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 No. )

 

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¨Preliminary Proxy Statement
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xDefinitive Proxy Statement
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Nevada Gold & Casinos, Inc.
  (Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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NEVADA GOLD & CASINOS, INC.

 

NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS

TO BE HELD ON

OCTOBER 10, 2016

  

Las Vegas, Nevada

August 29, 2016

 

To Our Shareholders:

  

The Annual Meeting of Shareholders of Nevada Gold & Casinos, Inc. (the “Company”) will be held at The New Tropicana Las Vegas, 3801 Las Vegas Boulevard South, Las Vegas, Nevada 89109 on Monday, October 10, 2016, commencing at 10:00 a.m. local time. At the meeting only holders of common stock of record at the close of business on August 19, 2016 will be entitled to vote on the following items:

  

1.To elect the four nominees named in the Proxy Statement;

 

2.To hold an advisory vote on the compensation of our named executive officers;

 

3.To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the 2017 fiscal year; and

 

4.Other matters if properly raised.

 

  NEVADA GOLD & CASINOS, INC.
     
  By  /s/Michael P. Shaunnessy  
     
  Chief Executive Officer &  
  President  

 

Even though you may plan to attend the meeting in person, please execute the enclosed proxy card and mail it promptly. A return envelope (which requires no postage if mailed in the United States) is enclosed for your convenience. Should you attend the meeting in person, you may revoke your proxy and vote in person.

 

 

 

 

TABLE OF CONTENTS

 

Proxy Statement 3
General Information 3
Record Date And Shares Outstanding 3
Revocability Of Proxies 3
Voting 3
Solicitation Of Votes 4
Shareholder Proposals 4
Security Ownership Of Directors And Executive Officers 5
Certain Beneficial Owners 5
Section 16(A) Beneficial Ownership Reporting Compliance 6
Proposal One 7
Election Of Directors 7
Nominees 7
Vote Required; Recommendation Of Board 7
Directors Not Standing For Election 9
Consideration Of Director Nominees 9
Director Independence 10
Code Of Ethics 10
Board Meetings And Committees 11
Board Leadership Structure 12
Communications With The Board 12
Attendance At Annual Meetings 12
Director Compensation 13
Audit Committee Report 13
Compensation Committee Report 14
Compensation Discussion And Analysis 14
Financial Targets For Fiscal 2017 16
Executive Officers 18
Compensation Of Executive Officers And Other Matters 19
Certain Relationships And Related Transactions 22
Proposal Two 23
Advisory Vote On Executive Compensation 23
Proposal Three 24
Selection Of Ernst & Young Llp 24
Audit Fees 24
Audit Committee Preapproval Policy 24
Shareholders Sharing An Address 25
Other Matters 25

 

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2016 ANNUAL MEETING OF SHAREHOLDERS

OF

NEVADA GOLD & CASINOS, INC.

  

PROXY STATEMENT

  

This proxy statement contains information relating to our 2016 Annual Meeting of Shareholders to be held at 10:00 a.m., local time, on October 10, 2016 at The New Tropicana Las Vegas, 3801 Las Vegas Boulevard South, Las Vegas, Nevada 89109 and to any adjournments or postponements. This proxy statement and the enclosed form of proxy are first being mailed to shareholders on or about August 29, 2016.

 

Accompanying this Proxy Statement is our annual report on Form 10-K filed with the Securities and Exchange Commission. This proxy statement, form of proxy and our annual report on Form 10-K are also available on our website at www.nevadagold.com.

 

GENERAL INFORMATION

 

Record Date and Shares Outstanding

 

The Board of Directors has set the close of business on August 19, 2016 as the record date (“Record Date”) for the determination of shareholders of the Company entitled to receive notice of and to vote at the Annual Meeting. On the Record Date August 19, 2016, 17,798,356 shares of the Company’s common stock were issued and outstanding and entitled to vote.

 

Revocability of Proxies

 

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by delivering to the Secretary of the Company written notice of revocation or a duly executed proxy bearing a later date or by attending the Annual Meeting and voting in person.

 

Voting

 

Quorum for the Annual Meeting

 

In order for business to be conducted at the Annual Meeting, a quorum must be present. The presence, in person or by valid proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast is necessary for a quorum to be present at the Annual Meeting.

 

In Person or By Proxy

 

Each share of the Company’s common stock outstanding is entitled to one vote on each matter which may be brought before the Annual Meeting. The shares represented by all valid proxies received by mail, unless previously revoked, will be voted at the Annual Meeting in accordance with the instructions contained therein. If any other matters properly come before the meeting, the persons named in the enclosed proxy or their duly appointed substitutes acting at the meeting will be authorized to vote or otherwise in their discretion on those matters.

 

Through Your Brokerage Firm

 

In the event that your shares are held in “street name” by a brokerage firm, your brokerage firm is the record holder of your shares but is required to vote your shares in accordance with your instructions. In order to do so, you will need to follow the instructions for voting provided by your broker. In the event that you do not provide the proper voting instructions your broker will only be permitted to vote on “routine” or “discretionary” matters (such as Proposal 3) but will not be permitted to vote your shares with respect to “non-routine” or “non-discretionary” matters (such as Proposal’s 1 and 2). The election of directors is no longer considered a “routine” or “discretionary” item and your broker may not vote your shares with respect to this proposal. Votes with respect to matters for which brokers do not have discretionary authority to vote are considered “broker non-votes” with respect to such matters. The ratification of the selection of Ernst & Young LLP as the Company’s independent public accounting firm for the 2017 fiscal year is the only routine matter and, if no voting instructions are provided, your broker only may vote your shares on this proposal.

 

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Votes Required for Each Proposal

 

Assuming a quorum is present, the following votes will be required for approval:

 

Proposal   Matter   Vote Required
Proposal 1   Election of Directors   The nominees for director receiving the
highest number of votes cast
         
Proposal 2   Advisory vote on executive compensation   Majority of votes cast
         
Proposal 3   Selection of Ernst & Young LLP as independent registered public accounting firm for the 2017 fiscal year   Majority of votes cast

 

For purposes of determining the number of votes cast, only those cast “for” or “against” are counted. Abstentions, “withhold” votes and broker non-votes are not considered “cast” but are counted for purposes of determining whether a quorum is present at the Annual Meeting. The Board knows of no other matters that are likely to be brought before the meeting other than the matters specifically referred to in the notice of the meeting.

 

Solicitation of Votes

 

It is expected that the solicitation of proxies will be conducted primarily by mail. The cost of this solicitation will be borne by the Company. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Proxies also may be solicited by certain directors, officers and employees of the Company, without additional compensation, personally or by telephone, telegram, telecopy or via the internet.

 

Shareholder Proposals

 

Proposals of shareholders that are intended to be presented at our 2016 Annual Meeting of Shareholders in the proxy material for such meeting must comply with the requirements of SEC Rule 14a-8 and, in order to be included in the Proxy Statement and proxy materials relating to our 2016 Annual Meeting of Shareholders, must have been received by our Secretary no later than May 5, 2016. A shareholder proposal or nomination for director that will not be included in our Proxy Statement and proxy but which a shareholder intends to present in person at the meeting, must be submitted to our Secretary not less than ninety (90) days prior to the anniversary date of the 2016 Annual Meeting of Shareholders.

 

In order for a shareholder proposal to be considered properly brought before the meeting by a shareholder, such shareholder must, in addition to any applicable requirements, have given timely notice and in proper form of the shareholder’s intent to bring such business before such meeting. To be timely, the shareholder’s notice must be received by our Secretary at our principal executive offices not less than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting; providing, however, that in the event the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the day of the meeting was mailed or such public disclosure made, whichever occurs first. To be in proper form, a shareholder’s notice to the Secretary shall set forth the following: the name and record address of the shareholder who intends to propose the business and the number of voting securities of the Company which are owned by such shareholder; a representation that the shareholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to introduce the business specified in the notice; a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; and any material interest of the shareholder in such business.

 

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Security Ownership of Directors and Executive Officers

 

The table below shows the number of shares of our common stock beneficially owned as of the close of business on August 19, 2016 by each of our directors and named executives as well as the number of shares beneficially owned by all of the directors and executive officers as a group.

