality, gaming, entertainment, restaurant and retail companies, (b) compensate him for the role as the leader and public face of our Company and (c) compensate him for attracting and retaining our senior executive team. Separation Arrangements with Messrs. Frissora, Donovan and Ottolenghi Each of Messrs. Frissora, Donovan and Ottolenghi departed from the Company, effective April 30, 2019, June 6, 2019 and November 15, 2019, respectively. Please refer to “—Discussion of the Summary Compensation Table” and “—Potential Payments upon Termination or Change in Control” for additional details regarding each such executive’s separation payments and benefits. PERSONAL BENEFITS AND PERQUISITES We provided the Company aircraft for Mr. Frissora’s personal use at certain times during 2019. Our other named executive officers may use Company aircraft for personal purposes at their own personal expense. These perquisites are more fully described in the “Summary Compensation Table.” Our use of perquisites as an element of compensation is limited. We do not view perquisites as a significant element of our comprehensive compensation structure, but we do believe that they can be used in conjunction with base salary to attract, motivate and retain individuals in a competitive environment. Under our group life insurance program, senior executives, including the named executive officers, are eligible for an employer-provided life insurance benefit equal to three times their base salary, with a maximum benefit of $3,500,000. In addition, group long-term disability benefits are available to all benefits-eligible employees. Under our group short-term disability insurance program, senior executives, including the named executive officers, are eligible for an employer-provided Company-paid short-term disability policy with a maximum $5,000 weekly benefit. OTHER BENEFITS During 2019, all of our named executive officers were eligible to participate in our health and welfare benefit plans, as well as the Caesars Savings and Retirement Plan (the “401(k) Plan”). DEFERRED COMPENSATION PLANS As of December 31, 2019, certain named executive officers had balances in two of the six deferred compensation plans that we maintain for our employees. The six deferred compensation plans are (1) the Harrah’s Entertainment, Inc. Executive Supplemental Savings Plan (“ESSP”), (2) the Harrah’s Entertainment, Inc. Executive Supplemental Savings Plan II (“ESSP II”), (3) the Caesars Entertainment Corporation Executive Supplemental Savings Plan III (“ESSP III”), (4) the Park Place Entertainment Corporation Executive Deferred Compensation Plan, (5) the Harrah’s Entertainment, Inc. Deferred Compensation Plan (“DCP”), and (6) the Harrah’s Entertainment, Inc. Executive Deferred Compensation Plan (“EDCP”). In December 2018, we adopted the ESSP III, effective January 1, 2019. These plans allow certain employees an opportunity to save for retirement and other purposes. Mr. Jenkin has a balance in the EDCP, and Mr. Hession has a balance in the ESSP II. Except for the ESSP III, all of these plans have been frozen and no longer provide for voluntary deferrals by active employees. The other named executive officers do not have a balance in any of the deferred compensation plans. For additional information, see “—2019 Nonqualified Deferred Compensation.” 44 CAESARS ENTERTAINMENT® EXECUTIVECOMPENSATIONMATTERS
To the Board of Directors of Caesars Entertainment Corporation: The role of the Compensation Committee is to assist the Board of Directors in its oversight of the Company’s executive compensation, including approval and evaluation of director and officer compensation plans, programs and policies and administration of the Company’s bonus and other incentive compensation plans. We have reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on this review and discussion, we recommend to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s 2019 annual report on Form10-K for the 2020 annual meeting of stockholders.
The above Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein. 2020 PROXY STATEMENT 45 EXECUTIVECOMPENSATIONMATTERS The Summary Compensation Table below sets forth certain compensation information for our current Chief Executive Officer, former Chief Executive Officer, our Chief Financial Officer, an additional three of our most highly compensated executive officers during 2019, which includes Messrs. Jenkin and Holdren and Ms. Digilio, and an additional two of our most highly compensated executive officers during 2019 who were not employed by the Company at the end of the year, which includes Messrs. Donovan and Ottolenghi (collectively, our “named executive officers”).
46 CAESARS ENTERTAINMENT® EXECUTIVECOMPENSATIONMATTERS
The table below details the amount of (i) the 401(k) employer match, (ii) the value of life and disability insurance premiums paid by the Company for coverage in excess of the nondiscriminatory group insurance generally available to all salaried employees and (iii) any other perquisites to the extent that the amount of any individual item exceeds the greater of $25,000 or 10% of the executive’s total perquisites:
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2018 | |||||||||
NAME | 401(K) EMPLOYER MATCH ($) | COST OF LIFE AND DISABILITY INSURANCE ($) | ALLOCATED AMOUNT FOR AIRCRAFT USAGE ($) | LEGAL FEE REIMBURSEMENTS ($) | |||||
Mark Frissora | 4,625 | — | 200,000 | 102,808 | |||||
Eric Hession | 4,625 | — | — | — | |||||
Thomas Jenkin | 2,775 | — | — | — | |||||
Robert Morse | 4,625 | — | — | — | |||||
Timothy Donovan | 3,469 | — | — | — | |||||
Les Ottolenghi | 4,625 | — | — | — |
(a) | Mr. Frissora was allocated up to $200,000 per fiscal year for personal use of Company aircraft, which is calculated based on the incremental cost to us of fuel, trip-related maintenance, crew travel expenses,on-board catering, landing fees, trip-related hangar/parking costs and other miscellaneous variable costs. Since our aircraft is | |
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EXECUTIVE COMPENSATION MATTERS
DISCUSSION OF THE SUMMARY COMPENSATION TABLE
We have entered into employment agreements with each of our named executive officers. We believe employment agreements are critical to enhancing and solidifying our relationships with these key executives. The agreements provide the executives with certainty as to compensation and benefits, including in the event of a termination of employment, and allow our executives to focus on growing the value of the Company. The agreements are also designed to protect the interests of the Company and its shareholders, including through the use of restrictive covenants. Some of the named executive officers may also hold LTI award agreements that requireaccess Company aircraft for personal purposes at their own personal expense.
(b) | Consists of payments
Summary Compensation Table
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(c) | Consists of payments provided to |
(d) | Consists of payments provided to Mr. Ottolenghi in connection with his separation, including (i) $930,188 in cash severance payments, (ii) $200,012 related to those PSU tranches for which the |
(5) |
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(6) | The value of the 2019
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(7) | The value of the 2019 Adjusted EBITDAR PSUs awarded to Mr. Jenkin |
2020 PROXY STATEMENT 47
EXECUTIVECOMPENSATIONMATTERS
$8.71. This maximum is inclusive of all three PSU tranches. The value of rTSR PSUs awarded to Mr. |
(8) | The value of the 2019 Adjusted EBITDAR PSUs awarded to Mr. Holdren on the date of grant assuming the highest level of performance conditions will be achieved is $605,398, which is based on the maximum vesting of 69,506 PSUs multiplied by the closing price of our common stock on March 28, 2019 of $8.71. This maximum is inclusive of all three PSU tranches. The value of rTSR PSUs awarded to Mr. Holdren on the date of grant assuming the highest level of performance conditions will be achieved is $605,406, which is based on the maximum vesting of 47,934 rTSR PSUs multiplied by the Monte Carlo fair value of $12.63 determined on the date of the grant, as described more fully in footnote (2) above. |
(9) | The value of the 2019 Adjusted EBITDAR PSUs awarded to Ms. Digilio on the date of grant assuming the highest level of performance conditions will be achieved is $450,010, which is based on the maximum vesting of 51,666 PSUs multiplied by the closing price of our common stock on March 28, 2019 of $8.71. This maximum is inclusive of all three PSU tranches. The value of rTSR PSUs awarded to Ms. Digilio on the date of grant assuming the highest level of performance conditions will be achieved is $450,006, which is based on the maximum vesting of 35,630 rTSR PSUs multiplied by the Monte Carlo fair value of $12.63 determined on the date of the grant, as described more fully in footnote (2) above. |
(10) | The value of the 2019 Adjusted EBITDAR PSUs awarded to Mr. Donovan |
(11) | The value of the 2019 Adjusted EBITDAR PSUs awarded to Mr. Ottolenghi |
(12) | Amount reflects the incremental cost associated with the modification of Mr. Frissora’s stock options in connection with his separation agreement. |
DISCUSSION OF THE SUMMARY COMPENSATION TABLE
We have entered into employment agreements with each of our named executive officers. We believe employment agreements are critical to enhancing and solidifying our relationships with our key executives. The agreements provide the executives with certainty as to compensation and benefits, including in the event of a termination of employment, and allow our executives to focus on growing the value of the Company. The agreements are also designed to protect the interests of the Company and its stockholders, including through the use of restrictive covenants. Some of the named executive officers are entitled to certain payments in the event of certain terminations of employment or in connection with a change in control, as further described under “—Potential Payments upon Termination or Change in Control.”
CHIEF EXECUTIVE OFFICER
Anthony Rodio
The Company entered into an employment agreement with Anthony Rodio on April 15, 2019, pursuant to which Mr. Rodio began serving as the Chief Executive Officer of the Company and Caesars Enterprise Services, LLC, effective as of May 6, 2019 (the date on which he became contractually available to perform services under the employment agreement, the “Effective Date”).
Mr. Rodio’s employment agreement provides for the following: (i) an annual base salary of $1,500,000; (ii) a target annual cash incentive opportunity (the “Bonus”) under the Company’s annual incentive bonus program(s) applicable to Mr. Rodio’s position of 100% of the base salary prorated from the Effective Date and, in the sole discretion of the Compensation Committee, up to an additional 100% of the base salary if the initial threshold for the target Bonus is exceeded;(iii) a one-time sign-on bonus payment in the amount of $250,000; (iv) eligibility to receive LTI grants at the discretion of the Compensation Committee; and (v) participation in the health and welfare benefit plans and programs maintained by us for the benefit of our employees. Subsequently in February 2020, the Compensation Committee approved an annual target for equity grants equal to 350% of Mr. Rodio’s base salary. The employment agreement also provides that Mr. Rodio’s employment is terminable by him or the Company at any time, with or without cause, and for any reason or no particular reason.
