(Front)
PROXY PROXY
ROYAL GOLD, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stanley Dempsey and John W. Goth, or
either of them, as attorneys, agents and proxies (the "Proxies"), each
with full power of substitution to vote, as designated below, all the
shares of Common Stock of Royal Gold, Inc. held of record by the
undersigned on September 18, 1998, at the Annual Meeting of Stockholders
of Royal Gold, Inc. (the "Meeting") to be held at the Oxford Hotel, Sage
Room, 1600 Seventeenth Street, Denver, Colorado, on November 17, 1998,
at 9:30 A.M., or at any postponement or adjournment thereof.
1. PROPOSAL to elect, as Class II directors for a term of three years
(term to expire in 2001) or until each such Director's successor is
elected and qualified, each of the following nominees:
FOR THE NOMINEES BELOW (except as marked to the contrary)
WITHHOLD AUTHORITY to vote for the nominees below
Pierre Gousseland Merritt E. Marcus James W. Stuckert
INSTRUCTION: To withhold authority to vote for any single nominee, draw
a line through the nominee's name above.
2. PROPOSAL to ratify the appointment of PricewaterhouseCoopers as
independent auditors of the Company for the fiscal year ended June
30, 1999.
FOR AGAINST ABSTAIN
In their discretion, the Proxies are also authorized to vote all of
the shares of the undersigned upon such other business as may
properly come before the Meeting. Management and Directors are not
currently aware of any other matters to be presented at the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 and 2.
The undersigned acknowledges receipt of this Proxy and a copy of the
Notice of Annual Meeting and Proxy Statement, dated October 15, 1998.
Dated ______________________________________________
______________________________________________
(Signature)
______________________________________________
(Signature if Held Jointly)
Please sign exactly as name appears on this Proxy. When
shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a
corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
Please mark, sign, date and return this Proxy promptly.
ROYAL GOLD, INC.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
303/573-1660 (Phone)
303/595-9385 (Fax)
[email protected] (E-mail)
www.royalgold.com (Web site)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 17, 1998
* * * *
To the Stockholders of ROYAL GOLD, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders
of Royal Gold, Inc. (the "Company"), a Delaware corporation, will be held
at the Oxford Hotel, Sage Room, 1600 Seventeenth Street, Denver,
Colorado, on Tuesday, November 17, 1998, at 9:30 A.M., Mountain Standard
Time, for the following purposes:
1. To elect three Class II directors to serve until the 2001
Annual Meeting of Stockholders or until each such director's
successor is elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers as
independent auditors of the Company for the fiscal year ended
June 30, 1999; and
3. To transact any other business that may properly come before
the meeting and any postponements or adjournments thereof.
Only stockholders of record at the close of business on September
18, 1998, will be entitled to notice of and to vote at the meeting and
any postponements or adjournments of the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
October 15, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. THE PROMPT RETURN OF
YOUR COMPLETED PROXY WILL ASSIST THE COMPANY IN OBTAINING A QUORUM OF
STOCKHOLDERS FOR THE ANNUAL MEETING. YOU ARE ALSO ENTITLED TO REVOKE
YOUR PROXY AT ANY TIME PRIOR TO THE MEETING, OR TO CHANGE YOUR VOTE BY
SUBSEQUENT PROXY, OR TO VOTE IN PERSON AT THE MEETING.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
ROYAL GOLD, INC.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
303/573-1660
303/595-9385 (Fax)
[email protected] (E-mail)
www.royalgold.com (Web site)
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to the Stockholders of Royal Gold,
Inc. (the "Company" or "Royal Gold"), a Delaware corporation, in
connection with the solicitation, by and on behalf of the Board of
Directors of the Company, of proxies to be voted at the Annual Meeting
of the Stockholders of the Company (the "Meeting") to be held at 9:30
A.M. on Tuesday, November 17, 1998, at the Oxford Hotel, Sage Room, 1600
Seventeenth Street, Denver, Colorado. This Proxy Statement, the enclosed
Proxy and the Company's Annual Report for the fiscal year ended June 30,
1998, are being mailed to Stockholders on or about October 16, 1998.
Only holders of shares of the Common Stock ($.01 par value) of the
Company ("Common Stock") of record at the close of business on September
18, 1998, will be entitled to notice of, and to vote at, the Meeting and
at any and all postponements and adjournments thereof.
If the enclosed Proxy is properly executed and received by the
Company by 10:00 a.m., Mountain Standard Time, on November 17, 1998, the
shares represented by the Proxy will be voted at the Meeting in
accordance with the instructions indicated thereon. If no choice is
indicated, the shares will be voted FOR each of the proposals identified
herein. Stockholders who execute Proxies retain the right to revoke such
Proxies at any time before they are voted by filing with the Secretary
of the Company either an instrument revoking the Proxy or a duly executed
Proxy bearing a later date. Proxies may also be revoked by any
Stockholder present at the Meeting who desires to vote his or her shares
in person.
Solicitation of Proxies may be made by directors, officers or
employees of the Company, without additional compensation, by telephone,
facsimile, or personal interview as well as by mail. The Company will
request banks and brokers to solicit their customers who beneficially own
Common Stock listed in the name of the nominees and will reimburse said
banks and brokers for the reasonable out-of-pocket expense of such
solicitation. Costs of solicitation will be borne by the Company.
