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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X]Preliminary Proxy Statement
[_]CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-
6(E)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Section 240.14a-12
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Dover Motorsports, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
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(2)Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)Proposed maximum aggregate value of transaction:
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(5)Total fee paid:
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[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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DOVER MOTORSPORTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 2002
----------------
TO THE HOLDERS OF COMMON STOCK AND CLASS A COMMON STOCK:
PLEASE TAKE NOTICE that the 2002 Annual Meeting of Stockholders of DOVER
MOTORSPORTS, INC., a Delaware corporation, will be held at the Dover Downs
Hotel and Conference Center, 1131 N. DuPont Highway, Dover, Delaware, on
Wednesday, May 22, 2002, at 9:00 A.M. for the following purposes:
1. To elect two Class III Directors to the Board of Directors;
2. To authorize the Board of Directors to effect a Reverse Stock Split
in a ratio of One for Two.
3. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Proxy Statement dated April 26, 2002 is attached.
The Board of Directors has fixed the close of business on April 18, 2002 as
the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
You are cordially invited to attend the Annual Meeting. If you cannot be
present in person, please sign and date the enclosed proxy and promptly mail
it in the enclosed return envelope which requires no United States postage.
Any stockholder giving a proxy has the right to revoke it any time before it
is voted. If you hold your stock in a broker or bank "street" account and wish
to vote your shares in person at the meeting, you must obtain the appropriate
documentation from your broker or bank custodian (the record holder).
BY ORDER OF THE BOARD OF DIRECTORS
KLAUS M. BELOHOUBEK,
Vice President-General Counsel and
Secretary
Dated: Dover, Delaware
April 26, 2002
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YOU ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO UNITED STATES POSTAGE.
PROXY STATEMENT
DOVER MOTORSPORTS, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 2002
----------------
The information concerning the enclosed proxy and the matters to be acted
upon at the Annual Meeting of Stockholders to be held on May 22, 2002 (the
"Annual Meeting") is submitted to the stockholders for their information.
DOVER MOTORSPORTS, INC., a Delaware corporation (the "Company"), was
previously known as Dover Downs Entertainment, Inc. The Company changed its
name on March 31, 2002 in connection with the transfer of its gaming
operations to Dover Downs Gaming & Entertainment, Inc. and the tax free spin-
off of that entity on a pro rata basis to the Company's stockholders.
SOLICITATION OF AND POWER TO REVOKE PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of the Company. Proxies solicited
hereby are to be voted at the Annual Meeting or at any adjournment thereof.
The mailing address for the Company's principal executive office is PO Box
843, Dover, Delaware 19903. This Proxy Statement and the form of proxy were
first sent to the Company's stockholders on or about April 26, 2002.
A form of proxy is enclosed. Each proxy submitted will be voted as directed
but, if not otherwise specified, proxies solicited by the Board of Directors
of the Company will be voted in favor of the candidates for election to the
Board of Directors as Class III Directors and for the proposal to authorize
the Board of Directors to effect a Reverse Stock Split in a ratio of One for
Two.
The solicitation of proxies will be by mail. It may be that further
solicitation of proxies will be made by telephone, telegram or interview with
some stockholders of the Company, following the original solicitation. All
such further solicitations will be made by regular officers and employees of
the Company, who will not be additionally compensated therefor, or its
Transfer Agent. The Company will bear the entire cost of all such
solicitations, which will be nominal and include reimbursements paid to
brokerage firms and others for their expenses in forwarding solicitation
material regarding the meeting to beneficial owners.
Each stockholder has the right to revoke his or her proxy at any time before
it is voted. A proxy may be revoked by filing with the General Counsel of the
Company a written revocation or a duly executed proxy bearing a later date or
by voting in person at the Annual Meeting. Any stockholder may attend the
Annual Meeting and vote in person, whether or not such stockholder has
previously given a proxy. If you hold your stock in a broker or bank "street"
account and wish to vote your shares in person at the meeting, you must obtain
the appropriate documentation from your broker or bank custodian (the record
holder).
1
CAPITAL STOCK AND VOTING RIGHTS
The outstanding capital stock of the Company on April 18, 2002 consisted of
14,284,252 shares of Common Stock, par value $.10 per share (the "Common
Stock"), and 23,769,085 shares of Class A Common Stock, par value $.10 per
share (the "Class A Common Stock"). Shares of Class A Common Stock are
convertible at any time into shares of Common Stock on a share-for-share basis
at the option of the holder thereof.
Voting Rights in General. Each holder of Common Stock is entitled to one
vote for each share of Common Stock held and each holder of Class A Common
Stock is entitled to ten votes for each share of Class A Common Stock held,
except to the extent that voting by class is required by law. At a meeting of
stockholders at which a quorum is present, a majority of the votes cast
decides all questions, unless the matter is one upon which a different vote is
required by express provision of law or the Company's Certificate of
Incorporation or Bylaws. Under the General Corporation Law of the State of
Delaware, holders of Common Stock and Class A Common Stock are entitled to
vote as a class with respect to certain matters, including mergers and
amendments to the Certificate of Incorporation of the Company which would have
certain specified effects on the Common Stock and Class A Common Stock,
respectively.
Quorum. A majority of the outstanding shares, present in person or by proxy,
will constitute a quorum at the Annual Meeting. Abstentions and broker non-
votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. Broker non-votes occur when a broker
or other nominee does not vote on a particular proposal because it does not
have discretionary voting authority for that proposal and has not received
voting instructions from the beneficial owner.
Vote Required. Proposal Number One relative to the election of the nominees
named herein as Directors will require a plurality of the votes cast by the
shares entitled to vote in the election (i.e., the nominees receiving the
greatest number of votes will be elected). Accordingly, abstentions and broker
non-votes will not affect the outcome of the election of directors. There is
no class voting or cumulative voting with respect to the election of
directors. Proposal Number Two relative to a Reverse Stock Split in a ratio of
One for Two requires the affirmative vote of a majority of the outstanding
shares of both Common Stock and Class A Common Stock, voting separately as a
class. Abstentions and broker non-votes on this proposal will be counted for
purposes of determining the number of shares present on the proposal but will
not be counted as votes "for" the proposal. Therefore, abstentions and broker
non-votes will have the same effect as votes against these proposals.
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of March 31, 2002, only 10 persons were known to the Company to own
beneficially more than five percent (5%) of the outstanding shares of the
Common Stock or Class A Common Stock. The name and address of each such
person, together with the number of shares owned and the percentage of
outstanding shares that ownership represents, and information as to Common
Stock and Class A Common Stock ownership of (i) each director, or nominee for
director, of the Company, (ii) the Named Executives identified in the Summary
Compensation Table, and (iii) the officers and directors of the Company as a
group, in each case according to information received by the Company, are set
forth below.