Subject to restrictions and requirements specified in the employment agreement (including that Mr. Rodio executes a separation agreement and release in a form customarily used by the Company for senior executives), in the event of a termination of Mr. Rodio’s employment by the Company without “Cause” or by Mr. Rodio for “Good Reason” (each, as defined in his
48 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
employment agreement) at any time other than within twenty-four months following a change of control of the Company, Mr. Rodio will be entitled to: (i) any unpaid base salary and other accrued obligations of the Company earned through the date of termination and(ii) a lump-sum severance payment in an amount equal to not less than one year salary at Mr. Rodio’s annual base salary rate plusa pro-rata target Bonus for the then-current bonus year to the extent not already paid to Mr. Rodio. In the event that Mr. Rodio’s employment is terminated by the Company without cause or by Mr. Rodio for good reason within twenty-four months following a change of control of the Company (provided that Mr. Rodio executes a separation agreement and release in a form customarily used by the Company for senior executives), Mr. Rodio will be entitled to a cash payment of $3,000,000.
In addition, Mr. Rodio is subject to restrictions on competition and employee and client solicitation during his employment with the Company and for up to an additional twelve months thereafter. The employment agreement also contains standard confidentiality, invention assignmentand non-disparagement covenants.
Mark Frissora
The Company and Caesars Enterprise Services, LLC (“CES”) entered into an employment agreement with Mark Frissora on February 5, 2015, which was amended on August 4, 2015, July 5, 2016 and March 8, 2017. Pursuant to the terms of the employment agreement, Mr. Frissora was appointed to the role of Chief Executive Officer and President of the Company and CES effective as of July 1, 2015. As described below, Mr. Frissora’s employment terminated on April 30, 2019.
The employment agreement provided that Mr. Frissora was entitled to a base salary, participation in the Company’s annual incentive bonus program(s) applicable to Mr. Frissora’s position (increased in 2018 to a target level of 200% to align his compensation with peer group companies), and certain perquisites, including (i) the use of our aircraft (up to a maximum value of $200,000 per fiscal year) and (ii) certain relocation benefits (including up to six months of temporary housing, reimbursements of costs incurred in connection with locating a suitable residence in Las Vegas for purchase, andgross-up for any taxes that may apply to such relocation benefits).
The agreement provided that if Mr. Frissora’s employment was terminated by the Company without “Cause,” by Mr. Frissora for “Good Reason” (as such terms are defined in the employment agreement), or due to the Company’snon-renewal of its term upon any expiration date, and subject to his execution andnon-revocation of a general release of claims, Mr. Frissora was entitled to receive:
Accrued and unpaid base salary;
Unreimbursed business expenses;
Amounts or benefits due under benefit and equity plans in accordance with the terms thereof;
• | Cash severance equal to two times his base salary plus one times his target bonus paid in installments over 24 months;provided,
|
A bonus for the year of termination of employment, based on actual full-year performance, prorated to reflect service through the date of termination, paid when bonuses are payable generally to active employees;
Company-paid COBRA continuation and a subsidy, at the same levels in effect as of the date of termination, for continued disability and life insurance coverage, paid in installments over 24 months; and
One year of additional vesting in respect of (i) Mr. Frissora’s CAC RSUs (which were converted into Company RSUs in connection with the Merger with CAC), (ii) his award of RSUs granted on March 23, 2016, and (iii) any other equity awards granted by the Company or CAC to Mr. Frissora after July 5, 2016.
In addition, Mr. Frissora’s employment agreement, as amended, provided that if his employment is terminated without cause, due to his death or “disability” (as defined in Mr. Frissora’s employment agreement) or by him for good reason, in each case prior to the second anniversary of the date Caesars Entertainment Operating Company, Inc. and certain of its subsidiaries emerged from bankruptcy pursuant to a plan of reorganization, (i) all of his outstanding awards under the 2012 PIP and any other Company long-term incentive program would immediately vest, (ii) any of his outstanding stock options would remain exercisable until at least the second anniversary of such termination, but not beyond the original term of the option, and (iii) any
2020 PROXY STATEMENT 49
For Mr. Donovan only, in the event of a Qualifying Termination (as defined in Mr. Donovan’s Executive Employment Agreement and described below), in addition to the benefits described above,
EXECUTIVECOMPENSATIONMATTERS
performance-based long-term incentive awards that vest, would vest based upon actual performance through the end of the applicable performance period.
The agreement also provided that Mr. Frissora was prohibited during the24-month period following the termination of his employment from: (i) competing with us or our affiliates and (ii) soliciting or hiring certain employees of the Company and our affiliates. The employment agreement also contains standard confidentiality, invention assignmentand non-disparagement covenants.
On November 1, 2018, Mr. Frissora and the Company entered into a Separation Agreement, which was amended on December 21, 2018 (as amended, the “Frissora Separation Agreement”). The Frissora Separation Agreement, together with Mr. Frissora’s employment agreement, as amended, govern the terms of his departure from the Company. Under the terms of the Frissora Separation Agreement, in connection with such departure, Mr. Frissora resigned from the Company’s Board of Directors and ceased to be an officer of the Company and its subsidiaries effective as of April 30, 2019 (the “Termination Date”). Such termination was treated as a termination of Mr. Frissora’s employment without “Cause” under his employment agreement for all purposes.
Pursuant to the Frissora Separation Agreement, Mr. Frissora continues to be bound by (and he acknowledged and agreed to comply with) the covenantsof non-solicitation, non-competition, non-disparagement, invention assignment, confidentiality and cooperation set forth in his employment agreement. Mr. Frissora further agreed to a consulting arrangement with the Company for asix-month period following the Termination Date, which would have provided for monthly payments of $83,333 and was terminable by either party upon 30 days’ notice. The consulting period was terminated on March 29, 2019, prior to it taking effect.
Mr. Frissora received the following promptly after the Termination Date (except as otherwise indicated): (i) accrued and unpaid salary for periods worked; (ii) reimbursement for unreimbursed expenses; and (iii) all benefits accrued and vested as of the Termination Date. In addition, subject to Mr. Frissora signing a release and waiver of claims, the Company provided Mr. Frissora the following separation payments and benefits: (v) cash severance of $8,000,000, payable over twenty-four months; (w) a prorated bonus for 2019 (payable in 2020), based on actual full year performance; (x) Company-paid COBRA continuation and a subsidy, at the same levels in effect as of the date of termination, for continued disability and life insurance coverage; (y) vesting of all unvested equity and cash awards under the Company’s LTI plans (with vesting of performance-based restricted stock units and options remaining subject to achievement of applicable targets and options generally exercisable for two years after vesting); and (z) up to $75,000 reimbursement for legal fees. In addition, Mr. Frissora was entitled to receive reimbursement of legal fees in connection with the amendment to the Separation Agreement. Generally, the foregoing severance amounts and benefits are consistent with those to which Mr. Frissora was entitled under his employment agreement.
Under the Frissora Separation Agreement, Mr. Frissora received an equity grant for the 2019 compensation year with a target value of $7,000,000, which vested on the Termination Date and was prorated and settled as follows: (i) any tranches of the award that are payable based on performance will remain outstanding until the applicable performance is determined and any amount payable to Mr. Frissora will be prorated based on the number of days in 2019 that elapsed through the Termination Date; and (ii) any portion of the award that is payable based on service will be prorated based on the number of days in 2019 that elapsed through the Termination Date.
OTHER NAMED EXECUTIVE OFFICERS
We entered into employment agreements, which have been amended from time to time, with Mr. Hession (on November 10, 2014, which was amended on March 8, 2017 and April 29, 2019), Mr. Jenkin (on January 3, 2012, which was amended on March 8, 2017), Mr. Holdren (on November 1, 2017, which was amended on December 22, 2018), Ms. Digilio (on September 24, 2018, which was amended on December 12, 2018), Mr. Donovan (on April 2, 2009, which was amended on March 8, 2017, October 6, 2017 and January 29, 2018), and Mr. Ottolenghi (on January 18, 2016, which was amended on January 18, 2016) (collectively, the“Non-CEO Employment Agreements”). The employment agreements for Mr. Donovan and Mr. Ottolenghi terminated on June 6, 2019 and November 15, 2019, respectively, in each case, in connection with their resignation from the Company.
50 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
TheNon-CEO Employment Agreements provide (or, for Messrs. Donovan and Ottolenghi, provided) for:
payment of an annual base salary (which may be adjusted from time to time);
participation in the Company’s annual incentive bonus program(s) applicable to the executive’s position;
for Ms. Digilio, aone-time bonus payment of $250,000 for 2018;
for Messrs. Donovan and Jenkin, an award of stock options under the applicable equity incentive plan and, for Messrs. Ottolenghi and Holdren and Ms. Digilio, participation in the Company’s LTI program at 150% of their base salary;
for Mr. Holdren and Ms. Digilio,one-timesign-on awards, payable in cash or equity (respectively), equal to $50,000 and $442,500 (respectively) based on certain conditions;
for Mr. Donovan, reimbursement of up to $80,000 for legal fees; and
provisions relating to severance payments and benefits upon certain terminations of employment, as described further below.
In addition, Mr. Jenkin’s employment agreement provides that, subject to Mr. Jenkin’s continued compliance with the noncompetition covenant, Mr. Jenkin (and his eligible dependents, if any) will be entitled to lifetime coverage under our group health insurance plan if (i) (A) Mr. Jenkin reaches the age of 50 and has attained 15 years of continuous service with the Company and (B) his employment is terminated without Cause, by him for Good Reason, due to Disability, or upon our delivery of anon-renewal notice; or (ii) (A) Mr. Jenkin reaches the age of 55 and has attained 10 years of continuous service with the Company and (B) his employment is terminated other than for Cause. Mr. Jenkin has attained the foregoing age and continuous service requirements and, therefore, following his termination of employment for any of the foregoing reasons, he will be required to pay 20% of the premium for this coverage, and we will pay the remaining premium, which will be imputed as taxable income to Mr. Jenkin. This insurance coverage terminates if Mr. Jenkin breaches hisnon-compete with us.
TheNon-CEO Employment Agreements each include the following restrictive covenants: (i) noncompetition restrictions effective during employment and for 18 months thereafter (or, for Mr. Jenkin, for 30 days or up to 18 months thereafter, depending on the type of and circumstances relating to the termination); (ii) employee, client and customernon-solicitation restrictions effective during employment and for 18 months thereafter; and (iii) standard confidentiality, invention assignment andnon-disparagement covenants (and, for Ms. Digilio, a mutualnon-disparagement covenant). A breach of thenon-compete covenant will cause our obligations under theNon-CEO Employment Agreements to terminate.