VOTING RIGHTS AND OUTSTANDING STOCK
All voting rights are vested exclusively in the holders of the
Common Stock. As of the record date, September 18, 1998, there were
issued and outstanding 17,091,594 shares of Common Stock, each of which
entitles the holder thereof to one vote on all matters which may come
before the Meeting. A majority of the issued and outstanding shares of
Common Stock, whether represented in person or by Proxy, shall constitute
a quorum at any meeting of the Stockholders. Abstentions will be counted
as present for purposes of determining whether there is a quorum. The
affirmative vote of sixty percent (60%) of the shares that are
represented at a meeting at which a quorum is present shall be the act
of the Stockholders. In the election of directors, each Stockholder
eligible to vote may vote the number of shares of Common Stock held for
as many persons as there are directors to be elected, but cumulative
voting is not permitted. Under Delaware law, holders of Common Stock are
not entitled to appraisal or dissenters' rights with respect to the
matters to be considered at the Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership, as of August 31,
1998, of the Common Stock by each director, by each executive officer,
by any person who is known to the Company to be the beneficial owner of
more than 5% of the issued and outstanding shares of Common Stock, and
by all of the Company's directors and executive officers as a group.
Name and Address Number of Shares of Common Stock Beneficially Owned Percent
of Beneficial Subject to of
Owners Shares Options(a) Total(b) Class
Stanley Dempsey (c) 529,983 420,050 950,033 5.6
Royal Gold, Inc.
1660 Wynkoop Street
Suite 1000
Denver, Colorado 80202
Edwin W. Peiker, Jr. (d) 437,778 22,500 460,278 2.7
John W. Goth 19,500 22,500 42,000 *
Pierre Gousseland 32,500 20,000 52,500 *
James W. Stuckert 1,590,500 20,000 1,610,500 9.4
Hilliard, Lyons, Inc.
P.O. Box 32760
Louisville, Kentucky 40232
Merritt E. Marcus 421,243 22,500 443,743 2.6
S. Oden Howell, Jr. 564,180 22,500 586,680 3.4
Peter B. Babin(e) 187,900 250,120 438,020 2.6
Thomas A. Loucks 336,858 206,140 542,998 3.2
Karen P. Gross 51,650 91,525 143,175 *
All Directors & 4,172,092 1,097,835 5,269,927 31
Officers as a
Group (10 persons)
Societe Generale - Ovalar 1,628,440 0 1,628,440 9.5
Rese/Ges/OPC
92972 Paris-Ladefense CE DEX
__________________
* Less than 1% ownership of the Company's Common Stock.
(a) See "Compensation of Directors and Executive Officers -- Option
Exercises and Year End-Values."
(b) The amounts shown in the table reflect all shares beneficially
owned, including shares subject to outstanding stock options that
are exercisable within sixty (60) days of the date of this Proxy
Statement.
(c) The amount shown in the table reflects shares beneficially owned
by Mr. Dempsey and members of his immediate family. Members of
Mr. Dempsey's family beneficially own 297,132 shares of Common
Stock. Mr. Dempsey disclaims beneficial ownership of these
297,132 shares of Common Stock.
(d) The amount shown in the table reflects shares beneficially owned
by Mr. Peiker and members of his immediate family. Members of Mr.
Peiker's family beneficially own 19,100 shares of Common Stock.
Mr. Peiker disclaims beneficial ownership of these 19,100 shares
of Common Stock.
(e) The amount shown in the table reflects shares beneficially owned
by Mr. Babin and members of his immediate family. Members of Mr.
Babin's family beneficially own 19,850 shares of Common Stock.
Mr. Babin disclaims beneficial ownership of these 19,850 shares of
Common Stock.
PROPOSAL 1.
ELECTION OF CLASS II DIRECTORS
The Company's Board of Directors consists of three classes of
directors, with each class of directors serving for a three-year term
ending in a successive year. The Company's current Class I directors are
Messrs. Dempsey, Babin and Goth; the Class II directors are Messrs.
Stuckert, Marcus and Gousseland; and the Class III directors are Messrs.
Peiker and Howell.
If the enclosed Proxy is duly executed and timely received for the
Meeting, and if no contrary specification is made as provided therein,
it is the intention of the persons named therein to vote the shares
represented thereby FOR Pierre Gousseland, Merritt E. Marcus, and James
W. Stuckert as Class II directors of the Company. If any of the nominees
for election as a Class II director should refuse or be unable to serve
(an event that is not anticipated), the Proxy will be voted for such
person who is designated by the Board of Directors to replace such
nominee. Each Class II director elected at the Meeting shall serve until
the 2001 Annual Meeting, or until his successor is elected and qualified.
Information concerning the nominees for election as directors is
set forth below under "Directors and Officers."
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE DIRECTOR NOMINEES.
DIRECTORS AND OFFICERS
Set forth below are the names, periods of service and past
experience of the directors and officers of the Company. The persons who
are nominated for election as directors at the Meeting are indicated with
an asterisk.
Stanley Dempsey
Age 59; Chairman and Chief Executive Officer since August 1984; Class I
director; Term expires 2000.
Chairman and Chief Executive Officer of the Company since April 4, 1988.
