<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
OROAMERICA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
OROAMERICA, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 1, 1997
To the Stockholders of OroAmerica, Inc.:
The Annual Meeting of Stockholders of OroAmerica, Inc., a Delaware
corporation, will be held on Tuesday, July 1, 1997, at 10:00 a.m., P.S.T., at
The Regent Beverly Wilshire Hotel, 9500 Wilshire Boulevard, Beverly Hills,
California, for the following purposes:
(1) To elect a Board of Directors;
(2) To consider and act upon a proposal to ratify the selection of
auditors; and
(2) To transact any other business that may properly come before the
meeting.
Only stockholders of record at the close of business on May 8, 1997 are
entitled to notice of and to vote at the meeting and any adjournments thereof.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The giving of
your proxy will not affect your right to vote in person should you later decide
to attend the meeting.
By Order of the Board of Directors
/s/ BETTY SOU
------------------------
Betty Sou
Secretary
Burbank, California
May 27, 1997
<PAGE> 3
OROAMERICA, INC.
443 NORTH VARNEY STREET
BURBANK, CALIFORNIA 91502
(818) 848-5555
------------------------
PROXY STATEMENT
MAY 27, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of OroAmerica, Inc. ("OroAmerica" or the
"Company") for the Annual Meeting of Stockholders to be held on July 1, 1997 and
any postponements or adjournments thereof. This Proxy Statement and the
accompanying Notice of Annual Meeting and form of proxy were first mailed to
stockholders on or about May 27, 1997.
The execution and return of the enclosed proxy will not in any way affect a
stockholder's right to attend the Annual Meeting in person. Any stockholder
giving a proxy may revoke it before it is voted by so notifying the Secretary of
OroAmerica in writing before or at the meeting, by providing a proxy bearing a
later date or by attending the meeting and expressing a desire to vote in
person. Your cooperation in promptly returning the enclosed proxy will reduce
OroAmerica's expenses and enable its management and employees to continue their
normal duties for your benefit with minimum interruption for follow-up proxy
solicitation.
Only stockholders of record at the close of business on May 8, 1997 are
entitled to receive notice of and to vote at the meeting. On that date,
OroAmerica had outstanding and entitled to vote at the Annual Meeting 6,254,378
shares of Common Stock, each of which is entitled to one vote at the meeting,
except as noted below with respect to the election of directors. The presence at
the Annual Meeting, either in person or by proxy, of the holders of a majority
of the shares of Common Stock outstanding on the record date is necessary to
constitute a quorum for the transaction of business.
A plurality of the votes cast is required for the election of directors.
The affirmative vote of a majority of the votes cast is required to approve each
of the other matters to be acted upon at the Annual Meeting. Mr. Benhamou, who
owns 3,573,560 shares of Common Stock, representing 57.1% of the votes entitled
to be cast at the Annual Meeting, has advised the Board of Directors that he
intends to vote all of his shares for the election of each of the Board's
nominees and in favor of each of the other proposals identified in the
accompanying Notice of Annual Meeting.
Abstentions and broker non-votes (which occur if a broker or other nominee
does not have discretionary authority and has not received voting instructions
from the beneficial owner with respect to the particular item) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted in tabulations of the votes cast on
proposals presented to the stockholders and have the same legal effect as a vote
against a particular proposal. Broker non-votes are not taken into account for
purposes of determining whether a proposal has been approved by the requisite
stockholder vote.
All proxies will be voted as directed by the stockholder on the proxy card.
IF NO CHOICE IS SPECIFIED, PROXIES WILL BE VOTED "FOR" THE DIRECTORS NOMINATED
BY THE BOARD OF DIRECTORS AND "FOR" THE RATIFICATION OF THE SELECTION OF
AUDITORS.
If any other matters are properly presented at the Annual Meeting,
including, among other things, consideration of a motion to adjourn the Annual
Meeting to another time or place for the purpose of soliciting additional
proxies, the persons named in the enclosed form of proxy and acting thereunder
will have discretion to vote on those matters in accordance with their best
judgment, subject to direction by the Board of Directors, to the same extent as
the person signing the proxy. It currently is not anticipated that any other
matters will be raised at the Annual Meeting.
