SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

 

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

þ  Definitive Proxy Statement

 

o  Definitive Additional Materials

 

o  Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12

 

LAS VEGAS SANDS CORP.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LETTER FROM THE CHAIRMAN

 

 

Dear Stockholder:

 

You are cordially invited to attend the 2008 annual meeting of stockholders of Las Vegas Sands Corp., which will be held on June 5, 2008 at 11:00 a.m., Las Vegas Time, at The Venetian Resort Hotel Casino located at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109.

 

Details regarding admission to the meeting and the business to be presented at the meeting can be found in the accompanying Notice of Annual Meeting and Proxy Statement.

 

Your vote is important. Whether or not you are able to attend, it is important that your shares be represented at the meeting. You may vote in person or by returning your proxy card. Instructions for voting are provided in the enclosed materials.

 

On behalf of the Board of Directors and the management of Las Vegas Sands Corp., thank you very much for your support.

 

Yours sincerely,

 

Sheldon G. Adelson

Chairman of the Board

and Chief Executive Officer

 

April 29, 2008

 

NOTICE OF ANNUAL MEETING

 

to be held on

 

June 5, 2008

 

 

To the Stockholders:

 

The annual meeting of stockholders of Las Vegas Sands Corp., a Nevada corporation (the “Company”), will be held at The Venetian Resort Hotel Casino located at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109, on June 5, 2008, at 11:00 a.m., Las Vegas Time, for the following purposes:

 

1. To elect three directors to the Board of Directors, each for a three-year term;

 

2. To consider and act upon the ratification of the selection of our independent registered public accounting firm;

 

3. To approve the performance-based provisions of the Company’s 2004 Equity Award Plan;

 

4. To approve the performance-based provisions of the Company’s Executive Cash Incentive Plan; and

 

5. To transact such other business as may properly come before the meeting or any adjournments thereof.

 

Stockholders of record at the close of business on April 21, 2008 are entitled to notice of and to vote at the meeting. A list of these stockholders will be available for examination by any stockholder, for any purpose germane to the meeting, during ordinary business hours, at the Company’s executive offices, located at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109, for a period of ten days prior to the meeting date. The list will also be available for inspection by any stockholder at the place of the stockholder meeting during the whole time thereof.

 

By Order of the Board of Directors,

 

William P. Weidner

President,

Chief Operating Officer

and Secretary

 

April 29, 2008

 

PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY.

Use of the enclosed envelope requires no postage for mailing in the United States.

 

PROXY STATEMENT

 

TABLE OF CONTENTS

 

 

PROXY STATEMENT

 

 

 

Our Board of Directors (the “Board”) has provided you with these proxy materials in connection with its solicitation of proxies to be voted at the annual meeting of stockholders. We will hold the annual meeting on Thursday, June 5, 2008 at The Venetian Resort Hotel Casino located at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109, beginning at 11:00 a.m., Las Vegas Time. Please note that throughout these proxy materials we may refer to Las Vegas Sands Corp. as “the Company,” “we,” “us,” or “our.” We first began mailing this Proxy Statement and accompanying proxy card on or about April 30, 2008.

 

Only stockholders of record of the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), as of April 21, 2008, will be entitled to vote at the meeting or any adjournment thereof.

 

The authorized capital stock of the Company presently consists of 1,000,000,000 shares of Common Stock. At the close of business on April 21, 2008, 355,420,946 shares of Common Stock were outstanding and entitled to vote. Each stockholder is entitled to one vote for each share held of record on that date on all matters that may come before the meeting. There is no cumulative voting in the election of directors.

 

You may vote in person by attending the meeting or by completing and returning a proxy by mail. To vote your proxy by mail, mark your vote on the enclosed proxy card, then follow the instructions on the card.

 

The presence, in person or by proxy, of the holders of at least a majority of the total number of outstanding shares of the Common Stock is necessary to constitute a quorum at the meeting. If you are the beneficial owner of shares held in “street name” by a broker, your broker, as the record holder of the shares, must vote those shares in accordance with your instructions. In accordance with the rules of the New York Stock Exchange (the “NYSE”), brokerage firms may give a proxy to vote their customer’s stock without customer instructions if (i) they transmitted proxy materials to the beneficial owner of the stock, (ii) did not receive voting instructions by the date specified in the statement accompanying the proxy materials and (iii) the brokerage firm has no knowledge of any contest with respect to the actions to be taken at the stockholders’ meeting and such actions are adequately disclosed to stockholders and do not include authorization for a merger, consolidation or any matter that could substantially affect the rights or privileges of the stock. Abstentions and broker non-votes are counted as present for the purpose of determining the presence or absence of a quorum for the transaction of business.

 

The affirmative vote of a plurality of the votes cast at the meeting will be required for the election of directors. Each other item to be acted upon at the meeting requires the affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting in person or by proxy and entitled to vote on the item, assuming that a quorum is present or represented at the meeting. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, and will have no effect. With respect to the other proposals, a properly executed proxy marked “ABSTAIN,” although counted for purposes of determining whether there is a quorum, will not be voted.

Accordingly, an abstention will have the same effect as a vote cast against a proposal. Under Nevada law, a broker non-vote will have no effect on the outcome of the matters presented for a stockholder vote.

 

Sheldon G. Adelson, the Chairman of the Board and Chief Executive Officer of our Company, beneficially owned approximately 52.0% of our Common Stock as of the record date and will be entitled to vote his shares at the annual meeting. Dr. Miriam Adelson, Mr. Adelson’s wife, and Irwin Chafetz, a director of our Company, are two of the three trustees of several trusts for the benefit of Mr. Adelson’s family members that collectively beneficially owned approximately 16.9% of our Common Stock as of the record date. Dr. Adelson retains voting control over the shares in these trusts. In addition, Mr. Chafetz is among the three trustees of several trusts for the benefit of Mr. Adelson that collectively beneficially owned approximately 4.8% of our Common Stock as of the record date. Mr. Chafetz shares voting control over the shares in these trusts. Mr. Adelson, Dr. Adelson and Mr. Chafetz have indicated that they will vote the shares of Common Stock over which they exercise voting control in favor of each of the proposals described in this Proxy Statement.

 

	•	“FOR” the election of each of the nominees for director as set forth under Proposal 1 below;
	•	“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2008 as described in Proposal 2 below;
	•	“FOR” the approval of the performance-based provisions in our 2004 Equity Award Plan as described in Proposal 3 below; and
	•	“FOR” the approval of the performance-based provisions in our Equity Award Plan as described in Proposal 4 below.

 

 

You may revoke or change your proxy at any time before it is exercised in any of three ways:

 

 

You will not revoke a proxy merely by attending the annual meeting. To revoke or change a proxy, you must take one of the actions described above.

 

If you hold your shares in a brokerage or other account, you may submit new voting instructions by contacting your broker, bank or nominee.