President and Chief Operating Officer of the Company from July 1, 1987
to April 4, 1988. From 1984 through June 1986, Mr. Dempsey was a partner
in the law firm of Arnold & Porter. During the same period, he was a
principal in Denver Mining Finance Company. From 1960 through 1987, Mr.
Dempsey was employed by AMAX, Inc. serving in various managerial and
executive capacities. Mr. Dempsey currently serves as a director of
Dakota Mining Corporation, Behre Dolbear & Company, Inc., and Hazen
Research, Inc., and is also a member of the board of directors of various
mining-related associations.
Peter B. Babin
Age 44; President of the Company since December 10, 1996; Class I
director; Term expires 2000.
President of the Company since December 10, 1996. Executive Vice
President of the Company from January 1, 1995 to December 10, 1996.
Senior Vice President from July 1, 1993 to January 1, 1995. From 1989
until 1993, Mr. Babin was a consultant to the Company. From 1986 through
1989, Mr. Babin was Senior Vice President and General Counsel of Medserv
Corporation, a provider of ancillary health care services.
John W. Goth
Age 70; Director since August 1988; Class I director; Term expires 2000.
Executive Director of the Denver Gold Group and Vice Chairman of the
Minerals Information Institute. A consultant to the mining industry since
1985. Mr. Goth was formerly a senior executive of AMAX, Inc. and
director of Magma Copper Corporation. He is currently a director of U.S.
Gold Corporation, Qualchem, Inc. and Behre Dolbear & Company. (1) (2)
*Pierre Gousseland
Age 76; Director since June 1992; Class II director; Term expires 1998.
Financial Consultant. Mr. Gousseland is Chairman of the Board of
Directors of Golden Star Resources Ltd. From 1977 until January 1986,
Mr. Gousseland was Chairman and Chief Executive Officer of AMAX, Inc.
He is presently a Director of Guyanor Ressources S.A. Formerly, Director
of the French American Banking Corporation of New York, the American
International Group, Inc., Union Miniere, S.A. (Belgium), Degussa AG
(Germany), IBM World Trade Europe/Middle East Africa Corporation,
Pancontinental Mining Europe GmbH (Germany), and Sauer Group Investments
Ltd. Mr. Gousseland has served on the Chase Manhattan International and
Creditanstaldt International (Vienna, Austria) Advisory Boards, and is
past president of the French-American Chamber of Commerce in the United
States. (2)
*Merritt E. Marcus
Age 64; Director since December 1992; Class II director; Term expires
1998.
President and Chief Executive Officer of Marcus Paint Company, a
manufacturer of industrial coatings, and Performance Powders, LLC, a
manufacturer of industrial powder coatings. Mr. Marcus has served
several terms as a director of the National Paint and Coatings Association.
*James W. Stuckert
Age 60; Director since September 1989; Class II director; Term expires
1998.
Chairman and Chief Executive Officer of Hilliard, Lyons, Inc.,
Louisville, Kentucky. Mr. Stuckert is also a Director of Hilliard, Lyons,
Inc. and Thomas Transportation. He joined Hilliard, Lyons in 1962 and
served in several capacities prior to being named Chairman in December
1995. Mr. Stuckert is a Board of Governor Member of the Security
Industries Association. (1) (2)
S. Oden Howell, Jr.
Age 58; Director since December 1993; Class III director; Term expires
1999.
Consultant to H&N Constructors, Inc., a contractor specializing in
remodeling and rehabilitation of government facilities. From 1972 until
1988, Mr. Howell was Secretary/Treasurer of Howell & Howell, Inc. He is
currently a Director of Florafax International, Inc.
Edwin W. Peiker, Jr.
Age 67; Director since May 1987; Class III director; Term expires 1999.
President and Chief Operating Officer of the Company from April 1988
until February 1992. Vice President of Engineering of the Company from
May 1987 to April 4, 1988. Principal in Denver Mining Finance Company
from 1984 until 1986. From 1983 to 1986, Mr. Peiker was engaged in
mineral consulting activities. During the period 1966-1983, Mr. Peiker
served in a variety of positions with the Climax Molybdenum division of
AMAX, Inc. involved in exploration activities worldwide. (1) (2)
Karen P. Gross
Age 44; Vice President of the the Company since June 1994 and Corporate
Secretary since 1989.
From 1987 until 1989, Ms. Gross was the Assistant Secretary to the Company
and Executive Assistant.
Thomas A. Loucks
Age 49; Executive Vice President and Treasurer of the Company since 1991.
From August 1988 until 1991, Mr. Loucks was Vice President, Corporate
Development of the Company. From August 1985 until August 1988, Mr.
Loucks was a Business Development Analyst with Newmont Mining Company.
Mr. Loucks is a Director of the Society of Economic Geologists, Inc., the
Society of Economic Geologists Foundation, Inc., and the Economic Geology
Publishing Company.
___________
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended June 30, 1998, the Board of Directors
held four regular meetings, two telephonic meetings, and on nine separate
occasions action was taken by unanimous consent. Each director attended
(in person or by telephone) at least 75% of the aggregate number of
meetings of the Board and of the Committee(s) of the Board on which he
served.