<PAGE> 4
The cost of preparing, printing and mailing the Proxy Statement, the Notice
and the enclosed form of proxy, as well as the cost of soliciting proxies
relating to the Annual Meeting, will be borne by OroAmerica. The original
solicitation of proxies by mail may be supplemented by telephone, telegram and
personal solicitation by officers and other regular employees of OroAmerica, but
no additional compensation will be paid to such individuals on account of such
activities. OroAmerica will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to their principals.
ELECTION OF DIRECTORS
NOMINEES AND VOTING
The Company is incorporated under the laws of the State of Delaware. Under
Delaware law and the Company's Certificate of Incorporation and Bylaws, the
Company's Board of Directors, which currently consists of five members, is
divided into three classes, with one class of directors elected at each annual
meeting of stockholders for a three-year term and until their respective
successors are elected and qualified. However, since the Company's Common Stock
is held by less than 800 stockholders, a majority of the Common Stock is held by
persons with California addresses and the Company has substantial business
contacts with the State of California, the Company is subject to Section 2115 of
the California Corporations Code. As a result, certain legal matters, including
provisions relating to the election of directors, are governed by California law
and not by Delaware law or the Company's Certificate of Incorporation and
Bylaws. Under applicable California law, all directors of the Company are
required to be elected each year.
Cumulative voting also could apply under applicable California law. This
means that, in the election of directors, each stockholder is entitled to a
number of votes equal to the number of his or her shares of stock multiplied by
the number of directors to be elected. A stockholder may cast all of such votes
for a single nominee or distribute them among the nominees as he or she sees
fit. However, no stockholder is entitled to cumulate votes for a nominee unless
the nominee's name has been placed in nomination prior to the vote and a
stockholder has given notice at the meeting, prior to the voting, of the
stockholder's intention to cumulate his or her votes. If any one stockholder
gives such notice, all stockholders may cumulate their votes for nominees. The
persons named in the enclosed form of Proxy may, in their discretion, cumulate
votes pursuant to the proxies for any one or more nominees.
The Board of Directors has nominated for election as directors the five
persons named below, all of whom are incumbent directors. All of the nominees
have indicated that they are able and willing to serve as a directors.
If the Company continues to be subject to Section 2115 of the California
Corporations Code at the time of the next annual meeting of stockholders, the
directors elected at the Annual Meeting will hold office until the next annual
meeting and until their respective successors are elected and qualified.
However, if at the time of the next annual meeting the Company no longer is
subject to Section 2115, Messrs. Benhamou and Rousso will be deemed to have been
elected as a Class II directors to serve for a term of three years and until
their successors are elected and qualified, and Messrs. Shao and Katz will be
deemed to have been elected as Class III directors to serve for a term of two
years and until their successors are elected and qualified. The term of Mr.
Massing will expire at the next annual meeting and upon the election and
qualification of his successor regardless of whether the Company continues to be
subject to Section 2115.
The Board of Directors recommends that the stockholders vote "FOR" the
election of its nominees. Unless otherwise instructed, the Board's proxies
intend to vote the shares of Common Stock represented by the proxies in favor of
the election of these nominees. If for any reason any of these nominees will be
unable to serve, the Board's proxies will vote instead for such other person or
persons as the Board of Directors may recommend.
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<PAGE> 5
The following table sets forth certain information as of May 8, 1997 with
respect to the Board's nominees:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
--------------------------------------------- ---- --------
<S> <C> <C>
Class I
Guy Benhamou............................... 45 1977
David Rousso............................... 56 1995
Class II
Bertram K. Massing......................... 63 1987
Class III
Shiu Shao.................................. 45 1993
Ronald A. Katz............................. 61 1993
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS DURING THE PAST FIVE YEARS
GUY BENHAMOU is a co-founder of the Company and has been its President,
Chief Executive Officer and a member of its Board of Directors since its
inception in January 1977. Mr. Benhamou was appointed Chairman of the Board in
May 1993.
DAVID ROUSSO was appointed to the Board of Directors in November 1995. Mr.
Rousso has been a professional investor since January 1991, and is the President
and sole shareholder of DPR Investments, a financial consulting firm. Mr. Rousso
also is Chairman of the Board of CreditCheck, Inc., a privately held financial
software company.
BERTRAM K. MASSING has been a partner in the law firm of Ervin, Cohen &
Jessup, which represents the Company in a variety of legal matters, for more
than the past five years. Mr. Massing originally was elected to serve on the
Board of Directors in order to satisfy the Company's obligation, under the terms
of an indenture entered into in connection with the issuance of senior
subordinated debentures, to have at least one director who is not an officer,
employee or affiliate of the Company. The indenture was terminated upon the
repayment of the debentures in November 1993.