 

   SHARES BENEFICIALLY OWNED AS OF AUGUST 19, 2016 
NAME AND ADDRESS (1)  NUMBER OF SHARES       PERCENT OF CLASS 
           
Frank Catania   73,917(2)     * 
William G. Jayroe   153,919(3)      * 
Francis M. Ricci   47,417(4)      * 
William J. Sherlock   130,917(5)      * 
Wayne H. White   55,917       * 
Michael P. Shaunnessy   315,000(6)      1.8%
James D. Meier   50,000(7)      * 
Ernest E. East   115,000(8)      * 
Victor H. Mena   104,943(9)      * 
All current directors and executive officers as a group (9 persons)   1,047,030(10)      5.9%

 

 

(1) Unless otherwise indicated, the address for the persons listed is 133 E. Warm Springs Road, Suite 102, Las Vegas, Nevada 89119.
(2) Includes options to purchase 17,500 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter.
(3) Includes (a) options to purchase 40,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter, (b) 3,334 shares of common stock owned by Christine Jayroe, (c) 3,334 shares of common stock owned by Hunter Jayroe, and (d) 3,334 shares of common stock owned by Haley Jayroe.
(4) Includes options to purchase 20,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter.
(5) Includes options to purchase 8,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter.
(6) Includes options to purchase 300,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter.
(7) Includes options to purchase 50,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter.
(8) Includes options to purchase 100,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter.                                                                                 
(9) Includes options to purchase 95,000 shares of common stock exercisable as of August 19, 2016 or within 60 days thereafter. 9,943 shares of the Company’s common stock owned by Mr. Mena were acquired through his participation in the Company’s 2010 Employee Stock Purchase Plan, as amended.
(10) Includes options to purchase 630,500 shares of common stock.
     * Less than one percent

 

Certain Beneficial Owners

 

The persons listed below are the only beneficial owners of more than 5% of Nevada Gold’s common stock known to the Company as of August 19, 2016.

 

Stephen Haberkorn   1,276,108    7.2%
7802 Harbour Towne Ave., Las Vegas, NV 89113          
Carl E. Giudici Trust   1,194,256    6.7%
850 S. Boulder Hwy PMB #432, Henderson, NV 89015          
Wedbush Opportunity Capital, LLC   1,145,913    6.4%
1000 Wilshire Blvd, Los Angeles, CA 90017          
Ocho Investments   989,410    5.6%
5170 Howards Point Road, Excelsior, MN 55331          
Louise H. Rogers   941,288    5.3%
2512 Alta Mira, Tyler, TX  75701          

 

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Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who own more than ten percent of our outstanding common stock, to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership of common stock. These persons are required by SEC regulation to furnish us with copies of all such reports they file.

 

To our knowledge, based solely on a review of the copies of such reports furnished to us, we believe that all Section 16(a) reports were timely filed by our officers, directors and greater than ten percent beneficial owners.

 

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PROPOSAL ONE

 

ELECTION OF DIRECTORS

 

Our Articles of Incorporation provide for a board of directors of no less than three (3) and no more than ten (10) members, the exact number within this range being determined by our Board. Currently, the number of members of our Board is five which, as set forth below, is being expanded to seven (7). All of our current Board members, and , if elected, the additional nominees, will be non-employee directors. Our Articles of Incorporation divide our Board into three classes with staggered terms. Each class of directors is elected for a term of three years. Currently, Class I consists of two directors, Class II consists of one director, and Class III consists of two directors.

 

Nominees

 

Four directors are to be elected at the Annual Meeting. On August 15, 2016 the Company entered into a Director Nomination Agreement with Esplanade Capital Partners I LLC and Novation Companies, Inc. (the “Nominating Shareholders”) pursuant to which we have added two nominees who will be included in the Company’s slate of director nominees. The number of directors on the Board will be expanded from 5 to 7 members. The Corporate Governance and Nominating Committee of our Board (the “Committee”) has reviewed and approved the qualifications of Shawn K. Kravetz and Rudolph K. Kluiber, each as designee of the Nominating Shareholders, and has recommended their nomination for election to the Board. In addition, the Committee has reviewed the credentials and recommended the nomination of William J. Sherlock and William G. Jayroe for reelection as directors.

 

The Board has approved the recommendations of the Committee and nominated William J. Sherlock, William G. Jayroe and Shawn W. Kravetz as Class III directors to serve as directors for a term that will expire at our Annual Meeting of Shareholders to be held in 2019. Rudolph K. Kluiber has been nominated as a Class II director to serve for the remainder of the term for Class II directors which expires at our Annual Shareholder Meeting in 2018. All of our nominees have indicated their willingness to serve.

 

Vote Required; Recommendation of Board

 

The candidates receiving the highest number of affirmative votes cast will be elected as directors.

 

Nominees   Age   Principal Occupation
William J. Sherlock   66  

Chairman, Nevada Gold & Casinos, Inc.

Former President/CEO, Foxwoods Resort & Casino

         
William G. Jayroe   58  

Executive VP, Sales and Marketing IEA, Inc.;

President & CEO, Hunter International Partners, LLC

         
Shawn W. Kravetz   46   President and Chief Investment Officer of Esplanade Capital LLC, an Investment Management Firm
         
Rudolph K. Kluiber   56   Managing Director of GRT Capital Partners, an Investment Management Firm

 

William J. Sherlock. Mr. Sherlock has served as Chairman since November 2009. Mr. Sherlock is a hospitality and casino industry veteran of 35 years. From 1997 to 2000, he was Chief Operating Officer and, from 2000 to 2006, he was Chief Executive Officer of Foxwoods Resort & Casino in Mashantucket, Connecticut, one of the world’s largest casinos. He currently serves as a Board member of the Inn at Mystic, Mystic, Connecticut and is a member of the Foxwoods Tribal Audit Authority. Prior to his service at Foxwoods Resort & Casino, Mr. Sherlock was President/CEO of various high profile casino/hotel properties including the New York New York Hotel & Casino in Las Vegas, Nevada, the Flamingo Hilton in Laughlin, Nevada and the Reno Hilton in Reno, Nevada. Mr. Sherlock served as Interim President of Foxwoods Resort Casino in Mashantucket, CT from June until December of 2010. From May 2012 to December 2014, Mr. Sherlock served as an Advisor to the Board of Directors of the Cosmopolitan Hotel and Casino in Las Vegas, Nevada. Mr. Sherlock is a Business Administration graduate of the University of South Carolina. As Chairman of our Board, Mr. Sherlock’s qualifications include industry, accounting and corporate governance experience, operating and executive leadership, strategy development, management experience and marketplace knowledge.

 

William G. Jayroe. Mr. Jayroe has served as a director since September 1995. Mr. Jayroe has three decades of technology development, sales, and management expertise. In 2013, Mr. Jayroe joined IEA, Inc. headquartered in Houston, Texas, a provider of environmental health and safety solutions to fortune 100 organizations, as Executive Vice President of Sales and Marketing. Prior to that he was an executive at IHS, a global environmental and crisis management software solutions provider headquartered in Englewood, Colorado. From May 2005 until January 2007, Mr. Jayroe was the Senior Vice President South East Region of Enviance, Inc., a software solutions company headquartered out of Carlsbad, California. From September 2001 until October 2003, Mr. Jayroe served as a Senior Vice President of Digital Consulting and Southwest Services. Mr. Jayroe founded and has been the CEO of Hunter International Partners, LLC since September 1998. Mr. Jayroe has a BS in Industrial Distribution from Texas A&M University. The Board believes Mr. Jayroe is qualified to serve as a director due to his experience as a senior executive, his executive leadership, and his contributions to strategy development and marketplace knowledge.