The Board of Directors has a standing Audit Committee and a
standing Compensation Committee. During the year ended June 30, 1998,
the Audit Committee consisted of James W. Stuckert, John W. Goth, and
Edwin W. Peiker, Jr. The Audit Committee held two meetings during the
fiscal year. The function of the Audit Committee is to aid the directors
in undertaking and fulfilling their responsibilities for financial
reporting to the stockholders; to review internal financial procedures
and reports; to recommend changes in the method of reporting to ensure
timely and accurate reporting of financial data; to review audit
principles in conjunction with the Company's independent auditors; to
provide better avenues of communication between the Board of Directors,
management and the external and internal auditors; and to recommend the
appointment of the Company's independent auditors.
During the year ended June 30, 1998, the Compensation Committee
consisted of John W. Goth, James W. Stuckert and Pierre Gousseland. The
Compensation Committee met twice during the last fiscal year. The
Compensation Committee assumes the crucial role of implementing
compensation plans for top executives, as well as directors. The
Committee forges the key link between the Board and management that
balances the interests of shareholders and those of management. The
Compensation Committee's function is to review new or modified programs
in the areas of executive salary, incentive compensation, and stock
plans; and review and make recommendations to the Company's Board of
Directors concerning the levels and form of compensation paid to the
officers and key employees of the Company.
None of the members of the Compensation Committee is or has been
an officer or employee of the Company, and none of the executive officers
of the Company has served as a member of the Compensation Committee or
as a director of another entity, one of whose executive officers served
on the Compensation Committee or as a director of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership to the Securities and
Exchange Commission. Officers, directors and greater than 10%
stockholders are required by the regulations of the Securities and
Exchange Commission to furnish the Company with copies of all Section
16(a) reports they file. Based solely on its review of copies of such
reports received by it and written representations from certain reporting
persons that no other reports were required for those persons, the
Company believes that all filing requirements applicable to its officers,
directors and greater than 10% stockholders were complied with for the
fiscal year ended June 30, 1998.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects all compensation awarded or paid to
or earned by the chief executive officer of the Company and other
executive officers of the Company, for the fiscal year ended June 30,
1998.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Name and Year Other
Principal Ended Annual
Position June 30 Salary($) Bonus($) Compensation($)
Stanley Dempsey 1998 240,000 110,000 -
Chairman & Chief 1997 215,000 100,000 -
Executive Officer 1996 185,000 75,000 -
Peter B. Babin 1998 175,000 80,000 -
President 1997 160,000 65,000 -
1996 120,000 40,000 -
Thomas A. Loucks 1998 120,000 45,000 -
Executive Vice 1997 114,000 35,000 -
President 1996 108,000 25,000 -
Karen P. Gross 1998 100,000 30,000 -
Vice President 1997 90,000 27,000 -
& Corporate 1996 65,000 18,250 -
Secretary
LONG-TERM COMPENSATION
Name and Year Restricted All Other
Principal Ended Stock Options/ LTIP ($)
Position June 30 Awards SARs(#) Payouts($) Compensation
Stanley Dempsey 1998 - 164,250(1) - 29,487(2)
Chairman & Chief 1997 - 50,000 - 25,562
Executive Officer 1996 - 55,000 - 20,564
Peter B. Babin 1998 - 105,120(1) - 23,027(3)
President 1997 - 30,000 - 19,718
1996 - 30,000 - 14,235
Thomas A. Loucks 1998 - 75,920(1) - 11,685(4)
Executive Vice 1997 - 20,000 - 11,650
President 1996 - 20,000 - 10,291
Karen P. Gross 1998 - 67,525(1) - 11,477
Vice President 1997 - 20,000 - 9,732
& Corporate 1996 - 20,500 - 7,125
(1) On May 29, 1998, the Board of Directors approved the
implementation of a stock option exchange program, whereby
employees could exchange their options for a lesser number of new
options with an exercise price based on the closing price of the
stock on said date. The compilation of the amount of new options
to be issued was computed by using the Black-Scholes Model. The
net result of applying this model is that the exercise price for
the new options will be lower and the number of overall shares
subject to options outstanding was reduced (see below, Option
Grants in Last Fiscal Year).
(2) The Company's SARSEP payments made to Mr. Dempsey in fiscal 1998,
1997, and 1996, were $22,325, $20,400, and $14,602, respectively,
and the Company's payment of group term life insurance and long-
term disability insurance premiums paid in fiscal 1998, 1997, and
1996 were $7,162, $7,162, and $5,962, respectively.
(3) The Company's SARSEP payments made to Mr. Babin in fiscal 1998,
1997, and 1996 were $17,854, $14,679, and $11,550, respectively,
and the Company's payment of group term life insurance and long-
term disability insurance premiums paid in fiscal 1998, 1997, and
1996 were $5,172, $5,039, and $2,686, respectively.
(4) The Company's SARSEP payments made to Mr. Loucks in fiscal 1998,
1997, and 1996 were $10,395, $10,360, and $9,205, respectively,
and the Company's payment of group term life insurance and long-
term disability insurance premiums paid in fiscal 1998, 1997, and
1996 were $1,290, $1,290, and $1,086, respectively.
(5) The Company's SARSEP payments made to Ms. Gross in fiscal 1998,
1997, and 1996 were $9,878, $9,731, and $5,827, respectively, and
the Company's payment of group term life insurance and long-term
disability insurance premiums paid in fiscal 1998, 1997, and 1996
were $1,599, $1,542, and $1,301, respectively.