 

Any revocation of a proxy, or a new proxy bearing a later date, should be sent to the following address: Corporate Secretary, Las Vegas Sands Corp., 3355 Las Vegas Sands Boulevard South, Las Vegas, Nevada 89109.

 

Our Board presently is not aware of any matters other than those specifically stated in the Notice of Annual Meeting, which are to be presented for action at the annual meeting. If any matter other than those described in this Proxy Statement is presented at the annual meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares.

 

Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.

 

The Notice of Annual Meeting and Proxy Statement and the Company’s 2007 Annual Report are available on the Investor Information page of our website, www.lasvegassands.com, at
http://phx.corporate-ir.net/phoenix.zhtml?c=185629&p=irol-ReportsAnnual. In the future, instead of receiving copies of the Proxy Statement and annual report in the mail, stockholders may elect to receive an e-mail with a link to these documents on the internet. Receiving your proxy materials online saves the Company the cost of producing and mailing documents to your home or business and gives you an automatic link to the proxy voting site.

 

Stockholders of Record.  If your shares are registered in your own name, to enroll in the electronic delivery service go directly to our transfer agent’s website at www.amstock.com anytime and follow the instructions.

 

Beneficial Stockholders.  If your shares are not registered in your name, to enroll in the electronic delivery service check the information provided to you by your bank or broker, or contact your bank or broker for information on electronic delivery service.

 

Each year in connection with the Company’s annual meeting of stockholders, the Company is required to send to each stockholder of record a Proxy Statement and annual report, and to arrange for a Proxy Statement and annual report to be sent to each beneficial stockholder whose shares are held by or in the name of a broker, bank, trust or other nominee. Because many stockholders hold shares of the Company’s Common Stock in multiple accounts, this process results in duplicate mailings of Proxy Statements and annual reports to stockholders who share the same address. To avoid this duplication, unless the Company receives instructions to the contrary from one or more of the stockholders sharing a mailing address, only one Proxy Statement will be sent to each address. Stockholders may, on their own initiative, avoid receiving duplicate mailings and save the Company the cost of producing and mailing duplicate documents as follows:

 

Stockholders of Record.  If your shares are registered in your own name and you are interested in consenting to the delivery of a single Proxy Statement or annual report, to enroll in the electronic delivery service go directly to our transfer agent’s website at www.amstock.com anytime and follow the instructions.

 

Beneficial Stockholders.  If your shares are not registered in your own name, your broker, bank, trust or other nominee that holds your shares may have asked you to consent to the delivery of a single Proxy Statement or annual report if there are other Las Vegas Sands Corp. stockholders who share an address with you. If you currently receive more than one Proxy Statement or annual report at your household, and would like to receive only one copy of each in the future, you should contact your nominee.

 

Right to Request Separate Copies.  If you consent to the delivery of a single Proxy Statement and annual report but later decide that you would prefer to receive a separate copy of the Proxy Statement or annual report, as applicable, for each stockholder sharing your address, then please notify us or your nominee, as applicable, and we or they will promptly deliver such additional Proxy Statements or annual reports. If you wish to receive a separate copy of the Proxy Statement or annual report for each stockholder sharing your address in the future, you may contact our transfer agent, American Stock Transfer & Trust Company, directly by telephone at 1-800-937-5449 or by visiting its website at www.amstock.com and following the instructions.

 

All meeting attendees may be asked to present a valid, government-issued photo identification (federal, state or local), such as a driver’s license or passport, and proof of beneficial ownership if you hold your shares through a broker, bank or other nominee before entering the meeting. Attendees may be subject to security inspections. Video and audio recording devices and other electronic devices will not be permitted at the meeting.

 

The following table sets forth information as of April 18, 2008, as to the beneficial ownership of our Common Stock, in each case, by:

 

 

 

 

 

 

 

Our Board currently has nine directors, divided into three classes, designated as Class I, Class II and Class III. Members of each class serve for a three-year term. Stockholders elect one class of directors at each annual meeting. Our directors are expected to attend each annual meeting of stockholders and all of our directors who were members of our Board at that time attended our 2007 annual meeting of stockholders held on June 7, 2007. The term of office of the current Class I directors will expire at the meeting. The term of office for the Class II directors will be subject to renewal in 2009 and the term of office for the Class III directors will be subject to renewal in 2010. Each director holds office until his or her successor has been duly elected and qualified or the director’s earlier resignation, death or removal. The nominees are all current directors of the Company, and each nominee has indicated that he will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy will be voted for another person nominated by the Board.

 

The nominees for re-election for a three-year term ending in 2011 are as follows:

 

The other members of the Board are as follows:

 

 

Board

 

NYSE Listing Standards.  Certain provisions of the corporate governance rules of the NYSE are not applicable to “controlled companies.” “Controlled companies” under those rules are companies of which more than 50 percent of the voting power is held by an individual, a group or another company. The Company currently is a “controlled company” under this definition by virtue of the ownership by Mr. Adelson of more than 50 percent of the voting power of the Common Stock and his ability to elect the entire Board. Accordingly, the Company has chosen to take advantage of certain of the exemptions provided in the NYSE’s rules. Specifically, the Company is not required to have a majority of independent directors or a nominating and governance committee or a compensation committee composed entirely of independent directors.

 

Independent Directors.  As a “controlled company” we are not required to have a majority of independent directors on our Board pursuant to the rules of the NYSE. However, the Board has determined that five of the nine members of the Board currently satisfy the criteria for independence under applicable rules promulgated under the Securities Exchange Act of 1934, as amended, and the NYSE corporate governance rules, namely Messrs. Heyer, Koo, Leven, Purcell and Siegel. In making its determination, the Board reviewed all the relevant facts and circumstances, the standards set forth in our Corporate Governance Guidelines, the NYSE rules and other applicable laws and regulations.

 

Two of our directors, Messrs. Chafetz and Forman, have business and personal relationships with our controlling stockholder, Mr. Adelson. Mr. Chafetz was a stockholder, vice president and director of the entity that owned and operated the COMDEX trade show and The Sands Expo and Convention Center, which were created and developed by Mr. Adelson. Mr. Forman was Vice President and General Counsel of this entity. Mr. Chafetz is also a director and a 14.7% shareholder of entities that control Interface Travel and Sunburst Vacations, and that are controlled by Mr. Adelson. Mr. Chafetz also is a trustee of several trusts for the benefit of Mr. Adelson and his family that beneficially own shares of our Common Stock. For additional information, see “Proxy and Voting Information — How You Can Vote” and “Principal Stockholders” above. These relationships with Mr. Adelson also include making joint investments and other significant financial dealings. As a result, Messrs. Adelson, Chafetz and Forman may have their financial interests aligned and therefore, the Board does not consider Messrs. Chafetz and Forman to be independent directors.

 

Board Meetings.  The Board held 12 meetings and acted by written consent one time during 2007. The work of the Company’s directors is performed not only at meetings of the Board and its committees, but also by consideration of the Company’s business through the review of documents and in numerous communications among Board members and others. During 2007, all directors attended at least 75% of the aggregate of all meetings of the Board and committees on which they served.

