SCHEDULE 14A
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ x ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
Name of Registrant as Specified in Its Charter:
Station Casinos, Inc.
Name of Person(s) Filing Proxy Statement:
UNITE HERE
Payment of Filing Fee (check the appropriate box)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
PROXY STATEMENT
INDEPENDENT SHAREHOLDER SOLICITATION
for Annual Shareholders Meeting
STATION CASINOS, INC.
May 18, 2005
[LOCATION]
[TIME]
First released to Shareholders ________ ___, 2005
UNITE HERE
1630 S. Commerce St.
Las Vegas, NV 89102
Tel. (702) 386-5188
Fax: (702) 386 5241
To Fellow Station Casinos, Inc. Shareholders:
We are writing to urge you to support our shareholder proposals
recommending reforms to enhance shareholder rights at Station
Casinos, Inc. (the Company).
Station Casinos has been one of the leading performers in the gaming
industry. However, we are concerned about the Company's
corporate governance practices and restrictions on shareholder
rights. We believe the Company's arsenal of anti-takeover
devices--a classified board, a stockholder rights plan (or "poison
pill"), blank check preferred stock, supermajority voting
requirements, golden parachutes, and restrictions on shareholders'
ability to call special meetings or act by written consent--serve
to potentially entrench management and the Board of
Directors from shareholders.
It is our opinion that enhancing shareholder rights at Station
Casinos, rather than maintaining the Company's current entrenchment
devices, is the best guarantee to ensure the continuing success of
the Company.
Removing the Company's anti-takeover devices is especially
important given the unprecedented merger-and-acquisition activity in
the gaming industry. In 2004, over $22 billion in gaming deals were
announced, and Boyd Gaming completed its $1.4 billion acquisition of
Coast Resorts, a major Station Casinos' competitor.
We believe the trend of consolidation among gaming operators is
likely to continue, a view backed by top gaming industry analysts:
"We believe that the industry could continue to experience
consolidation, particularly among the small-cap operators, as the
gap between them and the large caps continues to widen." (Lehman
Brothers Global Equity Research, "Opportunity Knocks", Aug. 24,
2004)
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None of the publications or authors cited in this proxy
statement are participants in this proxy solicitation. We have not
requested nor obtained the consent of any of these sources for
referring to these materials in our proxy statement.
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"We expect consolidation to continue as smaller operators need scale
to compete with the larger casino operators, although we anticipate
that the rate of M&A will slow from 2004's torrid pace." (Bear
Stearns Equity Research, "U.S. Gaming: Let the Games Begin,"
January, 2005).
"Casino operators remain in a period of strong secular growth but
are likely to face momentum concerns as growth slows....In this
environment, consolidation will likely become an increasingly
important component of growth, which presents both opportunity and
risk." (Citigroup Smith Barney Equity Research, "United States,
Gaming and Lodging, 2004 Midyear Update: What's Next?" Jun. 18, 2004).
Given this environment, we believe that the Company's current
anti-takeover devices provide our Board of Directors and management
with too much power to potentially reject offers that may be in the
best interests of shareholders.
ACCORDINGLY, WE URGE SHAREHOLDERS TO VOTE FOR OUR PROPOSALS
RECOMMENDING THE BOARD DO THE FOLLOWING:
1. Strengthen shareholder rights by changing a "supermajority"
voting provision in the bylaws to simple majority.
2. Declassify the Board and institute annual election of Directors.
3. Allow shareholders to vote on the Company's "poison pill" or
redeem it.
Below is the full text of our proposals, along with supporting
statements for each proposal.
1. ESTABLISH SIMPLE MAJORITY VOTING BY SHAREHOLDERS
RESOLVED, that the shareholders of Station Casinos, Inc. urge the
Board of Directors to increase shareholder rights by lowering the
voting requirement to amend the Company's Restated Bylaws from the
current "supermajority" to a simple majority.
Supporting Statement:
We believe shareholders' ability to exercise their rights to be
fundamental to good corporate governance, including the ability of
shareholders to enact bylaw amendments or take other action by a
majority of shares outstanding. A simple majority of shareholder
votes should be sufficient to mandate changes to the Company's
bylaws.