Option Grants in Last Fiscal Year
During the fiscal year ended June 30, 1998, officers of the Company
were awarded a total of 412,815 stock options, whereby a Stock Option
Exchange Program ("Exchange Program") was implemented and all employees
of the Company could exchange their options for a lesser number of new
options with an exercise price based on the closing price of the stock
then outstanding on said date (May 29, 1998). The compilation of the
amount of new options to be issued was computed by using the Black-
Scholes Model, which is a calculation of the value of a stock option
based on the vesting period, years elapsed and remaining to the option
term, option price at issuance, and the current market price of the
stock, as well as the volatility of the stock price over a period of
years. The new options issued under the Exchange Program are not
exercisable for six months from the date of grant, or until November 29,
1998, and the vesting period for the new options is the same as for the
old options.
Under the Exchange Program, 715,750 old options, with an average
exercise price of $9.16, were exchanged for 522,498 new options, or a 27%
reduction in the number of options. The exercise price of the new
options is $5.375. Of these 522,498 new options, options to acquire
412,815 shares were awarded to officers of the Company, and options to
acquire 109,683 shares were awarded to employees of the Company who are
not officers or directors.
No stock appreciation rights were awarded to any of the officers
of the Company during the fiscal year ended June 30, 1998.
The following table sets forth certain information on option grants
in fiscal 1998 to the named executive officers.
INDIVIDUAL GRANTS
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (#) Fiscal Year(1) ($/share)(2) Date
Stanley Dempsey 37,866 31.4% $5.375 12/06/99
34,612 12/07/00
5,486 12/06/04
5,082 12/07/05
37,447 12/10/06
43,757 10/03/07
Peter B. Babin 22,544 20.1% $5.375 12/06/99
15,630 12/07/00
5,486 12/06/04
5,082 12/07/05
22,738 12/10/06
33,640 10/03/07
Thomas A. Loucks 24,739 14.5% $5.375 12/06/99
7,746 12/07/00
5,486 12/06/04
5,082 12/07/05
15,251 12/10/06
17,616 10/03/07
Karen P. Gross 9,699 12.9% $5.375 12/06/99
8,150 12/07/00
5,486 12/06/04
5,082 12/07/05
15,888 12/10/06
23,220 10/03/07
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term (3)
Name 5% 10%
Stanley Dempsey 555,216 1,407,026
Peter B. Babin 355,338 900,496
Thomas A. Loucks 256,633 650,358
Karen P. Gross 228,255 578,444
____________
(1) The percentage of total options granted is stated for the entire
number of options granted to each employee.
(2) The exercise price for all options listed is $5.375, which was
the fair market value of the Company's common stock on the date
of the grant.
(3) The potential realizable values are stated for the entire number
of options granted to each employee. Actual gains, if any, on
stock option exercises are dependent on the future performance
of the common stock (as well as the option holder's continued
employment through the vesting period). The amounts reflected
in this table may not necessarily be achieved.
Option Exercises and Year-End Values
The table below sets forth information regarding the deemed value
of options exercised by officers during the year ended June 30, 1998, and
the deemed value of options held by such persons at June 30, 1998. At
June 30, 1998, and at the date of this Proxy Statement, no shares of
Common Stock acquired by officers of the Company as a result of the
exercise of stock options as set forth below were sold; all shares
acquired as a result of the exercise of such stock options continue to
be held by such officers.
Value of
Exercisable/
Number of Unexercisable
Shares Unexercised In-the-Money
Acquired on Value Options Held Options Held
Name Exercise (#) "Realized"($) at FY-End (#)(1) at FY-End ($)(2)
Stanley Dempsey 54,800 $306,950(3) 420,050 $1,279,000/0
Peter B. Babin 30,000 $158,500(4) 250,120 $ 725,000/0
Thomas A. Loucks 77,000 $442,875(5) 225,640 $ 748,600/0
Karen P. Gross 17,000 $ 70,125(6) 91,525 $ 120,000/0
(1) Of the total of 967,835 options, 94,848 Non-Incentive Stock
Options ("NSOs") are exercisable through December 6, 1999, at
$5.375/share; 66,138 NSOs are exercisable through December 7,
2000, at $5.375/share; 555,020 Incentive Stock Options ("ISOs")are
exercisable through December 21, 2001, at $0.125/share; 21,944
ISOs are exercisable through December 6, 2004, at $5.375/share;
20,328 ISOs are exercisable through December 7, 2005, at
$5.375/share, 79,228 NSOs are exercisable through December 10,
2006, at $5.375/share; 12,096 ISOs are exercisable through
December 10, 2006, at $5.375/share; 98,185 NSOs are exercisable
through October 3, 2007 at $5.375/share; and 20,048 ISOs are
exercisable through October 3, 2007 at $5.375/share.
(2) Value calculated based on closing "sale" price as reported on The
Nasdaq Stock Market ("NASDAQ"), at June 30, 1998, of $5.00/share.
(3) Based on difference between exercise price ($0.125/share) and
closing "sale" price as reported on NASDAQ, on the dates of
exercise (17,400 shares at $7.75/share; 17,400 shares at
$4.25/share; 20,000 shares at $5.25 share).