Number of Shares and Percentage
Nature of Beneficial Beneficially Owned Percentage of
Ownership by Class(1) by Class Combined
------------------------ ------------------- Voting Power
Names and Addresses Common Class A Common Class A of Both
of Beneficial Owners Stock Common Stock Stock Common Stock Classes
-------------------- ------- -------------- ------ ------------ -------------
Estate of John W.
Rollins................. -- 10,311,960(2) -- 43.4% 40.9%
One Rollins Plaza
Wilmington, DE 19803
2
Number of Shares and Percentage
Nature of Beneficial Beneficially Owned Percentage of
Ownership by Class(1) by Class Combined
------------------------- ------------------- Voting Power
Names and Addresses Common Class A Common Class A of Both
of Beneficial Owners Stock Common Stock Stock Common Stock Classes
-------------------- --------- ------------ ------ ------------ -------------
Henry B. Tippie......... 192,000 3,000,000(2)(3) 1.3% 12.6% 12.0%
P.O. Box 26557
Austin, TX 78755
R. Randall Rollins...... -- 2,030,000 -- 8.5% 8.0%
2170 Piedmont Street, NE
Atlanta, GA 30301
Gary W. Rollins......... -- 2,030,000 -- 8.5% 8.0%
2170 Piedmont Street, NE
Atlanta, GA 30301
Eugene W. Weaver........ 37,500 2,117,000(4) 0.3% 8.9% 8.4%
570 Winturford Drive
West Chester, PA 19382
Jeffrey W. Rollins...... 67,440(5) 1,253,975 0.5% 5.3% 5.0%
2200 Concord Pike, 14th
Floor
Wilmington, DE 19803
Melvin L. Joseph........ 20,000 860,000 0.1% 3.6% 3.4%
RD #7, Box 218
Georgetown, DE 19947
Denis McGlynn........... 51,964 869,000(6) 0.4% 3.7% 3.5%
1131 North DuPont
Highway
Dover, DE 19901
John W. Rollins, Jr..... 193,800(7) 197,000 1.4% 0.8% 0.9%
2200 Concord Pike, 14th
Floor
Wilmington, DE 19803
Patrick J. Bagley....... 1,000 -- -- -- --
709 Kilburn Road
Wilmington, DE 19803
Robert M. Comollo....... 24,500 -- 0.2% -- --
1131 North DuPont
Highway
Dover, DE 19901
Klaus M. Belohoubek..... 19,485 -- 0.1% -- --
2200 Concord Pike, 15th
Floor
Wilmington, DE 19803
Edward J. Sutor......... 17,775 -- 0.1% -- --
1131 North DuPont
Highway
Dover, DE 19901
Timothy R. Horne........ 26,890 -- 0.2% -- --
1131 North DuPont
Highway
Dover, DE 19901
Merrill Lynch Investment
Managers................ 1,340,152 -- 9.4% -- 0.5%
800 Scudders Mill Road
Plainsboro, NJ 08536
3
Number of Shares and Percentage
Nature of Beneficial Beneficially Owned Percentage of
Ownership by Class(1) by Class Combined
----------------------- ------------------- Voting Power
Names and Addresses Common Class A Common Class A of Both
of Beneficial Owners Stock Common Stock Stock Common Stock Classes
-------------------- --------- ------------- ------ ------------ -------------
Gabelli Asset
Management, Inc......... 737,500 -- 5.2% -- 0.3%
One Corporate Center
Rye, NY 10580
Putnam Investments LLC.. 730,000 -- 5.1% -- 0.3%
One Post Office Square
Boston, MA 02109
Vanguard Group.......... 722,700 -- 5.1% -- 0.3%
P.O. Box 2600
Valley Forge, PA 19482-
2600
All Directors and 652,334 10,326,975 4.6% 43.5% 41.2%
Officers as a Group (12
persons)
--------
(1) Class A Common Stock is convertible, at any time, on a share-for-share
basis into Common Stock at the option of the holder thereof. As a result,
pursuant to Rule 13d of the Securities Exchange Act of 1934, a
stockholder is deemed to have beneficial ownership of the shares of
Common Stock which such stockholder may acquire upon conversion of the
Class A Common Stock. In order to avoid overstatement, the amount of
Common Stock beneficially owned does not take into account such shares of
Common Stock which may be acquired upon conversion of the Class A Common
Stock (an amount which is equal to the number of shares of Class A Common
Stock held by a stockholder). The above numbers include the following
shares of Common Stock subject to options granted under the Company's
1996 Stock Option Plan (the "Plan") which the listed beneficial owner has
the right to acquire beneficial ownership as specified in Rule 13d of the
Securities Exchange Act of 1934: Denis McGlynn, 51,764 shares; Edward J.
Sutor, 13,255 shares; Timothy R. Horne, 26,390 shares; Klaus M.
Belohoubek, 14,985 shares; and Robert M. Comollo, 12,500 shares; and all
directors and officers as a group, 118,894 shares.
(2) Henry B. Tippie is the executor of the Estate of John W. Rollins, Sr. His
individual holdings are listed separately from the holdings of the
Estate.
(3) Includes 150,000 shares of Common Stock held by his wife and 42,000
shares of Common Stock held as Co-Trustee, as to which Mr. Tippie
disclaims any beneficial interest.
(4) Includes 10,000 shares of Common Stock and 100,000 shares of Class A
Common Stock held by his wife and 10,000 shares of Common Stock and
15,000 shares of Class A Common Stock held as Trustee, as to which Mr.
Weaver disclaims any beneficial interest, and 600,000 shares of Class A
Common Stock owned by a partnership over which Mr. Weaver has sole voting
power, as to which Mr. Weaver disclaims beneficial interest in 76.14% of
the partnership.
(5) Includes 21,550 shares of Common Stock owned by a limited liability
corporation over which Mr. Rollins has sole voting and investment power.
(6) Includes 52,000 shares of Class A Common Stock held by his wife, as to
which Mr. McGlynn disclaims any beneficial interest.
(7) Includes 900 shares of Common Stock held by his wife, as to which Mr.
Rollins disclaims any beneficial interest.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Two individuals are to be elected at the Annual Meeting to serve as Class
III Directors for a term of three years, and until the election and
qualification of their successors. Six other individuals serve as directors
but are not standing for re-election because their terms as directors extend
past the Annual Meeting pursuant to
4
provisions of the Company's Restated Certificate of Incorporation which
provide for the election of directors for staggered terms, with each director
serving a three year term.
Unless a stockholder WITHHOLDS AUTHORITY, the proxy holders will vote FOR
the election of each of the persons named below to a three year term as a
director. Although the Board of Directors does not contemplate the
possibility, in the event a nominee is not a candidate or is unable to serve
as director at the time of the election, unless the stockholder WITHHOLDS
AUTHORITY, the proxies will be voted for such nominee as is designated by the
present Board of Directors to fill such vacancy.
