Sosnoff Asks Caesars Shareholders to Oust Top Executives From Board

Escalating the struggle for control of Caesars World, New York money manager Martin T. Sosnoff has begun asking stockholders to oust top management from its board and to eliminate anti-takeover defenses from its bylaws.

Henry Gluck, chairman and chief executive, said Wednesday that he is barred by securities laws from commenting on Sosnoff’s solicitation material at this point.

Gluck and three other top officers would be removed as directors under Sosnoff’s proposal.

Sosnoff, who is the company’s biggest shareholder with 13.9% of the stock, needs majority approval from holders of the 30.2 million shares outstanding. The result of his shareholder solicitation is expected to be known May 26.

Consent forms have been sent to stockholders this week with a letter in which Sosnoff said removal of Gluck and three other inside directors would leave in place “a truly independent board” that can review his sweetened $932-million tender offer to increase his holding to 92.4%. He would pay $32 for each share he buys and exchange securities for the rest.

A consent election is similar to a proxy contest and is conducted by mail, but with no stockholders’ meeting being called to complete the voting.

Caesars World management has asked shareholders to back its own plan to recapitalize the company, entailing the borrowing of $1 billion to finance a special cash dividend of $25 a share.

Stockholders also would receive stock in the reorganized company, which would retain its assets. Caesars World plans a stockholder meeting and election in June and is to mail out its proxy material in May.

Meanwhile, in another forum, Sosnoff notified New Jersey casino regulators early this week that he would shut down the firm’s Los Angeles headquarters and make other cost-cutting moves if he should get control of the company.

He told authorities he would keep Caesars Palace in Las Vegas and Caesars Atlantic City, as well as its four Pocono Mountain resorts in Pennsylvania, but might sell Caesars Tahoe in Stateline, Nev.

Accompanying Sosnoff’s current letter to stockholders is a 22-page statement outlining opposition to the company’s inside directors.

Besides Gluck they are J. Terrence Lanni, president and chief operating officer; Philip Ball, senior vice president and general counsel, and M. Peter Schweitzer, vice chairman.

Sosnoff’s statement said the board has adopted a series of anti-takeover devices, which in Sosnoff’s opinion, “has the effect of perpetuating and protecting the extraordinary benefits enjoyed by the inside directors.”

If approved, the consent would eliminate from bylaws those provisions. Among them, it said, are those restricting the number, tenure and qualification of directors, and procedures “interfering with” the effecting of shareholder action by written consent.

Sosnoff also seeks to change bylaws to reduce the board to five directors from the present nine. He also wants a provision that the president of the company shall be chief executive and that the sole duties of the chairman and vice chairman of the board shall be to preside at all meetings of the shareholders and the directors.

He proposes several amendments to the articles of incorporation. They include prohibiting the board, without shareholder approval, from adopting a so-called poison pill plan, in which the company would issue to shareholders any security conferring rights or benefits on them upon occurrence of certain events or stock transactions.

Sosnoff also seeks to prohibit the board of directors from declaring a dividend on common stock payable in debt or equity securities unless approved by a majority of shareholders.

In citing reasons for the consent solicitation, Sosnoff noted that after he increased his tender offer April 13 to $32 from the initial $28, the Caesars World board “took less than 48 hours to publicly recommend that shareholders reject it.”

Although the board earlier had said its recapitalization plan was a financially superior alternative, Sosnoff’s said, it was “in sharp contrast” that the company’s recommendation against the improved offer did not state whether the board still viewed the recapitalization plan as financially superior.