John Farahi
MONARCH CASINO & RESORTAbout John Farahi
John Farahi (age 77) is Co‑Chairman of the Board, Chief Executive Officer, and Secretary of Monarch Casino & Resort, Inc. (MCRI). He has served as Co‑Chairman and CEO since inception (1993) and as Secretary since November 2011; he holds a political science degree from California State University, Hayward . During 2020–2024, company performance under his tenure showed Net Income rising from $23.68m (2020) to $72.77m (2024) and EBITDA from $43.16m (2020) to $180.39m (2024), while the value of an initial $100 investment in MCRI was $178.88 in 2024 versus $126.10 in 2020; peer index TSR values were $97.42 (2024) and $115.48 (2020) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Golden Road Motor Inn, Inc. (MCRI subsidiary) | President, Director, General Manager | 1973–1993 | Led operations prior to formation of Monarch; foundational operating experience |
| Monarch Casino & Resort, Inc. | Co‑Chairman and CEO | 1993–present | Oversaw expansion, including Black Hawk ramp; long-term capital project execution |
| Monarch Casino & Resort, Inc. | Secretary | 2011–present | Corporate governance and administrative oversight |
| Farahi Investment Company (FIC) | Partner | n/a | Real estate investment/development expertise complementary to gaming assets |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Washoe County Airport Authority | Trustee | 1997–2005 | Regional infrastructure and tourism connectivity oversight |
| Nevada Commission on Tourism | Member | n/a | Industry policy/tourism development input |
| Reno‑Sparks Convention & Visitors Authority | Board Member | Until 2017 | Market development and convention demand support |
| U.S. Holocaust Memorial Council | Appointee (by President Obama) | Appointed 2013 | Public service; national profile |
Fixed Compensation
Multi‑year cash and total pay (NEO Summary Compensation Table):
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary | $750,000 | $750,000 | $750,000 |
| Annual Bonus (Cash) | $150,000 | $150,000 | $150,000 |
| Stock Option Awards (Grant Date FV) | $2,573,722 | $2,302,418 | $2,754,025 |
| All Other Compensation | $22,391 | $6,769 | $6,563 |
| Total Compensation | $3,496,113 | $3,209,187 | $3,660,587 |
Design notes (2024):
- Target bonus percentage set at 20% of salary; quantitative metric is Adjusted EBITDA with additional discretionary qualitative component .
- Option repricing/exchanges prohibited without shareholder approval .
Performance Compensation
Annual cash bonus (2024):
| Metric | Weighting | Target | Actual | Payout ($) | Notes |
|---|---|---|---|---|---|
| Adjusted EBITDA | Quantitative + discretionary qualitative | $178.0m | 1.3% above target; 5.6% above 2023 | $150,000 | CEO’s target bonus set at 20% of salary |
Equity awards granted in 2024:
| Grant Date | Type | Shares | Exercise Price | Vesting | Grant Date Fair Value |
|---|---|---|---|---|---|
| 12/31/2024 | Stock Options | 66,666 | $78.90 | 100% on 3rd anniversary (12/31/2027) subject to service | $2,754,025 |
Option exercises (2024):
| Metric | 2024 |
|---|---|
| Options Exercised (Shares) | 66,668 |
| Value Realized on Exercise | $4,417,422 |
Grant practices and clawback:
- Audit Committee awards options on predetermined schedule; no grants within 4 trading‑day windows around material filings in 2024 .
- Clawback policy (2023 update) aligned with SEC/Nasdaq; recovery of erroneously‑awarded comp upon restatement .
Equity Ownership & Alignment
Beneficial ownership (as of April 11, 2025):
| Metric | Value |
|---|---|
| Shares Beneficially Owned | 3,502,711 |
| Ownership (% of Class) | 18.50% |
| Shares Held in Trusts | 2,507,609 |
| Shares Held Directly | 528,436 |
| Options Exercisable within 60 Days | 466,666 |
Unvested option tranches and vesting schedule (at FY‑end 2024):
| Vest Date | Unvested Options | Exercise Price | Notes |
|---|---|---|---|
| 12/31/2025 | 66,666 | $76.89 | Subsequent grant; single‑tranche vest |
| 12/31/2026 | 66,668 | $69.15 | Subsequent grant; single‑tranche vest |
| 12/31/2027 | 66,666 | $78.90 | Subsequent grant; single‑tranche vest |
Hedging/pledging:
- Policy prohibits short sales and trading in puts/calls by directors and executive officers; no anti‑pledging policy disclosed in the proxy .
Employment Terms
- Employment agreements: None — the company discloses no written or unwritten employment agreements with NEOs .
- Severance/Change‑in‑Control: Double‑trigger acceleration of unvested options upon a “Corporate Transaction/Change in Control”; at 12/31/2024 share price ($78.90), CEO’s accelerated unvested in‑the‑money value would have been $784,012 .
- CEO pay ratio (2024): 67:1 (CEO total annual comp $3,654,031; median employee $54,739) .
- Non‑compete/non‑solicit: Not disclosed.
- Ownership guidelines: Not disclosed.
Performance & Track Record
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Income (USD) | $23,678,675 | $68,487,227 | $87,478,678 | $82,448,188 | $72,769,403 |
| EBITDA (USD) | $43,161,156 | $137,294,593 | $167,085,251 | $170,832,406 | $180,394,138 |
| TSR Index ($100=base) – Company | $126.10 | $152.32 | $158.37 | $154.22 | $178.88 |
| TSR Index ($100=base) – Peer (S&P 1500 Casino & Gaming) | $115.48 | $113.77 | $90.05 | $104.02 | $97.42 |
Notes:
- Compensation/performance linkage emphasizes Net Revenue, Net Income, Adjusted EBITDA/Margin, Diluted EPS, Free Cash Flow, and Leverage Ratio as key measures .