 

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Shawn W. Kravetz. Mr. Kravetz is President and Chief Investment Officer of Esplanade Capital LLC, an investment management company he founded in 1999. The firm manages private investment partnerships. From 1997 until 1999, Mr. Kravetz was a Principal at The Parthenon Group, a leading strategy consulting boutique, where he advised chief executives on corporate strategy. From 1995 until 1997, Mr. Kravetz was Director of Strategic Planning and Corporate Development at the CML Group, where he oversaw activities at subsidiaries including NordicTrack, The Nature Company, and Smith & Hawken. Mr. Kravetz received an A.B. in Economics from Harvard University, magna cum laude, in 1991 and an MBA with High Distinction from Harvard Business School in 1995. The Board believes that Mr. Kravetz’s experience in the capital markets and his previous experience working with management make him well qualified to serve on the Board.

 

Rudolph K. Kluiber. Since 2001, Mr. Kluiber has served as a Managing Director of GRT Capital Partners (“GRT”), an investment management firm located in Boston, Massachusetts. Prior to forming GRT, Mr. Kluiber was Senior Vice President and Portfolio Manager for State Street Research & Management Company from 1997 to 2001, where he ran the State Street Aurora Fund and managed the Small-Cap Value effort. Mr. Kluiber served as a director of Steinway Musical Instruments, Inc. from 2001 to 2011 and currently serves on the board of Wessanen, a publicly traded Dutch organic food company. Mr. Kluiber is a cum laude graduate of Harvard College and holds an MBA from the University of California Los Angeles. The Board believes that Mr. Kluiber’s financial and business expertise, including capital markets, combined with his company and industry experience, make him well qualified to serve on the Board.

 

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ELECTION OF

MESSRS. SHERLOCK, JAYROE, KRAVETZ AND KLUIBER.

 

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Directors Not Standing For Election

 

The members of the Board whose terms do not expire and who are not standing for election at this Annual Meeting are set forth below:

 

Name   Age   Class/Term Expiration   Principal Occupation
             
Frank Catania   73   Class I/2017   President, Catania Consulting Group, L.L.C.
             
Wayne H. White   77   Class I/2017   Retired, Former Investment Banker
             
Francis M. Ricci   73   Class II/2018   President, Orchard Lane Consulting

 

Frank Catania. Mr. Catania has served as a director since October 2009. Mr. Catania has over 30 years of gaming and legal experience and is currently a principal of Catania Consulting Group, LLC, which specializes in providing gaming expertise to both the public and private sectors. Mr. Catania also serves as counsel to the law firm of Catania & Ehrlich, P.C., which specializes, in part, in all aspects of casino law, including licensing and compliance. He is a member of the Board of Directors of Continental 8 Technologies, an operator of data centers worldwide. Mr. Catania served on the Board of Directors of Empire Resorts, Inc. from May 2006 until March 2009. He had also served as the Director of New Jersey's Division of Gaming Enforcement, a premier and world-renowned gaming regulatory and enforcement agency. Mr. Catania is a former Deputy Speaker of the New Jersey General Assembly and served for four years as an Assemblyman, representing his district in Passaic County. Mr. Catania was a founding member of the International Masters of Gaming Law, a non-profit association dedicated to the education and advancement of gaming law, having served as its first President. He is a graduate of Rutgers University and Seton Hall University Law School where he is now an adjunct professor of gaming law. The Board believes Mr. Catania is qualified to serve as a director due to his knowledge of the casino industry, his experience as an independent director of other casino companies and his experience in gaming regulatory matters.

 

Wayne H. White. Mr. White has served as a director since July 2003. From 1983 until his retirement in July 2002, Mr. White was an investment banker for Henry Swift & Company, Dakin Securities and Wells Fargo Securities. From 1996 until July 2002, Mr. White served as a member of the corporate finance department of Wells Fargo Securities. His duties included working on public and private offerings of equity, private placements of equity, mergers and acquisitions, and the rendering of fairness opinions. Mr. White's specialties were leisure industry sectors, including casinos, casino suppliers and restaurants. Mr. White received his BS in political science from the University of Utah, and his law degree from Hastings College of Law in San Francisco. Mr. White’s qualifications include extensive knowledge of financial, securities and capital markets, executive leadership and strategy development.

 

Francis M. Ricci. Mr. Ricci has served as a director since July 2003. Since 1991, Mr. Ricci has been involved in the ownership and management of several private companies serving as CEO or CFO, including Natural Swing Products Co., Premier Scale Company and, starting in March 1998, Pro Gear Holdings, Inc. d/b/a Yes! Golf. Since 2010, Mr. Ricci, as owner of Orchard Lane Consulting, offers financing and debt resolution and restructuring consultation. He also acts as a Senior Business Intermediary with Gottesman Company, a Network of Mergers and Acquisition Finders, throughout the U.S. and Canada. Mr. Ricci, a CPA, practiced as an audit specialist for more than 20 years with Deloitte & Touche, serving as a partner for 12 years. Mr. Ricci received his MBA and BS in accounting from the University of Montana. Mr. Ricci’s qualifications include financial and accounting expertise, executive leadership and marketplace knowledge.

 

Consideration of Director Nominees

 

Shareholder Nominees

 

The Corporate Governance and Nominating Committee considers properly submitted shareholder nominations for candidates for membership on our Board as described below under “Identifying and Evaluating Nominees for Directors.” Shareholders who wish to communicate with the Corporate Governance and Nominating Committee concerning potential candidates for our Board should do so by sending correspondence to our Secretary, addressed to Nevada Gold & Casinos, Inc., Attention: Secretary, 133 E. Warm Springs Road, Suite 102, Las Vegas, NV 89119. Any such communication should be made in accordance with our Bylaws. Our Bylaws provide that any shareholder entitled to vote at the annual meeting may nominate a person for election to the Board by complying with the procedures set forth in Article II, Section 2.16 of the Bylaws. In general, these procedures provide as follows:

 

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· the notice from a shareholder must be received by the Company not less than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of shareholders; if the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice must be received not later than the close of business on the tenth (10th) day following the date on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs;
   
· the shareholder's notice must state the proposed nominee’s name, age, business address and residence address, principal occupation, number of shares of the Company’s common stock owned, and any other information about the person required under SEC rules for director nominees to be named in a Proxy Statement;
   
· the notice must include the name, record address and number of shares of the Company’s common stock owned by the shareholder recommending the proposed nominee;
   
· the notice must include a description of all arrangements or understandings between such shareholder and each proposed nominee; and
   
· the notice must include any other information relating to such shareholder that would be required to be disclosed in a Proxy Statement or other filings required to be made in connection with solicitations of proxies for elections of directors pursuant to Section 14 of the Securities Exchange Act of 1934.

 

A copy of our Bylaws is available to a shareholder by sending a written request to our Secretary. The Corporate Governance and Nominating Committee follows the procedures in our Bylaws and, accordingly, will consider candidates recommended by shareholders who comply with our Bylaws.

 

Director Qualifications

 

In discharging its responsibilities to nominate candidates for election to the Board, the Corporate Governance and Nominating Committee has not specified any minimum qualifications for serving on the Board. However, the Corporate Governance and Nominating Committee endeavors to evaluate, propose, and approve candidates with business experience and personal skills in gaming, finance, marketing, financial reporting and other areas that may be expected to contribute to an effective Board. The Corporate Governance and Nominating Committee seeks to assure that our Board is composed of individuals who have experience relevant to our needs and who have the highest professional and personal ethics, consistent with our values and standards. Candidates should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Each director must represent the interests of all shareholders.

 

Identifying and Evaluating Nominees for Directors

 

The Corporate Governance and Nominating Committee utilizes a variety of methods for identifying and evaluating nominees for director. Candidates may come to the attention of the Corporate Governance and Nominating Committee through current Board members, professional search firms, shareholders or other persons. These candidates are evaluated at regular or special meetings of the Corporate Governance and Nominating Committee, and may be considered at any point during the year. As described above, the Corporate Governance and Nominating Committee will consider properly submitted shareholder nominations for candidates for the Board. Following verification of the shareholder status of persons proposing candidates, recommendations will be aggregated and considered by the Corporate Governance and Nominating Committee. If any materials are provided by a shareholder in connection with the nomination of a director candidate, such materials will be forwarded to the Corporate Governance and Nominating Committee.