Currently, the Company has a "supermajority" requirement for
bylaw amendments: two-thirds of the outstanding shares (not just
shares voted). We believe this requirement unduly limit
shareholders' influence and role in our company, particularly given
the significant insider ownership (more than 20%) of the Company's
common stock. The supermajority requirement creates in our
view an unreasonably high threshold for outside shareholders to
affect fundamental changes to the Company's Restated Bylaws.
We believe the restoration of simple majority rule by shareholders
is the first step toward meaningful corporate governance reform at
the Company. We urge the Board of Directors to increase shareholder
rights and establish simple majority voting by shareholders with
respect to amending the Company's Restated Bylaws.
2. INSTITUTE ANNUAL ELECTION OF DIRECTORS
RESOLVED, that shareholders of Station Casinos, Inc. urge the Board
of Directors to take necessary steps, in compliance with state law,
to declassify the board and institute annual election of directors.
The board's new election system shall be instituted in a manner
that does not affect the unexpired terms of directors previously
elected.
Supporting Statement:
Station Casinos' Board of Directors is divided into three classes
of directors serving staggered three-year terms. This means an
individual director faces election only once every three years, and
shareholders only vote on approximately a third of the board each year.
We believe this director classification system is not in the best
interests of shareholders because it reduces the accountability of
the board to shareholders and is an unnecessary takeover defense.
Shareholders should have the opportunity to vote on the performance
of the entire Board each year. Replacing the current classification
system with annual elections of all directors would give
shareholders an opportunity to register their views on the
performance of the board collectively and each director individually.
A study by researchers at Harvard Business School and the University
of Pennsylvania's Wharton School titled "Corporate Governance and
Equity Prices" (Quarterly Journal of Economics, February 2003)
looked at the relationship between corporate governance practices
(including classified boards) and firm performance. The study found
a significant positive link between governance practices favoring
shareholders (such as annual director elections) and firm value,
though the study did not break out the impact of individual
governance practices.
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Of course, commentators and corporate governance experts
disagree on the propriety and utility of anti-takeover provisions.
Those favoring such provisions note that they increase the board's
ability to negotiate terms when an outside investor wishes to
acquire control of a company, and sometimes those terms may benefit
some or all shareholders. We do not believe this possible benefit
outweighs the undemocratic nature of anti-takeover provisions and
their potential entrenching effects.
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Many institutional investors increasingly favor requiring annual
elections for all directors. The Council of Institutional
Investors, the California Public Employees' Retirement System, and
Institutional Shareholder Services support this reform.
We urge shareholders to demand that Station Casinos, Inc. declassify
its Board of Directors and adopt annual director elections.
3. SHAREHOLDER APPROVAL OF POISON PILLS
RESOLVED, that shareholders of Station Casinos, Inc. urge the Board
of Directors to submit the Company's Rights Agreement to
shareholders for approval or, if such approval is not granted by a
majority vote of shareholders, redeem it, and to seek shareholder
approval for extending this "poison pill" or adopting other similar
plans in the future.
Supporting Statement:
On October 6, 1997, the Company's Board of Directors adopted,
without shareholder approval, a "Rights Agreement" (which was last
amended on December 1, 1998). The agreement provides that the Board
can thwart a potential large bidder (for 15% or more) by
giving all other shareholders additional stock for each
share owned.
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The Company's latest 10K explains: "On October 6, 1997,
we declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock. * * * Each
Right entitles the registered holder to purchase from us one
one-hundredth of a share of Series A Preferred Stock, par value
$0.01 per share ("Preferred Shares") at a price of $40.00 per one
one-hundredth of a Preferred Share, subject to adjustment. The
Rights are not exercisable until the earlier of 10 days following a
public announcement that a person or group of affiliated or
associated persons have acquired beneficial ownership of 15% or more
of our outstanding common stock ("Acquiring Person") or 10 business
days (or such later date as may be determined by action of the Board
of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make a tender offer or exchange
offer, the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of our outstanding
common stock.
