Bob Farahi
MONARCH CASINO & RESORTAbout Bob Farahi
Bob Farahi (age 74) is Co‑Chairman of the Board and President of Monarch Casino & Resort, Inc. (MCRI) since its inception in 1993; previously Vice President and Director of Golden Road (1973–1993). He holds a biochemistry degree from UC Berkeley and divides time between MCRI and private companies, including partnership in Farahi Investment Company (FIC) . Company performance context: 2024 Adjusted EBITDA was $180.4M vs $170.8M in 2023 (+5.6% YoY), and the 2024 Adjusted EBITDA target of $178.0M was exceeded by 1.3%; 2024 net income was $72.8M. Five‑year TSR values per the pay‑versus‑performance table range from 126.10 (2020) to 178.88 (2024), with peer index TSR at 97.42 in 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Golden Road (direct wholly-owned subsidiary of MCRI) | Vice President and Director | 1973–1993 | Operating leadership prior to MCRI inception; contributed to casino operations expertise |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Farahi Investment Company (FIC) | Partner | Not disclosed | Real estate investment/development exposure; potential network benefits and related-party considerations |
Fixed Compensation
| Metric | 2021 | 2022 | 2024 |
|---|---|---|---|
| Base Salary ($) | 250,000 | 250,000 | 250,000 |
| Target Bonus (%) | 20% (program standard) | 20% (program standard) | 20% (program standard) |
| Actual Bonus Paid ($) | 50,000 | 50,000 | 50,000 |
| All Other Compensation ($) | 3,009 (vehicle insurance/registration) | 6,541 (vehicle insurance/registration) | 6,323 (vehicle insurance/registration) |
| Total Reported Pay ($) | 1,589,870 | 1,457,715 | 1,683,376 |
Notes:
- Company policy provides CEO and President with use of a company‑provided vehicle; perquisites shown reflect insurance/registration and automobiles are fully depreciated .
Performance Compensation
Annual Cash Bonus Program (2024)
| Component | Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|---|
| Quantitative | Adjusted EBITDA | Not disclosed | $178.0M | 1.3% above target; +5.6% vs 2023 | $50,000 cash (Bob) | N/A (cash) |
| Qualitative | Discretionary goals (tactical execution, staff development/retention, process improvement) | Not disclosed | Not disclosed | Committee discretionary assessment | Included within $50,000 cash | N/A (cash) |
Program design: Target bonus typically 20% of salary; CEO recommends for other executives (not himself); the Compensation Committee sets targets and reviews performance annually; risk controls include clawback and prohibition of option repricing without stockholder approval .
Stock Option Awards and Vesting
Option philosophy centers on long‑term at‑risk pay aligned with stockholder gains; initial grants vest in three equal tranches starting year three and fully vest by year five; subsequent grants vest in full at three years. Exercise price equals closing price on grant date; options encourage retention and have no vesting earlier than three years (subsequent grants) or five years (initial grants) .
| Grant Date | Shares | Exercise Price ($) | Vesting | Expiration |
|---|---|---|---|---|
| 12/31/2024 | 33,334 | 78.90 | Vests in full on 12/31/2027 (3‑year cliff) | 12/31/2034 |
| 12/31/2023 | 33,333 | 69.15 | Vests in full on 12/31/2026 (3‑year cliff) | 12/31/2033 |
| 12/31/2022 | 33,333 | 76.89 | Vests in full on 12/31/2025 (3‑year cliff) | 12/31/2032 |
| 12/31/2021 | 33,334 | 73.95 | Exercisable | 12/31/2031 |
Clawback: Updated in 2023 per SEC/Nasdaq rules; recovery applies to erroneously‑awarded compensation upon accounting restatements .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 1,176,794 shares (6.36% of outstanding) |
| Ownership Breakdown | 961,774 held in trusts; 181,686 held directly; includes options to purchase 33,334 shares (exercisable within 60 days of 4/11/2025) |
| Options – Exercisable vs Unexercisable (12/31/2024) | Exercisable: 33,334 @ $73.95 exp. 12/31/2031; Unexercisable: 33,333 (vest 12/31/2025), 33,333 (vest 12/31/2026), 33,334 (vest 12/31/2027) |
| Hedging/Pledging Policy | Short sales and trading in puts/calls prohibited for directors and executive officers; pledging not disclosed |
| Ownership Guidelines | Not disclosed for executives/directors in proxy |
Employment Terms
| Term | Provision |
|---|---|
| Employment Agreement | None; no written or unwritten employment agreements for NEOs |
| Severance | No contract/plan/arrangement providing cash severance at termination or change in control |
| Change‑in‑Control (2014 Plan) | Double trigger for assumed/replaced awards (accelerate upon termination without cause or with good reason within 12 months of transaction); single trigger for awards not assumed or for CoC not constituting a Corporate Transaction (accelerate immediately prior to effective date) |
| Definitions | Good Reason, Cause, Corporate Transaction, and Change in Control defined; gaming suitability impacts could constitute cause |
| Option Grant Practices | Audit Committee awards options per predetermined schedule; blackout protections around material filings |
Board Governance
- Board service history: Director since 1993; nominated for Class B term expiring in 2027; Co‑Chairman of the Board and President .