 

Director Independence

 

The Board determines independence on the basis of the standards specified by the New York Stock Exchange (NYSE). The Board is comprised entirely of independent directors and none of our current directors, or nominees, have any economic relationship with the Company other than as a shareholder or director.

 

Code of Ethics

 

We have adopted a Code of Ethics that applies to directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics is posted on our website at http://www.nevadagold.com, under the heading “Corporate Governance.” Changes and waivers granted with respect to our Code of Ethics related to officers identified above, and our other executive officers and directors that are required to be disclosed pursuant to applicable rules and regulations of the SEC will also be posted on our website and a Current Report on Form 8-K will be filed within four (4) business days of the change or waiver.

 

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Board Meetings and Committees

 

The Board met five times during the fiscal year ended April 30, 2016. Each Board member attended every meeting. The Board has four standing committees: (1) the Compensation Committee; (2) the Audit Committee; (3) the Corporate Governance and Nominating Committee; and (4) the Compliance Committee.

 

The membership of the Board’s standing committees is as follows:

 

  Audit
Committee
    Compensation
Committee
    Corporate Governance
and
Nominating Committee
    Compliance
Committee
   
William J. Sherlock M     M           M    
Francis M. Ricci C     M     M     M    
William G. Jayroe       C                
Wayne H. White             C          
Frank Catania M     M     M     C    

 

C—Chairman

M—Member

 

Audit Committee

 

The Audit Committee consists of three directors: Messrs. Ricci, Catania and Sherlock, each of whom is independent as defined in the listing standards of the Stock Exchange. The Audit Committee engages our independent auditors, reviews our financial controls, evaluates the scope of the annual audit, reviews audit results, consults with management and our independent auditors prior to the presentation of financial statements to shareholders and, as appropriate, initiates inquiries into aspects of our internal accounting controls and financial affairs. The Audit Committee met four times in the fiscal year ended April 30, 2016. Each member attended all the Audit Committee meetings. 

 

The Board has determined that Mr. Ricci is an independent audit committee financial expert as defined by Item 401(h) of Regulation S-K of the Exchange Act. Mr. Ricci serves as Chairman of the Audit Committee.

 

The Report of the Audit Committee is included in this Proxy Statement. The Audit Committee operates pursuant to a written charter a copy of which is available on our website at http://www.nevadagold.com under the heading “Corporate Governance.”

 

Compensation Committee

 

The Compensation Committee consists of four directors: Messrs. Jayroe, Sherlock, Ricci, and Catania, each of whom is independent as defined in the listing standards of the Stock Exchange. The Compensation Committee reviews and approves salaries and incentive compensation for our executive officers. The Compensation Committee held four meetings in the fiscal year and all members attended the meetings.

 

The Report of the Compensation Committee is included in this Proxy Statement. The Compensation Committee operates pursuant to a written charter. A copy of the Compensation Committee Charter is available on the Company’s website at http://www.nevadagold.com under the heading “Corporate Governance.

 

Compensation Committee Interlocks and Insider Participation

 

No member of the Compensation Committee serves as an officer or employee of the Company. None of our executive officers serve on the board of directors or compensation committee of a company that has an executive officer who serves on our Board or the Compensation Committee.

 

Corporate Governance and Nominating Committee

 

The Corporate Governance and Nominating Committee consists of three non-employee directors: Messrs. White, Ricci, and Catania, each of whom is independent as defined in the listing standards of the Stock Exchange. The Corporate Governance and Nominating Committee reviews and approves candidates for election and to fill vacancies on the Board, including re-nominations of members whose terms are due to expire. The Corporate Governance and Nominating Committee is also responsible for developing and implementing guidelines relating to the operation of the Board and its committees and the Company as a whole. The Corporate Governance and Nominating Committee met four times in the fiscal year ended April 30, 2016. All members attended the meetings.

 

11 

 

 

The Corporate Governance and Nominating Committee operates pursuant to a written Charter. A copy of the Corporate Governance and Nominating Committee Charter is available on our website at http://www.nevadagold.com under the heading “Corporate Governance.

 

Compliance Committee

 

The Compliance Committee operates pursuant to a Gaming Compliance Program adopted by the Board and currently consists of three non-employee directors: Messrs. Catania, Sherlock and Ricci. The Compliance Committee was established in February of 2012 in accordance with an Order of Registration issued by the Nevada Gaming Commission. The Compliance Committee was created in order to: (i) monitor our compliance with gaming laws in jurisdictions which we and our affiliates operate in order to prevent regulatory violations and to promptly detect and correct any regularity violation that might occur; (ii) advise the Board of any gaming law compliance problems or situations which may adversely affect the objectives of gaming control in jurisdictions we operate; (iii) provide appropriate reports for the purpose of keeping the Nevada Gaming Control Board advised of our compliance efforts in the State of Nevada and other jurisdictions; (iv) perform due diligence regarding proposed transactions and associations involving any of our affiliates’ gaming operations; and (v) receive, coordinate and distribute appropriate input from our affiliates to enhance their respective compliance with respect to gaming laws and regulations. The Compliance Committee met four times in the fiscal year ended April 30, 2016. All members attended the meetings.

 

Risk Oversight

 

Risk oversight is the responsibility of the full Board of Directors. The Board reviews information regarding the Company’s risk profile and has, in consultation with management and the Company’s independent auditors, identified specific areas of risk including regulatory compliance, legislative and political conditions, capital availability and liquidity. While the full Board has overall responsibility for risk oversight the Board had assigned certain areas of risk oversight to its Committees. Throughout the year the Board and its Committees receive reports from management that include information regarding major risks and exposures facing the Company and the steps management has taken to monitor and control such risks and exposures.

 

Board Leadership Structure

 

Mr. Sherlock is our Lead Independent Director. Among other things the Lead Independent Director is responsible for covering, chairing and setting the agenda for non-management executive sessions, acting as a liaison between directors and management, consulting with the Chief Executive Officer regarding the agenda of Board meetings and on behalf of and at the discretion of the Board meeting with shareholders and speaking on behalf of the Board in circumstances where it is appropriate for the Board to have a voice distinct from that of management.

 

Communications with the Board

 

The Board has adopted the following procedure for shareholders who wish to communicate any concern directly with the Board. Shareholders may mail or deliver their communication to our principal executive office, addressed as follows:

 

Addressee (*)

c/o Secretary

Nevada Gold & Casinos, Inc.

133 E. Warm Springs Road, Suite 102

Las Vegas, NV 89119

 

*Addressees: Board of Directors; Audit Committee of the Board of Directors; Corporate Governance and Nominating Committee of the Board of Directors; Compensation Committee of the Board of Directors; Compliance Committee of the Board of Directors; name of individual director.

 

Copies of written communications received at such address will be forwarded to the addressee as soon as practicable.

 

Attendance at Annual Meeting

 

Members of the Board are encouraged to attend our Annual Meeting; however, attendance is not mandatory. All five members of the Board attended our last Annual Meeting.

 

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Director Compensation

 

Director Fees

 

Our independent directors are paid an annual fee of $35,000 (the “Base Compensation”). A portion of the Base Compensation ($10,000) is paid in fully vested common stock of the Company the value of which is determined as the closing price of such stock on the date of the Annual Meeting of Shareholders of the Company. The independent Chairman of the Board and the Chairman of the Audit Committee are paid an additional annual fee of $15,000 and the Chairman of the Compliance Committee receives an additional annual fee of $7,000. Members of the Compliance Committee, Messrs. Sherlock and Ricci receive $3,000 annually for service on the committee. All directors are reimbursed for their reasonable expenses for attending Board and Board committee meetings. During the fiscal year ended April 30, 2016, there were no grants of options to purchase shares of our common stock.

Director Summary Compensation Table

 

The table below contains information about the compensation received by each of our directors during the fiscal year ended April 30, 2016.