The name and age of each of the nominees, his principal occupation, and the
period during which he has served as a Director are set forth below. Similar
information is also provided for those directors whose terms expire in future
years.
Names of Service as
Nominees Principal Occupation(1) Director Age
-------- ----------------------- ------------ ---
Class III (Term Expires
2005)
Denis McGlynn........... President and Chief Executive Officer 1979 to date 56
Jeffrey W. Rollins...... Principal, Context Ventures, Inc., LLC 1993 to date 37
Names of Directors Whose
Terms Have Not Expired
------------------------
Class I (Term Expires
2003)
Henry B. Tippie......... Chairman of the Board; Chairman of the 1996 to date 75
Board and Chief Executive Officer,
Tippie Services, Inc.
R. Randall Rollins...... Chairman of the Board and Chief 1996 to date 70
Executive Officer, Rollins, Inc.;
Chairman of the Board and Chief
Executive Officer, RPC, Inc.
Patrick J. Bagley....... Former Vice President--Finance, 1996 to date 55
Treasurer and Director, Rollins Truck
Leasing Corp.
Class II (Term Expires
2004)
John W. Rollins, Jr..... Former President, Chief Executive 1996 to date 59
Officer and Director, Rollins Truck
Leasing Corp.
Eugene W. Weaver........ Former Senior Vice President- 1971 to date 69
Administration
Melvin L. Joseph........ Vice President and Director of Auto 1969 to date 80
Racing, Dover International Speedway,
Inc.; President, Melvin Joseph
Construction Company
--------
(l) Except as noted, the nominees and other directors have held the positions
of responsibility set out in the above column (but not necessarily their
present titles) for more than five years. In addition to the
directorships listed in the above column, the following individuals also
serve on the board of directors of the following companies: Henry B.
Tippie, Rollins, Inc., Safety-Kleen Corp., RPC, Inc. and Marine Products
Corporation; R. Randall Rollins, SunTrust Banks Inc., SunTrust Banks of
Georgia and Marine Products Corporation; John W. Rollins, Jr., Safety-
Kleen Corp.; and Eugene W. Weaver, WSFS Financial Corp. Jeffrey W.
Rollins co-founded Context Ventures, Inc., LLC, a firm that provides
management and financial services, in 2001. From 1997 to 2001 he was Vice
President-Development for Brandywine Center Management, L.L.C., a real
estate management company. Previously he was Vice President of the
Eastern Region of Rollins Environmental, Inc., now a subsidiary of
Safety-Kleen. John W. Rollins, Jr., Patrick J. Bagley and Klaus M.
Belohoubek were all executive officers of Matlack Systems, Inc. during
2001. Matlack Systems, Inc. was in the business of providing
transportation services and is liquidating its holdings under
5
the protection of Chapter 11 of the United States bankruptcy code. Dover
International Speedway, Inc. is a wholly-owned subsidiary of the Company.
Rollins Truck Leasing Corp. was merged into a subsidiary of Penske Truck
Leasing Co., L.P. on February 28, 2001 and is engaged in the business of
truck leasing. Rollins, Inc. is a consumer services company engaged in
residential and commercial termite and pest control. Safety-Kleen Corp. is
engaged in the business of industrial waste disposal. RPC, Inc. is engaged
in oil and gas field services. Marine Products Corporation is engaged in
boat manufacturing. WSFS Financial Corp., SunTrust Banks Inc., and SunTrust
Banks of Georgia are all financial institutions. Tippie Services, Inc.
provides management services. John W. Rollins, Jr. and Jeffrey W. Rollins
are brothers. R. Randall Rollins is a cousin of John W. Rollins, Jr. and
Jeffrey W. Rollins.
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors held four regularly scheduled meetings during the
year ended December 31, 2001. All meetings were attended by one hundred
percent of the Board except for one meeting attended by eighty-nine percent of
the Board.
Audit Committee. The Audit Committee consists of Patrick J. Bagley,
Chairman, R. Randall Rollins and Jeffrey W. Rollins. The Audit Committee held
two meetings during the year ended December 31, 2001. The Committee's
functions are described under the caption "Report of the Audit Committee."
Executive Committee. The Executive Committee consists of Henry B. Tippie,
Chairman, and Denis McGlynn. The Executive Committee held four meetings during
the year ended December 31, 2001. The Executive Committee has the power to
exercise all of the powers and authority of the Board of Directors in the
management of the business and affairs of the Company in accordance with the
provisions of the By-laws of the Company.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee consists of Henry B. Tippie, Chairman, and Patrick J. Bagley. The
Compensation and Stock Option Committee held one meeting during the year ended
December 31, 2001. The Committee establishes compensation and benefits for the
Company's directors, officers and key employees and administers the Company's
outstanding Stock Option Plans including the granting of options to various
employees of the Company and its subsidiaries.
The Company does not have a nominating committee of the Board of Directors.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company or any of its subsidiaries
are each paid an annual retainer for Board service of $12,000, an attendance
fee of $1,000 for each Board of Directors or committee meeting attended and,
in addition to the Board of Directors or committee meeting attendance fees,
the Chairman of the Board receives $3,000 per quarter and the Chairman of the
Audit Committee receives $1,000 per quarter.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
reports and the Performance Graph on page shall not be incorporated by
reference into any such filings.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is established pursuant to the
Company's Bylaws and the Audit Committee Charter adopted by the Board of
Directors on April 28, 2000.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent auditors are
responsible for performing an independent audit of the Company's
6
consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America and for issuing a report
thereon. The Audit Committee's responsibility is generally to monitor and
oversee these processes, as described in the Audit Committee Charter. It is
not the duty of the Audit Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate and in
accordance with generally accepted accounting principles; that is the
responsibility of management and the Company's independent public accountants.
Each member of the Audit Committee is independent in the judgment of the
Company's Board of Directors and as required by the listing standards of the
New York Stock Exchange.
With respect to the year ended December 31, 2001, in addition to its other
work, the Audit Committee:
. Reviewed and discussed with the Company's management and the independent
auditors the audited financial statements of the Company as of December
31, 2001 and for the year then ended;
. Discussed with the independent auditors the matters required to be
discussed by auditing standards generally accepted in the United States
of America; and
. Received from the independent auditors written affirmation of their
independence required by Independence Standards Board Standard No. 1 and
discussed with the auditors the firm's independence from the Company.
Based upon the review and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements of
the Company, as of December 31, 2001 and for the year then ended, be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2001 for filing with the Securities and Exchange Commission. In giving this
recommendation to the Board of Directors, the Audit Committee has relied on
(i) management's representation that such financial statements have been
prepared with integrity and objectivity and in conformity with generally
accepted accounting principles and (ii) the report of the Company's
independent auditors with respect to such financial statements.