- Committee roles: Committees (Audit; Compensation; Marketing) are composed of independent directors (Audit Chair Craig Sullivan; Compensation Chair Yvette Landau). Bob Farahi is not listed as a member of these committees .
- Attendance: Board held four meetings in 2024; each incumbent attended ≥75% of aggregate Board + committee meetings; Bob Farahi did not attend one of the three Board meetings for personal reasons .
- Independence and leadership: Paul Andrews, Yvette Landau, and Craig Sullivan are independent directors; Company does not have a Lead Independent Director. Dual roles exist (John Farahi CEO + Co‑Chair; Bob Farahi President + Co‑Chair), raising independence considerations .
- Director compensation: Non‑employee directors receive $50,000 annual cash retainer; committee chair fees ($25k Audit; $10k other chairs) plus stock option grants (6,100 shares). Employee directors (e.g., Bob) are not in non‑employee director program .
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Value of $100 Investment (Company TSR) | 126.10 | 152.32 | 158.37 | 154.22 | 178.88 |
| Value of $100 Investment (Peer Index TSR) | 115.48 | 113.77 | 90.05 | 104.02 | 97.42 |
| Net Income ($) | 23,678,675 | 68,487,227 | 87,478,678 | 82,448,188 | 72,769,403 |
| Adjusted EBITDA ($) | 43,161,156 | 137,294,593 | 167,085,251 | 170,832,406 | 180,394,138 |
Additional 2024 bonus calibration: Adjusted EBITDA target $178.0M; achieved +1.3% vs target; +5.6% YoY .
Related Party Transactions
- BLI leases: Parking Lot Lease (20‑year term started 11/17/2015, minimum annual rent $695k with COLA every 5 years; 2024 payments $748k rent + $27k operating expenses; renewal option + $1.6M obligation if not renewed). Driveway Lease amended 8/28/2015 (Company responsible for O&M; exercised renewal terms; 2024 rent $420k + $51k operating expenses). Bob and John Farahi (and Ben Farahi) beneficially own limited partnership interests in BLI; Farahi family affiliates also provide billboard/storage/parking leases ($493k in 2024) .
- Audit Committee approval required for related person transactions under Nasdaq rules; case‑by‑case review .
Risk Indicators & Red Flags
- Dual roles and lack of Lead Independent Director (potential governance/influence risks) .
- Related party leases with entities affiliated with Farahi family (conflict‑of‑interest potential; oversight rests with Audit Committee) .
- Section 16 compliance: Bob Farahi had one late Form 4 in 2024 (monitor reporting timeliness) .
- Hedging prohibition in place; pledging not disclosed (continue to monitor for pledging risk) .
Compensation Peer Group & Say‑on‑Pay
- Peer group for pay‑versus‑performance analysis: S&P 1500 Casino & Gaming Index .
- 2025 agenda includes advisory vote on executive compensation; Board recommends “FOR.” Historical say‑on‑pay percentages not disclosed in the 2025 proxy .
Equity Ownership & Alignment (Detail)
| Holder | Shares | % of Class | Notes |
|---|---|---|---|
| Bob Farahi | 1,176,794 | 6.36% | 961,774 in trusts; 181,686 direct; includes options to purchase 33,334 shares (exercisable within 60 days) |
Performance Compensation – Option Overhang and Upcoming Vests
| Grant Cohort | Shares | Vest Date | Potential Near‑Term Supply |
|---|---|---|---|
| 2022 Grant | 33,333 | 12/31/2025 | 2025 vest adds exercisable supply |
| 2023 Grant | 33,333 | 12/31/2026 | 2026 vest adds exercisable supply |
| 2024 Grant | 33,334 | 12/31/2027 | 2027 vest adds exercisable supply |
Note: Attempted to retrieve Form 4 trading data to assess near‑term selling pressure, but insider-trades tool returned authorization error. Section 16 late filings table indicates one Bob Farahi late Form 4 in 2024; continue monitoring filings for sales/exercises .
Investment Implications
- Alignment: Bob’s 6.36% ownership (with significant trust holdings) and a predominantly options‑based long‑term incentive program tie personal outcomes to stock appreciation and near‑term performance via Adjusted EBITDA bonuses; hedging prohibited, pledging not disclosed .
- Retention/overhang: Three‑year cliff vesting on subsequent option grants creates retention hooks through 2027; watch option expiries/vests (2031–2034 expirations) and any Form 4 sales post‑vest for supply pressure .
- Governance risk: Dual executive/board roles and absence of a Lead Independent Director diminish independence optics; related party leases require ongoing Audit Committee scrutiny .
- Pay‑for‑performance: 2024 bonus tied to Adjusted EBITDA (target exceeded by 1.3%); five‑year TSR outperformed peer index in 2024, while net income declined in 2024 vs 2022–2023. The heavy use of stock options keeps pay sensitive to share price but introduces potential dilution and selling pressure at vest .
- Transaction readiness: Equity awards accelerate on change‑in‑control under defined conditions (double trigger for assumed awards; single trigger if not assumed or certain CoC events), but no cash severance. This could reduce transaction friction but raises deal‑closing supply dynamics if widespread acceleration occurs .