SHIU SHAO has been employed by the Company since April 1981. Mr. Shao
served as Controller of the Company from 1981 to 1984 and Vice President
-- Finance from 1984 until September 1991, when he was appointed Chief
Financial Officer. Mr. Shao also has served as a director of the Company since
May 1993 and was appointed a Vice President of the Company in May 1994.
RONALD A. KATZ is the Chief Executive Officer of Ronald A. Katz Technology
Licensing, L.P., a patent licensing company. He served as Special Advisor to the
Chairman of First Data Corporation, an affiliate of American Express, from
August 1992 to October 1994, and served as Vice Chairman of American Express
Information Services Corporation from August 1989 to August 1992. From 1970 to
1988, Mr. Katz was involved in a variety of business ventures, including the
formation of Light Signatures, Inc., a developer of counterfeit prevention
technology. Mr. Katz also was a co-founder of Telecredit, Inc., a payment
services company, and served as an executive officer of Telecredit from 1961 to
1970.
No family relationships exist between any of the directors or officers of
OroAmerica.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
OroAmerica maintains an Audit Committee whose current members are Messrs.
Massing, Katz and Rousso. The Audit Committee's responsibilities include
approval of the selection and engagement of independent accountants and review
of the plan and scope of their audit for each year, the results of such audit
when completed and their fees for services performed. The Audit Committee also
assists and makes recommendations to the Board of Directors in fulfilling the
Board's responsibilities relating to OroAmerica's accounting, financial
reporting and internal control functions and reviews and passes upon all
transactions with
3
<PAGE> 6
affiliates and other persons having a material financial interest in OroAmerica.
The Audit Committee met twice during fiscal 1997.
OroAmerica maintains a Compensation Committee whose current members are Mr.
Katz and Mr. Rousso. Mr. Massing also was a member of the Compensation Committee
until March 1997. The Compensation Committee approves the compensation of the
executive officers of OroAmerica, formulates and reviews significant
compensation policies and decisions and administers OroAmerica's employee
benefit plans. The Compensation Committee met once during fiscal 1997.
OroAmerica's Board of Directors met seven times during fiscal 1997 and took
one action by unanimous written consent. Each director attended at least 75% of
the meetings of the Board of Directors and of any committees on which he served.
OroAmerica does not maintain a nominating committee.
COMPENSATION OF DIRECTORS
Since September 30, 1993, directors who are not employees of OroAmerica
have been paid an annual fiscal year retainer of $10,000 plus $1,000 for each
Board meeting attended. The same compensation arrangements will apply in fiscal
1998. All directors are reimbursed for their travel expenses incurred in
attending Board or committee meetings.
Pursuant to the provisions of the OroAmerica, Inc. 1994 Directors' Stock
Option Plan (the "Directors' Plan"), each new non-employee director, on the date
of his or her election to the Board of Directors (whether elected by the
stockholders or the Board of Directors), automatically will be granted a stock
option to purchase 10,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock on the date of grant. Only one grant
may be made under the Directors' Plan to each non-employee director. In
recognition of his services to the Board of Directors, on March 18, 1996, Mr.
Katz was granted a stock option to purchase 5,000 shares of Common Stock at an
exercise price of $4.6875, the fair market value of the Common Stock on the date
of grant. The option, which was granted outside of the Directors' Plan, has a
ten year term and is subject to vesting over a five-year period, with 20% of the
option becoming exercisable on each successive anniversary of the date of grant.