 

Committees

 

Standing Committees.  Our Board has three standing committees: an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”) and a nominating and governance committee (the “Nominating and Governance Committee”).

 

Audit Committee.  The Audit Committee operates under a written charter. The primary purpose of the Audit Committee is to assist the Board in monitoring the integrity of our financial statements, our independent registered public accounting firm’s qualifications and independence, the performance of our audit function and independent registered public accounting firm and our compliance with legal and regulatory requirements. Among other things, our Audit Committee selects our independent registered public accounting firm and reviews with such firm the plan, scope and results of such audit, and the fees for the services performed. The Audit Committee also reviews with management, the independent registered public accounting firm and internal auditors the adequacy of internal control systems, receives internal audit reports and subsequently reports its findings to the full Board.

 

The current members of our Audit Committee are Irwin A. Siegel (Chairman), Andrew R. Heyer and James L. Purcell. The Board has determined that Messrs. Siegel, Heyer and Purcell are each independent under applicable

NYSE and federal securities rules and regulations on independence of Audit Committee members. The Board has determined that each of the members of the Audit Committee is “financially literate” and that Mr. Siegel qualifies as an “audit committee financial expert,” as defined in the NYSE’s listing standards and federal securities rules and regulations. The Audit Committee held six meetings and did not act by written consent during 2007.

 

Compensation Committee.  The Compensation Committee operates under a written charter pursuant to which it has direct responsibility for the compensation of our executive officers. The Compensation Committee has the authority to set salaries, bonuses and other elements of employment and to approve employment agreements for our executive officers. The Compensation Committee also may delegate its authority to the extent permitted by the Board, the Compensation Committee charter, our by-laws, state law and NYSE regulations. In addition, the Compensation Committee has the authority to approve employee benefit plans as well as to administer our 2004 Equity Award Plan. The current members of the Compensation Committee are Charles D. Forman (Chair), Irwin Chafetz, Michael A. Leven, and James L. Purcell. The Compensation Committee held nine meetings and did not act by written consent during 2007. Under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), compensation paid to members of senior management in excess of $1 million per year is not deductible by the Company unless the compensation is “performance-based” as described in the applicable regulations. As required by its charter, the Compensation Committee established a Performance Subcommittee to make the required determinations relating to “performance-based” compensation for purposes of Section 162(m). Messrs. Leven (Chair) and Purcell are the members of the Performance Subcommittee and are independent directors under Section 162(m). The Performance Subcommittee met as part of each Compensation Committee meeting and also acted five times by written consent during 2007. Additional information about the Compensation Committee, its responsibilities and its activities is provided under the caption “Compensation Discussion and Analysis.”

 

Nominating and Governance Committee.  The Nominating and Governance Committee operates under a written charter and has the authority to, among other things, review and make recommendations regarding the composition of the Board and its committees; develop and implement policies and procedures for the selection of Board members; identify individuals qualified to become Board members and select, or recommend that the Board select, director nominees; assess, develop and make recommendations to the Board with respect to Board effectiveness and related corporate governance matters, including corporate governance guidelines and procedures intended to organize the Board appropriately; and oversee the evaluation of the Board and management. The current members of the Nominating and Governance Committee are Michael A. Leven (Chair), Sheldon G. Adelson and Andrew R. Heyer. The Nominating and Governance Committee held no separate meetings and did not act by written consent during 2007. The activities of the members of the Nominating and Governance Committee were discussed during regularly scheduled Board meetings.

 

Compensation Committee Interlocks and Insider Participation.  The members of the Compensation Committee in 2007 were Messrs. Forman, Chafetz, Leven and Purcell. Mr. Forman was, from 1989 to 1995, an officer of Interface Group-Massachusetts, LLC and Interface Group-Nevada, Inc., companies controlled by Mr. Adelson (our “principal stockholder”). Mr. Chafetz is a director of The Interface Group, LLC, a Massachusetts limited liability company that controls Interface Group-Massachusetts, LLC, a company that owns and operates Interface Travel and Sunburst Vacations LLC. From 1989 to 1995, Mr. Chafetz was a Vice President and director of Interface Group-Nevada, Inc. and a director and Vice-President of our subsidiary, Las Vegas Sands, Inc. Except as described above, none of the other members of our Compensation Committee is, or has been, an employee or officer of the Company. None of our executive officers serves, or in the past year has served, as a member of the Board or Compensation Committee of any entity that has one or more executive officers who serve on our Board or Compensation Committee.

 

Commitment to Corporate Governance.  Our Board and management have a strong commitment to effective corporate governance. We have in place a comprehensive corporate governance framework for our operations which, among other things, takes into account the requirements of the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the Securities and Exchange Commission and the NYSE. The key components of

this framework are set forth in our amended and restated articles of incorporation and by-laws and the following additional documents:

 

 

Copies of each of these documents are available on our website at www.lasvegassands.com by clicking on “Investor Information,” then “Corporate Governance.” Copies also are available without charge by sending a written request to Investor Relations at the following address: Las Vegas Sands Corp., 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89109.

 

Corporate Governance Guidelines.  We have adopted Corporate Governance Guidelines for the Company setting forth the general principles governing the conduct of the Company’s business and the role, functions, duties and responsibilities of the Board, including, but not limited to, such matters as composition, membership criteria, orientation and continuing education, retirement, committees, compensation, meeting procedures, annual evaluation and management succession planning.

 

Code of Business Conduct and Ethics.  We have adopted a Code of Business Conduct and Ethics that applies to all of the Company’s directors, officers (including the principal executive officer, principal financial officer and principal accounting officer), employees and agents. The Code of Business Conduct and Ethics establishes policies and procedures that the Board believes promote the highest standards of integrity, compliance with the law and personal accountability. The Company’s Code of Business Conduct and Ethics is provided to all new directors, officers and employees.

 

Statement on Reporting Ethical Violations.  We have adopted a Statement on Reporting Ethical Violations to facilitate and encourage the reporting of any misconduct at the Company, including violations or potential violations of our Code of Business Conduct and Ethics, and to ensure that those reporting such misconduct will not be subject to harassment, intimidation or other retaliatory action. The Statement on Reporting Ethical Violations is provided to all new directors, officers and employees.

 

Related Party Transactions.  We have established policies and procedures for the review, approval and/or ratification of related party transactions. Under its charter, the Audit Committee approves all related party transactions required to be disclosed in our public filings and all transactions involving executive officers or directors of the Company that are required to be approved by the Audit Committee under the Company’s Code of Business Conduct and Ethics. Under our procedures, our executive officers and directors provide our corporate counsel’s office with the details of any such proposed transactions. Proposed transactions are then presented to our Audit Committee for review, discussion and approval. The Audit Committee may, in its discretion, request additional information from the director or executive officer involved in the proposed transaction or from management prior to granting approval for a related party transaction.

