def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Exchange Act of 1934
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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-12
LAKES ENTERTAINMENT, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TABLE OF CONTENTS
130
Cheshire Lane
Minnetonka, Minnesota 55305
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
June 1, 2011
To the
Shareholders of Lakes Entertainment, Inc.:
Please take notice that our Board of Directors has called the
annual meeting of shareholders of Lakes Entertainment, Inc.
(Annual Meeting) to be held at the Doubletree
Park Place Hotel, 1500 Park Place Boulevard, Minneapolis,
Minnesota 55416 at 3:00 p.m. local time on Wednesday,
June 1, 2011, or at any adjournment or postponements of the
Annual Meeting, for the purpose of considering and taking
appropriate action with respect to the following:
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1.
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The election of six directors to our Board of Directors;
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2.
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The ratification of the appointment of Piercy Bowler
Taylor & Kern, Certified Public Accountants, as our
independent registered public accounting firm for the 2011
fiscal year; and
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3.
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The transaction of any other business as may properly come
before the Annual Meeting or any adjournments or postponements
of the Annual Meeting.
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Pursuant to due action of our Board of Directors, shareholders
of record on April 8, 2011, will be entitled to notice of,
and to vote at, the Annual Meeting or any adjournments or
postponements of the Annual Meeting.
By Order of the Board of Directors
Timothy J. Cope,
President, Chief Financial Officer, and
Treasurer
April 15, 2011
IMPORTANT
NOTICE
PLEASE
VOTE BY TELEPHONE OR INTERNET, OR, IF YOU RECEIVED PAPER COPIES
OF OUR PROXY MATERIALS, YOU CAN ALSO MARK, DATE, SIGN AND
PROMPTLY MAIL THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE
MEETING. WHEN YOU SUBMIT YOUR VOTE, PLEASE ALSO INDICATE WHETHER
YOU ARE PLANNING TO ATTEND THE
MEETING.
LAKES
ENTERTAINMENT, INC.
130 Cheshire Lane
Minnetonka, Minnesota 55305
PROXY
STATEMENT
Annual
Meeting of Shareholders to be Held
June 1, 2011
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Lakes
Entertainment, Inc. (Lakes or the
Company) to be used at our annual meeting of
shareholders (Annual Meeting) to be held at
the Doubletree Park Place Hotel, 1500 Park Place Boulevard,
Minneapolis, Minnesota 55416 at 3:00 p.m. local time on
Wednesday, June 1, 2011 the purpose of considering and
taking appropriate action with respect to the following:
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1.
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The election of six directors to our Board of Directors;
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2.
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The ratification of the appointment of Piercy Bowler
Taylor & Kern, Certified Public Accountants, as our
independent registered public accounting firm for the 2011
fiscal year; and
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3.
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The transaction of any other business as may properly come
before the Annual Meeting or any adjournments or postponements
of the Annual Meeting.
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The approximate date on which we first sent this proxy statement
and the accompanying proxy to our shareholders was
April 15, 2011.
PROXIES
AND VOTING
Only shareholders of record at the close of business on
April 8, 2011 (Record Date) for the
Annual Meeting will be entitled to notice of, and to vote at,
the Annual Meeting or any adjournments or postponements of the
Annual Meeting. There were 26,405,679 shares of our common
stock outstanding on the Record Date, which is the only class of
our capital stock entitled to vote at the Annual Meeting. Each
share of common stock is entitled to one vote upon each matter
to be presented at the Annual Meeting. A quorum, consisting of a
majority of the outstanding shares of our common stock entitled
to vote at the Annual Meeting, must be present in person or
represented by proxy before action may be taken at the Annual
Meeting.
Pursuant to rules adopted by the Securities and Exchange
Commission, we have elected to provide access to our proxy
materials over the Internet. Accordingly, we have sent to most
of our shareholders the Notice of Internet Availability of Proxy
Materials (the Notice) containing instructions on
how to access this Proxy Statement and our 2010 Annual Report
on-line. Shareholders who have received the Notice will not be
sent a printed copy of our proxy materials in the mail, unless
they request to receive one.
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to Be Held on June 1,
2011: This Proxy Statement and our 2010 Annual Report are
available at www.lakesentertainment.com/proxy
To vote your shares, please follow the instructions on the
Notice you received for our Annual Meeting of Shareholders. If
you received paper copies of our proxy materials, we have
enclosed a proxy card for you to use to vote your shares. In
order to register your vote, complete, date and sign the proxy
card and return it in the enclosed envelope or vote your proxy
by telephone or Internet in accordance with the voting
instructions on the proxy card.
Each proxy returned to the Company will be voted in accordance
with the instructions indicated on the proxy. If no instructions
are indicated on the proxy, it will be voted in favor of the
proposals set forth in this proxy statement. For
Proposal One, the six nominees who receive the highest
number of affirmative votes will be elected as directors.
Proposal Two requires the affirmative vote of the holders
of a majority of the shares of common stock present in person or
represented by proxy and entitled to vote at the Annual Meeting.
Each shareholder who signs and returns a proxy in the form
enclosed with this proxy statement has the
1
unconditional right to revoke the proxy at any time prior to its
use at the Annual Meeting. A shareholder can change his or her
proxy or vote in one of three ways: (1) send a signed
notice of revocation to our Secretary to revoke the previously
given proxy; (2) send a completed proxy card bearing a
later date than the previously given proxy to our Secretary
indicating the change in your vote; or (3) attend the
Annual Meeting and vote in person, which will automatically
cancel any proxy previously given, or the shareholder may revoke
his or her proxy in person, but a shareholders attendance
alone at the Annual Meeting will not revoke any proxy that the
shareholder has previously given. If a shareholder chooses
either of the first two methods, the shareholder must take the
described action prior to the start of the Annual Meeting. Once
voting on a particular matter is completed at the Annual
Meeting, a shareholder will not be able to revoke his or her
proxy or to change his or her vote as to that matter. Unless a
shareholders proxy is so revoked or changed, the shares of
common stock represented by each proxy received by the Company
will be voted at the Annual Meeting and at any adjournments or
postponements thereof. If a shareholders shares of common
stock are held in street name by a broker, bank or other
financial institution, such shareholder must contact it to
change his or her vote.
All shares represented by proxies will be voted for the election
of the nominees for the Board of Directors named in this proxy
statement and for the ratification of the appointment of Piercy
Bowler Taylor & Kern, Certified Public Accountants,
(PBTK) as the Companys independent registered
public accounting firm for the 2011 fiscal year, unless a
contrary choice is specified. If any nominee should withdraw or
otherwise become unavailable for reasons not presently known,
the proxies which would have otherwise been voted for such
nominee will be voted for such substitute nominee as may be
selected by the Board of Directors. A withheld vote
will be counted for purposes of determining whether there is a
quorum, but will not be voted in favor of the nominee with
respect to whom authority has been withheld. A proxy voted
abstain with respect to Proposal Two will not
be voted, although it will be considered present and entitled to
vote, and thus has the same effect as a negative vote. A broker
non-vote is treated as present for purposes of determining a
quorum, but will not be counted as shares entitled to vote and
will have no effect on the result of the vote.
Effect of Not Casting Your Vote. If you
hold your shares in street name and you do not instruct your
bank or broker how to vote in the election of directors
(Proposal One), no votes will be cast on your behalf in
that proposal. Your bank or broker will, however, continue to
have discretion to vote any uninstructed shares on the
ratification of the appointment of the Companys
independent registered public accounting firm
(Proposal Two). If you are a shareholder of record and you
do not cast your vote, no votes will be cast on your behalf on
any of the items of business at the Annual Meeting.
The Board of Directors unanimously recommends that you vote
FOR the election of all nominees for the
Board of Directors named in this proxy statement and
FOR the ratification of the appointment of
PBTK as our independent registered public accounting firm for
the 2011 fiscal year.
While the Board of Directors knows of no other matters to be
presented at the Annual Meeting or any adjournment or
postponements thereof, all proxies returned to the Company will
be voted on any such matter in accordance with the judgment of
the proxy holders.
2
PROPOSAL FOR
ELECTION OF DIRECTORS
(Proposal One)
Our Board of Directors currently consists of six directors. All
of the current directors have been nominated for election by the
Board of Directors. If elected, each nominee will hold office
until the next Annual Meeting of the shareholders, or until his
successor is elected and shall have been qualified. All nominees
have consented to be named and have indicated their intention to
serve as members of the Board of Directors, if elected. The
number of members constituting our Board of Directors has been
previously set by shareholders at seven. The existing vacancy on
the Board of Directors results from a prior resignation of a
director. Notwithstanding the existing vacancy on the Board of
Directors, proxies cannot be voted for more than six
individuals, which number represents the number of nominees
named by the Board of Directors.
The biographies of each of the nominees below contains
information each director has given us regarding the
persons service as a director, business experience and
director positions held currently or at any time during the last
five years. In addition, we describe below the experiences,
qualifications, attributes or skills that caused the Corporate
Governance Committee and the Board to determine that the person
should serve as a director for the Company.
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Name and Age of
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Principal Occupation, Business Experience
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Director
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Director
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For Past Five Years and Directorships of Public Companies
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Since
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Lyle Berman
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Chairman of the Board and Chief Executive Officer of
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1998
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Age 69
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Lakes Entertainment, Inc. since June 1998 and Chairman of the
Board of Directors of Grand Casinos, Inc. (the predecessor to
Lakes) from October 1991 through December of 1998. Mr. Berman
served as President of Lakes from November 1999 until May 2003.
Mr. Berman has also served as the Executive Chairman of the
Board of WPT Enterprises, Inc. (now known as Voyager Oil &
Gas, Inc.) from its inception in February 2002, and had served
as its Chief Executive Officer from February 25, 2005 until
April 1, 2005. Mr. Berman has also been Chairman of the Board of
PokerTek, Inc. since January 2005. Mr. Berman also served as
Chief Executive Officer of Rainforest Café, Inc. from
February 1993 until December 2000. We believe Mr. Bermans
qualifications to sit on our Board of Directors include his over
20 years of experience in the casino industry, including
serving as our Chairman and Chief Executive Officer since 1998,
his extensive executive experience running large national
companies, and his particular strengths in strategic operations
and strategy, food and beverage, and retail sales.