4
<PAGE> 7
OWNERSHIP OF COMMON STOCK
The following table sets forth information with respect to the beneficial
ownership of OroAmerica Common Stock as of May 8, 1997 by (i) each person who is
known by OroAmerica to be the beneficial owner of more than five percent (5%) of
the outstanding Common Stock, (ii) each director of OroAmerica, (iii) the
executive officers named in the Summary Compensation Table on page 6 and (iv)
all directors and executive officers as a group. Unless otherwise indicated,
each of the entities and persons named in the table has sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by it or him, except to the extent that authority is shared by spouses under
applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-----------------------
NAME AND ADDRESS NUMBER PERCENT
------------------------------------------------------- ---------- -------
<S> <C> <C>
Guy Benhamou........................................... 3,573,560 57.14%
443 North Varney Street
Burbank, CA 91502
FMR Corp.(2)........................................... 392,500 6.28%
82 Devonshire Street
Boston, MA 02109
Peter Cundill & Associates (Bermuda) Ltd(3)............ 389,693 6.23%
15 Alton Hill
Southhampton, Bermuda SN 01
Shiu Shao.............................................. 95,750 1.51%
David Rousso........................................... 62,000 *
Bertram K. Massing..................................... 14,000 *
Ronald A. Katz......................................... 7,000 *
Sophia Chalermsopone................................... 70,750 *
David Wu............................................... 21,830 *
Claudia Hollingsworth.................................. 20,000 *
Andrew Concool......................................... 500 *
All directors and executive officers as a group (10
persons)............................................. 3,875,390 59.72%
</TABLE>
- ---------------
* Indicates ownership of less than one percent.
(1) Includes shares which may be purchased upon the exercise of options which
are exercisable as of May 8, 1997, or become exercisable within 60 days
thereafter, for the following: Mr. Benhamou -- 0 shares; Mr. Shao -- 95,750
shares; Mr. Rousso -- 2,000 shares; Mr. Massing -- 10,000 shares; Mr.
Katz -- 7,000 shares; Ms. Chalermsopone -- 70,250 shares; Mr. Wu -- 20,000
shares; Ms. Hollingsworth -- 20,000 shares; Mr. Concool -- 0 shares; and all
directors and executive officers as a group -- 235,000 shares.
(2) Sole voting power with respect to 7,800 shares and sole dispositive power
with respect to 392,500 shares.
(3) Sole voting power with respect to 173,096 shares and sole dispositive power
with respect to 141,400 shares.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation paid to OroAmerica's Chief
Executive Officer and to each of the other four most highly paid executive
officers for services rendered in all capacities to OroAmerica for the fiscal
years ended January 31, 1997, February 2, 1996 and January 27, 1995. The table
also summarizes all compensation paid during such fiscal years to a former
executive officer of OroAmerica, who resigned in December 1996 and who would
have been one of the four most highly paid executive officers of OroAmerica
during fiscal 1997 but for such resignation.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(1) COMPENSATION(2)
- ---------------------------- ---- -------- ------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Guy Benhamou................ 1997 $637,500 -- -- $ 6,530
Chairman of the Board 1996 662,500 -- -- 7,942
President and Chief 1995 650,000 $45,076 -- 7,142
Executive Officer
Shiu Shao................... 1997 211,554 -- 10,000 6,530
Vice President and 1996 219,246 -- -- 7,942
Chief Financial Officer 1995 215,552 64,360 25,000 6,917
Claudia Hollingsworth....... 1997 167,321 -- 10,000 2,375
Vice President-Sales 1996 145,351 -- -- 2,310
1995 143,443 49,554 -- 2,310
Andrew Concool(3)........... 1997 164,035 -- 10,000 6,530
Vice President-Sales 1996 194,552 -- -- 7,942
1995 188,692 -- -- 7,142
Sophia Chalermsopone........ 1997 142,169 -- 10,000 5,203
Vice President-Sales 1996 159,545 -- -- 5,178
1995 152,716 53,616 50,000 5,579
David Wu.................... 1997 140,197 -- 10,000 2,375
Vice
President-Manufacturing 1996 146,053 -- -- 2,310
1995 146,741 34,731 -- 2,310
</TABLE>
- ---------------
(1) Number of shares of Common Stock underlying options granted under the
Amended and Restated OroAmerica, Inc. 1988 Incentive Stock Option Plan (the
"1988 Plan"). No SARs may be granted under the 1988 Plan.
(2) Consists of contributions by the Company to a defined contribution 401(k)
plan for each of the named executive officers of $2,375 in fiscal 1997 and
$2,310 in fiscal 1996 and 1995. Also includes premiums for medical and
dental insurance coverage for dependents of Mr. Benhamou, Mr. Shao, Mr.
Concool and Ms. Chalermsopone of $4,155, $4,155, and $2,828, respectively
for fiscal 1997, $5,632, $5,632, $5,632 and $2,868, respectively, for fiscal
1996, and $4,832, $4,607, $4,832 and $3,269, respectively, for fiscal 1995.
(3) Mr. Concool's employment at OroAmerica terminated in December 1996.