 

Name  Fees
Paid
in Cash
($) (1)
   Fees Paid in Stock
($) (2)
   Total
($)
 
William J. Sherlock   45,500    10,000    55,500 
Frank Catania   34,500    10,000    44,500 
Francis M. Ricci   45,500    10,000    55,500 
William G. Jayroe   27,500    10,000    37,500 
Wayne H. White   27,500    10,000    37,500 

 

 

(1) Includes fees for the Board and two committee chairmanships, and membership on the Compliance Committee.  Only the chairs of the Board (i.e., Mr. Sherlock), the Audit Committee (i.e., Mr. Ricci) and the Compliance Committee (i.e., Mr. Catania) receive chairmanship fees.  As the chairs of the Board and the Audit Committee, Messrs. Sherlock and Ricci receive $15,000 annually while, as the chair of the Compliance Committee, Mr. Catania receives $7,000 annually.  Also, as members of the Compliance Committee, Messrs. Sherlock and Ricci receive $3,000 annually.
(2) An annual grant of fully vested common stock valued at $10,000 on the date of grant.

 

As of August 19, 2016, the directors had outstanding option awards as follows:

 

Name  Outstanding Stock
Options
Exercisable
(#)
   Outstanding Stock
Options Unexercisable
(#)
   Option
Exercise
Price
($)
   Option
Expiration
Date
William G. Jayroe   10,000    -    1.57   07/27/2021
    10,000    -    1.25   07/28/2019
    20,000    -    0.82   10/17/2022
                   
Francis M. Ricci   10,000    -    1.57   07/27/2021
    10,000    -    1.25   07/28/2019
                   
William J. Sherlock   8,000    -    1.57   07/27/2021
                   
Frank Catania   17,500    -    0.82   10/17/2022

 

Audit Committee Report

 

The following Audit Committee report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Audit Committee report by reference therein.

 

Nevada Gold & Casinos, Inc. strongly values the importance of accurate and transparent financial disclosure and effective internal controls over financial reporting. To that end, the Company is continually working to maintain sound accounting practices, internal controls and risk management practices. The Audit Committee engages and supervises our independent auditors and oversees our financial reporting process on behalf of the Board. Management has the primary responsibility for the preparation of financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in our annual report on Form 10-K for the fiscal year ended April 30, 2016 with management, including a discussion of the quality of the accounting principles, the reasonableness of significant judgments made by management and the clarity of disclosures in the financial statements.

 

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The Audit Committee has discussed with Ernst & Young, LLP (“E&Y”), the Company’s independent auditors, the matters required to be discussed by applicable Public Company Accounting Oversight Board standards. In addition, the Audit Committee has received the written disclosure and the letter from E&Y required by applicable requirements of the Public Company Accounting Oversight Board regarding E&Y’s communications with the Audit Committee concerning independence, and has discussed with E&Y its independence.

 

The Audit Committee discussed with E&Y the overall scope and plans for the audit. The Audit Committee met with E&Y, with and without management present, to discuss the results of E&Y’s examinations, evaluations or our internal controls, and the overall quality of our financial reporting.

 

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2016 filed with the SEC on July 29, 2016.

 

Audit Committee of the Board of Directors

 

Francis M. Ricci, Chairman

William J. Sherlock

Frank Catania

 

Compensation Committee Report

 

The following Compensation Committee report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Compensation Committee report by reference therein.

 

The Compensation Committee has reviewed and discussed with management, among other things, the section of this Proxy Statement captioned “Compensation Discussion and Analysis.”  Based on that review and discussion, the Compensation Committee has recommended to our Board that the “Compensation Discussion and Analysis” section be included in this Proxy Statement.

 

Compensation Discussion and Analysis

 

The Compensation Discussion and Analysis reports on compensation policies applicable to our “Named Executive Officers” who are our Chief Executive Officer, Chief Financial Officer and our two remaining executive officers at the end of our fiscal year ended April 30, 2016. Our Named Executive Officers are the following individuals, to whom we sometimes refer as our NEO’s:

 

Name   Age   Title
         
Michael P. Shaunnessy   62   President, Chief Executive Officer
James D. Meier   52   Vice President, Chief Financial Officer and Secretary
Victor H. Mena   52   Vice President of Washington Operations
Ernest E. East   73   Vice President, Chief Regulatory & Compliance Officer

 

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Overview and Philosophy

 

The key objectives of our executive compensation program are to attract, retain and motivate well-qualified executives who will guide our growth and development in a dynamic industry. Our executive compensation program is designed:

 

·To offer fair and competitive annual base salaries consistent with similarly situated companies of the same size in the gaming industry;

 

·To reward executives for corporate and individual performance through annual incentive compensation programs; and

 

·To encourage long-term performance through the use of long-term incentives, such as stock options, that aligns the interests of our employees and shareholders.

 

The Compensation Committee administers all plans and programs connected with the compensation of our executive officers and directors. Our business plans and strategic objectives are generally presented by our management to our Board.  The Board engages in an active discussion concerning the financial and development targets, the appropriateness of the strategic objectives, and the difficulty in achieving same.  In establishing the compensation plan, our Compensation Committee then utilizes the primary objectives from the adopted business and development plans as the primary targets for determining the executive officers’ annual incentives and long-term incentive compensation. 

 

The Chief Executive Officer makes recommendations to the Compensation Committee for the actual incentive compensation for all other executives based on our actual performance relative to the existing targets as well as on individual performance, and recommends the executives’ base salaries levels for the coming fiscal year. The Compensation Committee considers these recommendations generally at the end of each fiscal year in determining its recommendations to the Board for the annual and long-term incentive compensation for each executive as well as for the executive’s base salary levels. The actual incentive compensation awarded to each executive officer is ultimately subject to the discretion of the Compensation Committee and the Board.

 

Also, the Compensation Committee periodically gathers and reviews data regarding the compensation practices and policies of other public companies in our industry. Peer group compensation data is reviewed by the Compensation Committee to determine whether the compensation paid to our executives is generally competitive with that paid to executive officers of other companies. The Compensation Committee has the authority to engage the services of consultants to assist the Committee in analyzing and reviewing policies and elements of compensation and the aggregate compensation of our NEO’s.

 

Information concerning the Compensation Committee, its current members and its Charter is provided on our website under the caption “Compensation Committee.

 

Elements of Compensation

 

The Company’s compensation programs are designed to align the interests of our executives with the interest of our shareholders. For this reason a significant portion of our executive pay is variable and at risk, subject to Company and individual performance. There are three key elements in our executive compensation program:

 

·Annual base salaries;
·Annual incentive compensation; and
·Long-term incentive compensation.

 

Annual Base Salaries

 

Annually, the Compensation Committee establishes the base salaries to be paid to our executive officers during the coming fiscal year, subject to the approval of the Board. In setting base salaries, the Compensation Committee takes into account several factors including, but not limited to, the executive officer’s experience, responsibilities, management abilities and job performance, as well as the performance of the Company as a whole, current market conditions and competitive salaries of executive officers with similarly situated companies in the gaming industry of approximately the same size. The Compensation Committee intends the annual base salaries of our executive officers to provide a minimum level of compensation for highly qualified individuals. The Compensation Committee believes that the annual base salaries of our executive officers is appropriate to support our objective of aligning pay with performance.

 

The Committee believes that our executive officers are strongly incentivized to improve our performance and lay the foundation for enhanced shareholder value. See pages 19 and 20 for a more complete summary of the Company’s employment agreements.

 

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Annual Incentive Compensation

 

The Compensation Committee intends that annual bonuses paid to our executive officers will reward them for the achievement of successful financial performance over a relatively short period of time. In addition, the Compensation Committee believes that it is important to recognize and reward our executive officers for successfully supporting our growth and development. Payment of annual bonuses to our executive officers is primarily based on measurable financial performance targets. The annual bonuses payments are limited to a maximum of 50% of annual base salary.

 

For fiscal year 2017, the Compensation Committee determined that the achievement by the Company of specific financial targets would represent 70% of any bonus payment to executive officers. The remaining 30% of the bonus component would be based upon the achievement of specific individual performance targets to be established for each executive. The following financial targets for the Company have been set.

 

Financial Targets For Fiscal 2017            
Adjusted EBITDA  $9,400,000   $11,280,000   $11,750,000 

 

Minimum and Maximum  Minimum       Maximum 
Bonus as a % of Base Salary   20%   30%   35%

 

Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and excludes gain/loss on asset dispositions, stock compensation, new venture EBITDA, legislative changes and other non-cash charges. Actual Financial results between the minimum and maximum will result in a prorated calculation to determine actual payment amounts.