(4) Based on difference between exercise price ($0.125/share) and
closing "sale" price as reported on NASDAQ, on the dates of
exercise (10,000 shares, at $7.75/share; 20,000 shares at
$4.25/share).
(5) Based on difference between exercise price ($0.125/share) and
closing "sale" price as reported on NASDAQ, on the dates of
exercise (15,000 shares, at $8.00/share; 15,000 shares, at
$8.00/share; 30,000 shares, at $4.25/share; 17,000 shares, at
$5.00/share).
(6) Based on difference between exercise price ($0.125/share) and
closing "sale" price as reported on NASDAQ, on the date of
exercise (17,000 shares at $4.25/share).
Repricing of Options
During the fiscal year ended June 30, 1998, the Compensation
Committee recommended, and the Board of Directors approved, the
implementation of a Stock Option Exchange Program for current employees
of the Company. Under the Stock Option Exchange Program, 715,750 old
options, with an average exercise price of $9.16 were exchanged for
522,498 new options, or a 27% reduction in the number of options. The
exercise price of the new options is $5.375. Of these 522,498 new
options, options to acquire 412,815 shares were awarded to officers of
the Company and options to acquire 109,683 shares were awarded to
employees of the Company who are not officers or directors. See "Board
Compensation Committee Report on Executive Compensation" for information
regarding the repricing of stock options.
TEN YEAR REPRICING TABLE
Securities
Underlying
Number of Market Price of
Options Stock at time of
Repriced or Repricing or
Name and Title Date Amended (#) Amendment ($)
Stanley Dempsey 05/29/98 47,302 $5.375
Chairman and CEO 05/29/98 12,698 $5.375
05/29/98 43,236 $5.375
05/29/98 11,764 $5.375
05/29/98 50,000 $5.375
05/29/98 60,000 $5.375
Peter B. Babin 05/29/98 26,302 $5.375
President 05/29/98 12,698 $5.375
05/29/98 18,236 $5.375
05/29/98 11,764 $5.375
05/29/98 30,000 $5.375
05/29/98 45,000 $5.375
Thomas A. Loucks 05/29/98 26,302 $5.375
Executive Vice 05/29/98 12,698 $5.375
President & 05/29/98 18,236 $5.375
Treasurer 05/29/98 11,764 $5.375
05/29/98 20,000 $5.375
05/29/98 25,000 $5.375
Karen P. Gross 05/29/98 9,802 $5.375
Vice President 05/29/98 12,698 $5.375
& Corporate 05/29/98 8,236 $5.375
Secretary 05/29/98 11,764 $5.375
05/29/98 20,000 $5.375
05/29/98 30,000 $5.375
Original New Length of original
Exercise Exercise Option term remaining
Name and Title Price Price At date of repricing
Stanley Dempsey $ 7.8750 $5.375 1.5 years
Chairman & CEO $ 7.8750 $5.375 6.5 years
$ 8.5000 $5.375 2.5 years
$ 8.5000 $5.375 7.5 years
$14.1250 $5.375 8.5 years
$ 8.5625 $5.375 9.5 years
Peter B. Babin $ 7.8750 $5.375 1.5 years
President $ 7.8750 $5.375 6.5 years
$ 8.5000 $5.375 2.5 years
$ 8.5000 $5.375 7.5 years
$14.1250 $5.375 8.5 years
$ 8.5625 $5.375 9.5 years
Thomas A. Loucks $ 7.8750 $5.375 1.5 years
Executive Vice $ 7.8750 $5.375 6.5 years
President & $ 8.5000 $5.375 2.5 years
Treasurer $ 8.5000 $5.375 7.5 years
$14.1250 $5.375 8.5 years
$ 8.5625 $5.375 9.5 years
Karen P. Gross $ 7.8750 $5.375 1.5 years
Vice President $ 7.8750 $5.375 6.5 years
& Corporate $ 8.5000 $5.375 2.5 years
Secretary $ 8.5000 $5.375 7.5 years
$14.1250 $5.375 8.5 years
$ 8.5625 $5.375 9.5 years
Compensation To Directors
During fiscal 1998, each non-employee director of the Company
received an annual fee of $12,000 for service as a director.
Pursuant to the Company's Equity Incentive Plan, each non-employee
director of the Company is granted annually in December a Non-Incentive
Stock Option ("NSO") to purchase 5,000 shares of Common Stock at an
exercise price equal to the fair market value of the Company's Common
Stock on the date of grant. Accordingly, on December 2, 1997, each non-
employee director of the Company was granted 5,000 NSOs, at an exercise
price of $5.625 per share. Such options have a ten year term and are
exercisable immediately with respect to 2,500 shares and after 12 months
with respect to the other 2,500 shares.
Employment Contracts
Each officer of the Company identified in the Summary Compensation
Table is employed pursuant to an employment contract providing for salary
at current salary levels. Each of the employment contracts is renewable,
for a term of 12 months, in February 1999. Pursuant to each of the
employment contracts, salary and benefits are to be continued for 12
months following such employee's involuntary termination, or following
such employee's voluntary termination after a "change in control" event.