Pursuant to Mr. Donovan’s employment agreement (as amended), upon Mr. Donovan’s “Qualifying Termination” (as defined in Mr. Donovan’s employment agreement and described below), in addition to the severance payments and benefits described above, and subject to his execution andnon-revocation of a general release of claims and continued compliance with the noncompete restrictions set forth in his employment agreement, Mr. Donovan was entitled to: (i) immediate vesting of all of his outstanding awards under our LTI plans granted on or before December 31, 2017, (ii) reimbursement of up to $200,000 (with interest) for a loss on the sale of his Las Vegas residence (as determined in accordance with his employment agreement), (iii) a pro rata bonus for the calendar year in which the termination occurs based on the same criteria and target bonus percentage applicable to similarly situated officers of CES, and (iv) certain other benefits. Mr. Donovan’s employment agreement was amended on January 29, 2018 to provide for, among other things, payment of a supplemental bonus of $320,963 with respect to the executive’s 2017 annual bonus. A “Qualifying Termination,” was defined to include Mr. Donovan’s (i) resignation (or giving written notice thereof) of his employment with CES for Good Reason, (ii) resignation (or giving written notice thereof), for any or no reason, of his employment with CES on or after January 1, 2020 on no less than 90 days’ notice, (iii) resignation (or giving written notice thereof) of his employment with CES on account of his retirement, or (iv) termination without Cause (or giving written notice thereof) by CES or any affiliate thereof. Upon a Qualifying Termination, the employment agreement also provided that Mr. Donovan will enter into aone-year consulting agreement, commencing on the date of termination, with CES under which he would have received an annualized fee of $500,000. In addition, any such Qualifying Termination would have been treated as Mr. Donovan’s resignation for Good Reason under his employment agreement and equity award agreements for all purposes.
During 2019, each of Messrs. Hession, Jenkin, Holdren, Donovan and Ottolenghi and Ms. Digilio were entitled to participate in benefits and perquisites, group health insurance, long-term disability benefits, life insurance, vacation, reimbursement of expenses, director and officer insurance, and the ability to participate in our 401(k) Plan.
2020 PROXY STATEMENT 51
EXECUTIVECOMPENSATIONMATTERS
On June 6, 2019, Mr. Donovan resigned from his positions as our Executive Vice-President, General Counsel and Chief Legal, Risk & Security Officer and received severance payments and benefits pursuant to his employment agreement and the Qualifying Termination provisions thereof, as described above. All of Mr. Donovan’s service-vesting RSUs accelerated and his PSUs and performance-based options remained outstanding and subject to the achievement of applicable targets. Please refer to “-Potential Payments upon Termination or Change in Control” for additional details regarding Mr. Donovan’s separation payments and benefits.
Additionally, on November 1, 2019, we informed Mr. Ottolenghi that his application to participate in Caesars’ Voluntary Severance Program (“VSP”), which was initiated in an effort towards greater operational efficiency, would be accepted. The program was offered toUS-based corporate employees in management roles of a certain grade and above, excluding certain revenue focused departments. Mr. Ottolenghi resigned from his position as Executive Vice President and Chief Information Officer, and from all other positions he held with the Company or its subsidiaries, effective November 15, 2019 (the “Separation Date”). In connection with his resignation, Mr. Ottolenghi entered into a separation and general release agreement which provided for the following payments and benefits in accordance with the terms of the VSP, subject to Mr. Ottolenghi’s execution andnon-revocation of a general release of claims: (i) eighteen (18)-months’ base salary in the amount of $930,187.50; (ii) the continuation of the company’s portion of healthcare coverage until the eighteen (18)-month anniversary of the Separation Date; (iii) accelerated vesting of outstanding and unvested CEC restricted stock units as of the Separation Date that vest based solely on time; (iv) accelerated vesting at target level of outstanding and unvested CEC restricted stock units granted in 2019 that are subject to performance conditions; (iv) a pro rata bonus for fiscal year 2019 based on services through the Separation Date and actual performance; (v) accelerated vesting of his 2018 cash retention award in the amount of $900,000; and (vi) Company-paid outplacement services. Mr. Ottolenghi’s restricted stock units granted during 2018 that vest in respect of performance conditions shall remain outstanding and will be paid out in accordance with the terms of the applicable award agreement and incentive plan. The Separation Agreement also requires Mr. Ottolenghi’s continued compliance with restrictive covenants, including the confidentiality,non-disparagement,non-competition andnon-solicitation provisions included in Mr. Ottolenghi’s employment agreement. Please refer to “-Potential Payments upon Termination or Change in Control” for additional details regarding Mr. Ottolenghi’s separation payments and benefits.
52 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
2019 GRANTS OF PLAN-BASED AWARDS
The following table gives information regarding potential incentive compensation for 2019 to our named executive officers in the “Summary Compensation Table.”Non-Equity Incentive Plan payouts approved for 2019 are included in the“Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table.”
ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS | ALL OTHER STOCK AWARDS: SHARES OF STOCK OR UNITS (#) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(2) ($) | |||||||||||||||||||||||||||||||||
NAME | GRANT DATE | THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | |||||||||||||||||||||||||||||
Anthony Rodio |
| NA |
|
| 276,164 |
|
| 1,972,602 |
|
| 3,945,204 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
Mark Frissora(7) |
| NA |
|
| 200,308 |
|
| 1,430,769 |
|
| 2,861,539 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 401,837 |
|
| 3,500,000 |
| ||||||||||
| 4/2/2019(4) |
|
| — |
|
| — |
|
| — |
|
| 27,007 |
|
| 108,025 |
|
| 216,050 |
|
| — |
|
| 953,861 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 16,744 |
|
| 66,973 |
|
| 133,946 |
|
| — |
|
| 583,335 |
| ||||||||||
|
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 34,640 |
|
| 138,559 |
|
| 277,118 |
|
| — |
|
| 1,750,000 |
| |||||||||
Eric Hession |
| NA |
|
| 113,763 |
|
| 812,596 |
|
| 1,625,192 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 93,571 |
|
| 815,003 |
| ||||||||||
| 4/2/2019(4) |
|
| — |
|
| — |
|
| — |
|
| 5,402 |
|
| 21,605 |
|
| 43,210 |
|
| — |
|
| 190,772 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 3,899 |
|
| 15,595 |
|
| 31,190 |
|
| — |
|
| 135,832 |
| ||||||||||
|
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 8,067 |
|
| 32,265 |
|
| 64,530 |
|
| — |
|
| 407,507 |
| |||||||||
Thomas Jenkin |
| NA |
|
| 135,588 |
|
| 968,488 |
|
| 1,936,975 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 111,275 |
|
| 969,205 |
| ||||||||||
| 4/2/2019(4) |
|
| — |
|
| — |
|
| — |
|
| 7,331 |
|
| 29,321 |
|
| 58,642 |
|
| — |
|
| 258,904 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 4,637 |
|
| 18,546 |
|
| 37,092 |
|
| — |
|
| 161,536 |
| ||||||||||
|
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 9,593 |
|
| 38,370 |
|
| 76,740 |
|
| — |
|
| 484,613 |
| |||||||||
Timothy Donovan |
| NA |
|
| 41,192 |
|
| 294,231 |
|
| 588,461 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 74,627 |
|
| 650,001 |
| ||||||||||
| 4/2/2019(4) |
|
| — |
|
| — |
|
| — |
|
| 5,016 |
|
| 20,062 |
|
| 40,124 |
|
| — |
|
| 177,147 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 3,110 |
|
| 12,438 |
|
| 24,876 |
|
| — |
|
| 108,335 |
| ||||||||||
|
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 6,434 |
|
| 25,733 |
|
| 51,466 |
|
| — |
|
| 325,008 |
| |||||||||
Les Ottolenghi |
| NA |
|
| 58,924 |
|
| 420,885 |
|
| 841,769 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 62,298 |
|
| 542,616 |
| ||||||||||
| 4/2/2019(4) |
|
| — |
|
| — |
|
| — |
|
| 3,858 |
|
| 15,432 |
|
| 30,864 |
|
| — |
|
| 136,265 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 2,596 |
|
| 10,383 |
|
| 20,766 |
|
| — |
|
| 90,436 |
| ||||||||||
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 5,371 |
|
| 21,481 |
|
| 42,962 |
|
| — |
|
| 271,305 |
| ||||||||||
|
| 11/15/2019(8) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 181,787 |
|
| 345,615 |
| |||||||||
Christopher Holdren |
| NA |
|
| 72,593 |
|
| 518,524 |
|
| 1,037,048 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 69,506 |
|
| 605,397 |
| ||||||||||
| 4/2/2019(4) |
|
| — |
|
| — |
|
| — |
|
| 3,907 |
|
| 15,625 |
|
| 31,250 |
|
| — |
|
| 137,969 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 2,896 |
|
| 11,584 |
|
| 23,168 |
|
| — |
|
| 100,897 |
| ||||||||||
|
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 5,992 |
|
| 23,967 |
|
| 47,934 |
|
| — |
|
| 302,703 |
| |||||||||
Monica Digilio |
| NA |
|
| 61,950 |
|
| 442,500 |
|
| 885,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||
| 3/28/2019(3) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 51,665 |
|
| 450,002 |
| ||||||||||
| 3/28/2019(5) |
|
| — |
|
| — |
|
| — |
|
| 2,153 |
|
| 8,611 |
|
| 17,222 |
|
| — |
|
| 75,002 |
| ||||||||||
|
| 3/28/2019(6) |
|
| — |
|
| — |
|
| — |
|
| 4,454 |
|
| 17,815 |
|
| 35,630 |
|
| — |
|
| 225,003 |
|
2020 PROXY STATEMENT 53
EXECUTIVECOMPENSATIONMATTERS
(1) | Represents potential threshold, target and maximum incentive compensation for 2019 under our |
(2) | The figures in this column reflect the grant date fair value of stock awards granted
|
(4) | Reflects the second tranche of the 2018 EBITDAR PSUs granted under the 2017 PIP for
|
(5) | Reflects the first tranche of the 2019 EBITDAR PSUs granted under the 2017 PIP as described under “—Compensation Discussion and Analysis—Elements of Executive Compensation and Benefits for 2019—Equity Awards—Annual Awards Update” that vested on March 28, 2020 based on the performance period of January 1, 2019 to December 31, 2019. The fair value shown in the table above is based on the closing price of our Common Stock on March 28, 2019. |
(6) | Reflects rTSR PSUs granted under the 2017 PIP in 2019 as described under “—Compensation Discussion and |
(7) | Pursuant to the Frissora Separation Agreement, Mr. Frissora’s 2019 equity awards were prorated based on the number of days in 2019 that Mr. Frissora was employed by the Company. |
(8) | Reflects Mr. Ottolenghi’s RSU awards that were modified in connection with his separation agreement and the related incremental cost. |
54 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
2019 FISCALYEAR-END
The following table shows the outstanding options to purchase our common stock and RSUs and PSUs held by each of our named executive officers as of December 31, 2019. See “—Compensation Discussion and Analysis—Elements of Executive Compensation and Benefits for 2019—Equity Awards and Cash Retention” for more information. As of December 31, 2019, Mr. Rodio did not hold any outstanding Company equity awards.