Audit Committee
Patrick J. Bagley, Chairman
R. Randall Rollins
Jeffrey W. Rollins
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During the fiscal year ending December 31, 2001, the members of the
Compensation and Stock Option Committee of the Board of Directors held primary
responsibility for determining executive compensation levels.
The Company is engaged in a highly competitive industry. As a consequence,
the Company views its ability to attract and retain qualified executives as
the cornerstone of its future success. In order to accomplish this objective,
the Company has endeavored to structure its executive compensation in a
fashion that takes into account the Company's operating performance and the
individual performance of the executive.
Of necessity, this analysis is subjective in nature and not based upon a
structured formula. The factors referred to above are not weighted in an exact
fashion.
Pursuant to the above compensation philosophy, the total annual compensation
of executive officers of the Company is made up of one or more of three
elements. The three elements are salary, an annual incentive and, in some
years, grants of stock options.
7
The salary of each executive officer is determined by the Compensation and
Stock Option Committee. As previously stated, in making its determinations the
Committee gives consideration to the Company's operating performance for the
prior fiscal year and the individual executive's performance.
The annual incentive compensation package for the executive officers is
developed by the Chief Executive Officer of the Company prior to the end of
each fiscal year and presented to the Committee for review, modification or
approval. The package is based upon a performance formula for the ensuing
fiscal year but its payment is within the discretion of the Chief Executive
Officer based on each individual officer's performance.
Awards under the Company's Stock Option Plan are purely discretionary, are
not based upon any specific formula and may or may not be granted in any given
fiscal year. Grants are made under the Plan and the Plan is administered
pursuant to Rule 16b-3 of the Securities Exchange Act of 1934. When
considering the grant of stock options, the Committee gives consideration to
the overall performance of the Company and the performance of individual
employees.
CEO COMPENSATION
The CEO's compensation is determined by the Compensation and Stock Option
Committee. As is the case with respect to the executive officers, the CEO's
compensation is based upon the Company's operating performance and his
individual performance. The CEO's compensation consists of the same three
elements identified above with respect to executive officers: salary, an
annual incentive, and, in some years, grants of stock options. The
determination of salary and the award of stock options, if any, are subjective
and not based upon any specific formula or guidelines. The determination of an
annual incentive is based on the amount by which the Company's pre-tax
earnings exceed a target established by the Committee prior to the beginning
of the fiscal year. The target is revised annually. The CEO is not a member of
the Committee and does not participate in the deliberations of the Committee
when his salary or incentive is determined.
Compensation and Stock Option Committee
Henry B. Tippie--Chairman
Patrick J. Bagley
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during its fiscal year ended December 31, 2001, all filing
requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
8
COMMON STOCK PERFORMANCE
The following graph reflects a comparison of the cumulative total stockholder
return on the Company's Common Stock with the S&P Composite 500 Index and an
index of peer companies selected by the Company consisting of companies engaged
in one or more of the following businesses: motorsports, horse racing and
gaming. In addition to the Company, the peer group includes Speedway
Motorsports, Inc., International Speedway Corporation, Penn National Gaming,
Inc., Argosy Gaming Company, The Sands Regent, President Casinos, Inc., Isle of
Capri Casinos, Inc., Churchill Downs, Inc. and Pinnacle Entertainment, Inc. The
graph assumes that the value of the investment in the Company's common stock
and each index was 100 at October 3, 1996 (the Company's initial public
offering date) and all dividends were reinvested. The comparisons in this table
are required by the Securities and Exchange Commission and, therefore, are not
intended to forecast or be necessarily indicative of any future return on the
Company's common stock.
COMPARISON OF 63 MONTH CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY,
THE S & P 500 INDEX AND A PEER GROUP
[CHART]
THE COMPANY S & P 500 PEER GROUP
10/4/96 100.00 100.00 100.00
6/97 106.85 127.84 84.03
6/98 186.63 166.40 94.76
6/99 215.68 204.27 138.26
6/00 172.88 219.08 122.48
12/00 139.27 199.09 118.23
12/01 193.14 176.21 142.49
*$100 invested on 10/4/96 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors serve on the Company's Compensation and Stock Option
Committee: Henry B. Tippie, Chairman and Patrick J. Bagley. Henry B. Tippie is
a non-employee director and, therefore, not an executive officer of the
Company.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to the Company for the fiscal years ended June 30, 1999,
June 30, 2000, the six months ended December 31, 2000, and the fiscal year
ended December 31, 2001 of those persons who were, at December 31, 2001, (i)
the Chief Executive Officer and (ii) the other most highly compensated
executive officers of the Company whose total annual salary exceeded $100,000
(the "Named Executives"):
SUMMARY COMPENSATION TABLE
Long Term Compensation
--------------------------
Annual Compensation Awards Payouts
-------------------------- ------------------ -------
Other Restricted All Other
Annual Stock Stock LTIP Compen-
Name and Principal Fiscal Salary Incentive Comp.(2) Awards(3) Options Payouts sation
Position Year(1) $(4) $ $ $ /SARs # $ $
------------------ ------- ------- --------- -------- ---------- ------- ------- ---------
Denis McGlynn........... 12/01 400,000 50,000 -- -- -- -- --
President and Chief 12/00 200,000 63,661 -- -- -- -- --
Executive Officer 6/00 350,000 193,866 -- -- 35,000 -- --
6/99 350,000 135,098 -- -- 25,000 -- --
Edward J. Sutor......... 12/01 190,000 10,000 -- -- -- -- --
Executive Vice President 12/00 95,000 37,732 -- -- -- -- --
6/00 175,000 88,773 -- -- 15,000 -- --
Timothy R. Horne........ 12/01 175,000 25,000 -- -- -- -- --
Vice President--Finance
and 12/00 87,500 19,188 -- -- -- -- --
Chief Financial Officer 6/00 140,000 44,509 -- -- 20,000 -- --
6/99 130,000 38,349 -- -- 10,000 -- --
Klaus M. Belohoubek..... 12/01 222,000 -- -- -- 30,000 -- --
Vice President--General
Counsel and Secretary
Robert M. Comollo....... 12/01 125,000 10,000 -- -- -- -- --
Treasurer 12/00 62,500 11,513 -- -- -- -- --
6 /00 125,000 26,706 -- -- 5,000 -- --
6/99 125,000 23,009 -- -- 5,000 -- --
--------
(1) On January 19, 2001, the Company changed its fiscal year end from June 30
to December 31. Accordingly, the amounts for the fiscal year ending
December 2000 reflect compensation for six months.
(2) The only type of Other Annual Compensation for each of the named officers
was in the form of perquisites and was less than the level required for
reporting.
(3) No awards have ever been made.