 

Individual Performance Targets

 

In addition to the financial targets set forth above, executive officers may also receive a bonus payment equal to 15% of base salary upon the achievement of individual performance targets established for each executive. Partial achievement of personal targets could result in a bonus payment of less than the maximum amount of 15% of base salary.

 

Notwithstanding the determination of an executive officer’s bonus under the above provisions, the Compensation Committee may, at its sole discretion and at any time prior to the time a particular bonus is paid, reduce the amount of or totally eliminate any such bonus to the extent the Compensation Committee determines that such reduction or elimination is appropriate under such circumstances as the Compensation Committee deems relevant.

 

Long-term Incentive Compensation

 

The Compensation Committee believes that employee stock ownership through stock options is a significant incentive in building stockholder value and aligning the interests of employees and stockholders. Stock options will only have value if our stock price increases. The 2009 Equity Incentive Plan (the “2009 Plan”) which was approved by our shareholders at the Special Meeting of Shareholders held on April 14, 2009 authorized the Compensation Committee to grant awards, including stock options and restricted stock, to our executive officers and Directors.

 

The Compensation Committee also believes that unvested stock options represent a significant tool to encourage retention of highly qualified executive officers. The vesting period of stock options encourages our executives to focus on our long-term development and creates greater likelihood of “in-the-money” unvested options, which will encourage our executive officers to remain with us rather than seek other opportunities.

 

The Compensation Committee generally considers stock option grants at the time an executive officer enters into an employment relationship with us while the granting usually occurs on the executive’s date of hire, anniversary date or the date of a regularly scheduled meeting of our Board.

 

Change in Control Payments

 

The employment agreements we have entered into with certain of our executive officers provide that they will receive certain payments if we undergo a change in control. The Compensation Committee believes that the prospect of a change in control would likely result in the executive officers facing personal uncertainties and distractions regarding the possible effects of such occurrence. The objective of providing pre-defined change in control benefits to our executive officers is to allow them to focus solely to the best interest of our shareholders in the event of any possible, threatened or pending change in control. This plan therefore serves as an important retention tool during any transition period of uncertainty to ensure that personal interests do not dilute our executive officers’ complete focus on promoting shareholder value. The details of such arrangements are discussed in the “Employment Agreements with Named Executive Officers, Termination of Employment and Change-In-Control Arrangementssection provided below.

 

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All Other Compensation

 

In January, 2014 the Company adopted an employee savings plan (401-K) pursuant to which the Company was not required to match employee contributions. The Company did not match employee contributions in fiscal 2015 or 2016.

 

Compensation Committee of the Board of Directors

 

William G. Jayroe, Chairman

Francis M. Ricci

William J. Sherlock

 

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EXECUTIVE OFFICERS

 

Executive officers are appointed by the Board and serve at the discretion of the Board, subject to any employment agreements.

 

Michael P. Shaunnessy. Mr. Shaunnessy, joined the Company on December 1, 2012 from MGM Resorts International where he served as Executive Vice President – Operations from June 2005 to November 2012. In that capacity, he was the Chief Operating and Financial Officer overseeing operations of MGM’s Railroad Pass and Gold Strike casino hotel properties, both in the Las Vegas, Nevada area. Prior to joining MGM, Mr. Shaunnessy served as Vice President – Administration of Monarch Casino Resorts, Inc. and Executive Vice President, Chief Financial Officer and director of Full House Resorts, Inc., both publicly-listed casino companies. During his seven years with Full House Resorts, he guided the company in relocating its offices from San Diego to Las Vegas and assessing all investments, operations and development projects. Earlier in his career, Mr. Shaunnessy was Vice President – Finance for Primadonna Resorts, Inc., a Nevada-based casino and hospitality company, and served in various capacities with Aztar Corporation, formerly Ramada, Inc. A certified public accountant, he earned a B.A. in Business Administration from Lewis University and an M.S. in Accountancy from Northern Illinois University.

 

James D. Meier. Mr. Meier joined Nevada Gold as Vice President of Finance and CFO in November 2014. With over 15 years working with publicly traded companies including small cap gaming companies, his diversified experience includes card rooms, acquisitions, strategic planning and financial analysis, internal controls and SEC reporting, as well as hands-on experience in casino accounting and regulatory compliance.  A CPA and CMA, Mr. Meier earned his Master’s Degree from University of Nevada, Las Vegas and his Bachelor of Science degree in Business Administration from Minnesota State University.

 

Victor H. Mena. Mr. Mena has worked in the Hospitality Industry since 1979 and has been involved in the Gaming Industry for the last 14 years. His career has spanned all aspects of the Restaurant Industry including developing and running 9 mini-casinos in the state of Washington for the Company. In 2009 Washington Gold Casinos, a wholly-owned subsidiary of Nevada Gold, acquired its first 3 mini-casinos and appointed Mr. Mena as Chief Operating Officer of the properties. Mr. Mena had been instrumental in the creation and development of these properties. In 2010 the Company acquired additional mini-casinos and Mr. Mena was instrumental in the turnaround of these assets. In 2011 another mini-casino was added to the Washington Gold portfolio. In October of 2012, Mr. Mena was appointed an executive officer of the Company with the title of Vice President of Washington Operations. Mr. Mena attended the University of Washington.

 

Ernest E. East. Mr. East has more than 30 years of gaming experience. He joined the Company in January, 2007 as Senior Vice President and General Counsel and currently serves as Vice President, Chief Regulatory and Compliance Officer. From 1998 until 2004 he was Senior Vice President, General Counsel and Chief Compliance Officer of Hyatt Gaming Services, LLC. Prior to joining Nevada Gold he was Chief Legal Officer of Global Trust Management, LLC, and prior to that, he was the Senior Vice President, General Counsel and Corporate Secretary of Sierra Pacific Resources. Mr. East previously served as Executive Vice President, Secretary and General Counsel of Trump Hotels and Casino Resorts and Del Webb Corporation. Mr. East is a graduate of the University of Tulsa and the University of Arkansas School of Law.

 

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Compensation of Executive Officers and Other Matters

 

Summary Compensation Table

 

The following table provides information about the compensation for the fiscal years ended April 30, 2016, 2015 and 2014 of our Principal Executive Officer, our Principal Financial Officer and our two remaining executive officers.

 

NAME
 AND
 PRINCIPAL
 POSITION
  FISCAL YEAR
(1)
  SALARY
 ($)
   BONUS
 ($)
   OPTION
AWARDS
($) (2)
   ALL OTHER
COMPENSATION
 ($)
   TOTAL PAY
($)
 
Michael P. Shaunnessy  2016   283,333    108,063    -    -    391,396 
CEO  2015   275,000    106,827    122,546    -    504,373 
(Principal Executive Officer)  2014   275,000    13,750    -    -    288,750 
                             
James D. Meier  2016   207,500    79,141    -    687    287,328 
Vice President, CFO  2015   100,000    38,846    106,850    -    245,696 
and Secretary  2014   -    -    -    -    - 
(Principal Financial Officer)                            
                             
Victor H. Mena  2016   215,000    87,376    -    1,800    304,176 
Vice President of Washington  2015   207,500    80,606    -    1,800    289,906 
Operations  2014   200,000    17,500    -    1,800    219,300 
                             
Ernest E. East (3)  2016   112,009    10,000    -    956    122,965 
Vice President and Chief  2015   84,615    7,000    -    1,260    92,875 
Regulatory & Compliance Officer  2014   80,000    -    -    1,192    81,192 

 

 

(1) Compensation data for the fiscal year ended April 30, 2016 includes the period from May 1, 2015 through April 30, 2016.
(2) The amounts in this column reflect the aggregate grant date fair value for stock options awarded during the fiscal year ended, computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718. Assumptions used in the calculation of this amount for fiscal year ended April 30, 2016 are included in Footnote 11 to our audited financial statements for the fiscal year ended April 30, 2016, filed with the SEC.  
(3) In April, 2015, a short term adjustment was made to Mr. East’s compensation while he was engaged as counsel for the Company on a full time basis. In July, 2015 Mr. East’s compensation was reset to his base compensation of $90,000 per annum.  

