Mandalay officials could get $75 million

Friday, Nov. 19, 2004 | 10:51 a.m.

Mandalay Resort Group officials are expected to receive cash payments of more than $75.5 million upon the company's historic acquisition by MGM Mirage, recent financial statements show.

Upon the close of the $7.9 billion deal, which is expected by the end of the first quarter next year, outstanding stock options as well as grants of restricted stock held by Mandalay executives and others will automatically be canceled in exchange for cash payments of $71 per share of Mandalay stock, which is equal to what MGM Mirage is paying for the company.

About $64.9 million of the payments will come from exercising restricted stock and about $10.7 million will come from the exercise of stock options, according to a filing made last week by the Securities and Exchange Commission.

The merger agreement calls for MGM Mirage to grant retention bonuses of up to $11 million to non-director executives, officers and other employees of Mandalay Resort Group, the filing said. It also calls for MGM Mirage to make another $8.5 million in payments to satisfy taxes on gains made as a result of the merger.

Top Mandalay officials would receive more than $20 million in payments from their share holdings alone, recent statements show.

Chief Executive Mike Ensign would receive $28.8 million, President and Chief Financial Officer Glenn Schaeffer would receive $25.9 million and Vice Chairman William Richardson would receive $21.3 million based on their most recently reported holdings.

The filing is the first evidence of sizable awards that are anticipated by company targets in a pair of upcoming megamergers, the largest in the history of the casino business.

Harrah's Entertainment Inc. hasn't yet disclosed what Caesars Entertainment Inc. executives are expected to receive as a result of Harrah's $9.4 billion buyout of Caesars, which will create a company even larger than the combined MGM Mirage and Mandalay Resort Group.

According to a Securities and Exchange Commission filing from Harrah's last month, Caesars executives are entitled to "accelerated vesting of Caesars stock options, restricted stock units, performance awards" and retention bonuses.

Caesars executives also are entitled to continued benefits for one year following the close of the deal that are at least equal in value to Caesars benefits, the filing said.

Harrah's is "still working on those numbers" and expects to eventually disclose those executive payments to the public, company spokesman Gary Thompson said.