OPTIONAWARDS | STOCKAWARDS | |||||||||||||||||||||||||||||||
NAME | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE (#) | EQUITY INCENTIVE PLAN AWARDS: NUMBEROF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#) | OPTION EXPIRATION DATE | OPTION EXERCISE PRICE ($) | NUMBER OF SHARES ORUNITS OFSTOCK THAT HAVE NOT VESTED (#) | MARKET VALUE OF SHARES ORUNITS OF STOCK THAT HAVE NOT VESTED ($)(1) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVENOT VESTED (#) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITSOR OTHER RIGHTS THAT HAVE NOT VESTED ($)(1) | ||||||||||||||||||||||||
Mark Frissora | — | 200,000 | (2) | 2/5/2025 | 9.45 | — | — | — | — | |||||||||||||||||||||||
— | — | — | — | 102,624 | (3) | 1,395,686 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 5,401 | (4) | 73,454 | ||||||||||||||||||||||||
— | — | — | — | — | — | 108,025 | (5) | 1,469,140 | ||||||||||||||||||||||||
— | — | — | — | — | — | 5,401 | (6) | 73,454 | ||||||||||||||||||||||||
— | — | — | — | — | — | 45,554 | (7) | 619,534 | ||||||||||||||||||||||||
— | — | — | — | 20,919 | (8) | 284,498 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 1,100 | (9) | 14,960 | ||||||||||||||||||||||||
— | — | — | — | — | — | 44,038 | (10) | 598,917 | ||||||||||||||||||||||||
Eric Hession | 15,107 | 3,486 | (11) | 7/25/2022 | 8.23 | — | — | — | — | |||||||||||||||||||||||
22,116 | 1,705 | (11) | 8/21/2022 | 8.22 | — | — | — | — | ||||||||||||||||||||||||
3,125 | — | 6/28/2023 | 9.45 | — | — | — | — | |||||||||||||||||||||||||
20,000 | — | 5/7/2024 | 9.45 | — | — | — | — | |||||||||||||||||||||||||
26,250 | — | 5/29/2025 | 9.36 | — | — | — | — | |||||||||||||||||||||||||
— | — | — | — | 130,065 | (12) | 1,768,884 | — | — | ||||||||||||||||||||||||
— | — | — | — | 43,211 | (13) | 587,670 | — | — | ||||||||||||||||||||||||
— | — | — | — | 20,525 | (3) | 279,140 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 1,080 | (4) | 14,688 | ||||||||||||||||||||||||
— | — | — | — | — | — | 21,605 | (5) | 293,828 | ||||||||||||||||||||||||
— | — | — | — | — | — | 1,080 | (6) | 14,688 | ||||||||||||||||||||||||
— | — | — | — | 93,571 | (14) | 1,272,566 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 32,265 | (7) | 438,804 | ||||||||||||||||||||||||
— | — | — | — | 14,816 | (8) | 201,498 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 779 | (9) | 10,594 | ||||||||||||||||||||||||
— | — | — | — | — | — | 31,191 | (10) | 424,198 |
2020 PROXY STATEMENT 55
EXECUTIVECOMPENSATIONMATTERS
OPTIONAWARDS | STOCKAWARDS | |||||||||||||||||||||||||||||||
NAME | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE (#) | EQUITY INCENTIVE PLAN AWARDS: NUMBEROF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#) | OPTION EXPIRATION DATE | OPTION EXERCISE PRICE ($) | NUMBER OF SHARES ORUNITS OFSTOCK THAT HAVE NOT VESTED (#) | MARKET VALUE OF SHARES ORUNITS OF STOCK THAT HAVE NOT VESTED ($)(1) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVENOT VESTED (#) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITSOR OTHER RIGHTS THAT HAVE NOT VESTED ($)(1) | ||||||||||||||||||||||||
Thomas Jenkin | 363,541 | 35,947 | (11) | 8/21/2022 | 8.22 | — | — | — | — | |||||||||||||||||||||||
37,500 | — | 6/28/2023 | 9.45 | — | — | — | — | |||||||||||||||||||||||||
88,000 | — | 5/7/2024 | 9.45 |
|
|
| — | — | — | |||||||||||||||||||||||
50,040 | — | 5/29/2025 | 9.36 |
|
|
| — | — | — | |||||||||||||||||||||||
— | — | — | — | 198,194 | (12) | 2,695,438 | — | — | ||||||||||||||||||||||||
— | — | — | — | 58,643 | (13) | 797,545 | — | — | ||||||||||||||||||||||||
— | — | — | — | 27,855 | (3) | 378,828 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 1,466 | (4) | 19,938 | ||||||||||||||||||||||||
— | — | — | — | — | — | 29,321 | (5) | 398,766 | ||||||||||||||||||||||||
— | — | — | — | — | — | 1,466 | (6) | 19,938 | ||||||||||||||||||||||||
— | — | — | — | 111,275 | (14) | 1,513,340 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 38,370 | (7) | 521,832 | ||||||||||||||||||||||||
— | — | — | — | 17,619 | (8) | 239,618 | — | — | ||||||||||||||||||||||||
— | — | — | — | — | — | 927 | (9) | 12,607 | ||||||||||||||||||||||||
— | — | — | — | — | — | 37,092 | (10) | 504,451 | ||||||||||||||||||||||||
Timothy Donovan | — | 9,737 | (11) | 8/21/2022 | 8.22 | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 19,059 | (3) | 259,202 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 1,003 | (4) | 13,641 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 20,062 | (5) | 272,843 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 1,003 | (6) | 13,641 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 25,733 | (7) | 349,969 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 11,817 | (8) | 160,711 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 621 | (9) | 8,446 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 24,876 | (10) | 338,314 | ||||||||||||||||
Les Ottolenghi | — | — | — | — | 14,661 | (3) | 199,390 | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 771 | (4) | 10,486 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 15,433 | (5) | 209,889 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 771 | (6) | 10,486 |
56 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
OPTIONAWARDS | STOCKAWARDS | |||||||||||||||||||||||||||||||
NAME | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE (#) | EQUITY INCENTIVE PLAN AWARDS: NUMBEROF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#) | OPTION EXPIRATION DATE | OPTION EXERCISE PRICE ($) | NUMBER OF SHARES ORUNITS OFSTOCK THAT HAVE NOT VESTED (#) | MARKET VALUE OF SHARES ORUNITS OF STOCK THAT HAVE NOT VESTED ($)(1) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVENOT VESTED (#) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITSOR OTHER RIGHTS THAT HAVE NOT VESTED ($)(1) | ||||||||||||||||||||||||
Christopher Holdren | — | — | — | — | 71,670 | (15) | 974,712 | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 31,251 | (13) | 425,014 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 14,844 | (3) | 201,878 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 781 | (4) | 10,622 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 15,625 | (5) | 212,500 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 781 | (6) | 10,622 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 69,506 | (14) | 945,282 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 11,005 | (8) | 149,668 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 579 | (9) | 7,874 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 23,169 | (10) | 315,098 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 23,967 | (7) | 325,951 | ||||||||||||||||
Monica Digilio | — | — | — | — | 28,366 | (16) | 385,778 | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 51,665 | (14) | 702,644 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| 8,181 | (8) | 111,262 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 430 | (9) | 5,848 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 17,222 | (10) | 234,219 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| — | — | 17,815 | (7) | 242,284 |
(1) | Market value is determined based on the closing price of our common stock on December 31, 2019 or $13.60 per share. |
(2) | 200,000 of the options vest based on the achievement of a $15.00 stock price target. |
(3) | Represents PSUs granted April 2, 2018
|
(4) | Represents the remaining 5% of the second tranche of the PSUs granted on April 2, 2018 which remain outstanding and are eligible to vest on April 2, 2021 based on the achievement of certain Company cumulative EBITDA goals. The number of PSUs shown represents the number of performance shares remaining in the second tranche that may be earned during the performance periods based on target performance. |
(5) | Represents PSUs granted on April 2, 2018 which are eligible to vest on April 2, 2021 based on achievement of certain Company EBITDA goals. The number of PSUs shown represents the number of performance shares that may be earned during the performance period based on target performance. |
(6) | Represents the remaining 5% of the first tranche of the PSUs granted on April 2, 2018 which remain outstanding and are eligible to vest on April 2, 2021 based on the achievement of certain Company cumulative EBITDA goals. The number of PSUs shown represents the number of performance shares remaining in the first tranche that may be earned during the performance periods based on target performance. |
(7) | Represents PSUs granted on March 28, 2019 which are eligible to vest on March 28, 2022 based on achievement of certain Company rTSR goals. The number of PSUs shown represents the number of performance shares that may be earned during the performance period based on target performance. |
(8) | Represents PSUs granted on March 28, 2019 with respect to which the performance goals have been attained and vested on March 28, 2020. |
(9) | Represents the remaining 5% of the first tranche of the PSUs granted on March 28, 2019 which remain outstanding and are eligible to vest on March 28, 2022 based on the achievement of certain Company cumulative EBITDA goals. The number of PSUs shown represents the number of performance shares remaining in the first tranche that may be earned during the performance periods based on target performance. |
(10) | Represents PSUs granted on March 28, 2019, 50% of which are eligible to vest on March 28, 2021 and March 28, 2022, respectively, based on achievement of certain Company EBITDA goals. The number of PSUs shown represents the number of performance shares that may be earned during the performance periods based on target performance. |
2020 PROXY STATEMENT 57
EXECUTIVECOMPENSATIONMATTERS
(11) | Performance options vest if the simple average of the last reported sale prices per share of the option shares for the30-calendar day period ending on the day immediately preceding the date of determination is equal to or greater than $35. |
(12) | One-half of RSUs vest on October 6, 2020 and 2021, respectively. |
(13) | One-half of RSUs vest on April 2, 2020 and 2021, respectively. |
(14) | 33% of RSUs vest on March 28 of each 2020, 2021 and 2022, respectively. |
(15) | 50% of RSUs vest on November 1, 2020 and 2021, respectively. |
(16) | 50% of RSUs vest on September 24, 2020 and 2021, respectively. |
2019 OPTION EXERCISES AND STOCK VESTED
The following table gives certain information concerning stock option and stock award exercises and vesting during 2019.