 

Grants of Plan-Based Awards Table

 

Stock Option awards and bonus payments to the NEOs for the fiscal year 2016 are shown in the above Summary Compensation Table. Also, see “Annual Incentive Compensation,” on page 16, for a discussion of the incentive plan.

 

Employment Agreements with Named Executive Officers, Termination of Employment and Change-In-Control Arrangements

 

We currently have employment agreements in place with Messrs. Shaunnessy, Meier, Mena and East.

 

Michael P. Shaunnessy. Pursuant to his current employment agreement which was executed on July 19, 2016 for a three year term, with an early termination provision, he receives (i) an annual base salary of $300,000; (ii) one month of paid vacation; (iii) contributions to any Company saving or other retirement plan; (iv) major medical and health insurance; and (v) customary reimbursement for travel and entertainment. In addition, Mr. Shaunnessy is be eligible for annual bonuses equal to 50% of his base salary for achieving reasonable goals established at the beginning of each fiscal year.

 

The Company may terminate Mr. Shaunnessy’s employment at any time without cause during the term of the agreement, but in such case it shall pay him one year of his annual salary, plus pro-rata bonus, accrued vacation and fringe benefits. The Company may terminate Mr. Shaunnessy’s employment for cause, as defined in the agreement, at any time, in which case, Mr. Shaunnessy will be entitled only to his salary, accrued vacation, and fringe benefits through the effective date of his termination. In addition, any unvested stock options shall be forfeited while all granted stock options which have been vested shall be treated as prescribed under the Company stock option plan. Mr. Shaunnessy may terminate his employment with the Company in the event of a “change of control”, as defined in the agreement, in which case, Mr. Shaunnessy will be entitled to a lump sum amount equal to his annual salary plus pro rata performance bonus, accrued vacation and fringe benefits. Also, all granted stock options not vested shall immediately become fully vested.

 

19 

 

 

James D. Meier. On July 19, 2016, the Company entered into a new employment agreement with Mr. Meier for a three year term with an early termination provision. Pursuant to the employment agreement, Mr. Meier serves as the Company’s vice president, chief financial officer and secretary, and receives, (i) an annual base salary of $215,000; (ii) vacation and fringe benefits, including enrollment in any Company savings plan or other retirement plan which the Company may adopt in the future; and, (iii) major medical and health insurance. In addition, Mr. Meier is eligible for annual bonuses up to 50% of his annual salary for achieving reasonable goals related to Company’s profitability and/or strategic goals established in the first 30 days of the fiscal year by the Company’s board of directors and/or the compensation committee.

 

The Company may terminate Mr. Meier’s employment at any time without cause during the term of the agreement, but in such case it shall pay him his annual salary, plus pro-rata bonus, accrued vacation and fringe benefits for a one year period. The Company may terminate Mr. Meier’s employment for “cause”, as defined in the employment agreement, at any time, in which case, Mr. Meier will be entitled only to his salary, accrued vacation, and fringe benefits through the effective date of his termination. In addition, any unvested stock options shall be forfeited while all granted stock options which have vested will be treated as prescribed under the Company stock option plan. Mr. Meier may terminate his employment with the Company in the event of a “change of control” (as defined in the employment agreement), in which case Mr. Meier will be entitled to a lump sum amount equal to his annual salary plus pro-rata performance bonus, accrued vacation and fringe benefits. In addition, all granted stock options but not yet vested shall immediately become fully vested.

 

Victor H. Mena. On January 20, 2015, the Company entered into an amendment to its employment agreement with Victor H. Mena. Pursuant to the amended employment agreement, Mr. Mena continues to serve as the Company’s Vice President of Washington Operations, and will be entitled to, among other things, (i) an annual base salary of $215,000; (ii) vacation and fringe benefits, including enrollment into any Company savings plan or other retirement plans which the Company may adopt in the future; and (iii) major medical and health insurance. In addition, Mr. Mena is eligible for an annual bonus up to 50% of his base salary for achieving reasonable goals related to the Company’s profitability and/or strategic goals established by the Company’s board of directors and/or the compensation committee. All stock options previously granted to Mr. Mena have vested and will be subject to the terms and conditions of the Company’s stock option plan.

 

The amended employment agreement is for a term of two years commencing on May 1, 2015. The Company may terminate Mr. Mena’s employment at any time without cause during the term of the agreement, but in such case it shall pay him his annual salary, plus pro-rata bonus, accrued vacation and fringe benefits for the remaining term of the employment agreement. The Company may terminate Mr. Mena’s employment for “cause” (as defined in the employment agreement) at any time, in which case, Mr. Mena will be entitled only to his salary, accrued vacation, and fringe benefits through the effective date of his termination. In addition, any unvested stock options shall be forfeited while all granted stock options which have vested will be treated as prescribed under the Company stock option plan. Mr. Mena may terminate his employment with the Company in the event of a “change of control” (as defined in the employment agreement), in which case Mr. Mena will be entitled to a lump sum amount equal to his annual salary plus pro-rata performance bonus, accrued vacation and fringe benefits. In addition, all granted stock options but not yet vested shall immediately become fully vested.

 

Mr. Mena is also subject to a non-competition obligation in the event of his termination for “cause” or if he were to voluntarily terminate his employment during the term of the employment agreement.

 

Ernest E. East. On April 14, 2011, the Company entered into an employment agreement with Ernest E. East. Pursuant to his employment agreement, Mr. East is entitled to: (i) an annual base salary of no less than $80,000, increased to $90,000 on January 1, 2016; (ii) vacation and fringe benefits, including enrollment in any company savings plan or other retirement plans which the Company may adopt in the future; and (iii) major medical and health insurance.  Mr. East is eligible for bonuses solely at the discretion of the Board. Mr. East performs duties as provided in the employment agreement and as directed by the Chairman of the Audit Committee. In performing his duties, Mr. East: (i) will not be required to devote more than 50% percent of his working time to the Company; (ii) may continue to perform his services from a location outside the corporate office of the Company; (iii) will travel to Company locations as reasonably requested by the Chairman of the Audit Committee; (iv) may perform legal and compliance services for third parties so long as there is no interference with his responsibilities to the Company and the services provided do not represent a conflict of interest with the Company. On April 22, 2015, a short term adjustment was made to Mr. East’s compensation retroactive to April 15, 2015. Pursuant to the adjustment, and continuing on a month to month basis while he was engaged as counsel for the Company on a full-time basis, Mr. East’s compensation was increased to $16,667 per month ($200,000 per annum). On July 13, 2015, Mr. East’s compensation was reset to his base compensation.

 

The Company may terminate the employment agreement with Mr. East without “cause,” in which case he would be entitled to a severance in the amount of his annual salary for a period of twelve months following the date of his termination plus pro-rata performance bonus, accrued vacation and fringe benefits, and all stock options granted but not vested at such time would immediately become fully vested. If we terminate Mr. East’s employment for “cause,” the employment agreement provides for a payment of only salary, vacation, and fringe benefits through the date of termination, and any unvested stock options would be forfeited. Mr. East may terminate his employment with us in the event of a “change of control,” in which case he would be entitled to a lump sum amount equal to his annual salary plus pro-rata performance bonus, accrued vacation and fringe benefits, and all granted stock options not yet vested would immediately become fully vested.

 

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Table Showing Benefits of a Termination without Cause or for Good Reason Other Than in Connection with a Change in Control

 

The following table sets forth the amounts payable under the employment agreements of each of our NEO’s in the event of a termination without cause or by the NEO for good reason other than in connection with a change in control. The amounts in the table assume that the termination took place on April 30, 2016. The closing price of our common stock on the last trading day in the fiscal year ended April 29, 2016 was $2.05.