(4) The salary reported for Mr. Belohoubek represents full salary from March
1, 2001 to December 31, 2001 as Mr. Belohoubek's primary salary was paid
by Rollins Truck Leasing Corp. prior to March 1, 2001 and the Company
contracted for his services from Rollins Truck Leasing Corp. prior to
March 1, 2001.
10
OPTION AND STOCK APPRECIATION RIGHTS GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted in the fiscal year
ending December 31, 2001 to each of the Company's Named Executives. Employees
of the Company and its subsidiaries are eligible for stock option grants based
on individual performance. The Company did not issue any stock appreciation
rights. The table also sets forth the hypothetical gains that would exist for
the options at the end of their eight-year terms, assuming compound rates of
stock appreciation of 0%, 5% and 10%. The actual future value of the options
will depend on the market value of the Company's Common Stock. All option
exercise prices are based on the market price on the grant date.
Potential Realizable
Individual Grants(1) Value at Assumed
------------------------------------------ Annual Rates of
% of Total Stock Price
Options Appreciation for
Options Granted To Exercise Option Term(2)
Granted Employees Price Expiration ---------------------
Name (#) in Fiscal Year ($/Sh) Date 0% 5% 10%
---- ------- -------------- -------- ---------- --- -------- --------
Klaus M. Belohoubek..... 30,000 46.2% $11.55 01/31/09 -- $165,438 $396,254
All employees as a
group.................. 65,000 100.0% $11.55 01/31/09 -- $358,450 $858,459
--------
(1) Options were granted on February 1, 2001. All options relate to shares of
Common Stock.
(2) These amounts, based on assumed appreciation rates of 0% and the 5% and
10% prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price. These numbers do not take into account certain
provisions of options providing for termination of the option following
termination of employment, nontransferability or phased-in vesting.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table summarizes option exercises for the fiscal year ending
December 31, 2001 by the Company's Named Executives, and the value of the
options held by such persons as of December 31, 2001. The Company has not
granted and does not have any Stock Appreciation Rights outstanding.
Value of Unexercised In-
Number of Unexercised the-Money Options at FY-
Shares Acquired Value Options at FY-End (#) End ($)(1)
Name on Exercise (#) Realized($)(2) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- -------------- ------------------------- -------------------------
Denis McGlynn........... -- -- 51,764 71,764 351,995 295,508
Edward J. Sutor......... -- -- 13,255 36,745 20,764 82,343
Timothy R. Horne........ -- -- 26,390 33,610 148,355 150,895
Klaus M. Belohoubek..... -- -- 12,750 50,250 16,119 156,182
Robert M. Comollo....... 10,000 49,750 12,500 11,500 76,406 53,982
--------
(1) The value of the Company's Common Stock on December 31, 2001 was $15.30
per share.
(2) Fair market value of underlying security at exercise date less the
exercise price.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
There were no Long-Term Incentive Plan Awards to the Named Executives during
the fiscal year ended December 31, 2001.
11
BENEFIT PLANS
Pension Plans
The Company's Pension Plan is a non-contributory qualified employee defined
benefit plan. All full time employees of the Company are eligible to
participate in the Pension Plan. Up to September 30, 1989, retirement benefits
were equal to the sum of from 1% to 1.8% of an employee's annual cash
compensation for each year of service to age 65. Commencing October 1, 1989
and thereafter, retirement benefits are equal to the sum of 1.35% of earnings
up to covered compensation, as that term is defined in the Plan, and 1.7% of
earnings above covered compensation. Pensionable earnings includes regular
salaries or wages, commissions, bonuses, overtime earnings and short-term
disability income protection benefits.
Retirement benefits are not subject to any reduction for Social Security
benefits or other offset amounts. An employee's benefits may be paid in
certain alternative forms having actuarially equivalent values. Retirement
benefits are fully vested after the completion of five years of credited
service or, if earlier, upon reaching age 55. The maximum annual benefit under
a qualified pension plan is currently $160,000 beginning at the Social
Security retirement age (currently age 65).
The Company maintains a non-qualified, defined benefit plan, called the
Excess Benefit Plan, which covers those participants of the Pension Plan whose
benefits are limited by the Internal Revenue Code. A participant in the Excess
Benefit Plan is entitled to a benefit equaling the difference between the
amount of the benefit payable without limitation and the amount of the benefit
payable under the Pension Plan.
Annual pension benefit projections for the Named Executives assume: (a) that
the participant remains in the service of the Company until age 65; (b) that
the participant's earnings continue at the same rate as paid in the fiscal
year ended December 31, 2001 during the remainder of his service until age 65;
and (c) that the Plans continue without substantial modification. Mr. Sutor
has resigned from the Company in order to assume the position of Executive
Vice President of Dover Downs Gaming & Entertainment, Inc. and, therefore, his
benefit projection reflects the discontinuation of benefit accruals under the
Plan.
The estimated annual benefit at retirement for each of the following Named
Executives of the Company is: Denis McGlynn, $70,459; Edward J. Sutor, $4,030;
Timothy R. Horne, $52,221; Klaus M. Belohoubek, $66,431; and Robert M.
Comollo, $39,438.
401(k) Retirement Plan
The Company has a deferred compensation plan pursuant to section 401(k) of
the Internal Revenue Code for all its full time employees who have completed
ninety (90) days of service. Covered employees may contribute up to 15% of
their compensation for each calendar year. In addition, the Company
contributes up to an additional 100% of the first $250 of compensation
contributed by any covered employee to the plan. An employee's maximum annual
contribution to the plan is $11,000. All contributions are funded currently.
PROPOSAL NUMBER TWO
AUTHORIZATION FOR THE BOARD TO
EFFECT A REVERSE STOCK SPLIT
IN A RATIO OF ONE FOR TWO
General
The Company's stockholders are being asked to act upon a proposal to
authorize the Board of Directors to effect a reverse stock split of one (1)
new share of Common Stock for each two (2) existing shares of Common Stock and
one (1) new share of Class A Common Stock for each two (2) existing shares of
Class A Common Stock (the "Reverse Stock Split") at any time prior to the
Company's 2003 Annual Meeting of Stockholders,
12
depending upon a determination by the Board of Directors that the Reverse
Stock Split is in the best interests of the Company and its stockholders. The
Board of Directors has approved the Reverse Stock Split and has directed that
the Reverse Stock Split be submitted to the Company's stockholders for
approval.
If the Reverse Stock Split is approved by the stockholders of the Company at
its 2002 Annual Meeting, the Reverse Stock Split will be effected only upon a
determination by the Board of Directors that the Reverse Stock Split is in the
best interests of the Company and its stockholders, based on factors,
including the marketability and liquidity of the Common Stock, prevailing
market conditions, the likely effect on the market price of the Common Stock,
and other relevant factors.