The Rights will expire on October 21, 2007. Acquiring Persons do not
have the same rights to receive common stock as other holders upon
exercise of the Rights. Because of the nature of the Preferred
Shares' dividend, liquidation and voting rights, the value of one
one-hundredth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one common
share. In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, the proper
provisions will be made so that each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will
thereafter become void), will thereafter have the right to receive
upon exercise that number of shares of common stock having a market
value of two times the exercise price of the Right. In the event
that the Company is acquired in a merger or other business
combination transaction or 50% or more of our consolidated assets or
earning power are sold after a person or group has become an
Acquiring Person, proper provision will be made so that each holder
of a Right will thereafter have the right to receive, upon exercise
thereof, that number of shares of common stock of the acquiring
company, which at the time of such transaction will have a market
value of two times the exercise price of the Right. Because of the
characteristics of the Rights in connection with a person or group
of affiliated or associated persons becoming an Acquiring Person,
the Rights may have the effect of making an acquisition of the
Company more difficult and may discourage such an acquisition."
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The Board adopted this agreement unilaterally and without seeking
prior approval of shareholders. Unless redeemed, the share purchase
rights set forth in the Rights Agreement will expire on October 21,
2007, unless the expiration date is extended or the rights are
earlier redeemed.
We do not believe the possibility of an unsolicited bid justifies
the unilateral implementation of such a device by the board.
-----------------------------------
Current management has many sources of protection from
takeovers, rendering a pill unnecessary (in our view) even if such
"protection" were deemed desirable. In addition to the three
provisions described here, the Company also has golden parachutes
for senior executives and Articles provisions requiring a 66.66%
supermajority for any merger or sale and allowing the board to issue
preferred stock with rights decided by the Board (commonly referred
to as a "blank check" provision). Nevada statutes have a series of
anti-takeover provisions, NRS 78.378-3793; 78.411-444.
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Therefore, we urge the board to submit the Rights Agreement to a
shareholder vote for approval and not to extend it or adopt other
poison pills in the future without first seeking shareholder approval.
According to the 1991 book Power and Accountability by Nell Minow
and Robert Monks: "All poison pills raise questions of shareholder
democracy and the robustness of the corporate governance process.
They amount to major de facto shifts of voting rights away from
shareholders to management, on matters pertaining to the sale of the
corporation. They give target boards of directors absolute veto
power over any proposed business combination, no matter how
beneficial it might be for the shareholders."
We urge all shareholders to vote FOR this resolution.
II. PROXY VOTING:
PLEASE USE THE ENCLOSED PROXY CARD TO VOTE FOR THE
PROPOSALS. YOU WILL ALSO RECEIVE A PROXY CARD FROM
MANAGEMENT. IF YOU SUPPORT ANY OF THE PROPOSALS, DO NOT
SEND BACK MANAGEMENT'S CARD (UNLESS THAT CARD GIVES YOU
A CHANCE TO VOTE ON SUCH PROPOSALS). ANY PROXY CARD YOU
HAVE SIGNED IS CANCELLED OUT BY SUBMITTING A LATER-DATED PROXY CARD.
We intend to solicit at least a majority of the voting power the
outstanding stock. You can revoke any proxy vote prior to the tally
at the shareholders meeting by signing and submitting new proxy
card, by sending written notice of revocation to the proxy holder,
or by appearing at the meeting and voting in person. The record
date for eligibility to vote is _____, 2005.
Our proposals are non-binding recommendations to the board (the
Board lawfully can disregard a majority shareholder vote in favor of
such proposals). Passage of these proposals requires approval
of a majority of votes cast. Under the Company's Articles and
Bylaws, each abstention and broker non-vote is treated as a vote
against proposals. We seek no discretionary voting authority
for the meeting: we will vote your stock as you instruct us. If
you return the enclosed card but give us no instructions, we will vote
your stock FOR our proposals and not vote the card in the director
selection nor on any other matter. The Company's bylaws require 35
days' advance notice before any matter may be raised at the meeting,
and therefore we do not expect any matter to be raised at the
meeting that is not addressed in this proxy statement. Our
proposals were submitted to management on February 25, 2005
We incorporate by reference all information concerning the board of
directors [and management's proposal to _____ ] and voting
procedures contained in management's proxy statement at
pages ___.
III. INFORMATION ON PARTICIPANTS IN THIS SOLICITATION:
The participants in this solicitation will be UNITE HERE, its
research analyst Chris Bohner, Culinary Workers Union Local 226 (a
UNITE HERE affiliate commonly known as "The Culinary") and its
research analyst Ken Liu. All have offices at the above address.