 

Name  Cash
Severance
($) (a)
   Value of Options and
Restricted Stock that Have
Accelerated Vesting
($) (b)
   Value of Medical
Continuation
($) (c)
   Gross-Up
Amount
($)
  Total
($)
 
Michael P. Shaunnessy   414,420    327,000    10,080      751,500 
James D. Meier   297,001    82,000    10,080       389,081 
Victor H. Mena   303,150    81,700    10,080       394,930 
Ernest E. East   99,900    88,000    10,080       197,980 

 

 

(a)These amounts include cash severance payments mandated by each of the above NEO’s employment agreement, including pro-rated performance bonus, accrued vacation and fringe benefits.

 

(b)Value calculated based on treasury method.

 

(c)These amounts are estimates based on a blended rate for the above NEOs, which includes a base COBRA cost and incremental costs for the portion of the premiums that we pay. The estimated amounts are given because of certain HIPAA privacy regulations and are expected to be close to the true rate for the individual.

  

Table Showing Benefits of a Change in Control

 

The following table sets forth the amounts payable under the employment agreements of each of our NEOs in the event of a termination in connection with a change of control event. Pursuant to each NEO’s employment agreement, a “change of control” is defined as the sale of substantially all of our assets, acquisition by a third party of more than 50% of our stock, merger, or other business combination with an unaffiliated entity or person. The amounts in the table assume that the triggering event took place on April 30, 2016. The closing price of our common stock on the last trading day in the fiscal year ended April 29, 2016 was $2.05.

 

Name 

Cash
Severance
($) (a)

   Value of Options and
Restricted Stock that Have
Accelerated Vesting
($)
   Value of Medical
Continuation
($) (b)
   Gross-Up
Amount
($)
  Total
($)
 
Michael P. Shaunnessy   414,420    327,000    10,080      751,500 
James D. Meier   297,001    82,000    10,080       389,081 
Victor H. Mena   303,150    81,700    10,080       394,930 
Ernest E. East   99,900    88,000    10,080       197,980 

 

 
(a)These amounts include a lump sum cash severance payments mandated by each of the above NEO’s employment agreement, including pro-rata performance bonus, accrued vacation and fringe benefits.

 

(b)These amounts are estimates based on a blended rate for each of the above NEOs, which includes a base COBRA cost and incremental costs for the portion of the premiums that we pay. The estimated amounts are given because of certain HIPAA privacy regulations and are expected to be close to the true rate for the individual.

  

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Outstanding Equity Awards at Fiscal Year-End

 

The table below presents information on the outstanding equity awards held by our NEOs as of April 30, 2016.

 

Name(*)  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Option
Exercise
Price
($)
   Option
Expiration
Date
Michael P. Shaunnessy   200,000    -    0.82   12/01/2022
    50,000    50,000    1.23   07/22/2024
                   
James D. Meier   50,000    50,000    1.23   11/01/2024
         -         
Victor H. Mena   20,000    -    1.25   07/28/2019
    50,000    -    0.98   07/27/2020
    25,000    -    1.57   07/27/2021
                   
Ernest E. East   60,000    -    1.25   07/28/2019
    10,000    -    0.98   07/27/2020
    10,000    -    1.57   07/27/2021
    20,000    -    0.82   10/17/2022

 

 

(*)The option awards were granted pursuant to our 2009 Plan, which was approved by shareholders at the 2009 Special Meeting of Shareholders. During the fiscal year ended April 30, 2016, no stock options were exercised by our NEOs. The fair market value of our common stock at the end of the fiscal year ended April 30, 2016 was $2.05 per share.

 

Certain Relationships and Related Transactions

 

Our Audit Committee charter requires that the Audit Committee reviews and approves all related party transactions for potential conflicts of interests. The Company paid $4,250 during the fiscal year ended April 30, 2016, in accordance with Club Fortune entering into a ground lease agreement with Gaming Ventures Las Vegas, Inc., the previous owner of Club Fortune, which is owned by a shareholder who owns over 5% of the Company. The company paid $85,322 during the fiscal year ended April 30, 2016 in accordance with a consulting agreement with the same shareholder.

 

We have entered into indemnity agreements with our directors which provide, among other things, that we will indemnify such directors, under the circumstances and to the extent provided for in the agreements, for expenses, damages, judgments, fines and settlements he may be required to pay in actions or proceedings which he is or may be made a party to by reason of his position as our director, and otherwise to the full extent permitted under Nevada law and our Bylaws.

 

Notes Receivable – Affiliates

 

None.

 

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PROPOSAL TWO

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act enables our shareholders to approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement (commonly referred to as “say-on-pay”).

 

Shareholders are encouraged to read the Compensation Discussion and Analysis section of this proxy statement for a more detailed discussion of how our compensation program reflects our compensation philosophy. We are asking shareholders to indicate their support for our Named Executive Officer compensation as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers. Accordingly, we will ask our shareholders to vote FOR adoption of the following resolution:

 

“RESOLVED, that the shareholders of Nevada Gold & Casinos, Inc. approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the Summary Compensation Table and related tables and disclosure.”

 

This vote is advisory and is not binding on the Compensation Committee or the Board.

 

THE BOARD RECOMMENDS A VOTE FOR ADOPTION OF THIS PROPOSAL.

 

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PROPOSAL THREE

 

SELECTION OF ERNST & YOUNG LLP

AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board has selected, and recommends the approval of the appointment of, Ernst & Young LLP as our independent public accounting firm for the fiscal year ending April 30, 2017.

 

Unless shareholders specify otherwise in the proxy vote, proxies solicited by the Board will be voted by the persons named in the proxy at the Annual Meeting to ratify the selection of Ernst & Young LLP (“E&Y”) as our independent public accounting firm for the fiscal year ending April 30, 2017. The affirmative vote of a majority of the votes cast at the Annual Meeting will be required for ratification. Although the appointment of an independent public accounting firm is not required to be submitted to a vote of shareholders, the Board recommended that the appointment be submitted to our shareholders for approval. If our shareholders do not approve the appointment of E&Y, the Board will consider the appointment of another independent public accounting firm.

 

E&Y served as our independent registered public accounting firm for the 2016 and 2015 fiscal years. Representatives of E&Y are expected to be present at the Annual Meeting and will be given the opportunity to make a statement. The recommendation of the Audit Committee to engage E&Y for fiscal year 2017 was unanimously approved by the Board of Directors.

 

Audit Fees

 

E&Y provided professional services related to our fiscal year ended April 30, 2016, and for our fiscal year ended April 30, 2015. Fees for audit services include fees associated with the annual audit and the reviews of the Company’s quarterly reports on Form 10-Q. Tax fees included tax compliance, tax advice and preparation of our Federal and State tax returns.

 

Approximate fees for professional services provided in each of the last two fiscal years:

 

   Fiscal 2016   Fiscal 2015 
Audit Fees  $412,993   $186,415 
Tax Fees  $147,750   $55,000 
Other  $9,200    - 

 

Audit Committee Preapproval Policy

 

The Audit Committee’s policy is to review and pre-approve any engagement of our independent auditor to provide any audit or permissible non-audit service to us. All of the services provided by our independent auditors were approved by our Audit Committee and the Audit Committee believes that the provision of these services is consistent with maintaining the accountant’s independence.

 

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2017.

 

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SHAREHOLDERS SHARING AN ADDRESS

 

Shareholders sharing an address with another shareholder may receive only one set of proxy materials at that address unless they have provided contrary instructions. Any such shareholder who wishes to receive a separate set of proxy materials now or in the future may write to us or call us to request a separate copy of these materials from:

 

Investor Relations

133 E. Warm Springs Road

Suite 102

Las Vegas, Nevada 89119

(702) 685-1000

 

Similarly, shareholders sharing an address with another shareholder who have received multiple copies of our proxy materials may write or call the above address and phone number to request delivery of a single copy of these materials.

 

OTHER MATTERS

 

The Board knows of no other matters that will be proposed for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy intend to vote on those matters in accordance with their best judgment.

 

  Nevada Gold & Casinos, Inc.
   
  By  /s/Michael P. Shaunnessy
   
  MICHAEL P. SHAUNNESSY,
  President & Chief Executive Officer

 

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY VOTE AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.

 

THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.

 

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