If approved by the stockholders of the Company, the Reverse Stock Split
would become effective on any date (the "Effective Date") selected by the
Board of Directors on or prior to the Company's 2003 Annual Meeting of
Stockholders. If the Reverse Stock Split is not effected by such date, the
Board of Directors will take action to abandon the Reverse Stock Split.
The complete text of the resolutions of the Board of Directors authorizing
the Amendment to the Company's Certificate of Incorporation required for the
Reverse Stock Split is set forth in Exhibit A to this Proxy Statement;
however, such text is subject to amendment to include such changes as may be
required by the Delaware Secretary of State. If the Reverse Stock Split is
approved by the requisite vote of the Company's stockholders, upon filing of
the Amendment to the Company's Certificate of Incorporation with the Delaware
Secretary of State on the Effective Date, the Reverse Stock Split will be
effective, and each two shares of the Common Stock or Class A Common Stock
issued and outstanding immediately prior thereto (the "Old Stock") will be
automatically converted into and reclassified as one share of the Company's
Common Stock or Class A Common Stock, as appropriate (the "New Stock");
provided, however, that no fractional shares of New Stock will be issued as a
result of the Reverse Stock Split. Each holder of Old Stock who would
otherwise be entitled to receive a fractional share of New Stock will receive
cash in lieu of such fractional share of New Stock in an amount equal to the
product obtained by multiplying (a) the closing price of the Common Stock as
reported on the New York Stock Exchange on the trading day immediately
preceding the Effective Date by (b) the number of shares of Old Stock held by
such holder that would otherwise have been exchanged for such fractional share
interest.
Exchange of Certificates
Shortly after the Effective Date, stockholders will be asked to surrender
certificates representing shares of Old Stock in accordance with the
procedures set forth in a letter of transmittal to be sent by the Company. The
Company will instruct its transfer agent to act as its exchange agent (the
"Exchange Agent") and to act for holders of Common Stock and Class A Common
Stock in implementing the exchange of their certificates. Upon the surrender
of certificates representing Old Stock, certificates representing shares of
New Stock will be issued and forwarded to the stockholders (and cash in lieu
of any fractional share interests); however, each certificate representing
shares of Old Stock will continue to be valid and represent the number of
shares of New Stock equal to one-half of the number of shares of Old Stock
(and cash in lieu of any fractional shares, as described above). For shares of
Old Stock held by a stockholder in a brokerage account in "street name", the
conversion and reclassification will be handled electronically with no action
necessary on the part of the stockholder.
Purposes of the Reverse Stock Split
The Board of Directors believes that the Reverse Stock Split is desirable
for several reasons. The Reverse Stock Split is intended to enhance the
acceptability of the Common Stock by the financial community and the investing
public. The reduction in the number of issued and outstanding shares of Common
Stock caused by the Reverse Stock Split is anticipated initially to increase
proportionally the per share market price of the Common Stock.
The Company's Common Stock is listed for trading on the New York Stock
Exchange. On April , 2002, the reported closing price of the Common Stock on
the New York Stock Exchange was $ per share. The
13
Board believes that a decrease in the number of shares of Common Stock
outstanding may increase the trading price of such shares to a price more
appropriate for a security listed on the New York Stock Exchange, although no
assurance can be given that the market price of the Common Stock will rise in
proportion to the reduction in the number of outstanding shares resulting from
the Reverse Stock Split.
Although, the Company has not experienced identifiable problems in the
marketability and liquidity of its Common Stock, the Board believes that the
current per share price of the Common Stock may limit the effective
marketability of the Common Stock because of the reluctance of many brokerage
firms and institutional investors to recommend lower-priced stocks to their
clients or to hold them in their own portfolios.
A variety of brokerage house practices tend to discourage individual brokers
from dealing with lower priced stocks. Some of those practices pertain to the
payment of broker's commissions and to procedures that make the handling of
lower priced stocks economically unattractive to brokers. In addition, the
structure of trading commissions tends to have an adverse impact upon holders
of lower priced stock because the brokerage commission on a sale of lower
priced stock generally represents a higher percentage of the sales price than
the commission on a relatively higher priced issue. The Reverse Stock Split
could result in a price level for the Common Stock that would minimize, to
some extent, the effect of brokerage house practices and the impact of trading
commissions on the market for the Common Stock. However, as a result of the
Reverse Stock Split, stockholders who now own "round lots" may hold "odd lots"
and, as a result, may be subject to increased transaction costs on the sale of
their Common Stock.
There can be no assurance that the market price per share of the Common
Stock after the Reverse Stock Split will be two times the market price per
share of the Common Stock before the Reverse Stock Split, or that such price
will either exceed or remain in excess of the current market price. Further,
there can be no assurance that the market for the Common Stock will be
improved. Stockholders should note that the Board of Directors cannot predict
what effect the Reverse Stock Split will have on the market price or liquidity
of the Common Stock.
Certain Effects of the Reverse Stock Split
The Reverse Stock Split will be effected by means of filing the Amendment to
the Company's Certificate of Incorporation with the Delaware Secretary of
State. Assuming approval of the Reverse Stock Split by the requisite vote of
the stockholders at the 2002 Annual Meeting, the Amendment to the Company's
Certificate of Incorporation will be filed with the Delaware Secretary of
State as promptly as practicable after a determination by the Board of
Directors to proceed with the Reverse Stock Split, and the Reverse Stock Split
will become effective on the date of such filing.
After giving effect to the settlement of fractional shares of Common Stock,
there will be no differences between the rights of the shares of Common Stock
and Class A Common Stock outstanding prior to the Reverse Stock Split and
those outstanding after the Reverse Stock Split is effected. The relative
voting power of Class A Common Stock to the voting power of the Common Stock
will be the same as existed immediately prior to the Reverse Stock Split. The
Company's currently outstanding options will be equitably adjusted so that the
number of shares of Common Stock so optioned will be decreased by one-half and
the exercise price increased by a factor of two. No officer, director or
affiliate of the Company is expected to derive any benefit from the Reverse
Stock Split other than the benefits that would be enjoyed by any other person
holding the same number of shares.
Consummation of the Reverse Stock Split will result in a decrease in the
Company's authorized capital stock from 131,000,000 shares to 66,000,000
shares: consisting of 37,500,000 shares of Common Stock, 27,500,000 shares of
Class A Common Stock, and 1,000,000 shares of Preferred Stock. The number of
authorized shares of Common Stock and Class A Common Stock was reduced by a
factor of two since the Reverse Stock Split will reduce the number of
outstanding shares by a factor of two. The par value of the New Stock will
remain at $.10 per share following the Reverse Stock Split. As a consequence,
the aggregate par value of the New Stock will be reduced, while the aggregate
capital in excess of par value attributable to such stock for statutory and
accounting
14
purposes will be correspondingly increased. This increase in capital in excess
of par value will be treated as capital for statutory purposes.