6
<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information at January 31, 1997 and
for the fiscal year then ended with respect to stock options granted to the
individuals named in the Summary Compensation Table above. No options have been
granted at an option price below the fair market value of the Common Stock on
the date of grant.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF
NUMBER OF PERCENTAGE OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------
NAME GRANTED(1) 1996 SHARE(2) DATE 5% 10%
- ------------------------------ ----------- ------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Guy Benhamou.................. -- -- -- -- -- --
Shiu Shao..................... 10,000 9.76% $ 4.6875 03/17/06 $25,844 $63,654
Claudia Hollingsworth......... 10,000 9.76% 4.6875 03/17/06 25,844 63,654
Andrew Concool................ 10,000 9.76% 4.6875 03/17/06 25,844 63,654
Sophia Chalermsopone.......... 10,000 9.76% 4.6875 03/17/06 25,844 63,654
David Wu...................... 10,000 9.76% 4.6875 03/17/06 25,844 63,654
</TABLE>
- ---------------
(1) All options have a ten year term and are subject to vesting over a four-year
period, with 20% of the options exercisable on the date of grant and an
additional 20% of the options becoming exercisable on each successive
anniversary of the date of grant. The vesting of the options will be
accelerated upon a sale of substantially all of OroAmerica's assets, the
dissolution of OroAmerica or upon a change in the controlling stockholder
interest in OroAmerica resulting from a tender offer, reorganization, merger
or consolidation.
(2) At the discretion of the Compensation Committee, the exercise price may be
paid by delivery of already-owned shares of Common Stock valued at the fair
market value on the date of exercise, and the tax withholding obligations
related to the exercise of the stock options, if any, may be satisfied by
offset of the underlying shares, subject to certain conditions. The
Compensation Committee retains the discretion, subject to plan limits, to
modify the terms of outstanding options and to reprice the options.
(3) The potential realizable values shown under these columns represent the
future value of the options (net of exercise price) assuming the market
price of the Common Stock appreciates annually by 5% and 10%, respectively.
The 5% and 10% rates of appreciation are prescribed by the Securities and
Exchange Commission and are not intended to forecast possible future
appreciation of OroAmerica's Common Stock.
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<PAGE> 10
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUE
The following table sets forth information with respect to the named
executive officers with respect to the unexercised stock options held by them as
of the end of the fiscal year ended January 31, 1997. No stock options issued
under the 1988 Plan were exercised during fiscal 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
JANUARY 31, 1997 JANUARY 31, 1997(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Guy Benhamou............................... -- -- -- --
Shiu Shao.................................. 88,750 27,000 $ 125 $ 500
Claudia Hollingsworth...................... 18,000 12,000 125 500
Andrew Concool............................. 38,250 12,000 125 500
Sophia Chalermsopone....................... 58,250 42,000 125 500
David Wu................................... 18,000 12,000 125 500
</TABLE>
- ---------------
(1) Based on the closing price on the New York Stock Exchange of OroAmerica
Common Stock on that date ($4.75), minus the exercise price.
EMPLOYMENT AGREEMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Since September 30, 1993, Mr. Benhamou has served as Chairman, Chief
Executive Officer and President pursuant to an employment agreement that
automatically renews for successive one-year periods unless terminated by either
party. Under the terms of the agreement, Mr. Benhamou receives an annual salary
of $650,000 and a bonus in an amount determined by the Compensation Committee of
the Board of Directors. Mr. Benhamou also is entitled to a bonus pursuant to the
1994 Chief Executive Officer Bonus Plan approved by stockholders in July 1994.
See "Compensation Committee Report on Executive Compensation". In addition to
salary and bonus, OroAmerica is required to provide Mr. Benhamou with the use of
an automobile and pay all expenses incurred in connection therewith.