OPTIONAWARDS | STOCKAWARDS | |||||||||||||||
NAME | NUMBER OF SHARES EXERCISED (#) | VALUE REALIZED ON EXERCISE(1) ($) | NUMBER OF SHARES VESTING (#) | VALUE REALIZED ON VESTING(2) ($) | ||||||||||||
Anthony Rodio | — | — | — | — | ||||||||||||
Mark Frissora | 800,000 | 9,208,000 | 1,859,834 | 17,180,312 | ||||||||||||
Eric Hession | — | — | 169,904 | 1,682,622 | ||||||||||||
Thomas Jenkin | — | — | 259,900 | 2,570,833 | ||||||||||||
Christopher Holdren | — | — | 66,303 | 711,595 | ||||||||||||
Monica Digilio | — | — | 14,183 | 166,367 | ||||||||||||
Timothy Donovan | 163,445 | 1,869,811 | 388,351 | 3,507,832 | ||||||||||||
Les Ottolenghi | — | — | 340,073 | 4,091,940 |
(1) | Value represents the difference between the fair market value of our stock underlying the options at exercise and the exercise price of the option. |
(2) | Value realized is calculated as the number of shares vested times the closing price of our common stock on the date vested. |
For discussion of how equity grants are determined, see “—Compensation Discussion and Analysis—Elements of Executive Compensation and Benefits for 2019-Equity Awards.”
2019 NONQUALIFIED DEFERRED COMPENSATION
The following table provides information on the deferred compensation plans that during 2019 provided for deferrals of compensation to our named executive officers on a basis that is not tax qualified. Other than Messrs. Hession and Jenkin, none of our named executive officers participated in any of our deferred compensation plans in 2019.
NAME | PLAN | EXECUTIVE CONTRIBUTIONS IN 2019(1) ($) | COMPANY’S CONTRIBUTIONS IN 2019(1) ($) | AGGREGATE EARNINGS IN 2019(1) ($) | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | AGGREGATE BALANCE AT DECEMBER 31, 2019 ($) | ||||||||||||||||
Eric Hession
| Harrah’s Entertainment, Inc. Executive Supplemental Savings Plan II |
| —
|
|
| —
|
|
| 41,425
|
|
| —
|
|
| 190,849
|
| ||||||
Thomas Jenkin
| Harrah’s Entertainment, Inc. Executive Deferred Compensation Plan |
| —
|
|
| —
|
|
| 1,588,967
|
|
| —
|
|
| 14,066,252
|
|
58 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
(1) | The following deferred compensation contribution and earnings amount were reported in the 2019 Summary Compensation Table. |
NAME | CONTRIBUTIONS IN 2019 ($) | ABOVEMARKETEARNINGSIN 2019 ($)(1) | ||||||
Eric Hession | — | — | ||||||
Thomas Jenkin | — | 536,268 |
(1) |
EXECUTIVE COMPENSATION MATTERS
All other earnings were at market rates from deferred compensation investments directed by the executives.
We do not provide a fixed benefit pension plan for our executives but maintain six deferred compensation plans as noted above in Deferred Compensation Plans. No deferrals were made to any deferred compensation plan in 2018 by our executives.
Our six deferred compensation plans that we maintain for our employees allow certain employees an opportunity to save for retirement and other purposes. As noted above, as of December 31, 2019, Mr. Jenkin has a balance in the EDCP, and Mr. Hession has a balance in the ESSP II. Except for the ESSP III and the Director Deferred Compensation Plan, each of our deferred compensation plans, including the EDCP and ESSP II, have been frozen and no longer provide for voluntary deferrals by active employees. Therefore, no deferrals were made to any deferred compensation plan in 2019 by our named executive officers; however, participants in each of these plans may still earn returns on existing plan balances based upon their selected investment alternatives, which are reflected in their deferral accounts. The other named executive officers do not have a balance in any of the deferred compensation plans.
For additional information, see “Compensation Discussion and Analysis-Deferred Compensation Plans.”
Harrah’s Entertainment, Inc. Executive Deferred Compensation Plan
We previously sponsored the EDCP, pursuant to which certain of our employees were eligible to voluntarily defer a portion of their annual compensation. The EDCP was frozen and new deferrals into the EDCP were terminated, in 2001. Amounts deferred pursuant to the EDCP prior to 2001 remain subject to the terms and conditions of the EDCP and will continue to earn interest (as further described below) at a fixed rate described in the EDCP and approved by the Human Resources Committee of the Board (the “HRC”). To assure payment of participant deferrals, an escrow fund was established under the EDCP. Under the EDCP, the executive earns the retirement rate under the EDCP if he attains (1) specified age and service requirements (i.e.,55 years of age plus 10 years of service or 60 years of age) or (2) attains specified age and service requirements (i.e.,is at least 50 years old, and when added to years of service, equals 65 or greater) and if his employment is terminated without cause pursuant to his employment agreement. Mr. Jenkin has met the foregoing requirements described in clause (1) to earn the retirement rate and, therefore, Mr. Jenkin is earning interest at the average retirement rate of 5.74% for calendar year 2019 on post-1995 deferrals, and 15.5% onpre-1996 deferrals. The executive receives service credit under the EDCP for any salary continuation andnon-compete period.
The HRC approves the EDCP retirement rate (which cannot be lower than a specified formula rate) annually. In October 1995, the HRC approved a fixed retirement rate of 15.5% for all account balances under the EDCP as of December 31, 1995 (subject to plan minimum rates contained in the EDCP). The interest rates on post-1995 deferrals continue to be approved each year by the HRC. The average retirement rate on post-1995 deferrals during 2019 was the EDCP’s minimum retirement rate of 5.74%.
Harrah’s Entertainment, Inc. Executive Supplemental Savings Plan II
We previously sponsored the ESSP II, pursuant to which certain of our employees were eligible to voluntarily defer a portion of their annual compensation. As of January 1, 2015, the ESSP II was frozen and it no longer accepts deferrals. Under the ESSP II certain key employees, including our named executive officers, could defer a specified percentage of their salary and bonus and choose from a selection of varied investment alternatives, the results of which would be reflected in their deferral accounts. In February 2009, the Company eliminated its option to make matching contributions with respect to deferrals of salary to those participants who are eligible to receive matching contributions under the Company’s 40l(k) plan with respect to deferrals of salary. Participants in the ESSP II were able to immediately vest in their own deferrals and in any Company-funded matching and/or discretionary contributions over five years. To assure payment of these deferrals, a trust fund was established similar to the escrow fund for the EDCP. The trust fund was funded to match the various types of investments selected by participants for their deferrals. The ESSP II does not provide a fixed interest rate, as the EDCP does, and therefore the market risk of plan investments is borne by participants rather than us. Mr. Hession’s earnings in 2019 under the ESSP II are included in the above table.
2020 PROXY STATEMENT 59
EXECUTIVECOMPENSATIONMATTERS
For the ESSP II, the table below shows the investment funds available and the annual rate of return for each fund for the year ended December 31, 2019:
NAMEOFFUND | 2019 RATEOFRETURN | |||
500 Index Trust B | 31.16% | |||
Aggressive Growth Lifecycle | 24.84% | |||
American International Trust | 22.40% | |||
BlackRock Small Cap Index | 24.80% | |||
Capital Appreciation Trust | 32.88% | |||
Conservative Lifecycle | 13.89% | |||
Diversified Bond | 13.00% | |||
Equity-Income Trust | 26.47% | |||
Growth Lifecycle | 21.88% | |||
Inflation Managed | 8.64% | |||
International Equity Index Trust B | 21.44% | |||
Mid Cap Stock Trust | 34.63% | |||
Mid Value Trust | 19.49% | |||
Moderate Lifecycle | 17.57% | |||
Money Market Trust | 1.97% | |||
PSF Real Estate | 31.28% | |||
Small Cap Stock Trust | 38.1% | |||
Small Cap Value Trust | 26.62% |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
For a detailed description of the termination or “change in control” provisions applicable to our named executive officers under their employment agreements, see “—Discussion of the Summary Compensation Table” above.
The following tables show the estimated amount of potential cash severance payable to each of the named executive officers, other than Messrs. Frissora, Donovan and Ottolenghi whose employment terminated during 2019, as well as the estimated value of continuing benefits, based on compensation and benefit levels in effect on December 31, 2019. The actual termination payments to Messrs. Frissora, Donovan, and Ottolenghi are summarized here:
Mark Frissora
We entered into a separation agreement with Mr. Frissora on November 1, 2018, which, as it was amended on December 21, 2018 (the “Frissora Separation Agreement”), which governed the terms of his separation from the Company. For additional details, see “—Discussion of the Summary Compensation Table—Chief Executive Officer.” Subject to the terms of the Frissora Separation Agreement, Mr. Frissora continued as President and Chief Executive Officer until his termination date of April 30, 2019. In connection with his termination, Mr. Frissora became vested in all unvested equity and cash awards (with vesting of PSUs and options remaining subject to achievement of applicable targets and options generally exercisable for two years after vesting) and as a result, a total of $32,000,000 of accelerated compensation expense was recognized through his exit date of April 30, 2019, of which $13,000,000 was recognized during the year ended December 31, 2019 and $19,000,000 during the year ended December 31, 2018. Mr. Frissora’s payments under the Frissora Separation Agreement consisted of $8,000,000 in cash severance payments, $1,359,231 in short-term incentive payments, $13,692,014 of value related to the acceleration of service-vesting RSU awards, $2,897,173 related to outstanding PSUs assuming attainment of target performance, and $2,000,000 in accelerated vesting of cash awards, and $24,872 in medical and welfare benefits. Value realized for stock awards was calculated as the number of accelerated RSU shares and the number of shares underlying the PSUs assuming attainment of target performance
60 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
times the closing price of our common stock at April 30, 2019 of $9.36. The performance vesting stock options were underwater as of the separation date and as such had no intrinsic value.