As of March 31, 2002, there were approximately 14,284,252 shares of Common
Stock and 23,769,085 shares of Class A Common Stock outstanding, held of
record by 1,228 holders. Following the Reverse Stock Split, the Company
estimates that it will have 7,142,126 shares of Common Stock and 11,884,542
shares of Class A Common Stock outstanding, held of record by substantially
the same number of holders. The Company's Common Stock will continue to be
registered under the Securities Exchange Act of 1934, as amended, and the
Company will remain obligated to comply with the reporting obligations of such
Act.
Federal Income Tax Consequences of the Reverse Stock Split
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the Reverse Stock Split. The Company believes that the Reverse
Stock Split will have the following federal income tax effects:
1. A stockholder will not recognize gain or loss on the exchange of Old
Stock for New Stock. In the aggregate, the stockholder's basis in
shares of New Stock will equal his basis in shares of Old Stock.
2. A stockholder's holding period for tax purposes for shares of New Stock
will be the same as the holding period for tax purposes of the shares
of Old Stock exchanged therefor.
3. The Company will not recognize any gain or loss as a result of the
Reverse Stock Split.
4. To the extent a stockholder receives cash from the Company in lieu of a
fractional share of New Stock, the stockholder will be treated for tax
purposes as though he sold the fractional share. Such a stockholder
will recognize a gain equal to the excess of (i) his cash distribution
over (ii) his tax basis in the fractional share deemed sold. If the
stockholder's tax basis in the fractional share deemed sold exceeds his
cash distribution, the stockholder will recognize a loss.
The foregoing discussion regarding the tax consequences of the split is
limited to federal income taxes, is provided for informational purposes only
and is not based upon the opinion of legal counsel or other tax experts. The
Company recommends that stockholders discuss the federal, state and local tax
consequences of the split with their own tax advisors.
Vote Required
The approval of the Reverse Stock Split requires the affirmative vote of a
majority of the outstanding shares of Common Stock, voting separately as a
class, and the affirmative vote of a majority of the outstanding shares of
Class A Common Stock, voting separately as a class. The enclosed form of proxy
provides a means for stockholders to vote for the approval of this proposal,
to vote against the approval of this proposal or to abstain from voting with
regard to the approval of this proposal. Each properly executed proxy received
in time for the 2002 Annual Meeting will be voted as specified therein. If a
stockholder executes and returns a proxy but does not specify otherwise, the
shares represented by such proxy will be voted "FOR" the approval of this
proposal.
No Dissenter's Rights
Stockholders have no right under Delaware law to appraisal or dissenter's
rights relative to the Reverse Stock Split.
THE BOARD RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE BOARD OF DIRECTORS
TO EFFECT A REVERSE STOCK SPLIT IN A RATIO OF ONE FOR TWO PURSUANT TO THE
RESOLUTIONS SET FORTH IN EXHIBIT A TO THIS PROXY STATEMENT.
15
AUDITORS
The Board of Directors has not selected or recommended the name of an
independent public accounting firm for approval or ratification by the
stockholders. The Board of Directors believes that it will be in the best
interests of the stockholders if it is free to make such determination based
upon all factors that are then relevant.
KPMG LLP served as the Company's auditors for the fiscal year ended December
31, 2001. A representative of KPMG LLP will be present at the Annual Meeting
and will have the opportunity to make a statement should such representative
so desire. Such representative also will be available to answer questions from
stockholders.
During the fiscal year ended December 31, 2001, KPMG LLP's services rendered
to the Company consisted of auditing the Company's financial statements. In
this capacity, KPMG LLP performed such tests of the Company's accounting
records and other auditing procedures as were required by generally accepted
auditing standards.
Audit Fees
Fees billed by KPMG LLP for the audit of the Company's consolidated
financial statements for the fiscal year ended December 31, 2001 and review of
its quarterly reports for that fiscal year were $81,000.
Financial Information Systems Design and Implementation Fees
KPMG LLP did not provide the Company with any professional services in
connection with financial information systems design and implementation.
All Other Fees
Fees billed by KPMG for services rendered to the Company, other than the
services described above under "Audit Fees" and "Financial Information Systems
Design and Implementation Fees," for the fiscal year ended December 31, 2001
were $316,345, of which $66,345 were for tax consulting services and benefit
plan audits and approximately $250,000 were for auditing the financial
statements of Dover Downs Gaming & Entertainment, Inc. in connection with its
spin-off to the stockholders of the Company and for reviewing the Securities
and Exchange Commission filings required in connection therewith.
STOCKHOLDER PROPOSALS
Appropriate proposals of eligible stockholders (an eligible stockholder must
be a record or beneficial owner of at least l% or $2,000 in market value of
securities entitled to be voted at the meeting and have held such securities
for at least one year) intended to be presented at the Company's next Annual
Meeting of Stockholders must be received by the Company no later than December
27, 2002 for inclusion in the Proxy Statement and form of proxy relating to
that meeting. Stockholders are also advised to review the Company's By-laws,
which contain additional advance notice requirements, including requirements
with respect to advance notice of stockholder proposals and director
nominations.
16
MISCELLANEOUS
ON WRITTEN REQUEST OF ANY RECORD OR BENEFICIAL STOCKHOLDER OF THE COMPANY,
THE COMPANY WILL PROVIDE, FREE OF CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001, WHICH
INCLUDES THE FINANCIAL STATEMENTS. REQUESTS FOR A COPY OF FORM 10-K SHOULD BE
MADE IN WRITING AND ADDRESSED TO:
TIMOTHY R. HORNE
VICE PRESIDENT--FINANCE and CHIEF FINANCIAL OFFICER
DOVER MOTORSPORTS, INC.
P. O. BOX 843
DOVER, DE 19903
THE COMPANY WILL CHARGE REASONABLE OUT-OF-POCKET EXPENSES FOR THE
REPRODUCTION OF EXHIBITS TO FORM 10-K SHOULD A STOCKHOLDER REQUEST COPIES OF
SUCH EXHIBITS.
The Company's Annual Report as of and for the fiscal year ended December 31,
2001 has been mailed to stockholders.
The Board of Directors knows of no business other than the matters set forth
herein which will be presented at the meeting. Inasmuch as matters not known
at this time may come before the meeting, the enclosed proxy confers
discretionary authority with respect to such matters as may properly come
before the meeting and it is the intention of the persons named in the proxy
to vote in accordance with their judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Klaus M. Belohoubek,
Vice President-General Counsel and
Secretary
Dover, Delaware
April 26, 2002
17
EXHIBIT A
REVERSE STOCK SPLIT RESOLUTIONS
RESOLVED, that the Company's Board of Directors has determined that it would
be advisable to effect a one for two reverse stock split of its Common Stock
and Class A Common Stock (the "Reverse Stock Split") and shall submit a
proposal to that effect to its stockholders for their approval; and
FURTHER RESOLVED, that, subject to obtaining stockholder approval at the
Company's 2002 Annual Meeting of Stockholders, but prior to the Company's 2003
Annual Meeting of Stockholders, the Company's Certificate of Incorporation
shall be amended by filing with the Delaware Secretary of State a Certificate
of Amendment (the "Amendment") in the following form, which Amendment includes
in its text certain additional resolutions adopted by this Board:
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DOVER MOTORSPORTS, INC.