In August 1996, OroAmerica entered into agreements with each of the named
executive officers other than Mr. Benhamou, which provide for payments to them
in the event of a change in control of OroAmerica. Under the agreements, the
executive officer will be entitled to certain payments from OroAmerica if the
executive officer's employment is terminated following a change in control of
OroAmerica, unless such termination is (i) because of the executive officer's
death or disability, (ii) by OroAmerica for "Cause" (as defined in the
agreements) or (iii) by the executive officer other than for "Good Reason" (as
defined in the agreements). The agreement with Mr. Shao provides for a payment
of three times the average of his annual salary and bonus for the three fiscal
years immediately preceding the change in control, reduced to the extent
necessary to prevent the payments made to Mr. Shao from exceeding the limits
imposed by Section 280G of the Internal Revenue Code of 1986. The agreement with
Ms. Chalermsopone provides for a payment of 12 months' base salary at the rate
being paid to her when the change in control occurred, and the agreements with
Ms. Hollingsworth and Mr. Wu provide for a payment of $150,000. No termination
benefit is required to be paid if the executive officer's employment terminates
prior to a change in control. In addition, Mr. Shao's agreement may be
terminated by OroAmerica at any time after August 7, 1999, while the agreements
with Ms. Chalermsopone, Ms. Hollingsworth and Mr. Wu may be terminated by
OroAmerica at any time after June 30, 1997. Mr. Concool's agreement provided for
a payment of $150,000 and terminated upon the termination of his employment at
OroAmerica in December 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors was
established on September 30, 1993, and currently consists of Messrs. Katz and
Rousso, each of whom is a non-employee director. Mr. Massing also was a member
of the Committee until March 1997. The Committee sets OroAmerica's compensation
policies applicable to executive officers and administers OroAmerica's bonus
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<PAGE> 11
plans and stock option plan. The Committee does not administer the 1994
Directors' Stock Option Plan, which is administered by the Board. The Committee
has prepared the following report for inclusion in this Proxy Statement.
Compensation Policy for Executive Officers
The policy of the Committee is to provide each executive officer current
cash compensation that is reasonable and consistent with OroAmerica's size,
industry and performance, and long-term incentive compensation, in the form of
stock options, based on the increase in value of OroAmerica's Common Stock. In
addition to salary, current cash compensation includes a bonus based in part on
OroAmerica's current annual performance and in part on the executive's
individual performance.
Compensation of Chief Executive Officer
Since the completion of OroAmerica's initial public offering in September
1993, Mr. Benhamou's salary ($650,000 per year) has been fixed by his employment
contract, and he is entitled under the contract to a bonus determined by the
Board of Directors or the Committee in its discretion. The Board has delegated
this responsibility to the Committee.
In keeping with the Committee's objective of rewarding executive officers
based on corporate performance, and in order to assure the deductibility to
OroAmerica of amounts paid to Mr. Benhamou, in March 1994, the Committee adopted
the 1994 Chief Executive Officer Bonus Plan (the "Bonus Plan"), which was
approved by stockholders in July 1994. The Bonus Plan provides for the payment
to Mr. Benhamou of an annual bonus based on a percentage of the amount by which
income before income taxes (before the payment of Mr. Benhamou's bonus) ("Pretax
Income") for the applicable year exceeds $5.0 million, calculated as follows: 2%
of Pretax Income in excess of $5.0 million up to $8.0 million; plus 4% of Pretax
Income in excess of $8.0 million up to $15.0 million; plus 6% of Pretax Income
in excess of $15.0 million. No bonus was paid to Mr. Benhamou pursuant to the
Bonus Plan for fiscal 1997.
Mr. Benhamou has not been awarded any stock options by OroAmerica, although
he is eligible to participate in the 1988 Plan. Mr. Benhamou also participates
in OroAmerica's defined contribution plan.
Compensation of Other Executive Officers
For fiscal 1997, compensation paid to OroAmerica's executive officers other
than Mr. Benhamou consisted of a base salary and contributions to a defined
contribution plan. The base salaries of executive officers other than Mr.
Benhamou for fiscal 1997 were determined by the Committee, based on Mr.
Benhamou's recommendations. In determining salaries, Mr. Benhamou and the
Committee considered available information about the pay scales of other
companies in the jewelry industry. The Committee believes that the salaries of
these executive officers are comparable to the salaries of executives with
similar experience and responsibilities in the jewelry industry.