UNITE HERE represents approximately 440,000 active members and more
than 400,000 retirees throughout North America. UNITE HERE owns 262
shares of Station Casino Inc. common stock. UNITE HERE and its
affiliates have engaged in shareholder solicitations on corporate
governance issues at several companies over the past decade.
Station Casino Inc.'s workforce is not unionized. The Culinary,
which represents approximately 50,000 employees of Las Vegas resorts
in collective bargaining, has an ongoing organizing drive at Station
properties in Las Vegas. Neither UNITE HERE nor the Culinary have
undertaken picketing or boycott activities against the Company. We
do not seek your support in labor matters, and do not believe that
enactment of the proposals would have any impact on such matters.
The proposals and UNITE HERE's proxy cards will be presented at the
meeting regardless of any developments in such matters.
UNITE HERE and the Culinary will bear all solicitation costs
(anticipated at $10,000) and will not seek reimbursement from the
Company. They will solicit proxies by mail, phone, e-mail, fax and
in person using its regular staff, who shall not receive any
additional compensation, but they may also hire an outside
solicitor. They will reimburse banks, brokers, and other custodians,
nominees or fiduciaries for reasonable expenses incurred in
forwarding proxy material to beneficial owners.
IV. YOUR RIGHT TO MAKE SHAREHOLDER PROPOSALS:
If a shareholder has owned more than $2000 worth of stock for more
than a year and meets the other criteria of SEC Rule 14a 8, then he
or she has the legal right to have a proposal appear in management's
proxy statement and proxy card. The deadline for shareholders to
submit proposals for inclusion in management's proxy materials for
the year 2005 is December 15, 2004.
V EXECUTIVE COMPENSATION/SECURITY OWNERSHIP OF
MANAGEMENT AND 5% OWNERS:
We incorporate by reference the information contained in
management's proxy statement at pages ____________.
PLEASE RETURN THE ENCLOSED PROXY CARD TODAY.
For more information, contact UNITE HERE at (702) 386 5188.
VOTE FOR THE CORPORATE GOVERNANCE REFORM PROPOSALS.
[page break]
PROXY CARD
solicited by UNITE HERE for Annual Shareholders
Meeting of Station Casino, Inc., May 18, 2005
The undersigned hereby designates Chris Bohner and Ken Liu, with
full power of substitution, as the proxies of the undersigned for
the sole purpose of voting all stock of the undersigned in the
manner marked below at the Station Casinos, Inc. annual shareholders
meeting for 2005. This proxy card grants no discretionary voting
authority: if matters come before the meeting other than the items
below, the stock of the undersigned will not be voted on such matters.
1. ELECTION OF DIRECTORS
For: [ ] MANAGEMENT NOMINEES:
01 __________________
02 ___________________
To withhold authority for individual candidates, cross out name(s).
Withhold Authority as to all above: [ ]
UNITE HERE MAKES NO RECOMMENDATION ON THE DIRECTORS ELECTION
UNITE HERE URGES A VOTE FOR SHAREHOLDER PROPOSALS
RECOMMENDING THE FOLLOWING :
2. Increase shareholder rights by changing the "supermajority"
voting provision for bylaw amendments to simple majority.
FOR THIS PROPOSAL:
AGAINST THIS PROPOSAL:
ABSTAIN:
3. Declassify the board and institute annual election of directors.
FOR THIS PROPOSAL:
AGAINST THIS PROPOSAL:
ABSTAIN:
4. Submit the Company's "poison pill" to shareholders for approval.
FOR THIS PROPOSAL:
AGAINST THIS PROPOSAL:
ABSTAIN:
If no direction is made above, UNITE HERE will vote this card FOR
the proposals and not vote it in the directors' election.
Dated: _____________
SIGNATURE:_______________________________________
PRINT: _____________________________________________
NAME:_____________________________________________
TITLE (if shares not held in above name): ________________
Optional information so we can make sure your vote gets counted and
provide you more info about shareholder issues at Station Casinos
(your info will not be put to any other use):
Telephone _________ Fax
E-mail address:____________
This card can be returned in the enclosed envelope or by fax to
(702) 386 5241.