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Timothy J. Cope
Age 59
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President of Lakes Entertainment, Inc. since May 2003 and Chief
Financial Officer, Treasurer, and a director of Lakes
Entertainment since June 1998. Mr. Cope has served as a director
of WPT Enterprises, Inc. (now known as Voyager Oil & Gas,
Inc.) from March 2002 through May 2009. Mr. Cope served as
Secretary of Lakes Entertainment, Inc. from June 1998 until
December 31, 2007. Mr. Cope served as an Executive Vice
President of Lakes Entertainment, Inc. from June 1998 until May
2003. Mr. Cope held the positions of Executive Vice President,
Chief Financial Officer and Director of Grand Casinos, Inc. from
1993 through 1998. We believe Mr. Copes
qualifications to sit on our Board of Directors include over
30 years of experience in the casino industry, including
more than 12 years as an officer of our company. He also
has extensive experience in corporate finance, strategic
planning, public company financial reporting and gaming
operations.
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1998
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Neil I. Sell
Age 69
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Director of Lakes Entertainment, Inc. since June 1998. Since
1968, Mr. Sell has been engaged in the practice of law in
Minneapolis, Minnesota with the firm of Maslon Edelman Borman
& Brand, LLP, which in the past, had rendered legal
services to Lakes. We believe Mr. Sells qualifications to
sit on our Board of Directors include his over 42 years of
practicing law combined with his extensive experience in
corporate legal and corporate governance matters.
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1998
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3
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Name and Age of
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Principal Occupation, Business Experience
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Director
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Director
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For Past Five Years and Directorships of Public Companies
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Since
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Ray M. Moberg
Age 62
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Director of Lakes Entertainment, Inc. since December 2003. Mr.
Moberg retired from Ernst & Young in 2003 after serving for
33 years, including as managing partner of its Reno office
from 1987 until his retirement. Mr. Moberg also served as a
director of WPT Enterprises, Inc. (now known as Voyager Oil
& Gas, Inc.) until April 2010. We believe Mr. Mobergs
qualifications to sit on our Board of Directors include his
financial expertise and his years of experience providing
strategic advisory services to complex organizations.
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2003
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Larry C. Barenbaum
Age 64
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Director of Lakes Entertainment, Inc. since February 2006. Mr.
Barenbaum has been Chief Executive Officer of Christopher &
Banks Corporation, a publicly held national specialty retailer
of womens apparel, since January 2011. Mr. Barenbaum has
served on the Christopher & Banks Corporation Board since
March 1992. Since November 1991, Mr. Barenbaum has been engaged
in investment activities and has provided consulting services to
various companies in the specialty retail and services industry.
We believe Mr. Barenbaums qualifications to sit on our
Board of Directors include his extensive experience in the sales
and marketing area.
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2006
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Richard D. White
Age 57
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Director of Lakes Entertainment, Inc. since December 2006. Mr.
White has been a Managing Director and head of the Private
Equity and Special Products Department of Oppenheimer & Co.
Inc. since June 2004. From 2002 to June 2004, he served as
President of Aeolus Capital Group LLC, a private equity and
investment management firm. From 1985 until 2002, he was a
Managing Director at CIBC Capital Partners, an affiliate of CIBC
World Markets, and its predecessor firm, Oppenheimer & Co.,
Inc. During that time, Mr. White worked in both the Investment
Banking and Private Equity Investing departments. Mr. White is a
director of Escalade Inc., a manufacturer of sporting goods and
office products; and G-III Apparel Group, Ltd. Mr. White also
serves as Chairman of the Board of Mercury Energy, Inc., a solar
energy systems integration company. From 2003 to 2008, Mr. White
served as a director for ActivIdentity Corp. We believe
Mr. Whites qualifications to sit on our Board of
Directors include his investment banking experience, his
managerial experience and his expertise in corporate finance and
strategic planning.
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2006
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EXECUTIVE
COMPENSATION
Elements
of Compensation
For the fiscal year ended January 2, 2011, referred to as
fiscal 2010, the principal components of compensation for
our only two named executive officers, Lyle Berman (Chief
Executive Officer), and Timothy J. Cope (President), included
base salary, annual incentive bonus compensation and long term
equity incentives.
Base salary. The base salaries of Lyle
Berman and Timothy J. Cope were established in their respective
employment agreements. Their base salaries were not increased in
fiscal 2010. We use base salary to recognize the experience,
skills, knowledge and responsibilities required of our named
executive officers in their roles. The Compensation Committee
(Committee) reviews each named executive
officers salary and makes adjustments, as appropriate. The
Committee also considers a number of factors including market
data taken from the public filings of public companies in the
gaming industry, internal review of the executives
compensation (both individually and relative to other
executives), level of the executives responsibility, and
individual performance of the executive. Consistent with fiscal
2009 base salaries, the base salaries of the named executive
officers continued to be the biggest portion of the name
executives compensation in fiscal 2010.
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We and the Committee believed that the base salaries of the
named executive officers for fiscal 2010 were at acceptable
market rates.
Annual incentive cash bonus. Annual
incentive cash bonuses are intended to reward individual and
Company performance during the year. The annual incentive cash
bonuses range is 0% 80% of the named executive
officers base salary. The bonuses are determined on a
discretionary basis by the Committee based on the performance of
the Company and the named executive officer for the completed
fiscal year. The annual incentive cash bonus awards made to
named executive officers in April 2011 for performance in fiscal
2010 are reflected in the Summary Compensation Table. The
Committee approved these discretionary annual incentive cash
bonuses due to achievement of strategic fiscal 2010 corporate
goals, including, among other things, operating results in line
with expectations of the Four Winds Casino for the Pokagon Band
of Potawatomi Indians. The annual incentive bonus program is
reviewed annually by the Committee to determine whether it is
achieving its intended purpose. We and the Committee believe it
achieved its purpose in 2010.
Long term equity incentive. The Company
traditionally uses stock options to motivate our named executive
officers to increase long-term shareholder value. The Committee
will consider providing other forms of equity-based compensation
awards to named executive officers under the 2007 plan, which
may be subject to performance goals, rather than just in the
form of stock option grants. Grants of equity-based awards to
named executive officers under the 2007 plan are made from time
to time at regularly scheduled meetings of the Committee in line
with our past practices. In 2009, the Committee granted
restricted stock units to named executive officers in addition
to stock options. Awards may not necessarily be made each year
if the Committee decides that the Companys strategic and
financial performance does not merit awards or the Committee
believes that the named executive officer has received a
sufficient amount of equity-based awards. In anticipation of the
expected future requirements under the Dodd-Frank Act, the
option grants since October 2010 include a recoupment or
claw back provision.
Personal benefits and
perquisites. Mr. Berman and
Mr. Cope have personal benefits and perquisites provided
under their respective employment agreements. Both agreements
were negotiated and executed February 15, 2006, and amended
effective February 15, 2009. The Company and the Committee
believe that the benefits and perquisites are reasonable and
consistent with the compensation program to better enable the
Company to retain superior employees for key positions. These
two officers are allowed personal use of the Companys
aircraft and term life insurance coverage paid by the Company.
The value of these benefits and perquisites is set forth in the
Summary Compensation Table.
Post-termination
benefits. Mr. Berman and Mr. Cope
have post-termination benefits as provided in their respective
employment agreements. See Potential Payments Upon
Termination or Change-In Control for a discussion of
those benefits. We provided these benefits to Mr. Berman
and Mr. Cope as they were part of the compensation package
they negotiated as part of their employment agreements.
5
Summary
Compensation Table
The following table sets forth the cash and non-cash
compensation for the last two fiscal years awarded to or earned
by (i) each individual that served as our Chief Executive
Officer during fiscal 2010 and (ii) our only other
individual who served as an executive officer of the Company
during and at the end of fiscal 2010. The Chief Executive
Officer and the other executive officer listed below are
collectively referred to in this proxy statement as the named
executive officers.
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Stock
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Option
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Total
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Name and Principal Position
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Year
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($)(1)
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($)
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($)(2)
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($)(2)
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($)
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($)
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Lyle Berman,
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2010
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500,000
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100,000
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129,600
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209,574
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(3)
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939,174
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Chairman of the Board, Chief Executive
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2009
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500,000
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100,000
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97,500
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73,770
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204,338
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975,608
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Officer
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Timothy J. Cope,
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2010
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350,000
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70,000
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129,600
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22,721
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(4)
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572,321
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President, Chief Financial Officer and
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2009
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350,000
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70,000
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97,500
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73,770
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22,285
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613,555
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Treasurer
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Includes cash compensation deferred at the election of the
executive officer under the terms of the Companys 401(k)
Savings Incentive Plan. |
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Includes full grant date fair value of each award under FASB
Accounting Standards Codification Topic 718. The full grant date
fair value is the amount the Company will expense over the
awards vesting period. The amounts do not reflect the
actual amounts that may be realized by the executive officers. A
discussion of the assumptions used in calculating the stock
option award amounts may be found in Note 2 to the audited
financial statements in our Annual Report on
Form 10-K
for the fiscal year ended January 2, 2011. Fiscal 2010
includes the October 15, 2010 grant of options to purchase
80,000 shares granted to each of Mr. Berman and
Mr. Cope. The exercise price of these options is $1.89 per
share and the options vest one-third on the first through third
anniversaries of the date of grant. |
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Amount primarily represents the incremental cost to the Company
arising from Mr. Bermans personal use of the
Companys corporate jet of $149,390. This amount also
includes payment by the Company of term life and executive
disability insurance premiums of approximately $43,184, matching
contributions by the Company under the Companys 401(k)
Savings Incentive Plan of $9,800, and travel and expense
allowance of $7,200. |
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Amount includes matching contributions by the Company under the
Companys 401(k) Savings Incentive Plan of $9,800, payment
by the Company of term life and executive disability insurance
premiums of approximately $5,721 and travel and expense
allowance of $7,200. |
Employment Agreements for Chief Executive Officer and
President. The Company entered into employment
agreements dated as of February 15, 2006 with Lyle Berman
and Timothy J. Cope to employ them as members of the
Companys senior management. Under the agreements, the
named executive officers are required to perform such duties as
may be designated by the Companys Board of Directors from
time to time. Each agreement had an initial term of
36 months and both agreements were amended in 2009 for an
additional 36 month term, which commenced February 15,
2009. The term of each agreement automatically extends for
successive one-year periods unless at least 60 days prior
to the end of a term, the Company or the named executive officer
gives notice to the other of an election to terminate the
agreement at the end of the current term. In addition, the
agreement may be terminated (a) upon the death or
disability (as defined in the agreement) of the named executive
officer; (b) by the Company for cause (as defined in the
agreement); (c) by the Company without cause; (d) as a
result of a constructive termination (as defined in the
agreement); or (e) by the named executive officer at any
time upon providing 60 days advance written notice to the
Company. Under the terms of the agreements, Mr. Berman and
Mr. Cope receive a base salary of $500,000 and $350,000,
respectively, or such other amount as may be determined by the
Company in its sole discretion, and a monthly travel and expense
fee in the amount of $600. They are also entitled to participate
in Lakes discretionary incentive compensation program and
to receive other benefits provided by the Company to senior
executives. Each employment agreement also contains customary
confidentiality provisions and a two-year post-employment
non-solicitation covenant. Each employment agreement also
contains an arbitration clause.
6
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth certain information relating to
equity awards outstanding at the end of fiscal 2010 for each
named executive officer.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares or Units
|
|
of Shares or
|
|
|
Unexercised Options
|
|
Unexercised Options
|
|
Option Exercise
|
|
|
|
of Stock That
|
|
Units of Stock
|
|
|
(#)
|
|
(#)
|
|
Price
|
|
Option Expiration
|
|
Have Not
|
|
That Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Lyle Berman
|
|
|
10,000
|
|
|
|
20,000
|
(1)
|
|
|
3.25
|
|
|
|
1/28/2019
|
|
|
|
20,000
|
(1)
|
|
|
57,000
|
|
|
|
|
117,404
|
|
|
|
117,405
|
(2)
|
|
|
3.40
|
|
|
|
9/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
3,733
|
|
|
|
14,934
|
(3)
|
|
|
3.40
|
|
|
|
9/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(1)
|
|
|
1.89
|
|
|
|
10/15/2020
|
|
|
|
|
|
|
|
|
|
Timothy J. Cope
|
|
|
10,000
|
|
|
|
20,000
|
(1)
|
|
|
3.25
|
|
|
|
1/28/2019
|
|
|
|
20,000
|
(1)
|
|
|
57,000
|
|
|
|
|
58,702
|
|
|
|
58,702
|
(2)
|
|
|
3.40
|
|
|
|
9/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
3,733
|
|
|
|
14,934
|
(3)
|
|
|
3.40
|
|
|
|
9/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(1)
|
|
|
1.89
|
|
|
|
10/15/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Awards vest in equal installments over a three-year period,
beginning on the first anniversary of the date of each grant.
The employee must be employed by Lakes on the anniversary date
in order to vest in any shares that year. Vested options are
exercisable for ten years from the date of grant. |
|
(2) |
|
Awards vest in equal installments over a two-year period,
beginning on the first anniversary of the date of each grant.
The employee must be employed by Lakes on the anniversary date
in order to vest in any shares that year. Vested options are
exercisable for ten years from the date of grant. |
|
(3) |
|
Awards vest in equal installments over a five-year period,
beginning on the first anniversary of the date of each grant.
The employee must be employed by Lakes on the anniversary date
in order to vest in any shares that year. Vested options are
exercisable for ten years from the date of grant. |
7
Potential
Payments Upon Termination or
Change-In-Control
The table below describes the potential payments and benefits
payable to each of the named executive officers who have
employment agreements with the Company upon termination of
employment due to disability, by the Company without cause, due
to a constructive discharge, due to the named executive
officers voluntary resignation, by the Company with cause,
expiration of the initial or renewal term of the named executive
officers employment agreement, and involuntary termination
within two years following a
change-in-control.
The amounts shown in the table assume that such termination was
effective as of January 2, 2011 and includes all amounts
earned through that date and are estimates of the amounts that
would be paid out to the named executive officers upon their
termination of employment. The actual amounts to be paid out can
only be determined at the time a named executive officer in fact
terminates employment with the Company.
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|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
Continuation of
|
|
|
|
|
|
|
|
|
Continuation of
|
|
Options
|
|
|
|
|
Named
|
|
Cash
|
|
Medical and
|
|
(unamortized
|
|
|
|
Total
|
Executive
|
|
Severance
|
|
Dental Benefits
|
|
expense as of
|
|
Excise Tax
|
|
Termination
|
Officer;
|
|
Payment
|
|
(Present Value)
|
|
1/2/2011)
|
|
Gross-Up
|
|
Benefits
|
Termination Event
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Lyle Berman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
|
250,000
|
|
|
|
10,117
|
|
|
|
215,055
|
|
|
|
79,889
|
|
|
|
555,061
|
|
Involuntary Termination without Cause
|
|
|
600,000
|
|
|
|
20,354
|
|
|
|
215,055
|
|
|
|
286,075
|
|
|
|
1,121,484
|
|
Constructive Discharge
|
|
|
600,000
|
|
|
|
20,354
|
|
|
|
215,055
|
|
|
|
286,075
|
|
|
|
1,121,484
|
|
Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
215,055
|
|
|
|
|
|
|
|
215,055
|
|
For Cause Termination
|
|
|
|
|
|
|
|
|
|
|
215,055
|
|
|
|
|
|
|
|
215,055
|
|
Expiration of Term
|
|
|
|
|
|
|
|
|
|
|
215,055
|
|
|
|
|
|
|
|
215,055
|
|
Involuntary Termination after
Change-in-Control
|
|
|
1,361,000
|
|
|
|
|
|
|
|
215,055
|
|
|
|
761,159
|
|
|
|
2,337,214
|
|
Timothy J. Cope
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
|
175,000
|
|
|
|
13,447
|
|
|
|
215,055
|
|
|
|
99,074
|
|
|
|
502,719
|
|
Involuntary Termination without Cause
|
|
|
420,000
|
|
|
|
26,894
|
|
|
|
215,055
|
|
|
|
300,716
|
|
|
|
962,665
|
|
Constructive Discharge
|
|
|
420,000
|
|
|
|
26,894
|
|
|
|
160,867
|
|
|
|
300,716
|
|
|
|
962,665
|
|
Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
215,055
|
|
|
|
|
|
|
|
215,055
|
|
For Cause Termination
|
|
|
|
|
|
|
|
|
|
|
215,055
|
|
|
|
|
|
|
|
215,055
|
|
Expiration of Term
|
|
|
|
|
|
|
|
|
|
|
215,055
|
|
|
|
|
|
|
|
215,055
|
|
Involuntary Termination after
Change-in-Control
|
|
|
938,000
|
|
|
|
|
|
|
|
215,055
|
|
|
|
691,223
|
|
|
|
1,844,278
|
|
Regular Benefits. The amounts shown in the
above table do not include payments and benefits that are
provided on a non-discriminatory basis to salaried employees
generally upon termination of employment. These include payment
of accrued, but unused vacation pay.
Death. A termination of employment due to
death does not entitle the named executive officers to any
payments or benefits that are not available to salaried
employees generally.
Disability. Each of the employment agreements
for Mr. Berman and Mr. Cope provides that if the
agreement is terminated due to the executives disability,
the executive would be entitled to receive an amount equal to
six months of his then base salary and the continuation of
medical and dental benefits for the executive and his dependents
during the six months following any such termination.
Involuntary Termination without Cause or Constructive
Discharge. If either Mr. Berman or
Mr. Cope is terminated without cause or through
constructive discharge, he would be entitled to:
|
|
|
|
|
base salary (including any accrued vacation) through the
termination date;
|
|
|
|
severance benefits equal to the accrued and unpaid base salary
for 12 months, or for the period of time remaining in the
term of employment, whichever is longer;
|
8
|
|
|
|
|
equivalent of bonus or incentive compensation (based upon the
average bonus percentage rate for the two fiscal years of the
Company preceding such termination) for 12 months, or for
the period of time remaining in the term of the employment
agreement, whichever is longer;
|
|
|
|
all medical and dental insurance benefits during the severance
period; and
|
|
|
|
all outstanding options to purchase shares of stock in the
Company immediately vest and become immediately exercisable for
two years after the date on which executive ceases to be
employed by the Company.
|
Involuntary Termination after
Change-in-Control. If
the employment of Mr. Berman or Mr. Cope is terminated
without cause or due to constructive discharge within two years
following a
change-in-control,
he would be entitled to:
|
|
|
|
|
all compensation due and payable to, or accrued for, the benefit
of the executive as of the date of termination;
|
|
|
|
a lump sum payment equal to two times the executives
annual compensation (which is defined as the executives
(i) annual base salary plus annual bonus or incentive
compensation computed at par levels, (ii) an amount equal
to the annual cost to executive of obtaining annual health care
coverage comparable to that currently provided by the Company,
(iii) an amount equal to any normal matching contributions
made by the Company on executives behalf in the
Companys 401(k) plan, (iv) annual automobile
allowance, if any, and (v) an amount equal to the annual
cost to the executive of obtaining life insurance and insurance
coverage for accidental death and disability insurance
comparable to that provided by the Company);
|
|
|
|
all outstanding options to purchase shares of stock in the
Company immediately vest and become immediately exercisable for
two years after the date on which executive ceases to be
employed by the Company;
|
|
|
|
the Company must use its best efforts to convert any then
existing life insurance and accidental death and disability
insurance policies to individual policies in the name of the
executive; and
|
|
|
|
if payments are made to the executive, or the value of other
benefits received by the executive, in connection with the
change of control exceed certain limits, Section 280G of
the Internal Revenue Code imposes an excise tax on the employee,
the costs of this excise tax, including related tax
gross-ups,
will be borne by the Company.
|
In exchange for these payments, Mr. Berman and
Mr. Cope are subject to non-solicitation covenants covering
the Companys employees, persons or entities that are doing
business with the Company, and anyone that is an active prospect
to do business with the Company, for a period of two years
following termination of employment with the Company.
Stock Option Acceleration and
Continuation. Upon the termination of the
employment of Mr. Berman or Mr. Cope for any reason,
including death, disability, expiration of the initial term,
nonrenewal, termination by the Company with or without cause,
termination by the executive with notice, due to a constructive
discharge or within two years of a change of control, all stock
options held by the executive immediately vest and become
immediately exercisable by the executive or his legal
representative for a period of two years following the date of
termination of the executives employment.
Excise Tax
Gross-Up. If
payments are made to Mr. Berman or Mr. Cope, or the
value of other benefits received by them, in connection with the
change-in-control
exceed certain limits, Section 280G of the Internal Revenue
Code imposes an excise tax on the employee. The costs of this
excise tax, including related tax
gross-ups,
will be borne by the Company.
9
Executive
Officers of Lakes Entertainment
The table below lists the executive officers of the Company as
of January 2, 2011:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position(s) with Lakes Entertainment
|
|
Lyle Berman
|
|
|
69
|
|
|
See Proposal One (Election of Directors) above.
|
Timothy J. Cope
|
|
|
59
|
|
|
See Proposal One (Election of Directors) above.
|
DIRECTOR
COMPENSATION
The following table sets forth the cash and non-cash
compensation for fiscal 2010 awarded to or earned by each of our
directors who is not also a named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
or Paid in
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
|
|
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
Name
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Neil I. Sell
|
|
|
64,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,000
|
|
Ray Moberg
|
|
|
77,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,000
|
|
Larry C. Barenbaum
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
Richard D. White
|
|
|
68,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,000
|
|
Morris
Goldfarb(2)
|
|
|
15,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,500
|
|
|
|
|
(1) |
|
We pay an annual fee of $50,000 to each of our directors who is
not otherwise employed by us or our subsidiaries, referred to as
a non-employee director. We also pay each non-employee
director a fee of $1,000 for each meeting of the Board of
Directors attended and $1,000 for each committee meeting that
the Board of Directors attended. We also pay the Chairman of our
Audit Committee an additional annual fee of $10,000 for serving
in such capacity. |
|
(2) |
|
On March 19, 2010, Morris Goldfarb resigned from the board
of directors of the Company. |
CORPORATE
GOVERNANCE
Board of
Directors
Our Board of Directors is currently comprised of the six members
identified under Proposal One (Proposal for Election of
Directors). The following directors, which constitute a majority
of the Board of Directors, are independent directors
as such term is defined in The NASDAQ Stock Markets
listing standards, referred to as Nasdaq listing
standards: Larry C. Barenbaum, Ray Moberg, Neil I. Sell and
Richard D. White. The independent directors meet without
management present at substantially all meetings of the Board of
Directors.
The Board of Directors has established an Audit Committee, a
Corporate Governance Committee and a Compensation Committee. The
Board of Directors held 10 meetings during fiscal 2010. None of
our directors attended fewer than 75 percent of the
aggregate of (i) the total number of meetings of the Board
of Directors held during fiscal 2010, and (ii) the total
number of meetings held by all committees of the Board on which
such director served.
Ability
of Shareholders to Communicate with the Companys Board of
Directors
We have established several means for shareholders and others to
communicate with our Board of Directors. If a shareholder has a
concern regarding our financial statements, accounting practices
or internal controls, the concern should be submitted in writing
to the chairperson of the Audit Committee in care of our
Secretary at our headquarters address. If the concern relates to
our governance practices, business ethics or corporate conduct,
the concern should be submitted in writing to a member of the
Corporate Governance Committee in care of our Secretary at our
headquarters address. If a shareholder is unsure as to which
category
10
the concern relates, the shareholder may communicate it to any
one of the independent directors in care of our Secretary at our
headquarters address. All such shareholder communications will
be forwarded to the applicable director(s).
Director
Attendance at Annual Meetings of Shareholders
The Company does not have a formal policy regarding attendance
by members of the Board of Directors at the Companys
Annual Meeting of shareholders but the Company does encourage
its Board members to attend such meetings. A total of four of
our directors attended the Companys 2010 annual meeting of
shareholders.
Boards
Role in Risk Oversight
It is the job of our chief executive officer, president, chief
financial officer, general counsel, and other members of our
senior management to identify, assess, and manage our exposure
to risk. The Board is actively involved in oversight of risks
that could affect the Company. This oversight is conducted
primarily by the full Board as well as through committees. The
Board satisfies this responsibility through regular reports
directly from officers responsible for oversight of particular
risks within the Company.
Executive
Chairman
The Board of Directors currently combines the role of Chairman
of the Board with the role of Chief Executive Officer. The Board
of Directors believes this provides an efficient and effective
leadership model for the Company. Combining the Chairman and CEO
roles fosters clear accountability, effective decision-making
and alignment on corporate strategy. The Board of Directors has
not appointed a lead independent director.
Audit
Committee of the Board of Directors
The Board of Directors has established a three-member Audit
Committee that consists of Larry C. Barenbaum, Richard D. White
and Ray Moberg, who is the chairperson of the audit committee.
The audit committee operates under an amended and restated
written charter adopted by the Board of Directors on
April 11, 2011, and a copy of this charter is attached as
Appendix A to this proxy statement. The primary functions
of the Audit Committee are (i) to serve as an independent
and objective party to monitor our financial reporting process
and internal control system, (ii) to review and appraise
the audit efforts of our independent auditors, and (iii) to
provide an open avenue of communication among the independent
auditors, financial and senior management and the Board of
Directors. The charter also requires that the Audit Committee
(or designated members of the Audit Committee) review and
pre-approve the performance of all audit and non-audit
accounting services to be performed by our independent
registered public accounting firm (auditors), other than certain
de minimus exceptions permitted by Section 202 of the
Sarbanes-Oxley Act of 2002. The Audit Committee held seven
meetings during fiscal year 2010. The Audit Committee also held
executive sessions on several occasions during the year where
Company management was not present.
The Board of Directors has determined that at least one member
of the Audit Committee, Mr. Moberg, is an Audit
Committee financial expert as that term is defined in
Item 407(d)(5)(ii) of
Regulation S-K
promulgated under the Securities Exchange Act of 1934, as
amended. In addition, each member of the Audit Committee is an
independent director, as such term is defined in the
Nasdaq listing standards. The Board of Directors has also
determined that each of the Audit Committee members is able to
read and understand fundamental financial statements and that at
least one member of the Audit Committee has past employment
experience in finance or accounting.
Report of
the Audit Committee
The Audit Committee is responsible for providing independent,
objective oversight of the Companys accounting functions
and internal controls. In connection with these
responsibilities, the Audit Committee has reviewed audited
financial statements of Lakes Entertainment, Inc. for fiscal
2010 and discussed them with management.
11
The Audit Committee has discussed with the independent auditors
the matters required to be discussed by Statement on Auditing
Standards No. 61, Communications with Audit
Committees, as adopted and amended by the Public Company
Accounting Oversight Board under Rule 3200T.
The Audit Committee has received and reviewed the written
disclosures and the letter from the independent auditors
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
auditors communications with the Audit Committee
concerning independence, and has discussed the independent
registered public accounting firms independence with the
independent auditors.
The Audit Committee, based on the review and discussions
described above, recommended to the Board of Directors that the
Companys audited financial statements be included in its
Annual Report on
Form 10-K
for fiscal 2010.
This report of the Audit Committee does not constitute
soliciting material, and shall not be deemed to be filed or
incorporated by reference into any other filing of the Company
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference
into such other filings.
AUDIT COMMITTEE
Larry C. Barenbaum
Ray Moberg
Richard D. White
12
Corporate
Governance Committee of the Board of Directors
The Board of Directors has established a two-member corporate
Governance Committee that consists of Neil I. Sell and Richard
D. White, each of whom satisfies the independence requirements
of the Nasdaq listing standards. The Corporate Governance
Committee held two meetings during fiscal year 2010.
The primary role of the Corporate Governance Committee is to
(1) develop the overall corporate governance policies for
the Company and (2) consider and make recommendations to
the full Board of Directors concerning the appropriate size,
function and needs of the Board, including establishing criteria
for Board membership and considering, recruiting and
recommending candidates (including those recommended by
shareholders) to fill new Board positions. The Corporate
Governance Committee (or a subcommittee thereof) recruits and
considers director candidates and presents qualified candidates
to the full Board for consideration. Qualified candidates will
be considered without regard to race, color, religion, sex,
ancestry, national origin or disability.
The Corporate Governance Committee will consider each
candidates general business and industry experience, his
or her ability to act on behalf of shareholders, overall Board
diversity, potential concerns regarding independence or
conflicts of interest and other factors relevant in evaluating
Board nominees. Additionally, the Board will consider whether or
not the candidate would be found suitable to be issued a gaming
license. This is a requirement of continued Board membership. If
the Corporate Governance Committee approves a candidate for
further review following an initial screening, the Corporate
Governance Committee will establish an interview process for the
candidate. Generally, the candidate will meet with the members
of the Corporate Governance Committee, along with our Chief
Executive Officer. Contemporaneously with the interview process,
the Corporate Governance Committee will conduct a comprehensive
conflicts-of-interest
assessment of the candidate. The Corporate Governance Committee
will consider reports of the interviews and the
conflicts-of-interest
assessment to determine whether to recommend the candidate to
the full Board of Directors. The Corporate Governance Committee
will also take into consideration the candidates personal
attributes, including, without limitation, personal integrity,
loyalty to us and concern for our success and welfare,
willingness to apply sound and independent business judgment,
awareness of a directors vital part in good corporate
citizenship and image, time available for meetings and
consultation on Company matters and willingness to assume broad,
fiduciary responsibility. The Corporate Governance Committee
operates under a written charter adopted by the Board of
Directors on April 25, 2005, and a copy of this charter is
attached as Appendix B to this proxy statement.
Recommendations for candidates to be considered for election to
the Board at our annual shareholder meetings may be submitted to
the Corporate Governance Committee by our shareholders.
Candidates recommended by our shareholders will be considered
under the same standards as candidates that are identified by
the Corporate Governance Committee. In order to make such a
recommendation, a shareholder must submit the recommendation in
writing to the Corporate Governance Committee, in care of our
Secretary at our headquarters address, at least 120 days
prior to the mailing date of the previous years Annual
Meeting proxy statement. To enable the committee to evaluate the
candidates qualifications, shareholder recommendations
must include the following information:
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The name and address of the nominating shareholder and of the
director candidate;
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A representation that the nominating shareholder is a holder of
record of our common stock and entitled to vote at the current
years Annual Meeting;
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A description of any arrangements or understandings between the
nominating shareholder and the director candidate or candidates
being recommended pursuant to which the nomination or
nominations are to be made by the shareholder;
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A resume detailing the educational, professional and other
information necessary to determine if the nominee is qualified
to hold a Board position;
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13
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Such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a
proxy statement filed pursuant to the proxy rules of the SEC had
each nominee been nominated by the Board of Directors; and
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The consent of each nominee to serve as a director if so elected.
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Compensation
Committee of the Board of Directors
The Board of Directors has established a two member Compensation
Committee that consists of Larry C. Barenbaum and Neil I. Sell,
each of whom satisfies the independence requirements of the
Nasdaq listing standards. Mr. Barenbaum and Mr. Sell
are also non-employee directors as defined by
Rule 16b-3
under the Securities Exchange Act of 1934 and outside
directors as defined by Section 162(m) of the
Internal Revenue Code. The Compensation Committee operates under
a written amended and restated charter adopted by the Board of
Directors on February 28, 2011, and a copy of this charter
is attached as Appendix C to this proxy statement. The
Compensation Committee reviews our remuneration policies and
practices, makes recommendations to the full Board of Directors
in connection with all compensation matters affecting us and
administers our incentive compensation plans.
The Compensation Committee has the authority, to the extent it
deems necessary or appropriate, to retain a compensation
consultant to assist in the evaluation of named executive
officer compensation. The Compensation Committee also has the
sole authority to approve the consultants fees and other
retention terms. The Compensation Committee also has the
authority, to the extent it deems necessary or appropriate, to
retain other advisors. The Company will provide appropriate
funding, as determined by the Compensation Committee, for
payment of compensation to any consulting firm or other advisors
hired by the Compensation Committee. During the first quarter of
2011 the Company President and Human Resources Department
performed a review of all Lakes employee salary levels by
position. The review utilized various independent sources. A
report was presented to the Compensation Committee.
The Compensation Committee meets as often as its members deem
necessary to perform the Compensation Committees
responsibilities but in no event less than twice annually. The
chair of the Compensation Committee presides at each meeting. In
consultation with the other members of the Compensation
Committee, the chair sets the frequency and length of each
meeting and the agenda of items to be addressed at each meeting.
The chair of the Compensation Committee also ensures that the
agenda for each meeting is circulated to each Compensation
Committee member in advance of the meeting. In addition, the
Compensation Committee makes regular reports to the Board and
proposes any necessary action to the Board.
In fiscal 2010, the Compensation Committee met on three
occasions. The committee members participated in each of those
meetings and, where appropriate, management was also present at
the meetings. The recommendations of the Compensation Committee
for named executive officer compensation for fiscal 2010 were
made to the Board, which subsequently adopted the Compensation
Committees recommendations without modifications. The
Chief Executive Officer does not participate in deliberations
concerning, or vote on, the compensation arrangements for
himself. Additional information regarding the Compensation
Committees processes and procedures for establishing and
overseeing executive compensation is disclosed under the heading
Executive Compensation Elements of
Compensation.
14
PROPOSAL TO
RATIFY THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal Two)
Our Board of Directors and management are committed to the
quality, integrity and transparency of our financial reports.
Independent registered public accounting firms play an important
part in our system of financial control. In accordance with the
duties set forth in its written charter, the Audit Committee of
our Board of Directors has appointed Piercy Bowler
Taylor & Kern, Certified Public Accountants, referred
to herein as PBTK, as our independent registered public
accounting firm for the 2011 fiscal year. Although it is not
required to do so, the Audit Committee and the full Board of
Directors wishes to submit the appointment of PBTK for
shareholder ratification at the Annual Meeting. Representatives
of PBTK are expected to be present at the Annual Meeting to
answer your questions and to make a statement if they desire to
do so.
If the shareholders do not ratify the appointment of PBTK, the
Audit Committee may reconsider its selection, but is not
required to do so. Even if the shareholders ratify the
appointment of PBTK at the Annual Meeting, the Audit Committee,
in its sole discretion, may direct the appointment of a new
independent registered public accounting firm at any time during
the year without notice to, or the consent of, the shareholders,
if the Audit Committee determines that such a change would be in
our best interests and the best interests of our shareholders.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Audit and
Non-Audit Fees
The following table presents fees for professional audit and
other services rendered by PBTK during fiscal 2010 and fiscal
2009.
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Fees for 2010
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Fees for 2009
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Audit
Fees(1)
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$
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214,328
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$
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292,577
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Audit-Related Fees
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Tax Fees
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All Other Fees
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Total Fees
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$
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214,328
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$
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292,577
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(1) |
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Audit Fees consisted principally of quarterly reviews and annual
audits of the Companys consolidated financial statements.
Audit Fees for 2009 also included an audit of internal control
over financial reporting. |
The Audit Committee of the Board of Directors has reviewed the
fees billed by PBTK during fiscal year 2010 and, after
consideration, has determined that the receipt of these fees by
PBTK is compatible with the provision of independent audit
services. The Audit Committee discussed these services and fees
with PBTK and our management to determine that they are
permitted under the rules and regulations concerning auditor
independence promulgated by the SEC, including those designed to
implement the Sarbanes-Oxley Act of 2002, as well as by the
American Institute of Certified Public Accountants.
Pre-Approval
of Audit and Non-Audit Services
As permitted under applicable law, our Audit Committee may
pre-approve from time to time certain types of services,
including tax services, to be provided by our independent
registered public accounting firm. As provided in the charter of
the Audit Committee, and in order to maintain control and
oversight over the services provided by our independent
registered public accounting firm, it is the policy of the Audit
Committee to pre-approve all audit and non-audit services to be
provided by the independent registered public accounting firm
(other than with respect to de minimus exceptions permitted
by the Sarbanes-Oxley Act of 2002), and not to engage the
independent registered public accounting firm to provide any
non-audit services prohibited by law or regulation. For
administrative convenience, the Audit Committee may delegate
pre-approval authority to Audit Committee members who are also
independent members of the Board of Directors, but any decision
15
by such a member on pre-approval must be reported to the full
Audit Committee at its next regularly scheduled meeting.
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the close of business on the April 8, 2011, the
record date, there were 26,405,679 shares of our common
stock issued and outstanding, which is the only class of capital
stock entitled to vote at the Annual Meeting. Each share of our
common stock is entitled to one vote on all matters put to a
vote of shareholders.
The following table sets forth certain information regarding the
beneficial ownership of our common stock by (i) all persons
known by us to be the owner (or deemed to be the owner pursuant
to the rules and regulations of the SEC), of record or
beneficially, of more than 5% of our outstanding common stock,
(ii) each of the directors and nominees for election to the
Board of Directors, (iii) each named executive officer, and
(iv) all directors and executive officers as a group, in
each case based upon beneficial ownership reporting of our
common stock as of such date. Except as otherwise indicated, the
information is given as of the Record Date, the mailing address
of each shareholder is 130 Cheshire Lane, Minnetonka, Minnesota
55305, and, unless otherwise noted, each shareholder has sole
voting and investment power with respect to the shares
beneficially owned.
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Shares of Lakes
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Common Stock
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Percentage of Common
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Name and Address
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Beneficially Owned
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Stock
Outstanding(8)
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Lyle
Berman(1)
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3,988,625
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15.1
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%
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Timothy J.
Cope(2)
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200,019
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0.8
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Larry C.
Barenbaum(3)
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8,702
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*
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Ray M.
Moberg(4)
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24,343
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*
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Neil I.
Sell(5)
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2,334,783
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8.8
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Richard D.
White(6)
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8,986
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*
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All Lakes Entertainment, Inc. Directors and Executive Officers
as a Group (6 people including the
foregoing)(7)
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6,565,458
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24.9
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* |
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Less than one percent. |
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(1) |
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Includes 422,806 shares held by Berman Consulting
Corporation, a corporation wholly owned by Mr. Berman,
323,000 shares owned by Mr. Berman through a Berman
Consulting Corporation profit sharing plan,
3,091,682 shares owned by Lyle A. Berman Revocable Trust
and options to purchase 141,137 shares. Excludes
549,984 shares which Mr. Berman has the right to
purchase from his former spouse under certain conditions. |
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(2) |
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Includes options to purchase 82,435 shares. |
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(3) |
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Includes options to purchase 5,369 shares. |
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(4) |
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Includes options to purchase 21,010 shares. |
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(5) |
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Includes an aggregate of 2,278,541 shares held by four
irrevocable trusts for the benefit of Lyle Bermans
children with respect to which Mr. Sell has shared voting
and dispositive powers as a co-trustee. Mr. Sell has
disclaimed beneficial ownership of such shares. Also includes
options to purchase 44,511 shares. |
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(6) |
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Includes options to purchase 5,653 shares. |
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(7) |
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Includes shares held by corporations controlled by such officers
and directors and shares held by trusts of which such officers
and directors are trustees. Also includes options to purchase
300,115 shares. |
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(8) |
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Shares of our common stock not outstanding but deemed
beneficially owned because the respective person or group has
the right to acquire them as of the Record Date, or within
60 days of such date, are treated as outstanding for
purposes of calculating the percentage of common stock
outstanding for such person or group. |
The foregoing footnotes are provided for informational purposes
only and each person disclaims beneficial ownership of shares
owned by any member of his or her family or held in trust for
any other person, including family members.
16
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Lyle
Berman Family Partnership Interest in Contract Obligation to
Third Party
In conjunction with the opening of the Four Winds Casino Resort
in 2007, we incurred an obligation to pay an aggregate of
approximately $11 million to an unrelated third party
during the term of our management contract with the Pokagon Band
of Potawatomi Indians. As of January 2, 2011, approximately
$0.8 million remained outstanding on this obligation. In
June 2006, the Lyle Berman Family Partnership, referred to as
the partnership, purchased a portion of the unrelated
third party receivable and will receive approximately
$0.3 million per year of this obligation during the
five-year term of the management contract for the Four Winds
Casino Resort. Lyle Berman, our Chairman and Chief Executive
Officer, does not have an ownership or other beneficial interest
in the partnership. Neil I. Sell, a member of our Board, is one
of the trustees of the irrevocable trusts for the benefit of
Lyle Bermans children that are the partners in the
partnership.
Review
and Approval of Related Party Transactions
Policy. The Audit Committee is
responsible for reviewing and approving (with the concurrence of
a majority of the disinterested members of the Board of
Directors) any related party and affiliated party transactions
as provided in the Amended and Restated Audit Committee Charter
adopted by the Board of Directors of the Company on
April 14, 2010. In addition, the rules of The Nasdaq Stock
Market provide that all related party transactions must be
reviewed for conflicts of interest by the Audit Committee. In
accordance with policies adopted by the Audit Committee, the
following transactions must be presented to the Audit Committee
for its review and approval:
1. Any transaction in which (i) the amount involved
exceeds $120,000, (ii) the Company was or is to be a
participant (within the meaning of
Regulation S-K,
Item 404(a)), and (iii) a related person (as defined
in
Regulation S-K,
Item 404(a)) has or will have a direct or indirect material
interest (within the meaning of
Regulation S-K,
Item 404(a)).
2. Any contract or other transaction between the Company
and one or more directors of the Company, or between the Company
and an organization in or of which one or more directors of the
Company are directors, officers, or legal representatives or
have a material financial interest within the meaning of
Minnesota Statutes, Section 302A.255.
Procedure. In addition to the
Companys Board of Directors complying with the
requirements of Minnesota Statutes, Section 302A.255 with
respect to any proposed transaction with a potential
directors conflict of interest, all proposed transactions
covered by the policy must be approved in advance by a majority
of the members of the Audit Committee, along with the
concurrence of a majority of the disinterested directors of the
Board of Directors. If a proposed transaction covered by the
policy involves a member of the Audit Committee, such member may
not participate in the Audit Committees deliberations
concerning, or vote on, such proposed transaction.
Prior to approving any proposed transaction covered by the
policy, the following information concerning the proposed
transaction will be fully disclosed to the Audit Committee:
1. The names of all parties and participants involved in
the proposed transaction, including the relationship of all such
parties and participants to the Company and any of its
subsidiaries.
2. The basis on which the related person is deemed to be a
related person within the meaning of
Regulation S-K,
Item 404(a), if applicable.
3. The material facts and terms of the proposed transaction.
4. The material facts as to the interest of the related
person in the proposed transaction.
5. Any other information that the Audit Committee requests
concerning the proposed transaction.
The Audit Committee may require that all or any part of such
information be provided to it in writing.
17
The Audit Committee may approve only those transactions covered
by the policy that a majority of the members of the Audit
Committee in good faith determine to be (i) fair and
reasonable to the Company, (ii) on terms no less favorable
than could be obtained by the Company if the proposed
transaction did not involve a director or the related person, as
the case may be, and (iii) in the best interests of the
Company.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our officers and directors, and persons who
own more than ten percent of a registered class of our equity
securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish
us with copies of all Section 16(a) forms they file.
Based solely on the Section 16(a) forms furnished to us, we
believe that all officers, directors and greater than ten
percent shareholders met all applicable filing requirements
under Section 16(a) during fiscal 2010.
PROPOSALS OF
SHAREHOLDERS
To be eligible to include a shareholder proposal in our proxy
statement for the 2012 annual meeting of shareholders pursuant
to
Rule 14a-8
under the Exchange Act, we must receive the shareholder proposal
on or before December 17, 2011.
Under our bylaws, a shareholder is eligible to submit a
shareholder proposal outside the processes of
Rule 14a-8
if the shareholder is of record based on the record date for
determining shareholders entitled to vote at the annual meeting.
The shareholder also must provide timely notice of the proposal
to us. To be timely under our bylaws, we must receive advance
notice of the proposal by March 3, 2011 (90 days
before June 1, 2012, the anniversary of our 2011 Annual
Meeting) or, if the 2012 Annual Meeting date is more than
30 days before or after June 1, 2012, advance notice
of the proposal must be received not less than 90 days
before such annual meeting or, if later, within 10 days
after the first public announcement of the date of the 2012
Annual Meeting. Any shareholder proposal notice must comply with
the content and other requirements for such notices specified in
our bylaws. In addition, we may exercise our discretion in
voting for any proposal not submitted in accordance with our
advance notice bylaws that is presented at the shareholders
meeting. All written proposals should be submitted to Timothy J.
Cope, President, Chief Financial Officer and Treasurer, 130
Cheshire Lane, Minnetonka, Minnesota 55305.
SOLICITATION
We will bear the cost of preparing, assembling and mailing the
proxy, proxy statement and other material that may be sent to
the shareholders in connection with this solicitation. Brokerage
houses and other custodians, nominees and fiduciaries may be
requested to forward soliciting material to the beneficial
owners of stock, in which case they will be reimbursed by us for
their expenses in doing so. Proxies are being solicited
primarily by mail, but, in addition, our officers and regular
employees may solicit proxies personally, by telephone, by
telegram or by special letter.
18
OTHER
MATTERS
The Board of Directors does not intend to present to the Annual
Meeting any other matter not referred to above and does not
presently know of any matters that may be presented to the
Annual Meeting by others. However, if other matters come before
the Annual Meeting, it is the intent of the persons named in the
enclosed proxy to vote the proxy in accordance with their best
judgment.
By Order of the Board of Directors
LAKES ENTERTAINMENT, INC.
Timothy J. Cope,
President, Chief Financial Officer and
Treasurer
19
Appendix A
LAKES
ENTERTAINMENT, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AMENDED AND RESTATED CHARTER
This Amended and Restated Charter of the Audit Committee of the
Board of Directors (the Board) was adopted by
the Board of Lakes Entertainment, Inc. (the
Company) on April 11, 2011.
The primary function of the Audit Committee (the
Committee) is to assist the Board of Directors
(the Board) in fulfilling its oversight
responsibilities by reviewing: the financial reports and other
financial information provided by the Corporation to any
governmental body or the public; the Corporations systems
of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have
established; and the Corporations auditing, accounting and
financial reporting processes generally. Consistent with this
function, the Committee should encourage continuous improvement
of, and should foster adherence to, the corporations
policies, procedures and practices at all levels. The
Committees primary duties and responsibilities are to:
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Serve as an independent and objective party to monitor the
Corporations financial reporting process and internal
control system.
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Review and appraise the audit performed by the
Corporations independent accountant, who reports directly
to the Committee.
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Provide an open avenue of communication among the independent
accountant, financial and senior management and the Board.
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The Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of
this Charter.
The Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent
directors (as defined by all applicable rules and regulations of
the Securities and Exchange Commission (the
Commission), Nasdaq and any other appropriate body),
and free from any relationship that, in the opinion of the
Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. All members
of the Committee should have a working familiarity with basic
finance and accounting practices, including being able to read
and understand financial statements, and at least one member of
the Committee shall have accounting or related financial
management expertise. The Committee shall endeavor to have, as
one of its members, an individual who qualifies as an
audit committee financial expert in compliance with
the criteria established by the Commission and other relevant
regulations at the time the regulations require disclosure of
the existence of an audit committee financial expert. The
existence of such audit committee financial expert, including
his or her name and whether or not he or she is independent, or
the lack of an audit committee financial expert, shall be
disclosed in the Corporations periodic filings as required
by the Commission.
Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by
the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at
the annual organizational meeting of the Board and shall serve
until the next annual organizational meeting of the Board or
until their successors have been duly elected and qualified. The
Board may remove or replace Committee members at its discretion.
Unless a Chair is elected by the full Board, the members of the
Committee may designate a Chair by majority vote of the full
Committee membership.
A-1
The Committee shall meet in person or telephonically no less
than four times during each fiscal year and may, in its
discretion, delegate specific responsibilities to a subcommittee
comprised of one or more members of the Committee. A majority of
the members of the Committee shall constitute a quorum for
transacting business at a meeting. The Committee may also take
action by majority written consent. The Committee may request
any officer or employee of the Corporation or the
Corporations outside counsel or independent accountant to
attend any meeting of the Committee or to meet with any members
of, or consultants to, the Committee. As part of its job to
foster open communication, the Committee should meet at least
annually with management, and the independent accountant in
separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed
privately.
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IV.
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Responsibilities
and Duties.
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To fulfill its responsibilities and duties, the Committee is
expected to:
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1.
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Provide an open avenue of communication between the Corporation,
the independent accountant and the Board.
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2.
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Maintain sole authority and responsibility for hiring and firing
the independent accountant, and maintain direct responsibility
for the appointment, compensation, and oversight of the
independent accountants work (including resolution of
disagreements between management and the auditor regarding
financial reporting) for the purpose of preparing or issuing an
audit report or related work. The independent accountant shall
report directly to the Committee.
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3.
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Assess the effectiveness of the Corporations internal
control environment, and evaluate the need for an internal audit
function; discuss with management any significant deficiencies
in internal controls which could adversely affect the
Corporations ability to record, process, summarize or
report financial data.
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4.
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Confirm and assure the independence of the internal audit
function and the independent accountant, including considering
whether the independent accountants performance of
permissible non-audit services and the compensations received
for such services is compatible with the independent
accountants independence.
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5.
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Review and pre-approve the independent accountants annual
engagement letter and all audit and non-audit accounting
services to be performed by the independent accountant (other
than with respect to de minimus exceptions permitted by the
Sarbanes-Oxley Act of 2002), to the extent such services are
permitted under applicable rules and regulation. By action of
the Committee, the authority to grant pre-approval may be
delegated to one or more designated members of the Committee who
are independent members of the Board, with any such pre-approval
to be reported to the Committee at its next regularly scheduled
meeting. Approval of non-audit services shall be disclosed to
investor in the Corporations periodic reports required by
Section 13(a) of the Securities Exchange Act of 1934, as
amended.
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6.
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Discuss the policies with respect to risk assessment and risk
management, including the Companys major financial risk
exposures and the steps management has taken to monitor and
mitigate such exposures.
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7.
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Consider, in consultation with the independent accountant, the
audit scope and plan of the independent accountant.
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8.
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Consider and review with the independent accountant:
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a.
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The adequacy of the Corporations internal controls,
including computerized information system controls and security.
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b.
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Any related significant findings and recommendations of the
independent accountant together with managements responses
thereto.
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A-2
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9.
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Review the following items with management and the independent
accountant at the completion of the annual examination and
recommend to the Board whether the financial statements should
be included in the Annual Report on
Form 10-K:
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a.
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The Corporations annual financial statements and related
footnotes.
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b.
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The independent accountants audit of the financial
statements and his or her report thereof.
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c.
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Any significant changes required in the independent
accountants audit plan.
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d.
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Any serious difficulties or disputes with management encountered
during the course of the audit.
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e.
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Other matters related to the conduct of the audit which are to
be communicated to the Committee under SAS numbers 61 and 90.
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10.
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Review with management, and if appropriate, with the independent
accountant, the interim financial results that are filed with
the Commission or other regulators.
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11.
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Review with management legal and regulatory matters that may
have a material impact on the financial statements, related
Corporation compliance policies, and programs and reports
received from regulators.
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12.
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Review and discuss with management and the independent
accountant the Corporations critical accounting policies
and estimates, all alternative treatments of financial
information within GAAP discussed between the independent
accountant and management, any significant changes in the
application of accounting principles, and all other material
written communications between the independent accountant and
management.
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13.
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Review the internal controls report prepared by management for
insertion into the annual report and, if applicable, the
independent accountants attestation on the assertions of
management that are contained in the internal controls report.
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14.
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Review with management and the independent accountant
disclosures by the Corporations Chief Executive Officer
and Chief Financial Officer in connection with their personal
certification of the Corporations periodic reports or
annual financial statements.
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15.
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Prepare and approve the audit committee report included in the
Corporations annual proxy statement.
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16.
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Ensure there is a process for the confidential, anonymous
submission by the Corporations employees of concerns
regarding questionable accounting and auditing matters.
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17.
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Ensure procedures are established for the receipt, retention and
treatment of complaints received by the Corporation regarding
accounting, auditing, and internal accounting controls.
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18.
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Review and approve (with the concurrence of a majority of the
disinterested members of the Board) any related party and
affiliated party transactions.
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19.
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Report Committee actions to the Board with such recommendations
as the Committee may deem appropriate.
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20.
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The Committee shall have the power to conduct or authorize
investigations into any matters within the Committees
scope of responsibilities.
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21.
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The Committee has the authority to engage and determine funding
for outside legal, accounting or other advisors and to obtain
advice and assistance from such outside advisors as deemed
appropriate to perform its duties and responsibilities.
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22.
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Report to the Board as it deems appropriate and as the Board may
request.
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23.
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Review the Committees charter at least annually and
recommend to the Board any necessary or desirable amendments as
conditions may dictate.
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24.
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Annually, perform a self-assessment relative to the Audit
Committees purpose, duties and responsibilities outlined
herein.
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25.
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The Committee will perform such other functions as assigned by
law, the Corporations articles or bylaws or the Board.
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V.
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Limitation
of Audit Committees Role.
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It is not the duty of the Committee to plan or conduct audits or
to determine that the Corporations financial statements
are complete and accurate and are in accordance with GAAP. Also,
nothing herein should be construed as imposing on the Committee
responsibility to ensure compliance with laws and regulations
and the ethics compliance program. Such matters are the
responsibilities of management and the independent accountant of
the Corporation. Consequently, the Committee is not responsible
for providing any expert or special assurance regarding the
Corporations financial statements and other financial
information, any internal controls over financial reporting or
any professional certification regarding the independent
accountants work, including without limitation its reports
on and review of the Corporations financial statements and
other financial information and its reports on the
Corporations internal controls over financial reporting.
Members of the Committee should not be assumed to be accounting
experts and are not deemed to have accepted a duty of care
greater than other members of the Board.
A-4
Appendix B
LAKES
ENTERTAINMENT, INC.
CORPORATE
GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
The Corporate Governance Committee (the Committee)
of the Board of Directors (the Board) of Lakes
Entertainment, Inc. (the Company) is responsible for
developing the overall corporate governance policies for the
Company and for identifying, screening, recruiting and
presenting director candidates to the Board. The Committee
provides assistance to the Board in the areas of committee
selection and rotation practices, evaluation of the overall
effectiveness of the Board, and review and consideration of
developments in corporate governance practices.
The Committee shall consist of two or more directors, each of
whom shall satisfy the applicable independence requirements of
The Nasdaq Stock Market and any other regulatory requirements
that may be applicable to the Committee from time to time
(Independent Directors).
Committee members shall be appointed by the Board on an annual
basis. Committee members shall serve until their resignation,
retirement, removal by the Independent Directors or until their
successors are duly appointed and qualified. Committee members
may be removed by the Board in its sole discretion for any
reason or no reason. The Board may fill any vacancy on the
Committee. The chair of the Committee shall be designated by the
full Board or, if it does not do so, the Committee members shall
elect a chair by vote of a majority of the full Committee.
The Committee may form and delegate authority to subcommittees
as the Committee may deem appropriate in its sole discretion,
provided that the subcommittees are composed entirely of
Independent Directors.
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III.
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Structure
and
Meetings.
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The Committee shall meet as often as its members deem necessary
to perform the Committees responsibilities but in no event
less than twice annually. The Committee may request that any
directors, officers or employees of the Company, or other
persons whose advice and counsel are sought by the Committee,
attend any meeting of the Committee to provide such pertinent
information as the Committee requests.
The chair of the Committee will preside at each meeting and, in
consultation with the other members of the Committee, will set
the frequency and length of each meeting and the agenda of items
to be addressed at each meeting. The chair of the Committee
shall ensure that the agenda for each meeting is circulated to
each Committee member in advance of the meeting. The Committee
shall prepare minutes of each meeting, which shall be provided
to all Committee members and the entire Board at the next
regularly scheduled meeting of the Committee or the Board, as
applicable. In addition, the Committee shall make regular
reports to the Board and will propose any necessary action to
the Board.
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IV.
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Goals
and
Responsibilities.
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In furtherance of its purposes, the Committee shall:
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(i)
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develop and recommend to the Board a set of corporate governance
principles applicable to the Company, and review and reassess
the adequacy of such guidelines annually and recommend to the
Board any changes deemed appropriate;
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(ii)
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evaluate the composition, organization and governance of the
Board, determine future requirements and make recommendations to
the Board for approval;
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(iii)
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determine desired Board and committee skills and attributes;
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(iv)
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review candidates for Board membership consistent with the
Boards criteria for selecting new directors, including a
review of candidates for Board membership recommended by
shareholders;
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(v)
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annually recommend a slate of nominees to the Board to be
considered for election or re-election at the Companys
annual shareholders meeting;
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(vi)
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conduct the appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates;
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(vii)
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review and evaluate on an annual basis the performance of the
Board, including conducting surveys of director observations,
suggestions and preferences, and other procedures established by
the Committee from time to time;
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(viii)
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evaluate and consider matters relating to the qualifications and
retirement of directors;
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(ix)
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develop a plan for, and consult with the Board regarding,
management succession;
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(x)
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consider questions of possible conflicts of interest of Board
members and of executive officers;
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(xi)
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identify and bring to the attention of the Board current and
emerging corporate governance trends and issues that may affect
the Companys business operations, performance, public
image or compliance with applicable laws;
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(xii)
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generally advise the Board on corporate governance matters;
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(xiii)
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review and approve the Companys Code of Ethics for
directors, officers and employees;
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(xiv)
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assist the Independent Directors in holding regularly scheduled
meetings at which only Independent Directors are present;
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(xv)
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recommend to the Board policies regarding processes by which
shareholders of the Company may communicate with the Board and
individual directors;
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(xvi)
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advise the Board on (a) committee member qualifications,
(b) appointments, removals and rotation of committee
members, (c) committee structure and operations (including
authority to delegate to subcommittees), and (d) committee
reporting to the Board;
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(xvii)
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review and reassess at least annually the adequacy of this
Charter and recommend any proposed changes to the Board for
approval; and
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(xviii)
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perform any other activities consistent with this Charter, the
Companys Articles of Incorporation, Bylaws and governing
law as the Committee or the Board deems appropriate.
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V.
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Committee
Authority;
Resources.
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The Committee shall have the authority, to the extent it deems
necessary or appropriate, to obtain advice and seek assistance
from internal or external legal, accounting or other advisors.
The Committee may conduct or authorize investigations into or
studies of matters within the scope of the Committees
duties and responsibilities, and may retain, at the
Companys expense, such advisors as it deems necessary to
assist with such investigations or studies. The Committee shall
have the sole authority to retain and terminate any search firm
to be used to identify director candidates, including sole
authority to approve such search firms fees and other
retention terms. The Company will provide appropriate funding,
as determined by the Committee, for payment of compensation to
advisors hired by the Committee.
B-2
Appendix C
LAKES
ENTERTAINMENT, INC.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
AMENDED AND RESTATED CHARTER
This Amended and Restated Charter of the Compensation Committee
of the Board of Directors (the Board) was
adopted by the Board of Lakes Entertainment, Inc. (the
Company) on February 28, 2011.
The primary purpose of the Compensation Committee (the
Committee) is to discharge the
responsibilities of the Board relating to compensation of the
Companys outside directors, the Companys Chief
Executive Officer and other executive officers, and
administration of the Companys equity compensation plans.
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II.
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Membership
and
Procedures.
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The Committee shall be comprised of not less than two members,
each of whom satisfy the definition of independent
under the listing standards of The Nasdaq Stock Market LLC
(Nasdaq). All Committee members shall also be
non-employee directors as defined by
Rule 16b-3
under the Securities Exchange Act of 1934 and outside
directors as defined by Section 162(m) of the
Internal Revenue Code.
Committee members will be appointed by the Board on an annual
basis after nomination by the Corporate Governance Committee of
the Board. Committee members shall serve until their
resignation, retirement, removal by the Board or until their
successors are duly appointed and qualified. Committee members
may be removed by the Board in its sole discretion for any
reason or no reason. The Board may fill any vacancy on the
Committee. The chair of the Committee shall be designated by the
full Board or, if it does not do so, the Committee members shall
elect a chair by vote of a majority of the full Committee. The
Committee shall have the authority to delegate any of its
responsibilities to subcommittees as the Committee may deem
appropriate, provided that the subcommittees are composed
entirely of independent directors as provided in the foregoing
paragraph.
The Committee shall meet as often as its members deem necessary
to perform the Committees responsibilities but in no event
less than twice annually. The Committee may request that any
directors, officers or employees of the Company, or other
persons whose advice and counsel are sought by the Committee,
attend any meeting of the Committee to provide such pertinent
information as the Committee requests. Meetings may be held
either in person or telephonically and at such times and places
as the Committee determines. A majority of the members of the
Committee shall constitute a quorum for transacting business at
a meeting. The Committee may also take action by majority
written consent.
The chair of the Committee will preside at each meeting and, in
consultation with the other members of the Committee, will set
the frequency and length of each meeting and the agenda of items
to be addressed at each meeting. The chair of the Committee
shall ensure that the agenda for each meeting is circulated to
each Committee member in advance of the meeting. The Committee
shall prepare minutes of each meeting, which shall be provided
to all Committee members and the entire Board at the next
regularly scheduled meeting of the Committee or the Board, as
applicable. In addition, the Committee shall make regular
reports to the Board and will propose any necessary action to
the Board.
C-1
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IV.
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Key
Responsibilities.
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The following functions shall be the common recurring activities
of the Committee in carrying out its responsibilities. These
functions are set forth as a guide with the understanding that
the Committee may diverge as circumstances require.
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Review the adequacy of the Companys compensation
philosophy, plans and programs in general on an annual basis,
comparing such plans and programs to those utilized by the
Companys peer group; review the appropriateness of
management incentives to ensure that such incentives are aligned
with the interests of the Companys shareholders; report
the results of, and recommendations resulting from, such reviews
to the Board.
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Oversee Company-wide compensation risk and review on an annual
basis whether the risks arising from the Companys
compensation policies and practices with respect to its
employees generally are reasonably likely to have a material
adverse effect on the Company.
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Review periodically executive compensation at the Company, such
as salary, bonus, equity-based incentives and miscellaneous
benefits, and modify as necessary to optimize performance and
remain competitive.
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Meet with the Companys management, and if deemed
appropriate, independent outside professional compensation
advisors to review current trends and practices in executive
compensation and disclosure requirements under various
securities rules and regulations.
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Review and approve all compensation arrangements between the
Company and its executive officers (the Companys Chief
Executive Officer may be present at the meeting deliberations on
this subject, but is not allowed to vote on these matters).
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Review and approve the Companys goals and objectives
relevant to Chief Executive Officer compensation, evaluate the
Chief Executive Officers performance in light of those
goals and objectives, and have sole authority to determine the
Chief Executive Officers compensation level based on this
evaluation (the Companys Chief Executive Officer may not
be present during the deliberations or vote on these matters).
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Review and approve any agreements, including employment,
severance and change in control agreements and plans, and other
similar arrangements, if any, for the Chief Executive Officer
and the other executive officers.
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To the extent required by
Regulation S-K,
review and discuss the Compensation Discussion and Analysis
required by Item 402(b) of
Regulation S-K
for inclusion in the Companys annual shareholder meeting
proxy statement, Annual Report on
Form 10-K
or information statement, as the case may be, and based on such
review and discussion determine whether or not to recommend to
the Companys Board of Director that such Compensation
Discussion and Analysis be included in such filing.
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Provide recommendations to the Board on compensation related
proposals to be considered at the Companys annual meeting
of shareholders, including, to the extent required by SEC
regulations, the frequency with which the Company should submit
to shareholders an advisory vote on executive compensation or
say-on-pay.
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Prepare and issue a compensation committee report for inclusion
in the Companys annual shareholder meeting proxy statement
in accordance with applicable rules and regulations of the SEC
and Nasdaq and any other report or other disclosure required to
be prepared by the Committee pursuant to the rules of the SEC
and Nasdaq for inclusion in the Companys annual
shareholder meeting proxy statement or other SEC filings.
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Administer all equity compensation plans and grant awards under
these plans in a manner consistent with each plans
intended purpose and recommend changes in such plans to the
Board as needed; provided, however, the Committee may delegate
to the President authority to grant awards under the
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C-2
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Companys equity compensation plans to persons who are not
serving as executive officers of the Company or deemed to be a
named executive officer of the Company within the
meaning of SEC rules and regulations; provided further, that no
such award for any one individual may exceed 10,000 shares
without the prior approval of the Committee.
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Establish and approve cash and equity compensation for members
of the Board and annually compare such compensation to companies
within the Companys peer group and to companies of
comparable size.
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Investigate or have investigated any variance or matter of
concern brought to the Committees attention that is within
the scope of its duties.
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Evaluate its own performance on an annual basis and present the
results of such evaluation to the Board.
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Review the adequacy of this Charter on an annual basis and
recommend any proposed changes to the Board for approval.
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Perform all other duties and responsibilities delegated to the
Committee by the Board of Directors.
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The Committee will have the authority, to the extent it deems
necessary or appropriate, to retain a compensation consultant to
assist in the evaluation of the Chief Executive Officer or
executive officer compensation. The Committee shall have the
sole authority to approve such consultants fees and other
retention terms. The Committee shall also have the authority, to
the extent it deems necessary or appropriate, to retain other
advisors. The Company will provide appropriate funding, as
determined by the Committee, for payment of compensation to any
consulting firm or other advisors hired by the Committee.
C-3
ANNUAL MEETING OF
SHAREHOLDERS
Doubletree Park Place Hotel
1500 Park Place Boulevard
Minneapolis, Minnesota
June 1, 2011
3:00 P.M.
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LAKES ENTERTAINMENT, INC.
FOR ANNUAL MEETING OF SHAREHOLDERS June 1, 2011
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proxy |
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This proxy is solicited on behalf of the Board of Directors for use
at the Annual Meeting on June 1, 2011.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted FOR Items 1, 2, and 3.
By signing the proxy, you revoke all prior proxies and appoint Lyle
Berman and Timothy J. Cope, and each of them with full power of substitution, to vote your
shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
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Shareholder Services
P.O. Box 64945
St. Paul, MN 55164-0945
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COMPANY
# |
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Vote by Internet, Telephone or Mail 24
Hours a Day, 7 Days a Week |
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Your phone or Internet vote authorizes the named
proxies to vote your shares in the manner as if
you marked, signed and returned your proxy card. |
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INTERNET www.eproxy.com/laco
Use the Internet to vote your proxy until 12:00 p.m. (CDT) on May 31, 2011. |
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PHONE 1-800-560-1965
Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CDT) on May 31, 2011. |
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MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope provided |
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If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card. |
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
ò
Please detach here
ò
The Board of Directors unanimously recommends that you vote FOR the election of
all nominees for the Board of Directors named in this proxy statement and FOR the
ratification of the appointment of PBTK as our independent registered public accounting firm
for the 2011 fiscal year.
1. |
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Election of directors: |
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01 Lyle Berman
04 Ray Moberg
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02 Timothy J. Cope
05 Larry C. Barenbaum
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03 Neil I. Sell
06 Richard D. White
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FOR all nominees
(except as marked
to the contrary below)
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WITHHOLD
vote for all
nominees listed |
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(Instructions: To withhold authority to vote for any individual nominee, write that nominees
name in the box provided to the right.)
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2.
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The ratification of the appointment of Piercy Bowler Taylor & Kern, Certified
Public Accountants, as our independent registered public accounting firm for the 2011 fiscal year
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For
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Against
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Abstain |
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3.
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The transaction of any other business as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting
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For
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Against
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Abstain |
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE
VOTED FOR EACH PROPOSAL.
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Address Change? Mark Box Indicate changes below:
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o
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Dated:
, 2011 |
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Signature(s) in Box
(Shareholder must sign exactly as the name appears at left. When signed as a corporate
officer, executor, administrator, trustee, guardian, etc., please
give full title as such. Both joint tenants must sign.)
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