 

Nomination of Directors.  The Nominating and Governance Committee proposed to the Board the candidates nominated for election at this annual meeting. The Nominating and Governance Committee, in making its selection of director candidates, considers the appropriate skills and personal characteristics required in light of the then-current makeup of the Board and in the context of the perceived needs of the Company at the time.

 

The Nominating and Governance Committee considers a number of factors in selecting director candidates, including:

 

 

 

The Nominating and Governance Committee has the discretion to weight these factors as it deems appropriate. The importance of these factors may vary from candidate to candidate.

 

The Nominating and Governance Committee will consider candidates recommended by directors and members of management and may, in its discretion, engage one or more search firms to assist in the recruitment of director candidates. The Nominating and Governance Committee does not have a policy for considering director candidates recommended by security holders and believes that not having such a policy is appropriate in light of our principal stockholder’s majority ownership of the Company’s Common Stock.

 

Presiding Non-Management Director.  In accordance with applicable rules of the NYSE and the Company’s Corporate Governance Guidelines, the Board meets at least quarterly in executive session without management directors or any members of the Company’s management being present. At each executive session a presiding director chosen by a majority of the directors present at such session presides over the session.

 

Stockholder Communications with the Board and Audit Committee.  The Board has established a process for stockholders and interested parties to communicate with members of the Board, the Audit Committee, the non-management directors and the presiding non-management director of executive sessions of the Board.

Director Communications

 

Stockholders and interested parties who wish to contact our Board, the Chairman of the Board, the presiding non-management director of executive sessions or any individual director are invited to do so by writing to:

 

Board of Directors of Las Vegas Sands Corp.
c/o Corporate Secretary
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89109

 

Complaints and concerns relating to our accounting, internal accounting controls or auditing matters should be communicated to the Audit Committee of our Board using the procedures described below. All other stockholder and other communications addressed to our Board will be referred to our presiding non-management director of executive sessions and tracked by the Corporate Secretary. Stockholder and other communications addressed to a particular director will be referred to that director.

 

Audit Committee Communications

 

Complaints and concerns relating to our accounting, internal accounting controls, or auditing matters should be communicated to the Audit Committee of our Board, which consists solely of non-employee directors. Any such communication may be anonymous and may be reported to the Audit Committee through the Office of the General Counsel by writing to:

 

Las Vegas Sands Corp.
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Office of the General Counsel

 

All communications will be reviewed under Audit Committee direction and oversight by the Office of the General Counsel, Internal Audit, or such other persons as the Audit Committee determines to be appropriate. Confidentiality will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee. The Office of the General Counsel will prepare a periodic summary report of all such communications for the Audit Committee.

 

This section contains certain information about our executive officers, including their names and ages (as of the mailing of these proxy materials), positions held and periods during which they have held such positions. There are no arrangements or understandings between our officers and any other person pursuant to which they were selected as officers.

 

 

For background information on Messrs. Adelson and Weidner, please see “Board of Directors.”

 

Bradley H. Stone has been Executive Vice President of our Company since August 2004. He has been Executive Vice President of Las Vegas Sands, LLC (or its predecessor, Las Vegas Sands, Inc.) since December 1995. From June 1984 through December 1995, Mr. Stone was President and Chief Operating Officer of the Sands Hotel in Atlantic City. Mr. Stone also served as an Executive Vice President of the parent Pratt Hotel Corporation from June 1986 through December 1995.

 

Robert G. Goldstein has been Senior Vice President of our Company since August 2004. He has been Senior Vice President of Las Vegas Sands, LLC (or its predecessor, Las Vegas Sands, Inc.) since December 1995. From 1992 until joining our Company in December 1995, Mr. Goldstein was the Executive Vice President of Marketing at the Sands Hotel in Atlantic City as well as an Executive Vice President of the parent Pratt Hotel Corporation.

 

Robert P. Rozek has been Senior Vice President and Chief Financial Officer since June 2006. Prior to joining our Company, Mr. Rozek was an executive with Eastman Kodak Company from June 2001 until June 2006, and most recently served as its Director and Vice President of Finance Operations and Vice President, Corporate Finance Group. Prior to joining Eastman Kodak Company, Mr. Rozek was a partner at PricewaterhouseCoopers LLP. Mr. Rozek has resigned from the Company effective May 23, 2008.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the Company’s executive officers and directors to file reports of ownership of our Common Stock with the Securities and Exchange Commission. Executive officers and directors are required to furnish the Company with copies of all Section 16(a) forms that they file. Based upon a review of these filings and representations from the Company’s directors and executive officers that no other reports were required, the Company notes that all reports for the year 2007 were filed on a timely basis.

The following discussion and analysis contains statements regarding Company performance objectives and targets. These objectives and targets are disclosed in the limited context of our compensation program and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

 

Compensation Philosophy and Objectives

 

Our executive compensation program is directed by the Compensation Committee of the Board of Directors. The Compensation Committee determines compensation based upon our overall compensation philosophy, which is described below.

 

Prior to and in anticipation of our initial public offering in 2004, we engaged Pearl Meyer & Partners, a nationally recognized compensation consulting firm, to conduct an analysis and to provide independent insights regarding executive compensation. The members of the Compensation Committee at that time directed Pearl Meyer & Partners to:

 

 

In addition, prior to our initial public offering, the members of the Compensation Committee at that time undertook a comprehensive review of total compensation of executives among 16 companies in the gaming industry. At that time, the Company viewed the following companies as its closest competitors for executive talent and market position:

 

 

The following companies also were included in the compensation review:

 

 

Following this review, the Compensation Committee developed a compensation philosophy, objectives and structure for total compensation for the executive officers named in the Summary Compensation Table (collectively, the “Executive Officers”). With the assistance of Pearl Meyer & Partners, the Compensation Committee developed a philosophy and structure for Executive Officer total compensation reflecting four primary objectives:

 

 

 

By focusing on the variable, performance-based elements of compensation, the Compensation Committee worked to develop a compensation structure under which a large portion of total compensation for our Executive Officers varies based upon the Company’s financial performance.

 

The compensation for our Executive Officers is specified in their long-term employment agreements that were entered into in 2004 (2006 in the case of Mr. Rozek), terminate in 2009 and are subject to extensions. Accordingly, the Compensation Committee did not formally benchmark compensation for our Executive Officers in connection with 2007 compensation. The Compensation Committee has not yet determined whether it will use benchmarking or some other method to determine compensation levels for our Executive Officers at such time as their employment agreements are extended or otherwise materially revised.

 

Elements of Executive Officer Compensation

 

Employment Agreements

 

In 2004, in connection with our initial public offering, we entered into employment agreements with Messrs. Adelson, Weidner, Stone and Goldstein, and in 2006 we entered into an employment agreement with Mr. Rozek. The total compensation package for our Executive Officers is included in these employment agreements and reflects our compensation philosophy and objectives. These employment agreements were designed to compensate our Executive Officers for anticipated Company growth by providing for increased compensation opportunities as the Company achieves higher EBITDAR levels. The Compensation Committee developed this structure to enable us to continue to provide our Executive Officers during the terms of their employment agreements with compensation levels that were competitive with those paid to executive officers at companies of comparable size.