Bonuses to executive officers other than Mr. Benhamou are awarded pursuant
to OroAmerica's Executive/Key Employee Bonus Plan, which was adopted based on
the recommendations of a compensation consulting firm. Under this plan,
participating executives and key employees may receive a cash bonus calculated
as a percentage of their base salary, with the applicable percentage determined
by reference to the income before income taxes of OroAmerica for the applicable
fiscal year and individual performance measures which are intended to recognize
individual contributions as reflected by the level of the executive's
responsibilities, his or her effectiveness in overseeing the matters under his
or her supervision and the degree to which he or she has contributed to the
accomplishment of major corporate goals. For each of the named executive
officers, 50% of the bonus is based on company performance, and 50% of the bonus
is based on individual performance. For certain other executive officers, the
bonus is based 25% on company performance and 75% on individual performance. For
the fiscal year ended January 31, 1997, the income before income taxes targets
and the individual performance measures were determined by the Committee, based
on Mr. Benhamou's recommendations. In light of the Company's performance, no
cash bonuses were paid to any executive officers of the Company for fiscal 1997.
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<PAGE> 12
Stock Option Plan
OroAmerica's stock option program provides additional incentives to key
employees to maximize stockholder value and provides a link between the
interests of senior managers and stockholders. By utilizing vesting periods, the
option program encourages key employees to remain in the employ of OroAmerica
and provides a long-term perspective to the compensation available under the
option program. The Committee determines the number of option shares to be
granted to each participating employee based upon his or her level of
responsibility, a review of OroAmerica's overall performance and prior grants.
During fiscal 1997, the Committee awarded stock options to five executive
officers. Although the Committee did not use any formal criteria in setting the
number of option shares granted to each executive officer, the Committee
believes that the number of option shares granted to each executive is
appropriate for his or her level of responsibility and experience and sufficient
to provide appropriate incentive to the executive.
Internal Revenue Code Provisions
The Committee will continue to consider the anticipated tax treatment to
OroAmerica regarding the compensation and benefits paid to the Chief Executive
Officer and the four other most highly compensated executive officers of
OroAmerica in light of Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). The Committee from time to time will consider
amendments to OroAmerica's compensation programs necessary to preserve the
deductibility of all compensation paid by OroAmerica which is subject to Section
162(m). While OroAmerica does not expect to pay its executive officers
compensation in fiscal 1998 in excess of the Section 162(m) deductibility limit,
the Board of Directors and the Committee retain discretion to authorize the
payment of compensation that does not qualify for income tax deductibility under
Section 162(m).
Bertram K. Massing
David Rousso
Ronald A. Katz
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<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the cumulative stockholder return on
OroAmerica Common Stock from September 23, 1993 (the date OroAmerica first
became publicly traded) through January 31, 1997, based on the market price of
the Common Stock, with the cumulative total return of the Nasdaq Market Value
Index and the Media General Recreation-Jewelry Index. The graph assumes that the
value of the investment in OroAmerica Common Stock and each index was $100 on
September 23, 1993 and that all dividends, if any, were reinvested. The
comparisons in this table are not intended to forecast or be indicative of
possible future price performance.
COMPARISON OF CUMULATIVE STOCKHOLDER RETURN OF OROAMERICA, INC.,
NASDAQ MARKET VALUE INDEX AND MEDIA GENERAL RECREATION-JEWELRY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) OROAMERICA, INC. INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
09/23/93 100 100 100
01/28/94 114.29 97.72 106.38
01/27/95 55.10 88.03 100.54
02/02/96 37.24 117.90 140.77
01/31/97 38.78 132.55 185.26
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Bertram K. Massing, a partner of Ervin, Cohen & Jessup, served as a member
of the Compensation Committee during fiscal 1997. Ervin, Cohen & Jessup provided
legal services to OroAmerica during fiscal 1997, and OroAmerica expects that
such law firm will render legal services to OroAmerica in the future.
11
<PAGE> 14
CERTAIN TRANSACTIONS
OroAmerica and Mr. Benhamou have entered into an agreement which obligates
OroAmerica to make available to Mr. Benhamou appropriate books, records and
personnel in connection with tax filings, audits and other proceedings relating
to OroAmerica's status as an S Corporation prior to September 1, 1992, and for
other similar matters, and to pay all expenses incurred in connection therewith.
The agreement also requires OroAmerica to indemnify Mr. Benhamou for the effect
of any adjustments (including interest and penalties) made by the Internal
Revenue Service or state taxing authorities to the income tax returns of
OroAmerica for periods in which OroAmerica was treated as an S Corporation, if
such adjustments result in an increase in Mr. Benhamou's tax liabilities. If, as
a result of any such adjustments, Mr. Benhamou receives a refund from any taxing
authority, Mr. Benhamou has agreed to pay such amount to OroAmerica as a capital
contribution. The amount of any indemnification payment made by OroAmerica to
Mr. Benhamou under this agreement will be increased to reflect the effects of
any federal, state or local income taxes imposed on Mr. Benhamou as a result of
the receipt of such payment, including any income taxes imposed on Mr. Benhamou
as a result of any such increase in the amount of an indemnification payment. As
a result of previous distributions made to Mr. Benhamou, OroAmerica may offset
up to $540,950 against any subsequent obligations it may have to indemnify Mr.