Timothy Donovan
On June 6, 2019, Mr. Donovan resigned from his positions as our Executive Vice-President, General Counsel and Chief Legal, Risk & Security Officer and received the following payments and benefits pursuant to the Qualifying Termination provisions of his employment agreement: $1,275,000 in severance payments, $294,231 in short-term incentive payments, $2,631,010 related to the acceleration of Mr. Donovan’s outstanding RSU awards, $951,109 related to outstanding PSUs assuming attainment of target performance, and $900,000 in accelerated vesting of cash awards, and $32,802 in medical and welfare benefits. The value realized for Mr. Donovan’s RSU awards and PSUs was based on the number of accelerated RSUs and the number of shares underlying the PSUs assuming attainment of target performance multiplied by the closing price of our common stock at June 6, 2019 of $9.13. The performance vesting stock options were underwater as of the separation date and, as such, had no intrinsic value. Pursuant to Mr. Donovan’s employment agreement, upon his resignation of employment, we entered into aone-year consulting agreement under which Mr. Donovan will receive an annualized fee of $500,000, payable in twelve (12) equal monthly installments. Under the consulting agreement, in the event the Company terminates the consulting agreement for any reason other than for cause (as defined in the consulting agreement) or pursuant to the Company’s ethics program, Mr. Donovan will continue to receive the annualized fee after such termination in monthly installments for the remainder of theone-year term. For additional details, please refer to “—Discussion of the Summary Compensation Table—Other Named Executive Officers.”
Les Ottolenghi
We entered into a separation agreement with Mr. Ottolenghi on November 15, 2019 (the “Ottolenghi Separation Agreement”), which governed the terms of his resignation from his position as Executive Vice President and Chief Information Officer, and from all other positions he held with the Company or its subsidiaries, effective November 15, 2019 (the “Separation Date”). For additional details, please refer to “—Discussion of the Summary Compensation Table—Other Named Executive Officers.” Pursuant to the Ottolenghi Separation Agreement, Mr. Ottolenghi received the following payments and benefits in accordance with the terms of the VSP: (i) eighteen (18)-months’ base salary; (ii) the continuation of the company’s portion of healthcare coverage until the eighteen (18)-month anniversary of the Separation Date; (iii) accelerated vesting of outstanding and unvested CEC restricted stock units as of the Separation Date that vest based solely on time; (iv) accelerated vesting at target level of outstanding and unvested CEC restricted stock units granted in 2019 that are subject to performance conditions; (iv) a pro rata bonus for fiscal year 2019 based on services through the Separation Date and actual performance; (v) accelerated vesting of his 2018 cash retention award in the amount of $900,000; and (vi) Company-paid outplacement services. Mr. Ottolenghi’s RSUs granted during 2018 that vested in respect of performance conditions remained outstanding and will be paid out in accordance with the terms of the applicable award agreement and incentive plan. These payments consisted of $930,188 in severance payments, $399,840 in short-term incentive payments, $2,355,960 related to the acceleration of Mr. Ottolenghi’s outstanding RSU awards, $1,092,087 related to outstanding PSUs assuming attainment of target performance, $900,000 in accelerated vesting of cash awards, and $30,124 in medical and welfare benefits. Value realized for stock awards was calculated based on the number of accelerated RSUs multiplied by the closing price of our common stock at November 15, 2019 of $12.96.
For each of the named executive officers included in the tables below, we have assumed that their employment was terminated on December 31, 2019 and the market value of their unvested equity awards was $13.60 per share, which was the fair market value of our common stock as of December 31, 2019. Due to the numerous factors involved in estimating these amounts, the actual value of benefits and amounts to be paid can only be determined upon a named executive officer’s termination of employment.
2020 PROXY STATEMENT 61
EXECUTIVECOMPENSATIONMATTERS
ANTHONY RODIO
COMPENSATION
| VOLUNTARY TERMINATION ($)
| RETIREMENT ($)
| INVOLUNTARY NOTFOR CAUSEOR GOODREASON TERMINATION ($)
| FORCAUSE TERMINATION ($)
| INVOLUNTARY OR GOOD REASON TERMINATION (CHANGEIN CONTROL) ($)
| DISABILITY ($)
| DEATH ($)
| |||||||||||||||||||||
Severance Payment | — | — | 1,500,000 | — | 3,000,000 | — | — | |||||||||||||||||||||
Short-Term Incentive(5) | — | — | 1,972,602 | — | 1,972,602 | (8) | — | — | ||||||||||||||||||||
Accelerated Vesting of Stock and/or Cash Award(4) | — | — | — | — | — | — | — | |||||||||||||||||||||
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Post-retirement Health Care(1) | — | — | — | — | — | — | — | |||||||||||||||||||||
Medical Benefits | — | — | 14,749 | — | 14,749 | 14,749 | — | |||||||||||||||||||||
Life and Accident Insurance and | — | — | 9,286 | — | 9,286 | 9,286 | 3,500,000 | |||||||||||||||||||||
Accrued Benefits Under Savings and Retirement Plan(3) | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | |||||||||||||||||||||
Totals | 8,400 | 8,400 | 3,505,037 | 8,400 | 5,005,037 | 32,435 | 3,508,400 |
ERIC HESSION
COMPENSATION
| VOLUNTARY TERMINATION ($)
| RETIREMENT ($)
| INVOLUNTARY NOTFOR CAUSEOR GOODREASON TERMINATION ($)
| FORCAUSE TERMINATION ($)
| INVOLUNTARY OR GOOD REASON TERMINATION (CHANGEIN CONTROL) ($)
| DISABILITY ($)
| DEATH ($)
| |||||||||||||||||||||
Severance Payment | — | — | 1,222,500 | — | 1,222,500 | 1,222,500 | — | |||||||||||||||||||||
Short-Term Incentive(5) | — | — | 900,000 | — | 1,802,956 | (9) | 900,000 | 900,000 | ||||||||||||||||||||
Accelerated Vesting of Stock and/or Cash Award(4) | — | — | — | — | 2,347,659 | — | — | |||||||||||||||||||||
Benefits and Perquisites: |
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| ||||||||||||
Post-retirement Health Care(1) | — | — | — | — | — | — | — | |||||||||||||||||||||
Medical Benefits | — | — | 22,588 | — | 22,588 | — | — | |||||||||||||||||||||
Life and Accident Insurance and | — | — | 8,740 | — | 8,740 | 8,740 | 2,207,000 | |||||||||||||||||||||
Accrued Benefits Under Savings and Retirement Plan(3) | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | |||||||||||||||||||||
Totals | 8,400 | 8,400 | 2,162,228 | 8,400 | 5,412,843 | 2,139,640 | (6) | 3,115,400 |
62 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
THOMAS JENKIN
COMPENSATION
| VOLUNTARY TERMINATION ($)
| RETIREMENT ($)
| INVOLUNTARY NOTFOR CAUSE OR GOOD REASON TERMINATION ($)
| FORCAUSE TERMINATION ($)
| INVOLUNTARY OR GOOD REASON TERMINATION (CHANGEIN CONTROL) ($)
| DISABILITY ($)
| DEATH ($)
| |||||||||||||||||||||
Severance Payment | — | — | 1,938,404 | — | 1,938,404 | 1,938,404 | — | |||||||||||||||||||||
Short-Term Incentive(5) | — | — | 1,868,488 | (10) | — | 1,868,488 | (10) | 900,000 | 900,000 | |||||||||||||||||||
Accelerated Vesting of Stock and/or Cash Award(4) | — | — | — | — | 2,791,849 | — | — | |||||||||||||||||||||
Benefits and Perquisites: |
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| |||||||||||
Post-retirement Health Care(1) | 119,573 | 119,573 | 119,573 | — | 119,573 | 119,573 | — | |||||||||||||||||||||
Medical Benefits | — | — | — | — | — | — | — | |||||||||||||||||||||
Life and Accident Insurance and | — | — | 13,957 | — | 13,957 | 13,957 | 3,500,000 | |||||||||||||||||||||
Accrued Benefits Under Savings and Retirement Plan(3) | 5,700 | 5,700 | 5,700 | 5,700 | 5,700 | 5,700 | 5,700 | |||||||||||||||||||||
Totals | 125,273 | 125,273 | 3,946,122 | 5,700 | 6,737,971 | 2,977,634 | (7) | 4,405,700 |
CHRISTOPHER HOLDREN
COMPENSATION
| VOLUNTARY TERMINATION ($)
| RETIREMENT ($)
| INVOLUNTARY NOTFOR CAUSE OR GOOD REASON TERMINATION ($)
| FORCAUSE TERMINATION ($)
| INVOLUNTARY OR GOOD REASON TERMINATION (CHANGEIN CONTROL) ($)
| DISABILITY ($)
| DEATH ($)
| |||||||||||||||||||||
Severance Payment | — | — | 1,037,813 | — | 1,037,813 | 1,037,813 | — | |||||||||||||||||||||
Short-Term Incentive(5) | — | — | 800,000 | — | 1,408,524 | (11) | 800,000 | 800,000 | ||||||||||||||||||||
Accelerated Vesting of Stock and/or Cash Award(4) | — | — | — | — | 1,743,874 | — | — | |||||||||||||||||||||
Benefits and Perquisites: |
|
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| |||||||||||||
Post-retirement Health Care(1) | — | — | — | — | — | — | — | |||||||||||||||||||||
Medical Benefits | — | — | 15,715 | — | 15,715 | 15,715 | — | |||||||||||||||||||||
Life and Accident Insurance and | — | — | 6,169 | — | 6,169 | 6,169 | 2,076,000 | |||||||||||||||||||||
Accrued Benefits Under Savings and Retirement Plan(3) | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | |||||||||||||||||||||
Totals | 8,400 | 8,400 | 1,868,097 | 8,400 | 4,220,495 | 1,868,097 | 2,884,400 |
2020 PROXY STATEMENT 63
EXECUTIVECOMPENSATIONMATTERS
MONICA DIGILIO
COMPENSATION
| VOLUNTARY TERMINATION ($)
| RETIREMENT ($)
| INVOLUNTARY NOTFOR CAUSE OR GOOD REASON TERMINATION ($)
| FORCAUSE TERMINATION ($)
| INVOLUNTARY OR GOOD REASON TERMINATION (CHANGEIN CONTROL) ($)
| DISABILITY ($)
| DEATH ($)
| |||||||||||||||||||||
Severance Payment | — | — | 885,000 | — | 885,000 | 885,000 |
|
| ||||||||||||||||||||
Short-Term Incentive(5) | — | — | 432,500 | — | 963,000 | (12) | 432,500 | 432,500 | ||||||||||||||||||||
Accelerated Vesting of Stock and/or Cash Award(4) | — | — | — | — | 1,296,257 | — | — | |||||||||||||||||||||
Benefits and Perquisites: |
|
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|
|
|
|
|
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|
|
|
|
|
| |||||||||||||
Post-retirement Health Care(1) | — | — | — | — | — | — | — | |||||||||||||||||||||
Medical Benefits | — | — | 15,746 | — | 15,746 | 15,746 | — | |||||||||||||||||||||
Life and Accident Insurance and | — | — | 5,397 | — | 5,397 | 5,397 | 1,770,000 | |||||||||||||||||||||
Accrued Benefits Under Savings and Retirement Plan(3) | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | 8,400 | |||||||||||||||||||||
Totals | 8,400 | 8,400 | 1,347,043 | 8,400 | 3,173,800 | 1,347,043 | 2,210,900 |
(1) | Reflects the estimated present value of all future benefits under our health plans. |
(2) | Reflects the estimated present value of the cost of coverage for life and accident insurance policies and the estimated amount of proceeds payable to the executive’s beneficiaries in the event of the executive’s death. |
(3) | Reflects the employer match portion for the Company’s 401(k) Plan. |
(4) | Represents the value associated with the vesting of all outstanding RSUs and PSUs from the 2019 Annual Grant as of December 31, 2019 valued at the closing price of the Company’s common stock as of December 31, 2019 ($13.60). |
(5) | Represents the actual bonus payment for the year ended December 31,
|
(10) | Under Mr. Jenkin’s employment agreement, he is eligible for apro-rated bonus if he is terminated without cause or |
(11) | Under the Merger Agreement with ERI, Mr. Holdren is eligible for apro-rated bonus if he is terminated without cause or terminated for good reason (in each case, as defined in
|
(12) | Under the
|
Additional Potential Payments in Connection with the Merger
In addition to the potential severance payments and benefits that may be paid to the named executive officers in connection with a potential termination of employment and upon a change in control, which would include the consummation of the Merger, the named executive officers are also entitled to additional payments and benefits upon the consummation of the Merger, or upon a qualifying termination after the consummation of the Merger, in each case, pursuant to the terms of the Merger Agreement.