Dover Motorsports, Inc., a corporation organized and existing under and by
virtue of
the General Corporation law of the State of Delaware (the "Corporation");
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Corporation, and declaring that such
amendment is advisable and that such amendment should be submitted to the
stockholders of the Corporation for approval. Resolutions setting forth the
proposed amendment follow:
RESOLVED, that paragraph (a) of Article Fourth of the Certificate of
Incorporation of this Corporation be amended in its entirety to read as
follows.
"(a) Authorized Capital. The total number of shares of stock which
the Corporation shall have authority to issue is 66,000,000 shares,
consisting of: 37,500,000 shares of Common Stock, which shares shall
have a par value of $.10 per share; 27,500,000 shares of Class A
Common Stock, which shares shall have a par value of $.10 per share;
and 1,000,000 shares of Preferred Stock, which shares shall have a
par value of $.10 per share Upon the effective date of this
Amendment (the "Effective Date") each two shares of Common Stock or
Class A Common Stock outstanding immediately prior to the Effective
Date (the "Old Stock") shall be automatically converted into and
reclassified as one share of Common Stock or Class A Common Stock,
as appropriate (the "New Stock") subject to the required settlement
of fractional shares. The Corporation shall (i) issue one share of
New Stock for every two shares of Old Stock outstanding and (ii) pay
cash in lieu of any fraction of a share of New Stock which any
stockholder would otherwise receive. The settlement amount for
fractional shares of New Stock shall be equal to the product
obtained by multiplying (i) the closing sale price per share for the
Old Stock on the New York Stock Exchange on the trading day
immediately preceding the Effective Date by (ii) the number of
shares of Old Stock that would otherwise have been exchanged for
such fractional share interest of New Stock. From and after the
Effective Date, certificates representing shares of Old Stock shall
be deemed to represent only the right to receive shares of New Stock
and cash in lieu of any fractional share of New Stock to which an
individual stockholder would otherwise be entitled.
Stockholders shall be required to deliver the certificates
representing their shares of the Old Stock outstanding immediately
prior to the Effective Date, upon which the Corporation shall,
A-1
through its exchange agent, issue certificates representing shares
of New Stock, and shall deliver a check for the amount necessary to
pay for any fraction of a whole share of New Stock.
From and after the Effective Date, the amount of capital
represented by the shares of the New Stock into which and for which
the shares of the Old Common Stock are converted and reclassified
under the terms of this Amendment shall be the same as the amount of
capital represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or increased in accordance
with applicable law.
RESOLVED, that the Board of Directors of the Corporation is hereby
authorized to adopt any further resolutions adjusting the capital
accounts of the Corporation as, in its judgment, shall be in the best
interests of the Corporation; and
RESOLVED, that the officers of the Corporation are hereby authorized
and directed to do all other things and execute and file all documents,
including amendments to the Corporation's Certificate of Incorporation,
which in their sole judgment are deemed to be necessary and proper to
carry out the intent of the foregoing resolutions.
SECOND: Thereafter, pursuant to resolutions of the Corporation's Board of
Directors, the Amendment was submitted to the stockholders of the
Corporation for approval at a Meeting of Stockholders, and such meeting was
called and held upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware. The necessary number of shares as
required by statute were voted in favor of the Amendment.
THIRD: The Amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Klaus M. Belohoubek, its Vice President--General
Counsel, as of this day of , 2002.
DOVER MOTORSPORTS, INC.
By __________________________________
Klaus M. Belohoubek
Vice President--General Counsel
FURTHER RESOLVED, that text of the above Amendment is subject to amendment
to include any changes as may be required by the Delaware Secretary of State;
that the Amendment shall be filed as promptly as practicable after a
determination by the Board of Directors to proceed with the Reverse Stock
Split; and that at any time prior to the filing of the Amendment and
notwithstanding authorization of the Amendment by the stockholders of the
Company, the Board of Directors may abandon the Amendment without further
action by the stockholders.
A-2
DOVER MOTORSPORTS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY, 22, 2002, 9:00 A.M.
The undersigned hereby constitutes and appoints Henry B. Tippie and Denis
McGlynn, and each of them jointly and severally, proxies with full power of
substitution, to vote all shares of Common Stock and Class A Common Stock which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on May, 22, 2002 at 9:00 A.M., Rollins Center, Dover Downs
Hotel and Conference Center, 1131 N. DuPont Highway, Dover, Delaware, or at any
adjournment thereof, on all matters set forth in the Notice of Annual Meeting
and Proxy Statement dated April 26, 2002, as follows:
(Mark only one box)
1. ELECTION OF DIRECTORS
Nominees: Denis McGlynn and Jeffrey W. Rollins
[_] VOTE FOR all nominees listed above; except vote withheld from following
nominee (if any):
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[_] VOTE WITHHELD FROM all nominees.
2. AUTHORIZATION FOR BOARD OF DIRECTORS TO EFFECT A REVERSE STOCK SPLIT IN A
RATIO OF ONE FOR TWO
[_] VOTE FOR Reverse Stock Split:
[_] VOTE AGAINST Reverse Stock Split:
[_] ABSTAIN FROM VOTING:
3. At their discretion, upon such matters as may properly come before the
Annual Meeting or any adjournment thereof.
(OVER)
(CONTINUED FROM OTHER SIDE)
The undersigned acknowledges receipt of the aforesaid Notice of Annual
Meeting and Proxy Statement, each dated April 26, 2002, grants authority to any
of said proxies, or their substitutes, to act in the absence of others, with all
the powers which the undersigned would possess if personally present at such
meeting, and hereby ratifies and confirms all that said proxies, or their
substitutes, may lawfully do in the undersigned's name, place and stead.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DOVER
MOTORSPORTS, INC. AND THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH YOUR INSTRUCTIONS. IF NO CHOICE IS SPECIFIED BY YOU, THIS PROXY
WILL BE VOTED FOR BOTH PROPOSALS 1 AND 2.
Please sign below, date and return promptly.
Signature(s) of Stockholder(s)
DATED: , 2002
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Signature(s) should conform to name(s) and title(s)
stenciled hereon. Executors, administrators,
trustees, guardians and attorneys should add their
title(s) on signing.
NO POSTAGE IS REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES