UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



SCHEDULE 14A



Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )



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Filed by a Party other than the Registrant ☐



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☐Preliminary Proxy Statement

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

☑Definitive Proxy Statement

☐Definitive Additional Materials

☐Soliciting Material Pursuant to §240.14a-12





CENTURY CASINOS, INC.

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(Name of Registrant as Specified In Its Charter)



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



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☐Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.



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amount on which the filing fee is calculated and state how it was determined):



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☐Fee paid previously with preliminary materials.



☐Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.  Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



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April 29, 2016





Dear Stockholder:



We cordially invite you to electronically attend the Annual Meeting of Stockholders of Century Casinos, Inc., which will be held on Thursday, June 9, 2016, at 8:00 a.m. Mountain Time (4:00 p.m. Central European Time). We are pleased to announce that this year’s Annual Meeting will again be a virtual meeting via live webcast on the Internet.  You will be able to attend the Annual Meeting, vote and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/cnty2016.  



At the Annual Meeting, you will be asked to vote on proposals to elect two Class I directors to our Board of Directors, ratify the appointment of our independent registered public accounting firm, approve an advisory (non-binding) resolution regarding the compensation of our named executive officers, approve and adopt the Century Casinos, Inc. 2016 Equity Incentive Plan and consider such other business as may properly come before the meeting.



Enclosed is a notice of the Annual Meeting, the proxy statement and proxy card along with a copy of our Annual Report for the 2015 fiscal year.



We encourage you to read the enclosed proxy statement and vote promptly.  If you attend the Annual Meeting, you may vote in person via the Internet even if you previously voted by proxy.  Thank you for your interest and support.





Sincerely,



/s/ Erwin Haitzmann

Erwin Haitzmann

Chairman of the Board of Directors

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455 E. Pikes Peak Ave., Suite 210

Colorado Springs, CO 80903



NOTICE OF ANNUAL MEETING OF STOCKHOLDERS



Notice is hereby given that the 2016 Annual Meeting of Stockholders of Century Casinos, Inc., a Delaware corporation, will be convened on Thursday, June 9, 2016 at 8:00 a.m. Mountain Time (4:00 p.m. Central European Time) via the Internet at www.virtualshareholdermeeting.com/cnty2016, for the following purposes:













Stockholders are cordially invited to attend the meeting in person via the Internet by going to the following web address:



www.virtualshareholdermeeting.com/cnty2016



Only those stockholders of record owning shares of our common stock at the close of business on April 11, 2016 are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement of the Annual Meeting. A complete list of these stockholders will be available for ten days prior to the meeting at the office of our Corporate Secretary at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903, and at the Annual Meeting.



If you attend the Annual Meeting via the live webcast, go to www.virtualshareholdermeeting.com/cnty2016 at least 15 minutes prior to the start time to register. Click on the link to the audio-only webcast on that page and a script will take you through the steps necessary to access the webcast. You will need to have your proxy card when you access the website. You will be prompted to enter your control number to create and submit an electronic ballot.



Our proxy statement is enclosed. Stockholders who cannot attend the meeting via Internet should vote by using the enclosed proxy card. Please fill-in, date, sign and return the enclosed proxy card in the enclosed envelope so that your shares may be voted at the meeting. If you attend the meeting via the Internet, you may revoke your proxy and vote in person. Your vote is important.



By order of the Board of Directors,



/s/ Margaret Stapleton

Margaret Stapleton

Executive Vice President and Corporate Secretary



Colorado Springs, Colorado

April 29, 2016

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455 E. Pikes Peak Ave., Suite 210

Colorado Springs, CO 80903



PROXY STATEMENT



Annual Meeting of Stockholders

To Be Held on June 9, 2016



This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Century Casinos, Inc. for the Annual Meeting of Stockholders (“Annual Meeting”) to be held via the Internet at www.virtualshareholdermeeting.com/cnty2016 on Thursday, June 9, 2016, at 8:00 a.m. Mountain Time (4:00 p.m. Central European Time), for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The enclosed materials were first mailed on or about May 2, 2016 to our stockholders of record as of April 11, 2016.  



The matters to be brought before the Annual Meeting are proposals to elect two Class I directors to our Board of Directors, ratify the appointment of our independent registered public accounting firm for the year ending December 31, 2016, approve an advisory (non-binding) resolution regarding the compensation of our named executive officers, approve and adopt the Century Casinos, Inc. 2016 Equity Incentive Plan (the “2016 Plan”) and the transaction of such other business that properly comes before the meeting.



All properly executed proxies received prior to the Annual Meeting will be voted at the Annual Meeting. If a stockholder directs how a proxy is to be voted with respect to the business coming before the Annual Meeting, the proxy will be voted in accordance with the stockholder’s directions. If a stockholder does not direct how a proxy is to be voted, it will be voted in favor of the election of the two Class I director nominees to the Board named in this proxy statement, for the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2016, for the approval of the advisory (non-binding) resolution regarding the compensation of our named executive officers, for the approval and adoption of the 2016 Plan, and in the proxy holder’s discretion in accordance with our bylaws for any other matters properly presented to be considered at the Annual Meeting. A proxy may be revoked at any time before it is exercised by giving written notice to our Corporate Secretary at the above address or by delivery of a subsequently executed proxy. Stockholders may vote their shares in person if they attend the Annual Meeting, even if they have executed and returned a proxy. Stockholders will not be able to vote their shares by phone at the meeting.



Proxies are being solicited by mail, and, in addition, our directors, officers and regular employees (who will not receive any additional compensation) may solicit proxies personally, by telephone, by email, or by special correspondence. We will reimburse brokerage firms and others for their expenses in forwarding proxy materials to the beneficial owners of our common stock. All expenses involved in preparing, assembling and mailing this proxy statement and the enclosed material and in connection with the solicitation of proxies in regard to the proposals brought forward by us and included in this proxy statement will be paid by us.



Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 9, 2016.



This proxy statement and the annual report to stockholders are available at www.proxyvote.com. None of the information contained in our annual report is proxy solicitation material.



VOTING SECURITIES



Only stockholders of record at the close of business on April 11, 2016 will be entitled to vote at the Annual Meeting. On that date, there were 24,431,120 shares outstanding of our common stock, our only class of voting securities. Each share of common stock is entitled to one vote per share. Cumulative voting in the election of directors is not permitted.

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The holders of a majority of our issued and outstanding shares of common stock, represented either in person or by proxy and entitled to vote at the meeting, will constitute a quorum for the transaction of business at the Annual Meeting. A vote of the holders of a majority of the common stock present, either in person or by proxy, and entitled to vote, is required to elect the Class I director nominees, to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2016, to approve the advisory (non-binding) resolution regarding the compensation of our named executive officers and to approve and adopt the 2016 Plan.  



A stockholder entitled to vote may abstain from voting for nominees for director in the election of directors and may abstain from voting on any of the other proposals. Abstentions are counted for purposes of determining a quorum to conduct business. Abstentions will have the effect of a vote “against” a proposal, since an abstention represents a share entitled to vote and is included in the denominator in determining the percentage approved. The inspectors of election will treat broker non-votes, which are shares held by brokers or nominees for which the broker or nominee has no discretionary power to vote on a particular matter and for which they have received no instructions from the beneficial owners or persons entitled to vote, as shares that are present for purposes of determining the presence of a quorum. However, for purposes of determining the outcome of any matters as to which the broker has indicated on the proxy that it does not have discretionary authority to vote, including the election of directors, those shares will be treated as not entitled to vote with respect to that matter (even though those shares may be entitled to vote on other matters).



STOCKHOLDER PROPOSALS



If you are a stockholder who wishes to present a proposal for inclusion in the proxy statement and form of proxy for consideration at our 2017 Annual Meeting of Stockholders, you must submit your proposals to the attention of our Corporate Secretary at our executive office at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903, so that the proposal is received by us no later than January 2, 2017. In order for a stockholder proposal to be properly considered at the 2017 Annual Meeting, our Corporate Secretary must have received notice of the proposal no sooner than December 11, 2016 and no later than February 9, 2017, in accordance with our amended and restated bylaws. Proposals received by us before December 11, 2016 or after February 9, 2017 will be deemed untimely and will not be considered at the 2017 Annual Meeting. 



STOCKHOLDER COMMUNICATIONS AND DIRECTOR NOMINATIONS



Stockholders or other interested parties may communicate with our Board, any individual director, or members of any Board committee. Stockholders should send any communications to investor@cnty.com, and identify the intended recipient or recipients. All communications addressed to the Board or any identified director or directors will be forwarded to the identified person or persons.



In order to nominate candidates for election to our Board, nominations must be timely received from a stockholder of record at our executive office at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903, as described above under “Stockholder Proposals”, and must set forth the name, age, business address and residence address of each nominee, the nominees’ principal occupation or employment, the number of shares of our common stock owned by each nominee, and any other information regarding each nominee required to be disclosed by applicable laws. The nomination must also state the name and address of the stockholder making such nominations and the number of shares of common stock owned by such person.





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PROPOSAL NO. 1



ELECTION OF DIRECTORS





Our Board is divided into three classes of directors as nearly equal in number as possible. Each director who is elected at an Annual Meeting will be elected for a three-year term expiring at the third Annual Meeting of stockholders after such director’s election. Accordingly, directors of one class only are elected at each year’s Annual Meeting of stockholders. All nominees, if elected, will serve until the expiration of their respective three-year terms or until their successors are duly elected and qualified. Our Board consists of five directors in three classes as follows: (i) two Class I directors, Mr. Robert S. Eichberg and Dr. Dinah Corbaci, whose terms will expire at the 2016 Annual Meeting; (ii) one Class II director, Mr. Peter Hoetzinger, whose term will expire at the 2017 Annual Meeting; and (iii) two Class III directors, Dr. Erwin Haitzmann and Mr. Gottfried Schellmann, whose terms will expire at the 2018 Annual Meeting. 



Based on the recommendations of our Governance and Nominating Committee, the Board has nominated Mr. Robert S. Eichberg and Dr. Dinah Corbaci for election as Class I directors to serve for three-year terms expiring at the 2019 Annual Meeting of stockholders.



Mr. Eichberg is presently a member of the Board of Directors, having served continuously as a director since January 1997.  Dr. Corbaci is presently a member of the Board of Directors, having served continuously as  a director since April 2000.  Mr. Eichberg and Dr. Corbaci have indicated a willingness to serve; however, in the event a nominee becomes unable to serve as a director, all proxies will be voted in accordance with the best judgment of the persons acting under such proxies.



Further information concerning Mr. Eichberg and Dr. Corbaci, the nominees for the Class I directors,  is set forth below under “Information Concerning Executive Officers and Directors.”



Vote Required



The affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote is required to elect each director. Abstentions effectively count as a vote against a nominee. Broker non-votes will have no effect on the outcome of the proposal. Proxies cannot be voted for a greater number of directors than the number nominated.



THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE NOMINEES AS CLASS I DIRECTORS.



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INFORMATION CONCERNING EXECUTIVE OFFICERS AND DIRECTORS



Information regarding our Board and other executive officers of the Company as of April 17, 2015 is as follows:

 

 

Erwin Haitzmann holds a Doctorate and a Masters degree in Social and Economic Sciences from the University of Linz, Austria (1980). Dr. Haitzmann has extensive casino gaming experience ranging from dealer to various casino management positions and has served on numerous casino company boards worldwide. Dr. Haitzmann has been employed full-time by us since May 1993 and has been employed as either our Chief Executive Officer or Co Chief Executive Officer since March 1994. Dr. Haitzmann has served as a director since March 1994. In determining that Dr. Haitzmann should serve as a director, the Board identified Dr. Haitzmann's extensive experience in the gaming industry and general executive management experience. In determining that Dr. Haitzmann should serve as Chairman of the Board, the Board identified Dr. Haitzmann’s length of service with us, his vast and extensive knowledge of the domestic and international casino industry and his knowledge of our overall business.



Peter Hoetzinger received a Masters degree from the University of Linz, Austria (1986). Thereafter, he was employed in several managerial positions in the gaming industry with Austrian casino companies and has served on numerous casino company boards worldwide. Mr. Hoetzinger has been employed full-time by us since May 1993. He has served as our President since 2000 and our Co Chief Executive Officer since March 2005. Mr. Hoetzinger has served as a director since March 1994. In determining that Mr. Hoetzinger should serve as a director, the Board identified Mr. Hoetzinger’s extensive experience in the domestic and international casino industry, general executive management experience and his knowledge of our overall business.



Robert S. Eichberg graduated from Bradley University in 1968 with a B.S. Degree in Accounting and is a Certified Public Accountant. He was employed by the public accounting firm of Deloitte & Touche, LLP from 1974 to 1994, ending his tenure there as tax partner. From 1994 to 1996, he served as tax partner for the public accounting firm of Price Bednar LLP. In 1996, he joined the public accounting firm of Causey Demgen & Moore, P.C., where he will be employed as  a principal until his retirement in June 2016. Mr. Eichberg has served as a director since January 1997. In determining that Mr. Eichberg should serve as a director, the Board identified Mr. Eichberg’s extensive financial, accounting and general executive management experience.



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Gottfried Schellmann graduated from University of Vienna with a Law degree and is a Certified Tax Advisor in Austria. After having worked for several firms, including KPMG Germany, as a tax and accounting manager, he formed Schellmann & Partner in 1993, where he specialized in tax and accounting work for provinces and municipalities in Austria. In 1999, he sold Schellmann & Partner to KPMG and served from 1999 to 2008 as a partner. He was a part of the Confederation Fiscale Europeenne, the umbrella organization of the European Associations of Tax Advisors in Brussels, Germany, from 1994 to 2014, holding roles as a representative on the Tax Committee from 1994 to 2004, Chair of the Indirect Tax Committee from 2005 to 2008, Chair of the Tax Committee from 2009 to 2012 and Vice President from 2013 to 2014. Since 2009, he has been a partner in Mueller & Schellmann, a boutique tax advisory company that he formed with a partner in 2009. He is also currently a member of the Worshipful Company of Tax Advisors in London. He is one of the main co-authors, together with certain officers of the Austrian Ministry of Finance, of the Austrian corporate tax code. Mr. Schellmann has served as a director since January 1997. In determining that Mr. Schellmann should serve as a director, the Board identified Mr. Schellmann’s extensive experience in international taxation, risk management, oversight and his general executive management experience.



Dinah Corbaci holds a Doctorate degree in Law from the University of Salzburg, Austria (1981). After her practice on the Austrian Court in Salzburg, she began working at IBM in 1984 where she served as Account Manager for large Austrian governmental customers. During her tenure at IBM from 1984 to 2009, she was responsible for all Austrian governmental customers concerning their strategic hardware development. As Software Account Manager for Software and Solutions, Dr. Corbaci was responsible for Austrian governmental customers’ application modernization and compliance with guidelines for the use of such software. In August 2009, Dr. Corbaci established her own private consulting firm, Dinah Corbaci Consulting for Information Technology. Dr. Corbaci has served as a director since April 2000. In determining that Dr. Corbaci should serve as a director, the Board identified Dr. Corbaci’s extensive experience with e-business solutions, transactions with governmental authorities, risk management, oversight and her general executive management experience.



Margaret Stapleton was appointed Executive Vice President and Principal Financial/Accounting Officer and Corporate Secretary, effective May 2010. She holds a Bachelor of Science degree in Accounting from Regis University, Denver, Colorado (2004) and has over 30 years of experience in corporate accounting and internal audit. Mrs. Stapleton has been employed by us since 2005, including previously serving as our Director of Internal Audit and Compliance from 2005 to 2010.



Andreas Terler is a Graduate Engineer in Applied Mathematics from the University of Graz, Austria (1994). Mr. Terler has more than ten years of casino industry experience. In 2010, Mr. Terler began overseeing our operations in North America, on our cruise ship-based casinos and our Caribbean operations. He has served as our Chief Information Officer since 2006. Mr. Terler has been employed by us since 2006. 



There are no family relationships between or among our directors or executive officers.



We have adopted a Code of Business Conduct and Ethics that applies to all directors, executive officers and employees. A complete text of this Code of Business Conduct and Ethics is available on the Corporate – Corporate Governance section of our website (www.cnty.com). Any future amendments to or waivers of the Code of Business Conduct and Ethics will be posted to the Corporate – Corporate Governance section of our website.



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth information as of April 11, 2016, concerning common stock ownership by (i) beneficial owners of more than five percent (5%) of our outstanding common stock that have publicly disclosed their ownership, (ii) each named executive officer and each member of our Board, and (iii) all of our executive officers and directors as a group. The number of shares indicated as beneficially owned by each person listed below is calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under Rule 13d-3(d), shares not outstanding that are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed. Accordingly, share ownership includes shares that may be acquired upon the exercise of options, warrants, rights or conversion privileges that are exercisable on April 11, 2016, or will become exercisable within 60 days of that date (by June 10, 2016). The percentage ownership of each person listed below is based on the 24,431,120 shares outstanding as of April 11, 2016. Unless otherwise indicated in the footnotes and subject to community property laws where applicable, each of the named persons or entities has sole voting and investment power with respect to the shares shown as beneficially owned.

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*Less than 1%.



(a)Flyfish Management & Consulting AG owns 1,350,000 of the reported shares (see “Executive Agreements”). Dr. Haitzmann has options to purchase 225,000 shares of our common stock that are exercisable on or before June 10, 2016.

(b)The Hoetzinger Family Foundation owns 94,397 of the reported shares (see “Certain Relationships and Related Transactions”). Focus Lifestyle and Entertainment AG owns 1,123,000 of the reported shares (see “Executive Agreements”). Mr. Hoetzinger has options to purchase 225,000 shares of our common stock that are exercisable on or before June 10, 2016.

(c)Includes 32,500 shares of our common stock issuable upon exercise of stock options that are exercisable on or before June 10, 2016.

(d)Includes (i) 7,500 shares of our common stock issuable upon exercise of stock options that are exercisable on or before June 10, 2016 and (ii) 15,500 shares of our common stock that Mr. Schellman has pledged as collateral in connection with a property acquisition.

(e)Includes 26,700 shares of our common stock issuable upon exercise of stock options that are exercisable on or before June 10, 2016.

(f)Includes 55,951 shares of our common stock issuable upon exercise of stock options that are exercisable on or before June 10, 2016. 

(g)Includes 35,000 shares of our common stock issuable upon exercise of stock options that are exercisable on or before June 10, 2016. 

(h)Based solely on a Schedule 13G/A filed on February 12, 2016. Ariel Investments, LLC has sole voting power with respect to 2,447,099 shares and sole dispositive power with respect to 3,316,958 shares.

(i)Based solely on a Schedule 13G/A filed on January 27, 2016 by Wells Fargo & Company on its own behalf and on behalf of certain subsidiaries. Wells Fargo & Company has (i) sole voting and dispositive power with respect to 10,216 shares and (ii) shared voting and dispositive power with respect to 2,415,230 shares.

(j)Based solely on a Schedule 13G/A filed on February 11, 2016. Wellington Management Group LLP has shared voting power with respect to 1,266,846 shares and shared dispositive power with respect to 1,926,787 shares.



CERTAIN INFORMATION REGARDING THE BOARD



The Board held two meetings during 2015. Each director attended at least 75% of the meetings of the Board and of each committee on which he or she sits. A majority of our directors are independent directors, as required by the NASDAQ Capital Market (“NASDAQ”) listing standards. Our Board determines whether a director is independent through a broad consideration of facts and circumstances, including an assessment of the materiality of any relation between us and a director not merely from the director’s standpoint, but also from that of persons or organizations with which the director has an affiliation. In making this determination, the Board adheres to the independence criteria defined by the NASDAQ listing standards and applicable SEC rules. Using these standards, our Board has determined that Robert S. Eichberg, Gottfried Schellmann and Dinah Corbaci qualify as independent directors.



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Our policy regarding attendance by members of the Board at our Annual Meeting of stockholders is to encourage directors to attend, either in person or by teleconference, subject to their availability during that time.  Dr. Haitzmann was the only Board member to attend the 2015 Annual Meeting.



Audit Committee. We have an Audit Committee of the Board, comprised of Robert S. Eichberg (Chairman), Gottfried Schellmann and Dinah Corbaci, which is governed by an Amended and Restated Charter and Powers of the Audit Committee, a current copy of which can be found at www.cnty.com. The Audit Committee selects and appoints our independent registered public accounting firm, reviews the performance of the independent registered public accounting firm, and approves the fees of the independent registered public accounting firm. The Audit Committee also reviews the independence of such accountants, our annual and quarterly financial statements and our system of internal controls. During 2015, the Audit Committee held four meetings.



The Board and the Audit Committee believe that the Audit Committee’s current composition satisfies the applicable rules and pronouncements of NASDAQ and the SEC that govern audit committee selection, experience and composition, including the requirement that all audit committee members be “independent directors,” as that term is defined by such rules. The Board has also determined that Robert S. Eichberg is an “audit committee financial expert,” as defined in applicable regulations of the SEC.



Compensation Committee. We have a Compensation Committee of the Board, which is comprised of Dinah Corbaci and Gottfried Schellmann, both of whom are independent Board members. The Compensation Committee operates pursuant to a written charter that was adopted by the Board, a current copy of which can be found at www.cnty.com.



The Compensation Committee has responsibility to: (i) develop guidelines and review the compensation and performance of our executive officers, and review and approve corporate goals relevant to the compensation of our executive officers in light of our goals and objectives; (ii) determine or recommend to the Board for determination the compensation of the Co Chief Executive Officers and other executive officers based on this evaluation; (iii) review and discuss with management our annual Compensation Discussion and Analysis; (iv) make recommendations to the Board regarding inclusion of the Compensation Discussion and Analysis in our annual proxy statement; (v) make recommendations to the Equity Incentive Plan Committee with respect to incentive-compensation plans and equity-based plans; (vi) develop plans for management succession; (vii) review major organizational and staffing matters; (viii) review director compensation levels and practices, and recommend, from time to time, changes in such compensation levels and practices to the Board; (ix) annually review and reassess the adequacy of the Compensation Committee’s charter and recommend any proposed changes to the Board for approval; (x) annually review the Compensation Committee’s own performance; and (xi) perform any other activities consistent with the Compensation Committee’s charter, our bylaws and applicable laws, rules and regulations that the Compensation Committee or the Board deem appropriate. 



The Compensation Committee has the discretion to modify the recommendations and make the final decisions regarding material compensation to executive officers, including base pay, incentive pay (bonus) and equity awards.



The Compensation Committee collaborates with our management team in reviewing the material terms of our existing compensation policies and programs for all employees and believes that such policies and programs do not encourage excessive risk-taking that is reasonably likely to result in a material adverse impact on us.



In fulfilling its responsibilities, the Compensation Committee may delegate any of its responsibilities to one or more subcommittees or to one of its members as the Compensation Committee may deem appropriate in its sole discretion, to the extent permitted by NASDAQ and SEC rules and any other applicable rules and regulations. In addition, the Compensation Committee may engage external compensation consultants to assist in setting executive compensation, but did not do so in 2015. During 2015, the Compensation Committee held one meeting. 



Governance and Nominating Committee.  We have a Governance and Nominating Committee comprised of Gottfried Schellmann (Chairman), Robert S. Eichberg and Dinah Corbaci. The Governance and Nominating Committee operates pursuant to a written charter that was adopted by the Board, a current copy of which can be found at www.cnty.com.  



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The Governance and Nominating Committee has responsibility to: (i) develop and recommend to the Board a set of corporate governance principles applicable to us; (ii) advise the Board on corporate governance matters; (iii) develop and recommend to the Board criteria for the selection of candidates to serve on the Board; (iv) establish procedures for the identification and evaluation of any candidate for the Board, including any incumbent director; (v) establish procedures for stockholders to submit potential candidates for election to the Board; (vi) select and approve all nominees for Board membership; (vii) make recommendations as necessary regarding changes in the size and composition of the Board and each Board committee; (viii) make recommendations as necessary regarding the establishment of new Board committees and selection of directors to serve on each committee; (ix) develop and administer an annual Board and committee evaluation process; (x) annually review the Governance and Nominating Committee’s own performance; and (xi) perform any other activities consistent with the Governance and Nominating Committee charter, our bylaws and applicable laws, rules and regulations that the Governance and Nominating Committee or the Board deem appropriate.



The Governance and Nominating Committee will consider director nominees recommended by stockholders under the same procedure used for considering director nominees recommended by management or other directors. See the “Stockholder Communications and Director Nominations” section of this proxy statement for procedures to be followed by stockholders to submit recommendations.



In fulfilling its responsibilities, the Governance and Nominating Committee may engage external consultants up to an amount of $30,000 per year. No external consultants were used during 2015. We believe that our current Board members collectively possess diverse knowledge and experience in the disciplines that impact our business. Prior to nominating a new director candidate, our Governance and Nominating Committee considers the collective experience of the existing Board members. Based on this evaluation, the Nominating Committee nominates individuals who it believes can either strengthen the Board's sophistication and experience or further diversify the collective experience represented. Although the Board does not currently have a policy directly addressing director diversity, the Governance and Nominating Committee, guided by the Governance and Nominating Committee's charter, generally assesses the diversity of the Board and the effectiveness of its diversity considerations prior to nominating any additional candidates for director. During 2015, the Governance and Nominating Committee held one meeting.



The general criteria that the Governance and Nominating Committee uses to select nominees are:





The Governance and Nominating Committee reviewed the qualifications of Mr. Eichberg and Dr. Corbaci, whose terms expire at the 2016 Annual Meeting, and have recommended to the Board that Mr. Eichberg and Dr. Corbaci be re-elected to the Board for three-year terms expiring at the 2019 Annual Meeting.



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BOARD LEADERSHIP STRUCTURE



The Board does not have a policy regarding the separation of the roles of Co Chief Executive Officer and Chairman of the Board, as the Board believes it is in our best interests to make that determination based on our particular position and direction and the membership of the Board. The Board has determined that having our Co Chief Executive Officer Dr. Haitzmann serve as Chairman is in the best interest of our stockholders at this time. This structure makes the best use of the Co Chief Executive Officer’s extensive knowledge of us and our industry, as well as fostering greater communication between our management and the Board. The combined role of Chairman and Co Chief Executive Officer is balanced by our governance structure, policies and controls. Three of the five members of our Board of Directors satisfy the requirements of independence promulgated by the SEC and NASDAQ, and the Audit, Compensation, and Governance and Nominating Committees are composed entirely of independent members of the Board. This structure encourages independent and effective oversight of our operations and prudent management of risk.



The Board has not appointed a “lead independent director” due to the small size of the Board and because three of the five directors are independent. The Board therefore does not believe that a “lead independent director” would add significant value at this time.



RISK OVERSIGHT



Our Board of Directors administers its risk oversight function directly and through its committees.  The Board has oversight responsibility for all risks and has various programs to oversee financial and business risks including (i) reviewing and discussing with management the quarterly and annual SEC filings, (ii) reviewing and discussing with management our business strategies and the related business plan, (iii) monitoring quarterly results, and (iv) reviewing and discussing with management results of our enterprise risk management program. 



Companies face a variety of risks, including credit risk, liquidity risk, and operational risk. The Board believes an effective risk management system will (i) timely identify the material risks that we face, (ii) communicate necessary information with respect to material risks to senior executives and, as appropriate, to the Board or relevant Board committee, (iii) implement appropriate and responsive risk management strategies consistent with our risk profile, and (iv) integrate risk management into our decision-making.



The Board has designated the Audit Committee to take the lead in overseeing risk management. The Audit Committee makes periodic reports to the Board regarding briefings provided by management and advisors as well as the Committee’s own analysis and conclusions regarding the adequacy of our risk management processes.



The Compensation Committee administers compensation risk oversight through its oversight of compensation practices and the Compensation Committee’s assessment of the potential impact of those practices on risk-taking. The Compensation Committee does not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on us.



In addition to the formal compliance program, the Board encourages management to promote a corporate culture that incorporates risk management into our corporate strategy and day-to-day business operations. The Board also continually works with the input of our executive officers to assess and analyze the most likely areas of future risk for us.



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION



During 2015, the members of the Compensation Committee were Mr. Gottfried Schellmann and Dr. Dinah Corbaci. Neither of these individuals are current or former officers of the Company or any of our subsidiaries. During 2015, none of our executive officers served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers served as a director or member of our Compensation Committee.



DIRECTOR COMPENSATION



Directors who are neither our employees nor employees of any of our subsidiaries earn $2,000 for each meeting attended and for each gaming application completed. Directors are reimbursed for expenses reasonably incurred in connection with their service on the Board.



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In addition, Mr. Eichberg receives $10,000 per year for his work as Chairman of the Audit Committee.  Mr. Schellmann and Dr. Corbaci each receive an additional $3,000 per year for their work as members of the Audit, Compensation and Governance and Nominating Committees.



Our Amended and Restated 2005 Equity Incentive Plan (the “Amended 2005 Plan”) expired in June 2015. During 2015, we did not grant any equity awards to our non-employee independent directors.



The following table sets forth the compensation of our non-employee directors for 2015:



DIRECTOR COMPENSATION TABLE









COMPENSATION DISCUSSION AND ANALYSIS



Executive Summary



2015 Performance and Results. During 2015, we made progress on our business strategy of developing new international gaming opportunities. These included the following:





These actions contributed significantly to our improved 2015 financial results, as follows:





*Adjusted EBITDA is a non-GAAP financial measure. For a discussion and reconciliation of Adjusted EBITDA to the most directly comparable measure under United States generally accepted accounting principles (“GAAP”), see Item 6. “Selected Financial Data – Non-GAAP Measures – Adjusted EBITDA” in our Annual Report on Form 10-K for the year ended December 31, 2015.



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Our named executive officers, along with many of our other employees, have worked diligently on developing these business opportunities, which we believe will contribute significantly to the success of our Company. For additional information, see “2015 Company Business Developments” below. 



Revised Compensation and Governance Programs. In response to the 2015 “Say-on-Pay” vote on the compensation of our named executive officers, at the direction of the Compensation Committee and the Board, the Company has conducted significant outreach to our major stockholders that represent approximately 46% of our total stock ownership to elicit feedback and discuss any concerns they may have about our executive compensation programs and policies. As a result of the 2015 Say-on-Pay vote and the stockholder outreach, the Compensation Committee is revising the design of our executive compensation program, which is expected to, among other things, increase the amount and type of performance-based compensation of our executive officers. The proposed 2016 Equity Incentive Plan includes a number of features that we believe are consistent with the interests of our stockholders and sound corporate governance practices, including:





The Compensation Committee also has recommended, and the Board of Directors has approved, a number of changes to the Company’s compensation and governance policies that we believe are important and consistent with governance and compensation policy best practices. These include:





See “Consideration of Say-on-Pay Results and Stockholder Outreach” and “Compensation Policies” below.



Overview of Compensation Goals and Objectives



The Compensation Committee is responsible for setting and reviewing the compensation of our named executive officers:





In order to better align the long-term interests of our executives with our stockholders and to attract and retain highly qualified executives, our compensation programs have been designed to provide competitive levels of compensation that integrate pay with our performance, with an emphasis on recognizing individual initiative and achievements.



We base our compensation primarily on our named executive officers’ experience, expertise and performance, with a portion of potential compensation dependent upon our successful long-term performance and position in the international gaming industry. The Compensation Committee believes that the compensation program for our named executive officers is designed to reward long-term performance. The Compensation Committee also believes that our compensation program motivates our named executive officers to deliver financial results that meet or exceed our expectations, seek and develop new gaming opportunities, and effectively manage our widespread international operations.

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2015 Company Business Developments



During 2015, we made progress on our business strategy of developing new international gaming opportunities. We opened Century Downs in April 2015. Century Downs, which is located in Balzac, a north metropolitan area of Calgary, Alberta, Canada, offers the only horse race track in the Calgary area and includes a 5.5 furlong (0.7 mile) racetrack, a gaming floor with 550 slot machines, a bar, a lounge, restaurant facilities, an off-track betting area and an entertainment area. We also began operating the southern Alberta pari-mutuel off-track horse betting network through Century Bets in May 2015. Century Bets provides pari-mutuel wagering content and live video to 17 off-track betting parlors throughout southern Alberta and has agreements with over 90 racetracks world-wide to broadcast races through the off-track betting network. During 2015, we started casino operations on three new cruise ships. We also mutually agreed with Norwegian to terminate our concession agreements for eight ship-based casinos that we operated on Oceania Cruises and Regent Seven Seas Cruises, which are indirect subsidiaries of Norwegian, in exchange for total consideration of $4.0 million, plus a limited consulting contract worth $2.0 million.  Our named executive officers, along with many of our other employees, have worked diligently on developing these business opportunities, which we believe will contribute significantly to the success of our Company.



These actions contributed significantly to improved 2015 financial results, as follows: (i) net operating revenue for the year ended December 31, 2015 was $134.4 million, a 12% increase compared to the year ended December 31, 2014; (ii) Adjusted EBITDA  for the year ended December 31, 2015 was $23.5 million, an 83% increase compared to the year ended December 31, 2014; (iii) net earnings attributable to Century Casinos, Inc. shareholders for the year ended December 31, 2015 were $11.9 million, an 867% increase compared to the year ended December 31, 2014; and (iv) earnings per share for the year ended December 31, 2015 were $0.49 compared to $0.05 for the year ended December 31, 2014.



Compensation Program Design



The executive compensation program is designed with our executive compensation objectives in mind and is comprised of fixed and variable pay plans, cash and non-cash plans, and short and long-term payment structures in order to recognize and reward executives for their contributions to us today and in the future.



Our current short-term executive compensation structure consists of base salary and annual incentive compensation in the form of cash bonuses.  Our long-term executive compensation consists of equity awards, which are generally in the form of stock options. The Compensation Committee believes that granting stock option awards to our named executive officers that generally vest over a four-year period promotes retention and motivates our named executive officers to achieve our long-term business objectives since the ultimate value of their stock options is strongly related to their long-term contributions to our Company.



We continually assess and evaluate the internal and external competitiveness of all components of the executive compensation program. Internally, we look at critical and key positions that are directly linked to our profitability and viability. We seek to ensure that the appropriate hierarchy of jobs is in place with appropriate ratios of Chief Executive Officer compensation to other senior executive compensation. Due to the highly competitive nature of the gaming industry, it is important for our pay plans to provide us with the ability to recruit, retain and internally develop top executive talent.



As discussed below, the Compensation Committee is in the process of revising the design of our executive compensation program and has recommended, and the Board of Directors has approved, a number of changes to the Company’s compensation and governance policies.



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Consideration of Say-on-Pay Results and Stockholder Outreach



At our Annual Meeting of Stockholders held on June 15, 2015, we conducted our annual advisory vote on the 2014 compensation program for our named executive officers (“Say-on-Pay”). The 2014 compensation of our named executive officers received support from approximately 50% of the shares present and entitled to vote on the Say-on-Pay proposal. In response to the Say-on-Pay vote, the Compensation Committee and the Board recognized the need to further improve and strengthen our overall compensation programs and policies.  At the direction of the Compensation Committee and the Board, the Company’s Co CEOs engaged in significant outreach to our major stockholders that represent approximately 46% of our total stock ownership to elicit feedback and discuss any concerns they may have about our executive compensation programs and policies. Although some stockholders expressed support for the Company’s compensation of executives, other stockholders commented that executive compensation should be aligned more closely with the Company’s performance and the long-term interests of the Company’s stockholders and that the Compensation Committee should consider a combination of quantifiable performance metrics in establishing executive compensation. The Compensation Committee and management also engaged an independent advisor to assist us with:





Based on these inputs, the Compensation Committee is in the process of revising the design of our executive compensation program, which is expected to, among other things, increase the amount and type of performance-based compensation of our executive officers. The Compensation Committee also has recommended, and the Board of Directors has approved, a number of changes to the Company’s compensation and governance policies in response to the 2015 Say-on-Pay vote. These include:





See “Compensation Policies” below. We will continue to consider the outcome of our Say-on-Pay vote results when determining the compensation of our named executive officers in the future.



Roles in Establishing Compensation



When determining the compensation of our named executive officers, the Compensation Committee solicits advice primarily from internal company resources, which may include, but are not limited to, our Co Chief Executive Officers and Executive Vice President and Corporate Secretary.



Our Co Chief Executive Officers annually review the performance of our named executive officers and, based on these reviews, recommend to the Compensation Committee compensation for all named executive officers. The Compensation Committee reviews the recommendations and makes the final decisions regarding compensation paid to our senior executives, including base pay, annual incentive bonuses and equity awards. The Compensation Committee did not engage a compensation consultant to assist with determining executive compensation for 2015. Although the Compensation Committee has not formally established a peer group, we have begun to examine companies both in the gaming and hospitality industries in connection with the reexamination of and revision to our compensation practices. Due to the highly specialized nature of our business, the Compensation Committee generally relies on internal resources and limits the external resources considered when establishing compensation to market data from the gaming industry.



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Elements of Compensation



Base Salary



The Compensation Committee sets base salaries for our named executive officers based on a variety of factors, including:



Dr. Haitzmann received a base salary consisting of (i) €220,000 (approximately $238,899 based on the exchange rate in effect on December 31, 2015) paid directly to him and (ii) a management fee of $360,000 paid on a monthly basis to Flyfish Management & Consulting AG. Mr. Hoetzinger received a base salary consisting of (i) €220,000 (approximately $238,899 based on the exchange rate in effect on December 31, 2015) paid directly to him and (ii) a management fee of $360,000 paid on a monthly basis to Focus Lifestyle and Entertainment AG.  The base salary of each of the Co Chief Executive Officers was the same in 2014 and 2015.  



In November 2013, the Compensation Committee increased the base salary of each of the Co Chief Executive Officers from €70,000 to €220,000 in recognition of their performance and additional responsibilities as a result of our expanded international operations and to closer align their base salaries with the base salaries of comparable companies in the gaming industry. In connection with the salary increases in 2013, each Co Chief Executive Officer is required to use 25% of the after-tax amount of the salary increase to purchase our common stock.



For 2015, Ms. Stapleton received a base salary of $140,000 and Mr. Terler received a base salary of €110,000 (approximately $119,450 based on the exchange rate in effect on December 31, 2015). The base salaries of Ms. Stapleton and Mr. Terler were the same in 2014 and 2015. In January 2014, the Compensation Committee approved a $5,000 increase in the annual salary of Ms. Stapleton and a €10,000 increase in the annual salary of Mr. Terler, effective as of April 1, 2014 based on their performance and the fact that their salaries had remained constant for several years. 



The Compensation Committee did not adjust the salaries of any named executive officers during 2015 because it is currently working on a comprehensive revision of our executive compensation program and will evaluate the salaries of the named executive officers after the new executive compensation program has been instituted. The Compensation Committee believes that the base salaries of the named executive officers are fair and competitive with those of executive officers at comparable companies in the gaming industry.



Annual Incentive Compensation



The Compensation Committee considers salaries and bonuses and, in the case of our Co Chief Executive Officers, the management agreements, in determining the competitiveness of the total compensation package. At the end of our fiscal year, the Compensation Committee reviews and approves all bonus payments, which are awarded to our named executive officers on a discretionary basis. In determining whether bonuses should be made and the amount of such bonuses, the Compensation Committee considers, among other things, growth in fundamental company value, market share, markets served, international diversification, risk spread, stock price development, revenues, Adjusted EBITDA, net earnings, operating margins, our positioning for future growth, comparison to companies in the gaming and entertainment industry that operate worldwide, and other measurements and performance criteria as the Compensation Committee deems applicable and appropriate, such as our increased international exposure due to our significant international operations.

 

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Incentive awards are made subject to the Compensation Committee’s discretion. The Compensation Committee may make adjustments to our overall corporate performance goals and our actual performance results that may cause differences between the numbers used for our performance goals and the numbers reported in our financial statements. These adjustments may exclude all or a portion of both the positive or negative effect of external events that are outside the control of our executives, such as natural disasters, litigation, or regulatory changes in accounting or taxation standards.  These adjustments may also exclude all or a portion of both the positive or negative effect of unusual or significant strategic events that are within the control of our executives but that are undertaken with an expectation of improving our long-term financial performance, such as restructurings, acquisitions, or divestitures.



The following table shows the amounts of the discretionary bonuses for 2015 awarded to our named executive officers by the Compensation Committee:







For its 2015 annual incentive bonus determination, the Compensation Committee considered the 2015 financial and operating results of our Company discussed in “2015 Company Business Developments” above, including the substantial increases in net operating revenue, Adjusted EBITDA, net earnings attributable to Century Casinos, Inc. shareholders and earnings per share and the business decisions taken and implemented to achieve those results.  The Compensation Committee determined that the 2015 annual incentive bonuses for the named executive officers were appropriate because of the significant results achieved in 2015 and the overall performance of management to position the Company for future growth and success.



Long-term Incentive Compensation



Historically, the Compensation Committee has granted equity awards to our named executive officers, other employees and members of the Board to promote our long-term success and enhance our value by linking the personal interests of those individuals to those of our stockholders and to provide an incentive to those individuals for outstanding performance that generates superior returns to our stockholders. The amount of equity awards to be issued is based on the discretion of the Compensation Committee. We have been able to motivate, attract and retain the services of key employees by periodically granting equity awards under our Amended 2005 Plan, which provided for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards. The Amended 2005 Plan terminated on June 17, 2015. On April 26, 2016, the Board approved the 2016 Plan, which provides for the grant of awards to eligible individuals in the form of stock, restricted stock, stock options, performance units or other stock-based awards, which is subject to approval by our stockholders at the Annual Meeting.



Stock Option Awards



The exercise price of each option grant is equal to the fair market value of our common stock (based on the closing price on NASDAQ) on the date of grant. The number of shares covered by any grant is generally determined by the Compensation Committee based on the recipient’s position, salary at the time of grant, amounts granted in previous years, and the then current stock price. Grants may be made to reflect increased responsibilities, to reward extraordinary performance or to encourage executives to have a long-term view of our success. The stock options generally vest over a four-year period.



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On December 26, 2014, the Compensation Committee approved grants of stock options to the named executive officers in the following amounts: 







The Compensation Committee considered a number of factors in determining the number of stock options to grant to the named executive officers in 2014, including that our Co Chief Executive Officers and Mr. Terler had not received any equity awards since November 2008 and Ms. Stapleton had not received any equity awards since May 2010, when she was appointed to serve as our Executive Vice President, Principal Financial Officer and Corporate Secretary. The Compensation Committee considered our growth over the past several years, our business and financial achievements in 2014 and the additional responsibilities undertaken by our named executive officers as a result of our business growth. The Compensation Committee granted the stock options to our named executive officers as a reward for their contributions to our success over the past several years, as recognition of their increased responsibilities, as an incentive for them that aligns their compensation with our long-term financial performance, and as a way of retaining our executives and offering compensation that the Compensation Committee believes is competitive with other comparable companies in the gaming industry.



The named executive officers did not receive any stock option awards for 2015, due in part to the Compensation Committee’s practice of only granting equity awards once every several or more years and because the stock options granted to the named executive officers in 2014 were expected to be long-term incentive compensation for the named executive officers for multiple years.



The Compensation Committee is currently evaluating the types and amounts of equity awards granted to our named executive officers in connection with its comprehensive revision of our executive compensation program. The Compensation Committee has not yet made any decisions regarding the named executive officers’ annual or long-term incentive compensation for 2016. 



Personal Benefits and Perquisites



Our use of perquisites as an element of compensation is limited. The Compensation Committee does not view perquisites as a significant element of our compensation structure, but does believe that they can be used in conjunction with base salary to attract, motivate and retain individuals in a competitive environment. Besides certain life insurance contributions and change of control protections, we generally provide broad-based perquisites to our executives and other employees. Executives and all other employees are eligible to participate in various benefit programs such as medical, dental and vision insurance, life insurance, both short and long-term disability, and employer contributions to the Century Casinos, Inc. 401(k) Savings and Retirement Plan. Relocation benefits are available and are negotiated on an individual basis when an employee is hired.



In addition to our group benefits, Dr. Haitzmann and Mr. Hoetzinger are also entitled to:





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Change of Control and Severance Benefits



Employment Agreements. We have entered into employment agreements with certain of our executive officers, including our Co Chief Executive Officers, which are described below under “Executive Agreements.” These agreements provide for severance compensation to be paid if the executives are terminated under certain conditions, such as a change of control or a termination without cause by us, each as is defined in the agreements.



Our Amended 2005 Plan and our previous equity incentive plan under which we have issued equity awards to our executive officers provide for full accelerated vesting of stock awards following a change of control, as defined in such plans.



The change of control provisions and the related severance compensation provisions of the employment agreements with our executive officers and our equity incentive plans are designed to meet the following objectives:



Change of Control.  Many larger, established casino developers consider companies at similar stages of growth as us as potential acquisition targets as a means of adding value to their company. In some scenarios, the potential for merger or acquisition may be in the best interests of our stockholders. In certain cases, we provide severance compensation if an executive is terminated as a result of a corporate transaction in order to maintain the continuity of management during the transaction and in order to promote the ability of our executive officers to act in the best interests of our stockholders even though there exists the possibility that they could be terminated as a result of the transaction.



We define a “change of control” in the employment agreements as follows:





Termination Without Cause By Us.  If we terminate the employment of Dr. Haitzmann or Mr. Hoetzinger without cause, we are obligated to continue to pay their base salary and bonus for a specified period of time, as per the executive officer’s employment agreement. We believe this is appropriate because (i) the terminated executive officer is bound by confidentiality and non-compete provisions covering a specified period of time; (ii) we and the executive officer have mutually agreed to a severance package that is in place prior to any termination event, which provides us more flexibility to make a change in senior management if such a change is in the best interests of us and our stockholders; and (iii) the terminated executive receives a fair severance payment that is defined in advance of a termination without cause.



For this scenario, we define “cause” for Dr. Haitzmann and Mr. Hoetzinger as follows:





Termination With Cause By Employee.  Dr. Haitzmann’s and Mr. Hoetzinger’s employment agreements provide severance in the event they terminate their employment with us for cause. This scenario would be treated similarly to a termination without cause by us for the same reasons provided for that situation, as described above.



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For this scenario, we define “cause” as follows:





Management Agreements. In addition to the employment agreements that we have with Dr. Haitzmann and Mr. Hoetzinger, we are party to separate management agreements with Flyfish Management & Consulting AG, a Swiss corporation that is beneficially owned by Dr. Haitzmann, and with Focus Lifestyle and Entertainment AG, a Swiss corporation that is a wholly-owned subsidiary of Mr. Hoetzinger’s family foundation. 



Termination with Cause by Consultant or without Cause by Us.  The management agreements provide for certain payments and benefits to be made to Flyfish Management & Consulting AG and/or Focus Lifestyle and Entertainment AG should either or both of them terminate the agreement for cause or should either or both of them be terminated by us without cause.  These payments and benefits include: (i) a lump sum cash payment of three times the current management fee and three times the average bonus for the prior three years and (ii) an option to continue to serve as a consultant for three years at the then-current management fee, prior year’s bonus and current benefits.  For the purposes of the determination of these payments and benefits, “cause” means (i) our failure for any reason, within 30 days after receipt of written notice, to correct, cease or otherwise alter any material adverse change in the conditions of engagement, including but not limited to any change in duties or (ii) a change of control has occurred.



A “change of control” under the management agreements is the same as a change of control under the employment agreements, as defined above.



For more information on our potential payments to named executive officers in connection with a termination or change of control, please see “Executive Compensation – Potential Payments upon Termination or Change of Control” below.



Compensation Policies



In response to the 2015 Say on Pay vote as discussed above and in conjunction with the Compensation Committee’s review of our compensation practices, we have adopted several new policies in 2016 that we believe are important and consistent with governance and compensation policy best practices.



Stock Ownership Policy.   It is our policy that all of our executive officers should have a significant financial stake in us.  To that end, we have adopted stock ownership guidelines applicable to our executive officers. The guidelines are applicable to each of our executive officers and provide that each executive officer is expected to directly or beneficially own shares of our common stock with a value at least equal to the amount shown below:



 

The amount of annual base salary includes any management fees paid to a Co CEO, a family foundation or a company directly or beneficially owned by such Co CEO or a subsidiary thereof in connection with a management agreement entered into between any of such parties and the Company or any subsidiary of the Company. Shares to be counted for purposes of the ownership guidelines will be fully-vested outstanding shares of which the individual is deemed to be the “beneficial owner” for purposes of Section 16 under the Exchange Act.  For each Co CEO, shares counted for purposes of the ownership guidelines include any shares owned by a  family foundation or a company directly or beneficially owned by a Co CEO or a subsidiary thereof.  Shares subject to a compensatory equity-based award of any kind that has not yet vested and shares subject to an option or stock appreciation right that has not yet been exercised will not be counted toward satisfaction of the stock ownership guidelines. Each executive officer has five years from the date he or she becomes subject to the guidelines to achieve compliance with the ownership guidelines.



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In addition, effective as of November 2013 each of the Co Chief Executive Officers received a base salary increase of €150,000. In connection with the salary increase, the Compensation Committee amended the employment agreement of each Co Chief Executive Officer to require each Co Chief Executive Officer to use 25% of the after-tax salary increase to purchase our common stock. In August 2014, the Compensation Committee revised the Co Chief Executive Officers’ stock purchase requirement to provide that each Co Chief Executive Officer has a three-year time period, which began on January 1, 2014, to complete the purchase of additional shares of our common stock using the after-tax amount of €112,500 of such Co Chief Executive Officer’s salary.



As of April 11, 2016, Messrs. Haitzmann and Hoetzinger beneficially owned 1,575,000 shares, or 6.4%, and 1,442,397 shares, or 5.9%, of our common stock. See “Security Ownership of Certain Beneficial Owners and Management” above.



Hedging and Pledging.  We have adopted a policy that provides for restrictions on equity transactions, including prohibitions on hedging transactions and pledging of our stock by our directors, officers and employees.



Clawback Policy. We have adopted a policy for recovery of incentive compensation from our executive officers under certain circumstances. The policy provides that we will, in all appropriate circumstances as determined by the Compensation Committee, and to the extent permitted by applicable law, require reimbursement or forfeiture of all or a portion of any incentive compensation awarded to our executive officers after April 22, 2016, which is the date our Board of Directors adopted the policy, where the Compensation Committee has determined that all of the following factors are present:

   



In those circumstances, we will, to the extent deemed appropriate by the compensation committee, seek to recover or cancel the amount(s) by which an executive officer’s incentive compensation that was awarded, vested or paid during the three-year period referenced above exceeded the amount(s) that would have been awarded, vested or paid based on the restated financial results, net of taxes paid or payable by the executive officer with respect to the recoverable compensation.



In addition, under the terms of the proposed 2016 Plan and equity award agreements under the 2016 Plan, equity awards may be subject to forfeiture, recovery by us or any other action pursuant to any compensation recovery policy adopted by the Board or the Compensation Committee, including in response to any requirements under the Exchange Act or any other applicable law or stock exchange listing standards.



Other Equity-Related Policies.  The 2016 Plan requires that all stock options granted under the plan have an exercise price that is not less than the fair market value of a share of our common stock on the date the grant is made. The 2016 Plan also prohibits re-pricing or exchanging underwater stock options under the 2016 Plan without stockholder approval.





Tax and Other Considerations



In designing our compensation programs, we take into account the various tax and accounting rules associated with different forms of compensation. Our executive compensation plans will generally be designed and implemented to maximize tax deductibility. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation greater than $1 million paid any taxable year to any “covered employee” (defined as a corporation’s chief executive officer and the three other most highly compensated executive officers (other than the chief financial officer) as of the end of the taxable year). However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met. The Amended 2005 Plan was structured to qualify awards as compensation that is exempt from the $1 million deduction limit. No “covered employees” were paid compensation exceeding $1 million in 2015 and, as a result, all compensation to “covered employees” is fully tax-deductible. We generally seek to preserve tax deductions for executive compensation, but non-deductible compensation may be paid to executive officers when necessary for competitive reasons or to attract or retain a key executive, or where achieving maximum tax deductibility would be considered disadvantageous to our best interests.

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COMPENSATION COMMITTEE REPORT



The Compensation Committee of the Board has reviewed and discussed the “Compensation Discussion and Analysis” included in this Proxy Statement with management. Based on the Compensation Committee’s review and discussion with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.



Compensation Committee:



Gottfried Schellmann

Dinah Corbaci



Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, the foregoing report of the Compensation Committee does not constitute soliciting material and shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such acts, except to the extent the Company specifically incorporates such report by reference therein.



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EXECUTIVE COMPENSATION



The table below sets forth the compensation earned in 2015, 2014 and 2013 by our named executive officers.



SUMMARY COMPENSATION TABLE



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GRANTS OF PLAN-BASED AWARDS



The named executive officers were not granted any equity awards during 2015.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END



The following table sets forth the number of options held by our named executive officers as of December 31, 2015.







OPTION EXERCISES AND STOCK VESTED IN 2015



The following table sets forth the options exercised and stock vested during 2015 for our named executive officers.









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Executive Agreements



Employment Agreements



In October 2001, we entered into separate employment agreements with Dr. Haitzmann and Mr. Hoetzinger. The agreements were amended in February 2003 to extend the employment periods to December 31, 2008 and to specify the duties of Dr. Haitzmann and Mr. Hoetzinger. The agreements were further amended in February 2005 to assign the employment agreements to our wholly-owned foreign subsidiary, to include changes to the employees’ salary and termination clauses, and to extend the employment periods to December 31, 2009 and for five-year renewable periods thereafter, unless sooner terminated by them or us. Effective September 2006, the employment agreements were further amended to provide each executive officer with life insurance. On November 3, 2014, the employment periods were extended to December 31, 2019. On September 30, 2015, Dr. Haitzmann’s employment agreement was further amended to assign his employment agreement to another of our wholly-owned subsidiaries and to include changes to carryover benefits in connection with such assignment.



In November 2013, the Compensation Committee approved an €150,000 increase in the annual salary of each of the Co Chief Executive Officers, effective as of November 2013. In connection with the salary increase, the Compensation Committee amended the employment agreement of each Co Chief Executive Officer to require each Co Chief Executive Officer to use 25% of the after-tax salary increase to purchase our common stock. In August 2014, the Compensation Committee revised the Co Chief Executive Officers’ stock purchase requirement to provide that each Co Chief Executive Officer has a three-year time period, which began on January 1, 2014, to complete the purchase of additional shares of our common stock using the after-tax amount of €112,500 of such Co Chief Executive Officer’s salary.  



Under the employment agreements, as compensation for the services rendered by Dr. Haitzmann and Mr. Hoetzinger to us, Dr. Haitzmann and Mr. Hoetzinger are paid not less than €220,000 (approximately $238,899 based on the exchange rate in effect on December 31, 2015) in annual base salary, plus annual increases and bonuses, and such other incentives, benefits, insurance policies and compensation as may have been and may be awarded to them from time to time by the Compensation Committee. We provide Dr. Haitzmann and Mr. Hoetzinger with, or reimburse them for, all reasonable expenses incurred in connection with the performance of their duties as our executives. Dr. Haitzmann and Mr. Hoetzinger are also each entitled to the use of an automobile provided to them and paid for by us for business and personal purposes; provided that Dr. Haitzmann may elect to receive a monthly automobile allowance instead of using an automobile provided by us.  



If either or both of Dr. Haitzmann and/or Mr. Hoetzinger dies or becomes disabled during the term of his employment, the employment agreements provide for the continuation of salary for 12 months. 



The employment agreements provide for certain payments and benefits to be made to Dr. Haitzmann and/or Mr. Hoetzinger should either or both of them be terminated without cause or should either or both of them terminate their own employment for cause or in the case of a change of control.  These payments and benefits include: (i) continuation of salary and bonuses for three years from the notification of termination, (ii) immediate vesting of all outstanding equity awards, (iii) an option to serve as a consultant for an additional three years at current salary plus previous year’s bonus and current benefits, and (iv) being made whole on an after-tax basis with respect to any taxes that might become payable as a result of any action or provision in connection with a change of control. The terms “cause” and “change of control” are as defined in “Compensation Discussion and Analysis – Change of Control and Severance Benefits” above.



Management Agreements



In addition to the employment agreements that we have with Dr. Haitzmann and Mr. Hoetzinger, we are party to separate management agreements with Flyfish Management & Consulting AG, a Swiss corporation that is beneficially owned by Dr. Haitzmann, and with Focus Lifestyle and Entertainment AG, a Swiss corporation that is a wholly-owned subsidiary of Mr. Hoetzinger’s family foundation.  Under the management agreement with Flyfish Management & Consulting AG, executive casino management services from Flyfish Management & Consulting AG are provided to us by a team of persons, of which Dr. Haitzmann is a member. Under the management agreement with Focus Lifestyle and Entertainment AG, executive casino management services from Focus Lifestyle and Entertainment AG are provided to us by a team of persons, of which Mr. Hoetzinger is a member. The management agreements with Flyfish Management & Consulting AG and Focus Lifestyle and Entertainment AG are effective through December 31, 2016 and for five-year renewable periods thereafter, unless sooner terminated by them or by us. The management agreements provide for an annual base management fee of $360,000 to each of Flyfish Management & Consulting AG and Focus Lifestyle and Entertainment AG, plus such annual increases and bonuses, and such other incentives, benefits and compensation as may be awarded to them, respectively, by the Compensation Committee.

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Payments to each of these management companies are included as salary to the respective executive in the Summary Compensation Table.



The management agreements also provide for certain payments and benefits to be made to Flyfish Management & Consulting AG and/or Focus Lifestyle and Entertainment AG should either or both of them terminate the agreement for cause or should either or both of them be terminated by us without cause.  These payments and benefits include: (i) a lump sum cash payment of three times the current management fee and three times the average bonus for the prior three years and (ii) an option to continue to serve as a consultant for three years at the then-current management fee, prior year’s bonus and current benefits.  For the purposes of the determination of these payments and benefits, “cause” means (i) our failure for any reason, within 30 days after receipt of written notice, to correct, cease or otherwise alter any material adverse change in the conditions of engagement, including but not limited to any change in duties or (ii) a change of control has occurred.



For the purposes of the prior two paragraphs, a “change of control” is as defined in “Compensation Discussion and Analysis – Change of Control and Severance Benefits” above.



POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL



We have entered into employment agreements with certain of our named executive officers that require us to make payments and provide various benefits in the event of the executive’s termination or a change of control.



The terms of the agreements and the estimated value of the payments and benefits due to the executives pursuant to their agreements under various termination events are detailed below.



Erwin Haitzmann and Peter Hoetzinger. Pursuant to Dr. Haitzmann’s and Mr. Hoetzinger’s employment agreements and management agreements, if we terminate these agreements without cause, if either officer terminates these agreements for cause or upon a change in our control, each of them will be entitled to:





If either Dr. Haitzmann or Mr. Hoetzinger terminates his agreement without cause, we have the option of either (i) to accept his resignation, effective immediately on receipt of such written notice; or (ii) to require him to continue to perform his duties hereunder, for a period not to exceed six months from the date of receipt of such written notice. In either event, he shall continue to receive the same compensation and management fee for a period of six months from the date of written notice or termination. Such compensation shall be paid to him in six equal, successive monthly payments, beginning on the first day of the month immediately following the date of written notice of termination. Upon termination due to death or disability, Dr. Haitzmann and Mr. Hoetzinger are each entitled to receive 12 months of salary paid on a monthly basis.



Under the terms of the employment agreements, each executive is required to not disclose any confidential or proprietary information relating to us to third parties. 



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Assuming Dr. Haitzmann was terminated on December 31, 2015 or that a change of control occurred on such date, and assuming further that the market value of his unvested awards was $7.78 per share of common stock, which was the closing price of our stock on December 31, 2015, Dr. Haitzmann would have been eligible for the following payments and benefits:







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Assuming Mr. Hoetzinger was terminated on December 31, 2015 or that a change of control occurred on such date, and assuming further that the market value of his unvested awards was $7.78 per share of common stock, which was the closing price of our stock on December 31, 2015, Mr. Hoetzinger would have been eligible for the following payments and benefits:







Margaret Stapleton.  Ms. Stapleton does not have an employment agreement with us.  If we terminate her employment without cause she would be entitled to all earned salary through the last day of employment. Ms. Stapleton is not entitled to any payments and there is no acceleration of options upon a change of control.  







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Andreas Terler. Pursuant to Mr. Terler’s employment agreement, if we terminate his agreement without cause he will be entitled to all earned salary through the last day of employment. Mr. Terler is not entitled to any payments upon a change of control under his employment agreement. However, 75,000 stock options granted to Mr. Terler in 2014 will vest immediately under the terms of his option award agreement.



Assuming Mr. Terler was terminated on December 31, 2015 or that a change of control occurred on such date, and assuming that the market value of his unvested equity awards was $7.78 per share of common stock, which was the closing price of our stock on December 31, 2015, Mr. Terler would have been eligible for the following payments and benefits:









EQUITY COMPENSATION PLAN INFORMATION



Information relating to securities authorized for issuance under our Amended 2005 Plan as of December 31, 2015 is as follows:





(1) As of December 31, 2015, there were 1,505,386 shares of common stock issuable upon exercise of outstanding options and other rights exercisable under the Amended 2005 Plan, which expired in June 2015.

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Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act, the following report of the Audit Committee shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such acts.



REPORT OF THE AUDIT COMMITTEE

OF THE BOARD OF DIRECTORS



The Audit Committee has reviewed and discussed with our management our audited consolidated financial statements of the Company for the year ended December 31, 2015. The Audit Committee discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by Auditing Standard No. 16 (Communications with Audit Committees).



The Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP its independence.



Based upon the review and discussions noted above, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on March 11, 2016.





Audit Committee:



Robert S. Eichberg, Chairman

Gottfried Schellmann

Dinah Corbaci



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PROPOSAL NO.  2



RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Audit Committee of the Board has appointed Deloitte & Touche LLP as the independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2016. On September 6, 2013, we engaged Deloitte & Touche LLP as our independent registered public accounting firm. The services provided to us by Deloitte & Touche LLP during 2015 and 2014 are described under “Principal Accounting Fees and Services” below. Although ratification is not required by law, the Board has determined that it is desirable to seek stockholder ratification of this appointment in light of the critical role played by the independent registered public accounting firm in auditing our financial statements. Notwithstanding the selection or ratification of Deloitte & Touche LLP, the Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of us and our stockholders. If the appointment is not ratified by our stockholders, the Audit Committee may reconsider whether it should appoint another independent registered public accounting firm. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting, either in person or via telephone, to respond to appropriate questions and will have an opportunity to make a statement if the representative desires to do so.



PRINCIPAL ACCOUNTING FEES AND SERVICES



The following table sets forth the aggregate fees billed to us by Deloitte &  Touche LLP for the years ended December 31, 2015 and 2014:







The Audit Committee approved in advance all audit services provided in 2015 and 2014 including audit engagement fees and terms provided to us by our independent auditors (subject to the de minimis exception for non-audit services contained in Section 10A(i)(1)(B) of the Exchange Act), all as required by applicable law or listing standards.



The independent auditors and our management are required to periodically report to the Audit Committee the extent of services provided by the independent auditors and the fees associated with these services.

Vote Required

Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2016 requires the affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote.  Abstentions effectively count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.



THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016.

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PROPOSAL NO. 3



ADVISORY VOTE ON EXECUTIVE COMPENSATION



The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. See “Compensation Discussion and Analysis”  and “Executive Compensation” above.



In order to better align the long-term interests of our executives with our stockholders and to attract and retain highly qualified executives, our compensation programs have been designed to provide competitive levels of compensation that integrate pay with our performance, with an emphasis on recognizing individual initiative and achievements and recognizing the complexity of our international operations. We base our compensation primarily on experience, expertise and performance, with a portion of potential compensation dependent upon our successful long-term performance and position in the international gaming industry.



At our Annual Meeting of Stockholders held on June 15, 2015, we conducted our annual advisory vote on the 2014 compensation program for our named executive officers. The 2014 compensation of our named executive officers received support from approximately 50% of the shares present and entitled to vote on the proposal. In response to these results, the Compensation Committee and the Board recognized the need to further improve and strengthen our overall compensation policy. At the direction of the Compensation Committee and the Board, the Company’s Co CEOs engaged in significant outreach to our major stockholders that represent approximately 46% of our total stock ownership to elicit feedback and discuss any concerns they may have about our executive compensation programs and policies. Although some stockholders expressed support for the Company’s compensation of executives, other stockholders commented that executive compensation should be aligned more closely with the Company’s performance and the long-term interests of the Company’s stockholders and that the Compensation Committee should consider a combination of quantifiable performance metrics in establishing executive compensation. The Compensation Committee and management also engaged an independent advisor to assist us with:





Based on these inputs, the Compensation Committee is in the process of revising the design of our executive compensation program, which is expected to, among other things, increase the amount and type of performance-based compensation of our executive officers.  The Compensation Committee also has recommended, and the Board of Directors has approved, a number of changes to the Company’s compensation and governance policies in response to the advisory vote on the 2014 compensation program. These include:





See “Compensation Discussion and Analysis--Compensation Policies” above.



This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors or the Compensation Committee of the Board of Directors. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. To the extent there is a vote against our named executive officer compensation as disclosed in this proxy statement, the Compensation Committee will evaluate whether any actions are necessary to address our stockholders’ concerns.



The affirmative vote of a majority of the shares present or represented and entitled to vote either in person or by proxy is required to approve this Proposal No. 3. Abstentions effectively count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.



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Accordingly, we ask our stockholders to vote on the following resolution at the Annual Meeting:



“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2016 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.”



THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.



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PROPOSAL NO. 4



APPROVAL AND ADOPTION OF THE CENTURY CASINOS, INC.

2016 EQUITY INCENTIVE PLAN



Introduction



We are asking our stockholders to approve the Century Casinos, Inc. 2016 Equity Incentive Plan (the “2016 Plan”), which was approved by our Board of Directors, subject to stockholder approval, on April 26, 2016. The 2016 Plan replaces the Amended 2005 Plan, which expired by its terms in June 2015. The 2016 Plan authorizes the issuance of 3,500,000 shares of our common stock.



Stockholder Approval and Board of Directors Recommendation



Stockholder approval of the 2016 Plan is being sought in order to (i) satisfy the stockholder approval requirements of the NASDAQ Stock Market, (ii) satisfy the requirement that stockholders approve the material terms of awards intended to qualify as performance-based compensation under Section 162(m) of the Code, and (iii) permit the grant of incentive stock options under Code Section 422.



Our Board of Directors recommends that our stockholders vote FOR approval of the 2016 Plan. The Board of Directors believes that we must offer a competitive equity incentive program if we are to continue to successfully attract and retain the best possible candidates for positions of responsibility. We expect that the 2016 Plan will be an important factor in attracting, retaining and rewarding the high caliber employees and non-employee directors essential to the Company’s success, and in motivating these individuals to strive to enhance the Company’s growth and profitability. The 2016 Plan is intended to ensure that the Company will have available an equity incentive program with a reasonable number of shares to meet these goals. Unless a contrary choice is specified, proxies solicited by the Board of Directors will be voted FOR approval of the 2016 Plan.



Key Compensation Practices



The 2016 Plan includes a number of features that we believe are consistent with the interests of our stockholders and sound corporate governance practices, including the following:



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Determination of 2016 Plan Share Reserve



In determining the amount of the share reserve for the 2016 Plan, our Compensation Committee considered a number of factors, including the following:





Expectations regarding future share usage under the 2016 Plan are naturally based on a number of assumptions regarding factors such as our future stock price performance, future growth in the population of eligible participants, the rate of future compensation increases, the rate at which shares are returned to the 2016 Plan reserve through forfeitures, cancellations and the like, and the level at which performance-based awards pay out. While the Compensation Committee believes that the assumptions utilized are reasonable, future share usage will differ from current expectations to the extent that actual events differ from the assumptions utilized.



Description of the 2016 Plan



The major features of the 2016 Plan are summarized below.  The summary is qualified in its entirety by reference to the full text of the 2016 Plan, which is attached as Appendix A to this Proxy Statement.



Purpose of the Plan.  The 2016 Plan is intended to enable us to attract and retain the best available personnel for positions of responsibility, and to provide them with incentive awards intended to align their interests with those of our stockholders and thereby promote our long-term business success.



Eligible Participants.  Employees, consultants and advisors of the Company or any subsidiary, as well as non-employee directors of the Company, are eligible to receive awards under the 2016 Plan.  As of March 31, 2016, there were approximately 1,680 employees of the Company and its subsidiaries, three non-employee directors of the Company and an indeterminate number of consultants and advisors who could be eligible to receive awards under the 2016 Plan.  Although not necessarily indicative of future grants under the 2016 Plan, as of the same date, approximately 35 of the 1,680 eligible employees and all of the non-employee directors have been granted awards under the Amended 2005 Plan, but no consultants or advisors have been granted awards under the Amended 2005 Plan.



Administration.  The 2016 Plan is administered by the Compensation Committee, except for awards to non-employee directors which are administered by the Board.  To the extent consistent with applicable law, the Compensation Committee may delegate its duties, power and authority under the 2016 Plan to any of its members, to our executive officers or non-employee directors with respect to awards to participants who are not themselves our directors or executive officers, or to one or more agents or advisors with respect to non-discretionary administrative duties.



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The Compensation Committee has the authority to determine the persons to whom awards will be granted, the timing, type and number of shares covered by each award, and the terms and conditions of the awards.  The Compensation Committee may also require or permit the deferral of the settlement of an award, establish and modify rules to administer the 2016 Plan, interpret the 2016 Plan and any related award agreement, cancel or suspend an award, accelerate the vesting of an award, and otherwise modify or amend the terms of outstanding awards to the extent permitted under the 2016 Plan.  Unless an amendment to the terms of an award is necessary to comply with applicable laws or stock exchange rules, a participant whose rights would be materially impaired by such an amendment must consent to it.



Except in connection with equity restructurings and other changes in the Company’s capitalization in which share adjustments are specifically authorized, the 2016 Plan prohibits the Compensation Committee from repricing any outstanding “underwater” option or SAR awards without the prior approval of our stockholders.  For these purposes, a “repricing” includes amending the terms of an option or SAR award to lower the exercise price, canceling an option or SAR award in exchange for replacement option or SAR awards having a lower exercise price or canceling an underwater option or SAR award in exchange for cash, other property or a “full value award” (an equity-based award other than an option or SAR award).



Subject to certain limits in the 2016 Plan, the Compensation Committee may also establish subplans or modify the terms of awards under the 2016 Plan with respect to participants who reside outside of the United States or are employed by a non-U.S. subsidiary in order to comply with local legal requirements.



Available Shares and Limitations on Awards.  A maximum of 3,500,000 shares of our common stock are available for awards and issuance under the 2016 Plan.  The shares of common stock that may be issued under the 2016 Plan are authorized but unissued or treasury shares.  The number of shares of common stock subject to options or SARs that may be granted to any one participant during a calendar year under the 2016 Plan may not exceed 1,000,000. There are certain additional limitations on individual awards intended to qualify as performance-based compensation under Code Section 162(m), as discussed below.  All of these share limitations are subject to adjustment for changes in our corporate capitalization or shares, as described below.



The aggregate grant date fair value of all awards granted during any calendar year under the 2016 Plan to any non-employee director (other than awards granted at the election of the director in lieu of cash retainers or fees otherwise payable to the director) may not exceed $500,000.



The 2016 Plan share reserve will be reduced by one share for every one share subject to an option or SAR award, and by 1.75 shares for every share subject to a full value award.  Any shares of common stock subject to an award under the 2016 Plan that expires, is forfeited or cancelled, or is settled or paid in cash will, to the extent of such expiration, forfeiture, cancellation or cash settlement, automatically replenish the 2016 Plan share reserve based on the same share ratio by which the share reserve was decreased when the award was originally granted. However, any shares tendered or withheld to pay the exercise price of an option award, any shares tendered or withheld to satisfy a tax withholding obligation in connection with any award, any shares repurchased by us using option exercise proceeds and any shares subject to an SAR award that are not issued in connection with the stock settlement of that award on its exercise will not replenish the 2016 Plan share reserve.



Awards granted or shares of our common stock issued under the 2016 Plan upon the assumption of, or in substitution or exchange for, outstanding equity awards previously granted by an entity acquired by us or any of our subsidiaries (referred to as “substitute awards”) will not reduce the share reserve under the 2016 Plan.  Additionally, if a company acquired by us or any of our subsidiaries has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition, the unused shares under that pre-existing plan may be used for awards under the 2016 Plan and will not reduce the share reserve under the 2016 Plan, but only if the awards are made to individuals who were not employed by or providing services to us or any of our subsidiaries immediately prior to such acquisition.



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Types of Awards. The 2016 Plan permits us to grant stock option awards, SAR awards, restricted stock awards, stock unit awards and other stock-based awards to eligible recipients.  These types of awards are described in more detail below.



Options.  Employees of our Company or any subsidiary may be awarded “incentive stock options” within the meaning of Code Section 422, and any eligible recipient may be awarded options to purchase common stock that do not qualify as incentive stock options, referred to as “nonqualified stock options.”  All 3,500,000 shares comprising the 2016 Plan’s initial share reserve may be the subject of incentive stock option awards.  The per share exercise price to be paid by a participant at the time an option is exercised may not be less than 100% of the fair market value of one share of our common stock on the date of grant, unless the option is granted as a substitute award as described above.  “Fair market value” under the 2016 Plan as of any date means the closing sale price of a share of our common stock on the NASDAQ Capital Market on that date.  As of March 31, 2016, the closing sale price of a share of our common stock on the NASDAQ Capital Market was $6.16.



The total purchase price of the shares to be purchased upon exercise of an option will be paid by the participant in cash unless the Compensation Committee allows exercise payments to be made, in whole or in part, (i) by means of a broker-assisted sale and remittance program, (ii) by delivery to us of shares of common stock already owned by the participant, or (iii) by a “net exercise” of the option in which a portion of the shares otherwise issuable upon exercise of the option are withheld by us.  Any shares delivered or withheld in payment of an exercise price will be valued at their fair market value on the exercise date.



An option will vest and become exercisable at such times, in such installments and subject to such conditions as may be determined by the Compensation Committee, and no option may have a term greater than 10 years from its date of grant. No dividends or dividend equivalents will be paid with respect to shares subject to an option.



Stock Appreciation Rights.  A SAR award provides the right to receive a payment from us equal to the difference between (i) the fair market value as of the date of exercise of the number of shares of our common stock as to which the SAR is being exercised, and (ii) the aggregate exercise price of that number of shares.  The Compensation Committee determines whether payment will be made in shares of our common stock, cash or a combination of both.  The exercise price per share of a SAR award will be determined by the Compensation Committee, but may not be less than 100% of the fair market value of one share of our common stock on the date of grant, unless the SAR is granted as a substitute award as described earlier.  A SAR award may not have a term greater than 10 years from its date of grant, and will be subject to such other terms and conditions, consistent with the terms of the 2016 Plan, as may be determined by the Compensation Committee.



Restricted Stock Awards.  A restricted stock award is an award of our common stock that vests at such times and in such installments as may be determined by the Compensation Committee.  Until it vests, the shares subject to the award are subject to restrictions on transferability and the possibility of forfeiture.  The Compensation Committee may impose such restrictions or conditions to the vesting of restricted stock awards as it deems appropriate, including that the participant remain continuously in our service for a certain period or that we, or any of our subsidiaries or business units, satisfy specified performance goals.  Except for regular cash dividends on restricted stock awards that are subject only to service-based vesting conditions, dividends and distributions that are paid on restricted stock will be subject to the same restrictions as the underlying shares.  Participants are entitled to vote shares of restricted stock prior to the time they vest.



Stock Unit Awards.  The grant of a stock unit provides the right to receive the fair market value a share of our common stock, payable in cash, shares, or a combination of both as determined by the Compensation Committee.  A stock unit award vests at such times and in such installments as may be determined by the Compensation Committee.  Until it vests, a stock unit award is subject to restrictions on transferability and the possibility of forfeiture.  Stock unit awards will be subject to such terms and conditions, consistent with the other provisions of the 2016 Plan, as may be determined by the Compensation Committee.  The Compensation Committee may provide for the payment or crediting of dividend equivalents on stock unit awards and other stock-based awards, but any dividend equivalents paid or credited on unvested awards of those types that are subject to performance-based vesting conditions will be subject to the same vesting conditions as the underlying units or share equivalents.



Other Stock-Based Awards.  The Compensation Committee may grant awards of common stock and other awards that are valued by reference to and/or payable in shares of our common stock under the 2016 Plan.  The Compensation Committee has complete discretion to determine the terms and conditions of such awards.



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Minimum Vesting Periods.  Awards that vest based solely on the satisfaction of service-based vesting conditions are subject to a minimum vesting period of one year from the date of grant, and awards whose grant or vesting is subject to performance-based vesting conditions must be subject to a performance period of at least one year.  These required vesting and performance periods will not apply: (i) to awards granted in payment of other compensation that is already earned and payable, (ii) upon a change in control, (iii) upon termination of service due to death or disability, (iv) to a substitute award that does not reduce the vesting period of the award being replaced, or (v) to awards involving an aggregate number of shares not in excess of 5% of the 2016 Plan’s share reserve.



Transferability of Awards.  In general, no right or interest in any award under the 2016 Plan may be assigned or transferred by a participant, except by will or the laws of descent and distribution.  However, the Compensation Committee may provide that an award (other than an incentive stock option) may be transferable by gift to a participant’s family member (as defined in General Instruction A.1(a)(5) to Form S-8 under the Securities Act, including the entities described therein) or pursuant to a domestic relations order.  Any permitted transferee of an award will remain subject to all the terms and conditions of the award applicable to the participant.



Effect of Termination of Service.  If a participant’s employment or other service relationship with us and our subsidiaries is terminated, the 2016 Plan provides that unvested portions of his or her outstanding awards will be forfeited and vested portions of outstanding option and SAR awards will continue to be exercisable for a period of either three months or one year after termination, depending on the reason for the termination, unless the termination is for cause.  In that case, the vested but unexercised portions of option and SAR awards will also be terminated. The Compensation Committee may provide for different termination consequences in an individual award agreement.



Unless defined differently in an agreement between a participant and us, “cause” for termination is generally defined in the 2016 Plan to involve (i) conviction  for committing a felony under federal law or the law of the state in which such action occurred, (ii) fraud or dishonesty against the Company or an affiliate or in the course of fulfilling the participant’s duties, (iii) willful and deliberate failure to perform his or her duties in any material respect, (iv) illegal drug use or alcohol abuse on Company or affiliate premises or at a Company or affiliate sponsored event, (v) conduct which in the good faith and reasonable determination of the Compensation Committee demonstrates gross unfitness to provide services to the Company or an affiliate, (vi) an intentional, material violation of any contract between the participant and the Company or an affiliate or of any statutory duty of the participant to the Company or an affiliate, or (vii) prior to a change in control, such other events as shall be determined by the Compensation Committee.



Performance-Based Compensation Under Section 162(m).  The Compensation Committee may grant full value awards under the 2016 Plan to employees who are or may be “covered employees,” as defined in Code Section 162(m), that are intended to be “performance-based compensation” within the meaning of Section 162(m) in order to preserve the deductibility of those awards for federal income tax purposes.  Under current Internal Revenue Service interpretations, the “covered employees” of a company for any year are its chief executive officer and any other executive officer (other than the chief financial officer) who is among the three other most highly compensated executive officers employed by the company at the end of that year.  Participants are entitled to receive payment for a Section 162(m) performance-based award for any given performance period only to the extent that pre-established performance goals set by the Compensation Committee for the performance period are satisfied.  Option and SAR awards granted under the 2016 Plan need not be conditioned upon the achievement of performance goals in order to constitute performance-based compensation for Section 162(m) purposes.



The maximum number of our shares that may be the subject of full value awards that are intended to qualify as performance-based compensation for purposes of Section 162(m), that are denominated in shares or share equivalents and that are granted to any participant during any calendar year may not exceed 1,000,000 shares.  The maximum amount payable with respect to any full value awards that are intended to qualify as performance-based compensation for purposes of Section 162(m), that are denominated other than in shares or share equivalents and that are granted to any participant during any calendar year shall not exceed $5,000,000.



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The pre-established performance goals set by the Compensation Committee must be based on one or more of the following performance measures specified in the 2016 Plan: (i) net earnings or net income; (ii) earnings before one or more of interest, taxes, depreciation, amortization and share-based compensation expense; (iii) earnings per share (basic or diluted); (iv) revenue; (v) gross profit; (vi) operating income; (vii) profitability as measured by return ratios (including, but not limited to, return on operating assets, return on assets, return on equity, return on invested capital and return on revenue) or by the degree to which any of the foregoing earnings measures exceed a percentage of revenue or gross profit; (viii) cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital); (ix) market share; (x) margins (including, but not limited to, one or more of gross, operating and net earnings margins); (xi) stock price; (xii) total stockholder return; (xiii) asset quality; (xiv) non-performing assets; (xv) operating assets; (xvi) balance of cash, cash equivalents and marketable securities; (xvii) cost and expense management; (xviii) economic value added or similar value added measurements; (xix) improvement in or attainment of working capital levels; (xx) productivity ratios; (xxi) employee retention or satisfaction measures; (xxii) safety record; (xxiii) customer satisfaction; (xxiv) debt, credit or other leverage measures or ratios; (xxv) implementation or completion of critical projects; (xxvi) marketing-spending efficiency; and (xxvii) core non-interest income.    



The Compensation Committee may select one measure or multiple measures for assessing performance, and the measurement may be based upon Company-wide, subsidiary, business unit or individual performance, and may be expressed in absolute amounts, on a per share basis, as a growth rate or change from preceding periods, or by relative comparison to the performance of other companies, indices or other external measures.  The Compensation Committee will define in an objective fashion the manner of calculating the performance goals based on the performance measures it elects to use in any performance period, and will establish such performance goals within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m).  In determining the actual amount to be paid with respect to an individual performance-based award for a performance period, the Compensation Committee may reduce (but not increase) the amount that would otherwise be payable as a result of satisfying the applicable performance goals.



Approval of the 2016 Plan at the 2016 Annual Meeting will be deemed to include approval of the material terms of awards intended to qualify as performance-based compensation under Section 162(m), including the employees eligible to receive such awards, the business criteria on which performance goals are based and the maximum awards that may be made to any individual.



Change in Control. If a change in control of our Company that involves a corporate transaction occurs, then the consequences will be as described in this paragraph unless the Compensation Committee provides otherwise in an applicable award agreement. If an outstanding award is continued, assumed or replaced by the surviving or successor entity in connection with a corporate transaction, and if within one year after the change in control a participant’s employment or other service is involuntarily terminated without cause, (i) each of the participant’s outstanding options and SARs will become exercisable in full and remain exercisable for one year, and (ii) each of the participant’s unvested full value awards will fully vest. For these purposes, a performance-based full value award will be considered fully vested if the performance goals are deemed to have been satisfied at the target level of performance and the vested portion of the award at that level of performance is proportionate to the portion of the performance period elapsed prior to the participant’s termination of employment or other service.



If any outstanding award is not continued, assumed or replaced in connection with a change in control involving a corporate transaction, then (i) all outstanding options and SARs will become fully exercisable for a period of time prior to the effective time of the corporate transaction and will then terminate at the effective time of the corporate transaction, and (ii) all full value awards will fully vest immediately prior to the effective time of the corporate transaction. In this scenario, performance-based full value awards will be considered fully vested in the same manner as described above, except that the proportionate vesting amount will be determined with respect to the portion of the performance period that elapsed prior to the change in control. Alternatively, if outstanding awards are not continued, assumed or replaced, the Compensation Committee may elect to terminate such awards in exchange for a payment with respect to each award in an amount equal to the excess, if any, between the fair market value of the shares subject to the award immediately prior to the effective date of such corporate transaction (which may be the fair market value of the consideration to be received in the corporate transaction for the same number of shares) over the aggregate exercise price (if any) for the shares subject to such award (or, if there is no excess, such award may be terminated without payment).



If a change in control of our Company that does not involve a corporate transaction occurs, the Compensation Committee may, in its discretion, take such action as it deems appropriate with respect to outstanding awards, which may include (i) providing that outstanding awards will vest and become exercisable or payable, in whole or in part, prior to or upon consummation of such change in control, or upon termination of a participant’s employment or other service under specified conditions after the change in control, or (ii) providing for the cancellation of any outstanding award in exchange for a payment equal to the intrinsic value of the award at the time of the change in control.

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For purposes of the 2016 Plan, the following terms have the meanings indicated:





Share Adjustment Provisions.  If certain transactions with our stockholders occur that cause the per share value of our common stock to change, such as stock splits, spin-offs, stock dividends or certain recapitalizations (referred to as “equity restructurings”), the Compensation Committee will equitably adjust (i) the class of shares issuable and the maximum number and kind of shares subject to the 2016 Plan, (ii) outstanding awards as to the class, number of shares and exercise price per share, and (iii) award limitations prescribed by the 2016 Plan.  In connection with other types of transactions that may also affect our common stock, such as reorganizations, mergers or consolidations, the Compensation Committee may make similar equitable adjustments in its discretion.



Deferral of Payouts.  The Compensation Committee may permit or require the deferral by a participant of the receipt of shares or cash in settlement of any full value award or cash incentive award under the 2016 Plan, and will prescribe the terms, conditions and procedures for such deferrals.



Effective Date and Term of the 2016 Plan.  The 2016 Plan will become effective on the date it is approved by our stockholders.  No awards may be made under the 2016 prior to its effective date.  If the 2016 Plan is not approved by our stockholders by June 30, 2016, the 2016 Plan will be of no further force or effect.  Unless terminated earlier by the Board, the 2016 Plan will terminate on the tenth anniversary of its effective date.  Awards outstanding under the 2016 Plan at the time it terminates will continue in accordance with their terms.  The Board may suspend or terminate the 2016 Plan at any time.



Amendment of the Plan. Our Board may amend the 2016 Plan at any time, but no amendments will be effective without stockholder approval if such approval is required under applicable laws or regulations or under the rules of the NASDAQ Stock Market.  No amendment of the 2016 Plan may materially impair the rights of a participant under any outstanding award without the consent of the affected participant, except for amendments necessary to comply with applicable laws or stock exchange rules.



U.S. Federal Income Tax Consequences



The following is a summary of the principal United States federal income tax consequences to the Company and to participants subject to U.S. taxation with respect to awards granted under the 2016 Plan, based on current statutes, regulations and interpretations.



Nonqualified Stock Options.  If a participant is granted a nonqualified stock option under the 2016 Plan, the participant will not recognize taxable income upon the grant of the option.  Generally, the participant will recognize ordinary income at the time of exercise in an amount equal to the difference between the fair market value of the shares acquired at the time of exercise and the exercise price paid.  The participant’s basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of our common stock on the date the option was exercised.  Any subsequent gain or loss will be taxable as a capital gain or loss.  The Company will generally be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes as ordinary income, subject to Code Section 162(m) with respect to covered employees.



Incentive Stock Options.  If a participant is granted an incentive stock option under the 2016 Plan, the participant will not recognize taxable income upon grant of the option.  Additionally, if applicable holding period requirements (a minimum of two years from the date of grant and one year from the date of exercise) are met, the participant will not recognize taxable income at the time of exercise.  However, the excess of the fair market value of the shares acquired at the time of exercise over the aggregate exercise price is an item of tax preference income potentially subject to the alternative minimum tax.  If shares acquired upon exercise of an incentive stock option are held for the holding period described above, the gain or loss (in an amount equal to the difference between the fair market value on the date of sale and the exercise price) upon disposition of the shares will be treated as a long-term capital gain or loss, and the Company will not be entitled to any deduction.  Except in the event of death, if the holding period requirements are not met, the incentive stock option will be treated as one that does not meet the requirements of the Code for incentive stock options and the tax consequences described for nonqualified stock options will generally apply.

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Other Awards.  The current federal income tax consequences of other awards authorized under the 2016 Plan generally follow certain basic patterns.  SAR awards are taxed and deductible in substantially the same manner as nonqualified stock options.  An award of restricted stock results in income recognition by a participant in an amount equal to the fair market value of the shares received at the time the restrictions lapse and the shares vest, unless the participant elects under Code Section 83(b) to accelerate income recognition and the taxability of the award to the date of grant.  Stock unit awards generally result in income recognition by a participant at the time payment of such an award is made in an amount equal to the amount paid in cash or the then-current fair market value of the shares received, as applicable.  In each of the foregoing cases, the Company will generally have a corresponding deduction at the time the participant recognizes ordinary income, subject to Code Section 162(m) with respect to covered employees.



Section 162(m) of the Code.  Code Section 162(m) denies a deduction to any publicly held corporation for compensation paid to certain “covered employees” in a taxable year to the extent that compensation to the covered employee exceeds $1,000,000, unless, among other exceptions, the compensation qualifies as “performance-based compensation.”  The 2016 Plan is intended to meet the requirements of Section 162(m), but full value awards granted under the 2016 Plan will only be treated as qualified performance-based compensation under Section 162(m) if the awards and the procedures associated with them comply with all other requirements of Section 162(m), including that the maximum amount of compensation a covered employee may receive is based on the satisfaction of pre-established objective performance goals.



Section 409A of the Code.  The foregoing discussion of tax consequences of awards under the 2016 Plan assumes that the award discussed is either not considered a “deferred compensation arrangement” subject to Section 409A of the Code, or has been structured to comply with its requirements.  If an award is considered a deferred compensation arrangement subject to Section 409A but fails to comply, in operation or form, with the requirements of Section 409A, the affected participant would generally be required to include in income when the award vests the amount deemed “deferred,” would be required to pay an additional 20 percent income tax on such amount, and would be required to pay interest on the tax that would have been paid but for the deferral.



Awards Under the 2016 Plan



Because the 2016 Plan will not become effective until it is approved by our stockholders, the Compensation Committee has not yet approved any awards under, or subject to, the 2016 Plan.  In addition, because all awards under the 2016 Plan are discretionary with the Compensation Committee, neither the number nor types of future 2016 Plan awards to be received by or allocated to particular participants or groups of participants is presently determinable. 



Vote Required



The affirmative vote of a majority of our common stock present, either in person or by proxy, and entitled to vote is required to approve this Proposal No. 4. Abstentions effectively count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.



THE BOARD RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE CENTURY CASINOS, INC. 2016 EQUITY INCENTIVE PLAN.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our outstanding common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. SEC rules also require our directors, officers and greater than 10% stockholders to furnish us with copies of all Section 16(a) reports they file.



To our knowledge, based solely upon review of the reports furnished to us and written representations from our directors and officers, all directors, officers and greater than 10% stockholders timely filed all reports regarding transactions in our securities required to be filed during 2015 under Section 16(a) of the Exchange Act.



CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Dr. Haitzmann, our Chairman and Co Chief Executive Officer, and Mr. Hoetzinger, our Vice Chairman, Co Chief Executive Officer and President, are Austrian citizens and have established wholly-owned companies or family trusts to hold a certain portion of their respective interests in us.  See “Security Ownership of Certain Beneficial Owners and Management.”



Our Audit Committee Charter provides that the Audit Committee must approve transactions between us and related parties for actual or apparent conflicts of interest. The Audit Committee defines a related party transaction as one between our directors and executive officers, their immediate family members and entities in which they hold a 5% or greater beneficial ownership interest, where the aggregate amount is expected to exceed $120,000 in any calendar year.



The Audit Committee approved the management agreements between us and entities indirectly owned by our Co Chief Executive Officers, as described above under “Executive Agreements.”



HOUSEHOLDING

 

To reduce the expense of delivering duplicate proxy solicitation materials, we and some brokers may take advantage of the SEC's "householding" rules. These householding rules permit the delivery of only one set of proxy solicitation materials to stockholders who share the same address, unless otherwise requested. Any stockholder of record who shares an address with another stockholder of record and who has received only one set of proxy solicitation materials may receive a separate copy of those materials, without charge, or request future delivery of separate materials upon writing our Corporate Secretary at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903 or calling (719) 527-8300. Likewise, any stockholder of record who shares an address with another stockholder of record and who has received multiple sets of proxy solicitation materials may request future delivery of a single copy of those materials upon writing our Corporate Secretary at 455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903 or calling (719) 527-8300.



If you consent to householding, your election will remain in effect until you revoke it. Should you later revoke your consent, you will be sent separate copies of those documents that are mailed at least thirty days or more after receipt of your revocation.