 

As described above, the compensation packages for our Executive Officers were determined with the assistance of Pearl Meyer & Partners and were based on information, benchmarks and other factors in existence

at the time we initially entered into the employment agreements with Messrs. Adelson, Weidner, Stone and Goldstein. Mr. Rozek’s compensation package was developed by reference to the compensation paid to the other Executive Officers. The elements of the compensation package (base salary, short-term incentives and long term incentives) were initially structured in 2004 to provide compensation at the level of the 75th percentile of the market of the 16 peer gaming companies described above, contingent upon the Company’s achievement of EBITDAR-based performance goals which are established annually by the Performance Subcommittee in its sole discretion, as further described below. The Performance Subcommittee established the required 2007 EBITDAR-based performance targets. However, because our Executive Officers’ compensation is governed by long-term employment agreements, the Compensation Committee did not specifically analyze the various elements of 2007 compensation or compare the elements of 2007 compensation to benchmark or other information.

 

The major elements of Executive Officer compensation and details regarding how each component was determined are described below.

 

Base Salary

 

Base salary levels for Executive Officers were determined based on the individual experience, responsibilities and tenure of the applicable Executive Officer at the time we entered into the employment agreements in 2004 (2006 in the case of Mr. Rozek), and were assessed relative to market levels. In the gaming industry, market-competitive levels of base salary for senior executive positions often exceed $1 million, and historically Messrs. Adelson, Weidner and Stone have earned base salaries in excess of this amount. However, beginning in 2005, consistent with our compensation philosophy and in order to maximize the tax deductibility of compensation, we limited annual base salaries for our Executive Officers to $1 million. The employment agreements include a performance-based incentive opportunity for those Executive Officers impacted by this limit.

 

Mr. Rozek’s employment agreement provides that his base salary will increase upon the Company’s attainment of predetermined annual EBITDAR-based targets as set forth in the following table, with additional increases to be determined by the Compensation Committee in its sole discretion.

 

 

Short-term Incentives

 

Our Executive Officers are eligible for annual performance-based cash incentives under the Company’s Executive Cash Incentive Plan, which was created to establish a program of annual incentive compensation awards for designated officers and other key executives that is directly related to our performance results.

 

Executive Officers are eligible for two types of annual performance-based incentive opportunities, a base bonus and an annual bonus. The target base bonus and annual bonus opportunities for each Executive Officer are described in his employment agreement as set forth below.

 

Base bonus.  Messrs. Adelson, Weidner, Stone and Goldstein are eligible for cash incentive bonuses earned and payable quarterly primarily subject to the Company’s attainment of predetermined EBITDAR-based performance targets. Base bonus payments may range from $0 (if the Company does not achieve the predetermined EBITDAR performance target) to a defined maximum opportunity specific to each Executive Officer.

Under their employment agreements, Messrs. Adelson, Weidner, Stone and Goldstein are entitled to the following cumulative increases in their base bonus opportunities as the Company achieves higher annualized six-month EBITDAR levels. Mr. Rozek’s employment agreement does not provide for a base bonus.

 

 

Annual bonus.  Under their employment agreements, Messrs. Adelson, Weidner, Stone, Goldstein and Rozek are each eligible to receive annual cash incentive bonuses equal to a percentage of his base salary plus his base bonus. The entire annual bonus payable to Messrs. Adelson, Weidner, Stone and Goldstein is subject to the Company’s achievement of EBITDA-based performance targets. One-half of Mr. Rozek’s annual bonus opportunity is based on the achievement of EBITDAR-based performance targets and the other half is based on his attainment of individual performance criteria that are established annually by the Compensation Committee. The target annual bonus percentages and the maximum annual bonus percentages, respectively, are as follows: Mr. Adelson, 80% and 160%; Mr. Weidner, 75% and 150%; Mr. Stone, 70% and 140%; Mr. Goldstein, 65% and 130% and Mr. Rozek, 60% and 120%.

 

Annual bonus payments for Messrs. Adelson, Weidner, Stone and Goldstein (and one half of the annual bonus payments for Mr. Rozek) may range from $0 (if the Company does not achieve 80% of the predetermined EBITDAR performance target) to a defined maximum opportunity specific to each Executive Officer (if the Company achieves 110% of the predetermined EBITDAR performance target). Annual bonus payments increase ratably if EBITDAR reaches 80% to 100% of the predetermined EBITDAR target. Annual bonus opportunities are subject to future increases as the Company achieves higher annualized six-month EBITDAR levels, as follows:

 

 

EBITDAR-based performance targets are established annually by the Performance Subcommittee following consultation with the other members of the Compensation Committee, our Executive Officers and such other members of our management as the Performance Subcommittee deems appropriate. The Performance Subcommittee establishes different EBITDAR-based performance targets for the base bonus and the annual bonus. Each year’s target represents the EBITDAR level that must be achieved in order for our Executive Officers to receive 100% of their target base bonus, if applicable, or their target annual bonus. For 2007, the Performance Subcommittee established an EBITDAR-based performance target of $830 million relating to the base bonus and $1.011 billion relating to the annual bonus. The 2007 performance targets for the base and annual bonuses were based on EBITDAR for all Company properties including The Venetian Resort Hotel Casino, the Sands Macao and the Sands Expo and Convention Center and, from their respective opening dates, The Palazzo Resort Hotel Casino and The Venetian Macao Resort Hotel. In determining the 2007 annual EBITDAR-based targets, the Performance Subcommittee’s goal was to set an aggressive objective based on its review of the annual budget information provided by management and the Board’s discussions with our Executive Officers and management about the assumptions underlying the budget, including the Company’s development plans for the upcoming year. In making

its determination, the Performance Subcommittee recognized the inherent difficulty of the task given the Company’s rapid expansion since its initial public offering, the unique nature of many of the Company’s development projects and the Company’s future growth plans. The Performance Subcommittee believed that the achievement of the 2007 performance targets required management to perform at a high level to earn the target bonus payments.

 

One-half of Mr. Rozek’s annual bonus opportunity is based on his attainment of the following individual performance criteria:

 

 

In 2007, the Company achieved 100% of the predetermined EBITDAR-based performance target relating to the base bonus. The Company achieved 86.9% of the predetermined EBITDAR-based performance target relating to the annual bonus. The Company paid Messrs. Adelson, Weidner, Stone and Goldstein 34.7% of their respective target annual bonus awards because their employment agreements tied the payment of the entire annual bonus amount to the Company’s achievement of the EBITDAR performance target. The Company paid Mr. Rozek 92.4% of his target annual bonus award because only one-half of his annual bonus opportunity is based on the achievement of EBITDAR-based performance targets and the other half is based on his attainment of the individual performance criteria described above. For 2007, the Compensation Committee determined that Mr. Rozek’s performance exceeded the standards established in his individual performance criteria. In addition, in February 2008, the Company paid supplemental bonuses to Messrs. Weidner, Stone, Goldstein and Rozek. These payments were made in recognition of their significant contributions to the Company during 2007, including in connection with the openings of The Venetian Macao Resort Hotel and The Palazzo Resort Hotel, and the continuing progress of the Company’s other projects, including the Marina Bay Sands in Singapore and Sands Bethworks in Pennsylvania. The base bonuses, annual bonuses and supplemental bonuses paid to our Executive Officers for 2007 performance are included in the Summary Compensation Table. For more information about base bonus and annual bonus incentive awards, see “Executive Compensation and Other Information — Employment Agreements.”