- The peer group for TSR comparisons is the S&P 1500 Casino & Gaming Index .
Board Governance
- Board tenure and roles: John Farahi has been Co‑Chairman and CEO since 1993; Secretary since 2011; Director since 1993; age 77 .
- Committee structure: Independent directors only on Audit (Chair: Craig F. Sullivan) and Compensation (Chair: Yvette E. Landau); CEO is not a member of these committees .
- Leadership/independence: CEO serves as Co‑Chairman; no lead independent director. Independent directors are Paul Andrews, Yvette E. Landau, Craig F. Sullivan .
- Board/committee meetings: Board held 4 meetings in 2024; each director attended at least 75% of meetings (Bob Farahi missed one Board meeting for personal reasons) .
- Director elections/structure: Classified Board (five directors) in two classes; suitability determinations required by Nevada and Colorado gaming regulators; John and Bob are brothers .
Director Compensation (context for governance; CEO is employee director)
- Non‑employee director pay: $50,000 annual cash retainer; Audit Chair +$25,000; other committee chairs +$10,000; annual option grant 6,100 shares (vest at 6 months) .
Related Party Transactions (Conflict checks)
| Transaction | Counterparty | 2024 Amounts | Key Terms |
|---|---|---|---|
| Parking Lot Lease (4.2 acres) | Biggest Little Investments, L.P. (BLI), an affiliate controlled by Farahi family stockholders | $748k rent; $27k operating expenses | 20‑year lease initiated 2015; COLA every 5 years; option to renew 10 years; $1.6m payment if no renewal |
| Driveway Lease (shared driveway ~37,400 sq ft) | BLI | $420k rent; $51k operating expenses | Initial 15‑year term (2004); amended 2015; multiple renewals exercised; option to purchase driveway at end of renewals |
| Billboard/storage/parking space leases | Affiliates controlled by Farahi family stockholders | $493k | Occasional leases in normal course |
Audit Committee reviews and approves related person transactions per Nasdaq and SEC rules .
Risk Indicators & Red Flags
- Section 16(a) compliance: CEO had 2 late Form 4 reports covering 4 transactions in 2024 (no known failures to file) .
- Dual roles and independence: CEO also serves as Co‑Chairman; no lead independent director .
- Related party transactions exist (BLI leases) with disclosed amounts; Audit Committee approval required .
- Hedging policy bars short sales and options trading by insiders; no anti‑pledging policy disclosed .
- Option repricing prohibited without shareholder approval .
Compensation Committee Analysis (Structure and process)
- Compensation Committee: Yvette E. Landau (Chair), Craig F. Sullivan, Paul Andrews; five meetings in 2024 .
- CEO comp determination considers corporate goals, Say‑on‑Pay feedback, and evaluation; CEO not present for deliberations on his compensation .
- Committee recommends including CD&A; attested via Compensation Committee Report .
Compensation & Incentives – Observations
- Cash vs equity mix: CEO cash components (salary + bonus) held flat at $900k across 2022–2024, while option grant values varied with award sizing/valuation ($2.30m–$2.75m), keeping pay predominantly equity‑linked .
- Metric rigor: 2024 Adjusted EBITDA set at $178.0m; achieved 1.3% above target and 5.6% YoY growth, supporting 100% target bonus payout .
- Equity design: Options vest ≥3 years (Subsequent Grants vest fully at 3 years; Initial Grant vests over 3–5 years), reinforcing retention and alignment with stock price appreciation; ISOs for CEO would carry 110% strike due to 10%+ ownership, though none granted to date .
Equity Overhang and Potential Selling Pressure
- Near‑term vesting “supply”: 200,000 unvested options scheduled to vest on 12/31/2025 (66,666), 12/31/2026 (66,668), and 12/31/2027 (66,666) may create tax/liquidity‑driven sale windows around those dates .
- 2024 exercises: CEO realized $4.42m from 66,668 option exercises, indicating willingness to monetize vested equity when appropriate .
Employment Economics in Change‑in‑Control
- No employment contract/severance multiple; compensation upon CIC primarily from acceleration of unvested options (double‑trigger). As of 12/31/2024 pricing, CEO’s accelerated value estimate was $784,012 .
Ownership Alignment
- High insider ownership: CEO beneficially owns 3.50m shares (18.50% of class), including 2.51m in trusts and 466,666 options exercisable within 60 days, strongly aligning interests with shareholders .
- Anti‑hedging policy in place; no disclosure of pledged shares or anti‑pledging policy .
Investment Implications
- Alignment and retention: Large long‑dated option overhang and substantial insider ownership support alignment; staggered, 3‑year vesting promotes retention absent employment contracts .
- Governance watch‑items: Dual role (CEO/Co‑Chairman), absence of a lead independent director, related party leases, and a few late Form 4s merit continued monitoring by governance‑sensitive investors .
- Performance linkage: Bonus tied to Adjusted EBITDA with 2024 target met; majority of realizable pay is equity‑sensitive, amplifying exposure to stock performance and earnings/FCF trajectory .
- Trading signals: Anticipate potential liquidity events around 12/31/2025, 12/31/2026, and 12/31/2027 as 200k options vest; 2024 exercises ($4.42m value realized) evidence monetization cadence to watch in blackout‑cleared windows .
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