A change in control event, as defined in the employment contracts, will
occur upon: (1) the acquisition, directly or indirectly, by any person
or related group of persons, of beneficial ownership of securities
possessing more than thirty percent (30%) of the total combined voting
power of the Company's outstanding securities; (2) a change in the
composition of the Board over a period of eighteen (18) consecutive
months or less such that fifty percent (50%) or more of the Board members
cease to be directors who either (A) have been directors continuously
since the beginning of such period, or (B) have been unanimously elected
or nominated by the Board for election as directors during such period;
(iii) a stockholder-approved merger or consolidation to which the Company
is a party and in which (A) the Company is not the surviving entity, or
(B) securities possessing more than thirty percent (30%) of the total
combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction; or (iv) the sale,
transfer or other disposition of all or substantially all of the
Company's assets in complete liquidation or dissolution of the Company.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") is responsible for setting and administering the policies
that govern the compensation for the executive officers of the Company.
The Compensation Committee evaluates the performance of management and
recommends to the full Board of Directors the compensation level for all
officers and key employees. The Compensation Committee also administers
the Company's Equity Incentive Plan and determines the amount of stock
options granted to officers and key employees. The Committee is
comprised of three outside directors appointed annually by the Board of
Directors.
The primary objectives of the Company's executive compensation
program are: to attract and retain key executives who are critical to
the long-term success of the Company by offering compensation packages
believed to be appropriate in light of compensation in the industry, to
provide an economic framework that will motivate executives to achieve
goals consistent with the Company's business strategy, to reward
performance that benefits all Stockholders, and to provide a compensation
package that recognizes individual results and contributions to the
overall success of the Company.
The Committee's policy objectives are to pay base salaries that are
comparable with those paid by the mining industry and bonuses when
individual performance or other circumstances warrant special recognition, in
view of the Committee.
The Committee is responsible for considering various information
when reviewing salary levels, as outlined in the Company's Business Plan,
and when making recommendations to the full Board. When reviewing individual
performance of officers of the Company, the Committee also takes
into account the views of the Company's Chairman and Chief Executive
Officer. Before or at the end of each year, the Committee evaluates each
individual officer's performance in order to determine whether to
recommend the payment of bonuses and/or options and, if so, the amount
of each such bonus and/or options.
In making recommendations concerning executive compensation, the
Committee reviews individual executive compensation, individual
performance, corporate performance, stock price appreciation, and total
return to Stockholders for the Company. The salary levels of the
Company's executives and officers are usually established by the Board
of Directors at its June meeting.
The Committee also reviews and approves stock option awards, under
the Company's Equity Incentive Plan. The purpose of stock option awards
is to provide key employees with an incentive to continue as employees
of the Company over a long term, and to align such employees' long range
interests with those of the Stockholders by providing the opportunity of
having an equity interest in the Company, i.e., to receive compensation
based on an increase in the Company's Common Stock price. The Committee
grants stock option awards based on salary, level of responsibility, and
performance. All stock options are granted with an exercise price equal
to the market price of the Common Stock on the date of grant. Incentive
Stock Options vest in one year and have a 10-year term. Non-Incentive
Stock Options typically vest on the date of grant and have a 10-year
term.
During the fiscal year ended June 30, 1998, the Compensation
Committee recommended, and the Board of Directors approved, the
implementation of a Stock Option Exchange Program ("Exchange Program")
for current employees of the Company. In effect, the Exchange Program
gave employees a period of time to exchange their options for a lesser
number of new options, equal in value to the old options surrendered in
exchange. The new options have an exercise price based on the closing
price of the stock on the date the Exchange Program was effective. The
new options issued under the Exchange Program are not exercisable for six
months from the effective date, and the vesting of the new options is the
same as for the old options. The reduced number of options employees
were eligible to receive was computed in reliance on the Black-Scholes
Model, a well-known formula for valuing options and widely used by
publicly held companies in the United States. The Black-Scholes Model
is a calculation of the value of a stock option based on the vesting
period, years elapsed and remaining to the option term, option price at
issuance and the current market price of the stock, as well as the
volatility of the stock price over a period of years.
Under the Stock Option Exchange Program, 715,750 old options, with
an average exercise price of $9.16 were exchanged for 522,498 new
options, or a 27% reduction in the number of options. The exercise price
of the new options is $5.375. Of these 522,498 new options, options to
acquire 412,815 shares were awarded to officers of the Company and
options to acquire 109,683 shares were awarded to employees of the
Company who are not officers or directors.
Chief Executive Officer. In evaluating the performance and setting
the compensation of the Chairman and Chief Executive Officer, the
Committee meets without the Chairman and Chief Executive Officer, or any
other officer, being present. The Committee took into account the base
salaries of chief executive officers of other mining companies, including
those companies that are listed in the Cumulative Total Shareholder
Return Chart, and the assessment of Mr. Dempsey's individual performance,
including his leadership with respect to the development of long-term
business strategies for the Company to improve its economic value,
leadership development, succession planning and management continuity.
The Committee also took into account the longevity of Mr. Dempsey's
service to the Company and its belief that Mr. Dempsey is an excellent
representative of the Company to the public by virtue of his stature in
the community and the industry in which the Company operates.