 

Long-term Incentives (Equity Awards)

 

Our Executive Officers are eligible for long-term, equity incentives under the Company’s 2004 Equity Award Plan, which is administered by the Compensation Committee and was created to give us a competitive edge in attracting, retaining and motivating employees and to enable us to provide incentives directly related to increases in our stockholder value.

 

The equity incentive awards under our Executive Officers’ employment agreements are split into two equal components:

 

 

 

Each Executive Officer’s employment agreement identifies the targeted total grant value of his equity incentive awards. Under their employment agreements, our Executive Officers are entitled to the following target grant values of their equity incentive awards as the Company achieves higher annualized six-month EBITDAR levels:

 

 

In 2007, the Company achieved 86.9% of the predetermined EBITDAR-based performance target relating to the award of restricted stock. The restricted stock awards to our Executive Officers for 2007 performance are included in the discussion relating to the Grants of Plan-Based Awards Table. For more information about equity incentive awards, see “— Executive Compensation Related Policies and Practices — Stock Option and Restricted Stock Grant Practices” and “Executive Compensation and Other Information — Employment Agreements.”

 

Personal Benefits

 

Under their employment agreements, Mr. Adelson is entitled to be reimbursed up to $100,000 annually, and Mr. Weidner is entitled to be reimbursed up to $50,000 during the term of his employment, for personal legal and financial planning fees and expenses. Mr. Adelson also is entitled during the term of his employment to the full-time and exclusive use of an automobile and a driver of his choice and security services for himself, his spouse and minor children. For more information, see footnote (4) to the Summary Compensation Table under “Executive Officer Compensation and Other Information.”

 

Our Executive Officers also participate in a group supplemental medical insurance program available only to certain of our senior officers. Our Executive Officers, as well as certain other employees, are also entitled to use workout facilities at the Canyon Ranch Spa at The Venetian Resort Hotel Casino and to receive dry cleaning services. Our Executive Officers are entitled to receive other employee benefits generally made available to our employees. In addition, on certain occasions, an Executive Officer’s spouse or other immediate family member has accompanied the Executive Officer on flights on aircraft that we own or lease. For more information, see footnote (5)(v) to the Summary Compensation Table under “Executive Officer Compensation and Other Information.”

 

Change in Control and Termination Payments

 

The employment agreements with our Executive Officers that we entered into in 2004 (2006 in the case of Mr. Rozek) provide for payments and the continuation of benefits upon certain terminations of employment or if there is a change of control of the Company. These provisions reflect the advice of our compensation consultant, Pearl Meyer & Partners, and are based on negotiations with our Executive Officers. In addition, the employment

agreements with our Executive Officers include restrictive covenants relating to future employment. Accordingly, the Compensation Committee believed the post termination payments were necessary in order to enable us to provide a competitive compensation package so that we could retain our executive officers.

 

The Company’s 2004 Equity Award Plan was established in 2004. The purpose of the plan is to provide a means through which the Company may attract able persons to enter and remain in the employ of the Company. The change of control provisions of the plan were designed in furtherance of this goal.

 

Further information about benefits under certain change in control and terminations of employment are described below under “Potential Payments Upon Termination or Change in Control.”

 

Tax and Accounting Considerations Relating to Executive Compensation

 

Section 162(m) of the Internal Revenue Code

 

The Compensation Committee’s general policy is that compensation should qualify to be tax deductible to the Company for federal income tax purposes. Under Section 162(m) of the Internal Revenue Code (the “Code”), compensation paid to certain members of senior management in excess of $1 million per year is not deductible unless the compensation is “performance-based” as described in the regulations under Section 162(m). Compensation is generally “performance-based” if it is determined using pre-established objective formulas and criteria approved by stockholders. The compensation awards under our Executive Cash Incentive Plan are designed to be tax deductible to us under either the performance-based compensation exception to Section 162(m) or the transitional rules applicable to us following our initial public offering. The maximum amount payable to a participant under the Executive Cash Incentive Plan in respect of an annual bonus award that is intended to qualify for the performance-based compensation exception to Section 162(m) is $10.0 million.

 

Our Executive Officers are eligible to receive cash bonuses payable under our Executive Cash Incentive Plan in the amounts determined in accordance with their employment agreements. The document governing the Executive Cash Incentive Plan specifies that the Compensation Committee, in its sole discretion, has full power and authority to administer the plan, including, among other things, the authority to designate an award as one that does not qualify as “performance-based” compensation under Section 162(m) of the Code. Accordingly, the supplemental bonuses paid to our Executive Officers included in the Summary Compensation Table with respect to 2007 performance were not made pursuant to the Executive Cash Incentive Plan. The Performance Subcommittee makes all determinations relating to “performance-based” compensation for purposes of Section 162(m). The Compensation Committee believes that mathematical formulas cannot always anticipate and fairly address every situation that might arise. The Compensation Committee therefore retains the authority to adjust compensation in the case of unexpected, unusual or non-recurring events, even if this results in the payment of non-deductible compensation or to otherwise award or pay non-deductible compensation if the Committee deems it in the best interests of the Company and its stockholders to do so.

 

In addition, bonus awards granted under the Executive Cash Incentive Plan must specify performance criteria to be achieved, a minimum acceptable level of achievement below which no payment or award will be made and a formula for determining the amount of any payment or award to be made if performance is at or above the minimum acceptable level but falls short of full achievement of the specified performance criteria. The Compensation Committee may modify performance criteria or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable, provided that no such modification may be made that would cause an award to no longer qualify as “performance-based” compensation under Section 162(m).

 

Our Executive Officers also are eligible to receive equity incentive awards under our 2004 Equity Award Plan. The amounts of the equity incentive awards are specified in the employment agreements. The Board of Directors has appointed the Compensation Committee to administer the 2004 Equity Award Plan. The Performance Subcommittee makes all determinations relating to “performance-based” compensation for purposes of Section 162(m). Under the plan, the Performance Subcommittee may not grant or provide payment in respect of an award intended to qualify as “performance-based” compensation unless the applicable performance goals have been achieved and, under the applicable performance formula, all or some of the performance award has been earned for the performance period.