64 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
Treatment of Caesars Equity Awards upon the Merger
Each PSU that vests based on the Company’s level of EBITDA or Adjusted EBITDA, as measured over the applicable performance period that is outstanding as of immediately prior to the consummation of the Merger (each, an “EBITDA PSU”) will, as of the consummation of the Merger, be converted into the right to receive the Cash Election Consideration (as defined in the Merger Agreement). For purposes of calculating the number of EBITDA PSUs to which each holder thereof is entitled, the number of EBITDA PSUs will be based on “actual” performance achieved (measured through the end of the month immediately prior to the consummation of the Merger, as proportionately extrapolated through the remainder of the applicable performance period), with respect to EBITDA PSUs that are eligible to vest in respect of the year in which the consummation of the Merger occurs, and will be based on “target” level achievement with respect to EBITDA PSUs eligible to vest in respect of full performance periods commencing after the closing date.
PROPOSAL 3 - ADVISORY VOTE TO SELECT THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
The table below shows the aggregate value of the EBITDA PSUs held by the named executive officers as of December 31, 2019, based on the closing market price of Caesars common stock on December 31, 2019, and assuming vesting at target-level performance for all such awards, including those EBITDA PSUs that are eligible to vest in respect of the year in which the closing occurs, which ultimately will be based on actual performance through the closing date.
NAME
| NUMBER OF EBITDA PSUs (#)
| VALUE ($)
| ||||||
Anthony Rodio | — | — | ||||||
Mark Frissora | 287,508 | 3,910,109 | ||||||
Eric Hession | 91,076 | 1,238,634 | ||||||
Thomas Jenkin | 115,746 | 1,574,146 | ||||||
Christopher Holdren | 66,784 | 908,262 | ||||||
Monica Digilio | 25,833 | 351,329 | ||||||
Timothy Donovan | 78,441 | 1,066,798 | ||||||
Les Ottolenghi | 31,636 | 430,250 |
Potential Severance Payments and Benefits to Executive Officers in connection with the Merger
In connection with the Merger, any outstanding Company stock options will vest in full in the event that the executive officer’s employment is terminated by the surviving corporation without cause or by the officer for good reason (in each case, as defined in the executive officer’s employment agreement or the 2017 PIP as in effect as of the date of the Merger Agreement), in either case within 24 months following the consummation of the Merger.
2020 PROXY STATEMENT 65
EXECUTIVECOMPENSATIONMATTERS
The table below summarizes the number of unvested time-based stock options and unvested performance-based stock options held by the named executive officers that are unvested as of December 31, 2019, and the aggregate value of such outstanding stock options, calculated based on the closing market price of Caesars common stock on December 31, 2019 (and subtracting the applicable exercise price applicable to such option). In the case of the performance-based stock options, the amounts shown below assume attainment of the performance goals. Unvested performance-based stock options are expected to be cancelled in connection with the consummation of the Merger.
NAME
| NUMBER OF STOCK OPTIONS (#)
| VALUE ($)
| ||||||
Anthony Rodio | — | — | ||||||
Mark Frissora | 200,000 | 830,000 | ||||||
Eric Hession | 5,191 | 27,893 | ||||||
Thomas Jenkin | 35,947 | 193,395 | ||||||
Christopher Holdren | — | — | ||||||
Monica Digilio | — | — | ||||||
Timothy Donovan | 9,737 | 52,385 | ||||||
Les Ottolenghi | — | — |
RSUs that are subject to time-based vesting conditions (“Time-Based RSUs”) and PSUs that are eligible to vest in respect of performance conditions that are based on stock or market price (“Market-Based PSUs”) will vest in full (at target level with respect to Market-Based PSUs) in the event that the executive officer’s employment is terminated either by the surviving corporation without cause or by the executive officer for good reason (in each case, as defined in the executive officer’s employment agreement or the 2017 PIP as in effect as of the date of the Merger Agreement), in either case within 24 months following the consummation of the Merger.
The table below summarizes the number of Time-Based RSUs and Market-Based PSUs held by the named executive officers as of December 31, 2019, with the aggregate value thereof calculated based on the closing market price of Caesars common stock on December 31, 2019.
NAME | NUMBER OF TIME- BASEDRSUs (#) | NUMBER OF MARKET-BASED PSUs (#) | AGGREGATE VALUE ($) | |||||||||
Anthony Rodio | — | — | — | |||||||||
Mark Frissora | — | 45,554 | 619,534 | |||||||||
Eric Hession | 266,847 | 32,265 | 4,067,923 | |||||||||
Thomas Jenkin | 368,112 | 38,370 | 5,528,155 | |||||||||
Christopher Holdren | 172,427 | 23,967 | 2,670,958 | |||||||||
Monica Digilio | 80,031 | 17,815 | 1,330,706 | |||||||||
Timothy Donovan | — | 25,733 | 349,969 | |||||||||
Les Ottolenghi | — | — | — |
66 CAESARS ENTERTAINMENT®
EXECUTIVECOMPENSATIONMATTERS
In accordance with applicable SEC rules, we are providing the ratio of the total annualized compensation of Mr. Rodio to the annualized compensation of an identified median employee of the Company. Mr. Rodio began his role as Chief Executive Officer of the Company (the “CEO”) on May 6, 2019.
For 2019, the total annualized compensation of the CEO was $4,791,280. The total annualized compensation of the identified median employee of our Company was $37,103. Our pay ratio is approximately 129 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
To calculate our 2019 CEO pay ratio, we used the same median employee identified in 2017. The Company reasonably believes that there has been no change in our employee population or employee compensation arrangements in 2019 that we believe would result in a significant change to our pay ratio disclosure.
To identify the median employee, the methodology and assumptions we used were as follows:
As of November 14, 2017 (the “determination date”), our total U.S. andnon-U.S. employee population consisted of 51,965 individuals. Employees who had no hours worked for pay periods ending within two weeks before the determination date were not considered in this analysis.
We used this total number of employees to calculate the number of employees excludable under the “de minimis” exemption. As permitted by applicable SEC rules, in identifying the median employee, we used the “de minimis” exemption to exclude from our employee population approximately 2,523 employees, or 4.86% of our global workforce, as follows:
COUNTRYORTERRITORY | NUMBER OF EMPLOYEES | PERCENTAGE OF WORKFORCE | ||||||
United Kingdom | 1,499 | 2.88% | ||||||
Egypt | 431 | 0.83% | ||||||
South Africa | 585 | 1.13% | ||||||
Hong Kong | 8 | 0.02% | ||||||
Total | 2,523 | 4.86% |
We used total cash compensation (which consisted of base salary, overtime pay, bonus, the Company’s contribution to health & welfare premiums, and the Company’s 401(k) match contribution) as our consistently applied compensation measure to identify the median employee. Compensation was annualized for permanent employees who joined Caesars in 2019. This was calculated using the same methodology that was used to calculate Mr. Rodio’s annualized total compensation in “Summary Compensation Table.”
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s total compensation allow companies to follow a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies with different employment and compensation practices may utilize different exclusions, methodologies, estimates and assumptions in calculating their own pay ratios.
2020 PROXY STATEMENT 67
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
| |||
Section 14APROPOSAL
3
To Ratify the Appointment of the Exchange Act requires the Company to provide shareholders with the opportunity to cast an advisory, non-binding vote on a resolution to determine how frequently the Company should seek an advisory vote on the compensation ofDeloitte & Touche LLP as the Company’s named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules. We are seeking advisory approval of the frequency of “say-on-pay” votes through the following resolution:
“RESOLVED, that the shareholders advise that an advisory resolution with respect to named executive officer compensation should be presented to the shareholders every one, two, or three years as reflected by their votes for each of these alternatives in connection with this resolution.”
By voting on this Proposal 3, shareholders may indicate whether they would prefer an advisory, non-binding vote on named executive officer compensation to occur once every one, two or three years. If you have no preference, you should abstain.