Benhamou under this agreement.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the accounting firm of Price Waterhouse
LLP to serve as independent auditors for the current fiscal year, subject to
ratification by the stockholders. Price Waterhouse LLP has served as
OroAmerica's independent auditors since 1983.
The Board of Directors recommends a vote "FOR" ratification of this
selection. Stockholder ratification of the selection of auditors is not required
under the laws of the State of Delaware, but the Board has determined to
ascertain the position of the stockholders on the selection. The Board of
Directors will reconsider the selection if it is not ratified by the
stockholders.
It is anticipated that representatives of Price Waterhouse LLP will be
present at the Annual Meeting, and such representatives will be given the
opportunity to make a statement, if they so desire, and to answer appropriate
questions.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual Meeting
of Stockholders must be received by OroAmerica by January 30, 1998 to be
considered by OroAmerica for inclusion in OroAmerica's proxy statement and form
of proxy relating to that meeting. Such proposals should be directed to the
attention of the Secretary, OroAmerica, Inc., 443 North Varney Street, Burbank,
California 91502.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires OroAmerica's
executive officers and directors, and persons who own more than ten percent of a
registered class of OroAmerica's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten percent stockholders are required by Securities
and Exchange Commission regulations to furnish OroAmerica with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to
OroAmerica, or written representations that no Forms 5 were required, OroAmerica
believes that, during fiscal 1997, all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than ten-percent
beneficial owners were complied with.
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<PAGE> 15
OTHER MATTERS
Neither OroAmerica nor any of the persons named as proxies knows of any
matters to be voted on at the Annual Meeting other than as described in this
Proxy Statement. However, if any other matters are properly presented at the
meeting, it is the intention of the persons named as proxies to vote in
accordance with their judgment on such matters, subject to direction by the
Board of Directors.
The 1997 Annual Report to Stockholders accompanies this Proxy Statement,
but is not to be deemed a part of the proxy soliciting material.
WHILE YOU HAVE THE MATTER IN MIND, PLEASE COMPLETE, SIGN AND RETURN THE
ENCLOSED PROXY CARD.
13
<PAGE> 16
OROAMERICA, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON JULY 1, 1997
The undersigned, revoking any previous proxies for such stock, hereby
appoints Guy Benhamou and Shiu Shao, and each of them, proxies of the
undersigned with full power of substitution to each, to vote all shares of
Common Stock of OROAMERICA, INC. which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of OroAmerica, Inc. to be held on July 1,
1997, and all postponements or adjournments thereof, with all the power the
undersigned would possess if personally present, with authority to vote (i) as
specified by the undersigned below and (ii) in the discretion of any proxy upon
such other business as may properly come before the meeting.
Vote this proxy as follows:
<TABLE>
<S> <C> <C>
1. Election of Directors: FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD VOTE [ ]
(except as marked to the contrary below) (for both nominees)
</TABLE>
Guy Benhamou, Shiu Shao, Bertram K. Massing, Ronald A. Katz and David Rousso
Instruction: To withhold vote for a nominee, mark through the nominee's name in
the above list.
2. Proposal to ratify the selection of Price Waterhouse as independent
auditors:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES OF THE BOARD OF DIRECTORS, FOR THE
RATIFICATION OF AUDITORS AND OTHERWISE IN THE DISCRETION OF ANY OF THE PERSONS
ACTING AS PROXIES.
IMPORTANT: Please date this proxy and sign
exactly as your name or names appear hereon. If
stock is held jointly, each should sign.
Executors, administrators, trustees, guardians
and others signing in a representative capacity,
please give your full title(s). If this proxy is -----------------------------
submitted to a corporation or partnership, it
should be executed in the full corporate or -----------------------------
partnership name by a duly authorized person. (Signature of Stockholder)
IMPORTANT: PLEASE SIGN PROXY EXACTLY AS YOUR
NAME OR NAMES APPEAR HEREON. Dated , 1997
-------------------