The Committee believes that the Chairman and Chief Executive
Officer, as well as the other officers of the Company, are strongly
motivated and are dedicated to the growth of the Company and to
increasing stockholder value. Because of the leadership provided by the
Chairman and other officers of the Company, the Committee felt that
bonuses should be awarded and salaries increased for the Chairman as well
as the other officers of the Company. Therefore, in fiscal 1998, a bonus
of $110,000 was awarded to the Chairman, and bonuses totaling $155,000
were awarded to the other officers. Effective, July 1, 1998, the
Chairman received a salary increase of $10,000, and the salaries of
certain officers of the Company were also increased, effective July 1,
1998.
This Report has been provided by the Compensation Committee:
John W. Goth, Chairman, James W. Stuckert, and Pierre Gousseland
Pension Plans
In fiscal 1994, the Company established a variation of a Simplified
Employee Pension ("SEP") Plan, known as a Salary Reduction/Simplified
Employee Pension Plan ("SARSEP"). Management chose this Plan because of
regulatory compliance simplicity, avoidance of significant administrative
expense, availability of substantial tax-advantaged investment
opportunities, and relative freedom from significant vesting or other
limitations. Under this Plan, the Company may contribute to a designated
IRA account, on an annual basis, up to 15% of each employee-participant's
base compensation. Each such contribution would, within limits, be a
deductible expense to the Company; would be free of federal income
taxation as to the employee; and would be subject to continuing
investment, on a tax-deferred basis, until assets are actually
distributed to the employee. All employees of Royal Gold are eligible
to participate in the Company's SEP Plan.
Performance Graph
The following graph compares the cumulative total return on Royal
Gold's Common Stock with the cumulative total return of two other stock
market indices: Standard and Poor's 500 Index and Standard and Poor's
Gold Mining Index.
CUMULATIVE TOTAL SHAREHOLDER RETURN CHART
06/30/93 06/30/94 06/30/95 06/30/96 06/30/97 06/30/98
Royal Gold $100 $ 50 $ 98 $100 $158 $ 61
S&P 500 Index $100 $101 $128 $161 $217 $282
S&P Gold
Mining Index $100 $ 96 $100 $107 $ 84 $ 64
(i) S & P 500 Index. Represents the return an investor would have
secured (assuming reinvestment of all dividends) on the basis of
an investment of $100 in the 500 equity issues that make up the
Standard and Poor's 500 Index.
(ii) S & P Gold Mining Index. Represents the return an investor would
have secured (assuming reinvestment of all dividends) on the basis
of an investment of $100 in the five equity issues that make up
the Standard and Poor's Gold Mining Index (Barrick Gold
Corporation, Battle Mountain Gold, Homestake Mining Company,
Newmont Gold Company, and Placer Dome Inc.).
(iii) The material in this chart is not "soliciting material," is not
deemed "filed" with the Commission, and is not to be incorporated
by reference in any filing of the Company under the Securities Act
or the Exchange Act, whether made before or after the date hereof
and irrespective of any general incorporation language in any such
filing.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Edwin W. Peiker, Jr., who is a director of the Company and was
president and chief operating officer of the Company from April 1988
until February 1992, is also a consultant to the Company. Mr. Peiker is
paid $500 per day for any work that he performs for the Company. In
fiscal 1998, Mr. Peiker did not perform any consulting work for the
Company and therefore no consultant fees were paid to Mr. Peiker.
PROPOSAL 2.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors recommends that the Stockholders ratify the
appointment of PricewaterhouseCoopers LLP, independent certified public
accountants, to audit the consolidated financial statements of the
Company for the fiscal year ended June 30, 1999.
Coopers & Lybrand has acted as auditors of the Company since
October 1995, and has also rendered certain non-audit services to the
Company, including tax advice. On July 1, 1998, Coopers & Lybrand L.L.P.
and Price Waterhouse LLP combined their businesses and practices and are
now known as PricewaterhouseCoopers LLP.
The ratification of the appointment of PricewaterhouseCoopers is
being submitted to the Stockholders because the Board of Directors
believes this to be a good corporate practice. Should the Stockholders
fail to ratify this appointment, the Board of Directors will review the
matter.
Representatives of PricewaterhouseCoopers have been invited to
attend the Annual Meeting of Stockholders. They will have an opportunity
to make a statement, if they so desire, and will have an opportunity to
respond to appropriate questions from the Stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
AS INDEPENDENT AUDITORS OF THE COMPANY.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought
before the Meeting. However, if other matters should come before the
Meeting, it is the intention of each person named in the Proxy to vote
such Proxy in accordance with his judgment on such matters.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal
executive office in Denver, Colorado, by June 16, 1999, if such proposals
are to be included in the proxy materials for the 1998 Annual Meeting of
Stockholders. The inclusion of any Stockholder proposal in the proxy
materials for the 1999 Annual Meeting of Stockholders will be subject to
applicable rules of the Securities and Exchange Commission.
Proxies for the 1999 Annual Meeting of Stockholders will confer
discretionary authority to vote with respect to all matters of which the
Company does not receive notice by August 31, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
October 15, 1998
Upon the written request of any record holder or beneficial owner of
Common Stock entitled to vote at the Annual Meeting, the Company will
provide, without charge, a copy of its Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission for the fiscal year
ended June 30, 1998. Requests for a copy of such Annual Report should
be mailed to Karen P. Gross, Vice President & Corporate Secretary, Royal
Gold, Inc., 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202-
1132, or send your request by E-mail to [email protected].