After careful consideration of this Proposal, the Board has determined that an advisory, non-binding vote on executive compensation that occurs every year is the most appropriate alternativeIndependent Registered Public Accounting Firm for the Company, and therefore the Board recommends that you vote for advisory, non-binding votes on named executive officer compensation to occur every year.year ending December 31, 2020
In formulating its recommendation, the Board considered that an annual advisory, non-binding vote on executive compensation will allow shareholders to provide the Company with their direct input on the Company’s compensation philosophy, policies and practices as disclosed in the proxy statement every year.
The option that receives the highest number of votes cast by shareholders will be considered approved by the shareholders on an advisory, non-binding basis. However, because this vote is advisory and not binding on the Board or the Company, the Board may decide that it is in the best interests of our shareholders and the Company to hold an advisory, non-binding vote on named executive officer compensation more or less frequently than the option approved by our shareholders.
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| |||
The Audit Committee has re-appointed Deloitte & Touche LLP as Caesars’ independent registered public accounting firm.
• Independent firm for 2019.with reasonable fees
• Minimalnon-audit services
• Audit Committee has determined that reappointment is in the best interests of shareholders
The Audit Committee has reappointed Deloitte & Touche LLP as Caesars’ independent registered public accounting firm for 2020. Deloitte & Touche LLP has served as Caesars’ independent registered public accounting firm since 2002. The Audit Committee reviews the performance and independence of the independent registered public accounting firm annually.
If the Company’s shareholders do not ratify the appointment of Deloitte & Touche LLP, the Audit Committee will reconsider the appointment and may affirm the appointment or retain another independent accounting firm. Even if the appointment is ratified, the Audit Committee may in the future replace Deloitte & Touche LLP as our independent registered public accounting firm if it is determined that it is in the Company’s best interests to do so.
Representatives of Deloitte & Touche LLP will be present at the annual meeting, and they will have the opportunity to make a statement if they desire to do so. We also expect that they will be available to respond to appropriate questions.
68 CAESARS ENTERTAINMENT® The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein. In the performance of its oversight function, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent registered public accounting firm. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm, the firm’s independence from the Company and its management. The Audit Committee has considered whether the independent registered public accounting firm’s provision ofnon-audit services to us is compatible with its independence. The Audit Committee discussed with our internal auditors and the independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of the audit of the financial statements, the audit of the effectiveness of our internal control over financial reporting, our progress in assessing the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, and the overall quality of our financial reporting, and reports to the Board of Directors on its findings. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, the inclusion of the Company’s audited financial statements in our 2019 |
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
In the performance of its oversight function, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent registered public accounting firm. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 16 (Communication with Audit Committees), as adopted by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm, the firm’s independence from the Company and its management. The Audit Committee has considered whether the independent registered public accounting firm’s provision of non-audit services to us is compatible with its independence.
The Audit Committee discussed with our internal auditors and the independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of the audit of the financial statements, the audit of the effectiveness of our internal control over financial reporting, our progress in assessing the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, and the overall quality of our financial reporting, and reports to the Board of Directors on its findings.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, the inclusion of the Company’s audited financial statements in our 2018 Annual Report for filing with the Securities and Exchange Commission.
John Dionne |
AUDIT-RELATED MATTERSChair
2020 PROXY STATEMENT 69
AUDIT-RELATEDMATTERS
POLICY ON AUDIT COMMITTEEPRE-APPROVAL
All services performed by Deloitte & Touche LLP in 2019 and 2018 werepre-approved in accordance with thepre-approval policy and procedures adopted by the Audit Committee at its February 26, 2003 meeting. This policy describes the permitted audit, audit-related, tax, and other services that Deloitte & Touche LLP may perform. Any requests for audit services must be submitted to the Audit Committee for specificpre-approval and cannot commence until such approval has been granted. Except for such services which fall under thede minimisprovision of thepre-approval policy, any requests for audit-related, tax, or other services also must be submitted to the Audit Committee for specificpre-approval and cannot commence until such approval has been granted. Normally,pre-approval is provided at regularly scheduled meetings. However, the authority to grant specificpre-approval between meetings, as necessary, has been delegated to the chairman of the Audit Committee. The chairman must update the Audit Committee at the next regularly scheduled meeting of any services that were granted specificpre-approval.
In addition, although not required by the rules and regulations of the SEC, the Audit Committee generally requests a range of fees associated with each proposed service. Providing a range of fees for a service incorporates appropriate oversight and control of the independent auditor relationship, while permitting the Company to receive immediate assistance from the independent auditor when time is of the essence.
The policy contains ade minimisprovision that operates to provide retroactive approval for permissiblenon-audit, tax, and other services under certain circumstances.
The provision allows for thepre-approval requirement to be waived if all of the following criteria are met:
1. | the service is not an audit, review, or other attest service; |
2. | the estimated fees for such services to be provided under this provision do not exceed a defined amount of total fees paid to the independent auditor in a given fiscal year; |
3. | such services were not recognized at the time of the engagement to benon-audit services; and |
4. | such services are promptly brought to the attention of the Audit Committee and approved by the Audit Committee |
No fees were approved under thede minimisprovision in 2019 or 2018.
The following table summarizes the aggregate fees paid or accrued by the Company to Deloitte & Touche LLP during 2019 and 2018:
(INTHOUSANDS) | 2019 ($) | 2018 ($) | ||||||
Audit Fees(1) |
| 10,632.8 |
|
| 14,037.9 |
| ||
Audit-Related Fees(2) |
| 986.9 |
|
| 860.7 |
| ||
Tax Fees(3) |
| 134.3 |
|
| 414.4 |
| ||
All Other Fees(4) |
| — |
|
| 165.6 |
| ||
Total |
| 11,754 |
|
| 15,478.6 |
|
(1) | Audit Fees include: |
Audit of the Company’s annual financial statements, including the audits of the various subsidiaries’ financial statements, including those of gaming operations as required by the regulations of the respective jurisdictions;
Sarbanes-Oxley Act, Section 404 attestation services;
Reviews of the Company’s quarterly financial statements;
Consultations related to accounting and reporting standards;
Consents and other services related to SEC matters and debt offerings; and
Relatedout-of-pocket expenses.
70 CAESARS ENTERTAINMENT®
AUDIT-RELATEDMATTERS
(2) | Audit-Related Fees include: |
Quarterly revenue and compliance audits performed at certain of our properties as required by state gaming regulations;
Agreed-upon procedures engagements; and
Relatedout-of-pocket expenses.
(3) | Tax Fees include: |
i. | Fees for tax compliance services totaled $0 and
2020 PROXY STATEMENT 75 OTHERINFORMATION
High River has sole voting power and sole dispositive power with regard to 23,995,074 shares (including shares underlying the Convertible Bonds). Each of Hopper, Barberry and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares. Icahn Master has sole voting power and sole dispositive power with regard to 39,755,538 shares (including shares underlying the Convertible Bonds). Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares. Icahn Partners has sole voting power and sole dispositive power with regard to 56,224,751 shares (including shares underlying the Convertible Bonds). Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares. Each of Hopper, Barberry and Mr. Icahn, by virtue of their relationships to High River (as disclosed in the Schedule 13D), may be deemed to indirectly beneficially own (as that term is defined in Rule13d-3 under the Exchange Act) the shares which High River directly beneficially owns. Each of Hopper, Barberry and Mr. Icahn disclaims beneficial ownership of such shares for all other purposes. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn, by virtue of their relationships to Icahn Master (as disclosed in the Schedule 13D), may be deemed to indirectly beneficially own (as that term is defined in Rule13d-3 under the Exchange Act) the shares which Icahn Master directly beneficially owns. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn disclaims beneficial ownership of such shares for all other purposes. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn, by virtue of their relationships to Icahn Partners (as disclosed in the Schedule 13D), may be deemed to indirectly beneficially own (as that term is defined in Rule13d-3 under the Exchange Act) the shares which Icahn Partners directly beneficially owns. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn disclaims beneficial ownership of such shares for all other purposes. The principal business address of each of (i) High River, Hopper, Barberry, Icahn Offshore, Icahn Partners, Icahn Master, Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP and Beckton is 16690 Collins Avenue, Penthouse Suite, Sunny Isles Beach, Florida 33160, and (ii) Mr. Icahn is c/o Icahn Associates Holding LLC, 767 Fifth Avenue, 47th Floor, New York, New York 10153.
76 CAESARS ENTERTAINMENT® OTHERINFORMATION DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Exchange Act requires our directors, executive officers and greater than 10% stockholders to file initial reports of ownership and reports of changes in ownership of any of our securities with the SEC and us. To our knowledge, based solely on a review of copies of such reports received with respect to the 2019 fiscal year and the written representations received from certain reporting persons that no other reports were required, we believe that during the past fiscal year, all Section 16(a) filing requirements applicable to our directors, executive officers and greater than 10% stockholders were met, except that a timely report was not filed to report the acquisition of performance stock unit awards on January 31, 2019 following certification of the attainment of the underlying goals with respect to the following officers and former officers: Richard Broome, Keith Causey, Timothy Donovan, Eric Hession, Mark Frissora, Christopher Holdren, Thomas Jenkin, Jan Jones Blackhurst, Les Ottolenghi, Marco Roca, and Christian Stuart. WHERE TO FIND ADDITIONAL INFORMATION We are subject to the informational requirements of the Exchange Act and in accordance therewith, we file annual, quarterly and current reports and other information with the SEC. This information may be accessed electronically by means of the SEC’s Internet site at http://www.sec.gov. We are an electronic filer, and the SEC maintains an Internet site at http://www.sec.gov that contains the reports and other information we file electronically. Our website address is www.caesars.com. Please note that our website address is provided as an inactive textual reference only. We make available free of charge, through our website, our annual report on Form10-K, quarterly reports on Form10-Q and current reports on Form8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The information provided on or accessible through our website is not part of this proxy statement. 2020 PROXY STATEMENT 77 INFORMATION ABOUT VOTING AND THE MEETING
Thomas Benninger Jan Jones Blackhurst Juliana Chugg Denise Clark Keith Cozza John Dionne James Hunt Don Kornstein Courtney Mather James Nelson Anthony Rodio
78 CAESARS ENTERTAINMENT® INFORMATIONABOUTVOTINGANDTHEMEETING
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