Sections 280G and 4999 of the Code (“Golden Parachute Payments”)

 

If any payment to an Executive Officer pursuant to his employment agreement is subject to the excise tax imposed by Section 4999 of the Code, the payments to the Executive Officer that are considered “parachute payments” will be limited to the greatest amount which can be paid under Section 280G without causing any loss of deduction to the Company but only if, by reason of such reduction, the net after tax benefit to the Executive Officer (as defined in his employment agreement) exceeds the net after tax benefit if the reduction were not made.

 

Accounting for Stock-Based Compensation

 

Beginning on January 1, 2006, we began accounting for stock-based compensation under our 2004 Equity Award Plan in accordance with the requirements of Statement of Financial Accounting Standards No. 123R.

 

Deferred Compensation

 

The Las Vegas Sands Corp. Deferred Compensation Plan was created to provide benefits to non-employee directors and a select group of management or highly paid employees to be selected by our Compensation Committee. All non-employee directors are eligible to participate in the Deferred Compensation Plan. The Deferred Compensation Plan allows participating employees to defer payment of their base salary and/or bonus and non-employee directors to defer payment of director fees. There are currently no participants in the Deferred Compensation Plan.

 

Executive Compensation Related Policies and Practices

 

Policies Regarding Stock Ownership and Hedging the Economic Risk of Stock Ownership

 

The Company believes that the number of shares of the Company’s Common Stock owned by each Executive Officer is a personal decision and encourages stock ownership, including through the compensation policies applicable to its Executive Officers. Accordingly the Company has not adopted a policy requiring its Executive Officers to hold a portion of their stock during their employment at the Company.

 

Under our securities trading policy, our officers, directors and employees are not permitted to purchase our Common Stock on margin, sell our Common Stock short or buy or sell puts, calls or other derivative instruments relating to our Common Stock. Although we discourage speculative hedging transactions, we do permit long-term hedging transactions that are designed to protect an individual’s investment in our Common Stock provided that the hedge is for at least six months in duration and relates to stock or options held by the individual.

 

Stock Option and Restricted Stock Grant Practices

 

The employment agreements for our Executive Officers provide that grants of stock options are to be made by March 15 of the year to which the grant relates. On March 30, 2007, the Company granted Messrs. Weidner, Stone, Goldstein and Rozek stock options in respect of 2007 performance. Grants of restricted stock are to be made by March 15 following the year to which the award relates, provided that the performance goals for such prior year have been achieved. On March 29, 2008, the Company granted Messrs. Weidner, Stone, Goldstein and Rozek restricted stock in respect of 2007 performance. Mr. Adelson waived his rights to receive the stock options and restricted stock grants relating to 2007 performance to which he was entitled under his employment agreement.

 

Grants of stock options and restricted stock under our 2004 Equity Award Plan are approved by the Compensation Committee’s Performance Subcommittee. Each of the members of the Performance Subcommittee is an independent director. All stock option grants to our Executive Officers under their employment agreements are approved on the grant date. The exercise price of all stock options is equal to the fair market value of our Common Stock on the grant date. On February 5, 2007, we amended the definition of fair market value in our 2004 Equity Award Plan to be the closing price of our Common Stock on the NYSE on the grant date. Prior to the amendment, fair market value was defined as the average of the high and low sale prices of our Common Stock on the NYSE on the trading day prior to the grant date.

 

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis contained in this Proxy Statement with management and, based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included by reference in the Company’s Annual Report on Form 10-K and this Proxy Statement.

 

 

Charles D. Forman, Chair
Irwin Chafetz
Michael A. Leven
James L. Purcell

 

The foregoing Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except to the extent the Company specifically incorporates this report by reference therein.

 

The following table provides information regarding compensation for our Chief Executive Officer, Chief Financial Officer and each of our other three highest paid executive officers for the years ended December 31, 2006 and 2007 (collectively, the “Executive Officers”).

 

Summary Compensation Table

 

 

 

 

 

All Other Compensation

 

 

 

 

 

2007 Grants of Plan-Based Awards

 

The following table presents information on potential payment opportunities in respect of 2007 performance under our Executive Cash Incentive Plan and equity awards granted during 2007 under our 2004 Equity Award Plan.

 

 

 

 

The March 30, 2007 grants of restricted stock shown in the table above are grants in respect of 2006 performance. On March 29, 2008, the Company granted Messrs. Weidner, Stone, Goldstein and Rozek restricted stock in respect of 2007 performance of 6,840 shares, 5,897 shares, 5,071 shares and 1,698 shares, respectively. Under his employment agreement, Mr. Adelson was entitled to receive a restricted stock grant of 15,298 shares in

respect of 2006 performance and a restricted stock grant of 7,430 shares in respect of 2007 performance. Mr. Adelson waived his right to receive both of these restricted stock grants.

 

The March 30, 2007 grants of stock options shown in the table above are grants in respect of 2007 performance. Under his employment agreement, Mr. Adelson was entitled to receive a grant of 45,502 stock options in respect of 2007 performance. Mr. Adelson waived his right to receive this stock option grant.

 

Employment Agreements

 

The Employment Agreements provide for the payment of base salary, cash incentive bonuses and equity incentive awards in amounts that are determined as described below.

 

Base salary.  The employment agreements for Messrs. Adelson, Weidner, Stone, Goldstein and Rozek provide for annual base salaries of $1,000,000, $1,000,000, $1,000,000, $965,000 and $500,000, respectively. Mr. Rozek’s base salary is subject to future increases as the Company achieves higher annualized six-month EBITDAR levels.

 

Base bonus.  The employment agreements for Messrs. Adelson, Weidner, Stone and Goldstein provide for target base bonus payments to be earned and payable quarterly, primarily subject to the Company’s attainment of predetermined EBITDAR-based performance targets. Mr. Rozek’s employment agreement does not provide for a base bonus. The target base bonuses for 2005 were $500,000, $300,000, $50,000 and $0, respectively. Commencing with 2006 and for each year during the term of the Executive Officer’s employment, the target annual base bonus increases automatically by at least four percent (4%) of the sum of (x) the Executive Officer’s base salary for the immediately preceding year plus (y) the base bonus paid to the Executive Officer with respect to the immediately preceding year. In addition, as described under “Compensation Discussion and Analysis,” the target annual base bonus opportunity is subject to future increases as the Company achieves higher annualized six-month EBITDAR levels.

 

Annual bonus.  The employment agreements for our Executive Officers provide for target annual bonus payments contingent on the Company’s achievement of annual performance objectives that are primarily EBITDAR-based. The amount of the annual bonus is equal to a percentage of the sum of (x) the Executive Officer’s base salary for the year plus (y) the base bonus paid to the Executive Officer for the year. Annual bonus payments may range from $0 (if the Company does not achieve 80% of the predetermined EBITDAR performance target) to a defined maximum opportunity specific to each Executive Officer (if the Company achieves 110% of the predetermined EBITDAR performance target). Annual bonus payments increase ratably if EBITDAR reaches 80% to 100% of the predetermined EBITDAR target. The target and maximum annual bonus opportunities as a percentage of base salary and base bonus for our Executive Officers are: Mr. Adelson, 80% and 160%; Mr. Weidner, 75% and 150%; Mr. Stone, 70% and 140%; Mr. Goldstein, 65% and 130%; and Mr. Rozek, 60% and 120%. As described above under “Compensation Discussion and Analysis,” each Executive Officer’s target and maximum annual bonus opportunity as a percentage of base salary and base bonus is subject to future increases as the Company achieves higher annualized six-month EBITDAR levels. The entire annual bonus payable to Messrs. Adelson, Weidner, Stone and Goldstein is subject to the Company’s achievement of the targeted financial performance objectives. One-half of Mr. Rozek’s annual bonus opportunity is based on the achievement of these financial performance objectives and the other half is based on his attainment of individual performance criteria that are established annually by the Compensation Committee.

 

Equity incentive awards.  Each Executive Officer’s employment agreement identifies the targeted total grant value of his equity incentive awards. The target total grant value of the equity incentive awards for 2005 for Messrs. Adelson, Weidner, Stone and Goldstein were $2,200,000, $2,000,000, $1,750,000 and $1,500,000, respectively. Mr. Rozek joined the Company in 2006. He received a grant of 40,000 stock options for 2006 and his target total grant value for restricted stock awards for 2006 was $250,000. As described above under “Compensation Discussion and Analysis,” the targeted total grant value of each Executive Officer’s equity incentive award is subject to future increases as the Company achieves higher annualized six-month EBITDAR levels.

For additional information about the employment agreements, see “Compensation Discussion and Analysis — Elements of Executive Officer Compensation — Employment Agreements” and “— Potential Payments Upon Termination or Change in Control.”

 

Outstanding Equity Awards at 2007 Fiscal Year-End

 

The following table sets forth information concerning stock options and shares of restricted stock held by our Executive Officers at December 31, 2007.

 

 

 

 

 

Option Exercises and Stock Vested in 2007

 

The following table sets forth information concerning the exercise of stock options and the vesting of restricted stock awards by the Executive Officers during 2007.

 

 

 

 

Potential Payments Upon Termination or Change in Control

 

Employment Agreements

 

The employment agreements for our Executive Officers provide for payments and the continuation of benefits upon certain terminations of employment or if there is a change in control of the Company.

 

In the event of a termination of employment of an Executive Officers for cause (as defined below) or a voluntary termination by an Executive Officer (other than for good reason (as defined below)), all salary and benefits for the Executive Officer will immediately cease (subject to any requirements of law).

 

In the event of a termination of employment of an Executive Officer by us without cause or a voluntary termination by an Executive Officer for good reason (as defined below) other than during the two year period following a change in control (as defined below), we will be obligated to pay or provide the Executive Officer with:

 

 

In the event of a termination of employment of an Executive Officer by us without cause or a termination by an Executive Officer for good reason within the two-year period following a change in control (or in the case of

Mr. Adelson, a voluntary termination at any time during the one-year period following a change in control), we will be obligated to pay or provide the Executive Officer with:

 

 

In the case of a termination of employment of an Executive Officer due to his death or disability (as defined in the applicable employment agreement), the Executive Officer (or his estate) will be entitled to receive:

 

 

If an Executive Officer terminates his employment on or after the last day of a fiscal year but before the actual grant date of the restricted stock award for that fiscal year, he will be granted a fully vested award for that fiscal year on the date the award would have otherwise been made (and subject to the applicable performance target being achieved) equal to the number of shares he would have been awarded multiplied by the following applicable percentage:

 

 

All payments under the employment agreements in connection with a termination of employment are subject to the Executive Officer’s agreement to release the Company from all claims relating to his employment and the termination of his employment. In addition, the Executive Officers are subject to covenants restricting their ability to compete with the Company or to hire Company employees for a specified period following termination of employment.

 

Definitions.  The terms “cause,” “good reason” and “change in control” are defined in the employment agreements as follows:

 

An executive officer may be terminated by the Company for “cause” if:

 

 

 

An executive officer may terminate his employment with the Company for “good reason” if:

 

 

A “change in control” occurs upon:

 

 

 

2004 Equity Award Plan

 

In the event of a change in control (as defined above and in the 2004 Equity Award Plan) if our Compensation Committee so determines:

 

 

In addition, performance compensation awards shall vest based on the level of attainment of the performance goals as determined by the Compensation Committee.

 

Potential Payments/Benefits Upon Termination of Employment

 

The table below sets forth information about the potential payments and benefits our Executive Officers may receive under their employment agreements upon the termination of their employment with the Company.

 

The table assumes that:

 

 

 

 

Each non-employee director receives an annual cash retainer of $50,000 and an annual grant of restricted stock equal in value to $50,000. The restricted stock is subject to a one year forfeiture period and may not be sold until the director retires from the Board (except to the extent necessary to cover taxes incurred as a result of the vesting of the restricted stock). In addition, each non-employee director receives a one time grant of options upon becoming a non-employee director with an aggregate value of $100,000 on the date of grant (based on the Black-Scholes option valuation model). The stock options vest in five equal installments on each of the first five anniversaries of the date of grant. Both the restricted stock grants and the options are granted to the directors pursuant to our 2004 Equity Award Plan. In 2007, Messrs. Chafetz, Forman, Heyer, Leven, Purcell and Siegel each received 636 shares of restricted stock.

 

We pay non-employee directors $1,500 for each meeting of the Board that they attend ($750 for telephonic meetings). We pay non-employee directors who are members of the Audit Committee or the Compensation Committee $1,000 for each committee meeting that they attend ($500 for telephonic meetings). We pay an annual retainer of $20,000 to the chairperson of the Audit Committee and an annual retainer of $5,000 to the chairperson of the Compensation Committee. Effective as of January 2008, we will pay an annual retainer of $2,500 to the chairperson of the Nominating and Governance Committee. The cash compensation payments may be deferred by directors into a deferred compensation plan that we have established. Directors are also reimbursed for expenses incurred in connection with their service as directors, including travel expenses for meeting attendance. As a retired partner of Paul, Weiss, Rifkind, Wharton & Garrison LLP, Mr. Purcell is obligated to turn over to his former law firm all consideration he receives as a director of our Company.

 

Beginning in 2006, the Compensation Committee retained HVS Executive Search for advice on compensation-related matters, including a review of director compensation. The Compensation Committee may, in its discretion, seek the advice of our chief executive officer or any of our other executive officers, in determining or recommending the amount or form of compensation for our outside directors.

 

In addition, prior to our initial public offering in 2004, the Compensation Committee retained Pearl Meyer & Partners and instructed it to assist us in organizing a board of directors and developing a total compensation package for outside directors that will enable the Company to attract and retain quality board members. This information was presented to the Board to assist it in establishing compensation levels for our directors at that time.

2007 Director Compensation Table

 

The following table describes the compensation arrangements with our non-employee directors for 2007.