SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PIERCING PAGODA, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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 paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[GRAPHIC OMITTED - LOGO]
Piercing Pagoda, Inc.
Piercing Pagoda, Inc.
P.O. Box 25007
Lehigh Valley, PA 18002-5007
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on Wednesday, September 16, 1998
The Annual Meeting of Stockholders of Piercing Pagoda, Inc. (the
"Company") will be held on Wednesday, September 16, 1998, at 10:00 a.m., at
The Holiday Inn, Gateway Conference Center, Routes 512 & 22 in Bethlehem,
Pennsylvania for the following purposes:
1. To elect one director to hold office until the 2001 Annual Meeting
of Stockholders.
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the 1999 fiscal year.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on July 27,
1998 as the record date for the meeting. Only stockholders of record at
that time are entitled to notice of and to vote at the meeting and any
adjournment or postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the
Company. Reference is made to the attached proxy statement for further
information with respect to the business to be transacted at the meeting.
You are cordially invited to attend the meeting in person. The Board
of Directors urges you to sign, date and return the enclosed proxy
promptly. The return of the enclosed proxy will not affect your right to
vote in person if you do attend the meeting.
John F. Eureyecko
Secretary
August 5, 1998
<PAGE>
Piercing Pagoda, Inc.
P.O. Box 25007
Lehigh Valley, PA 18002-5007
---------------------------
PROXY STATEMENT
for
Annual Meeting of Stockholders
September 16, 1998
--------------------------
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Piercing Pagoda, Inc., a Delaware
corporation (the "Company"), for use at the Company's Annual Meeting of
Stockholders (the "Meeting"), which will be held on Wednesday, September
16, 1998, at 10:00 a.m. at The Holiday Inn, Gateway Conference Center,
Routes 512 & 22 in Bethlehem, Pennsylvania and any adjournment or
postponement thereof. This proxy statement, the foregoing notice and the
enclosed proxy are first being sent to stockholders of the Company on or
about August 5, 1998.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before
the Meeting, however, the persons named in the enclosed proxy, or their
duly constituted substitutes acting at the Meeting, will be authorized to
vote or otherwise act thereon in accordance with their judgment on such
matters. If the enclosed proxy is properly executed and returned prior to
voting at the Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. In the absence of
instructions, the shares will be voted "FOR" the nominee of the Board of
Directors in the election of one director whose term of office will extend
until the 2001 Annual Meeting of Stockholders and until his successor is
duly elected and qualified, and "FOR" the approval of KPMG Peat Marwick LLP
as the Company's independent auditors for the current fiscal year ending
March 31, 1999.
A plurality of the votes cast is required for the election of
directors. The affirmative vote of a majority of the shares represented in
person or by proxy at the meeting and entitled to vote on the subject
matter is required to approve the appointment of auditors. Abstentions will
be considered present and entitled to vote at the Meeting for purposes of
determining the presence of a quorum, but will not be counted as votes for
a given matter. Abstentions on the proposal to approve the appointment of
auditors will have the effect of votes against the proposals because they
require for passage the affirmative vote of a majority of the shares
present in person or represented by proxy at the meeting and entitled to
vote. Brokers who hold shares in street name for customers have the
authority under the rules of the various stock exchanges to vote on certain
matters when they have not received instructions from beneficial owners.
Where brokers vote on some matters but cannot exercise discretionary
authority on a matter for beneficial owners who have not provided voting
instructions (commonly known as "broker non-votes"), those shares will be
considered present and entitled to vote for quorum purposes, but will not
be included in the vote totals for the matter on which the broker could not
vote. Any broker non-votes on the proposal to approve the appointment of
auditors would have no effect on the outcome of the proposals because this
proposal requires the affirmative vote of a majority of the shares present
in person or represented by proxy and entitled to vote, and such broker
non-votes will not be considered shares present and entitled to vote with
respect to such matters under applicable Delaware law.
Any proxy may be revoked at any time prior to its exercise by
notifying the Secretary in writing, by delivering a duly executed proxy
bearing a later date, or by attending the Meeting and voting in person.
<PAGE>
VOTING SECURITIES AND SECURITY OWNERSHIP
Voting Securities
At the close of business on July 27, 1998, the record date, there were
6,070,720 shares of the Company's common stock (the "Common Stock")
outstanding. Only stockholders of record at the close of business on that
date are entitled to vote at the Meeting. At the Meeting, such stockholders
will be entitled to one vote for each share of Common Stock owned at the
record date. There is no other class of voting securities outstanding. The
presence at the Meeting, in person or by proxy, of persons entitled to cast
the votes of a majority of such outstanding shares of Common Stock will
constitute a quorum for consideration of the matters expected to be voted
on at the Meeting. In the election of directors, stockholders will not have
cumulative voting rights. No effect is given herein to the 3-for-2 stock
split on the outstanding Common Stock to be effected in the form of a stock
dividend declared on June 30, 1998 and payable on August 13, 1998 to
stockholders of record on July 31, 1998.
Securities Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the
Company regarding beneficial ownership of the Company's Common Stock as of
July 27, 1998 by (i) each person known by the Company to be the beneficial
owner of more than 5% of the Company's outstanding Common Stock, (ii) each
director of the Company, (iii) each Named Officer (as hereinafter defined)
and (iv) all directors and Named Officers of the Company as a group.
Information with respect to 5% owners is based solely on public filings.
Amount and Nature Percent
Beneficial Owner of Beneficial of
Ownership(1) Common Stock(1)
Richard H. Penske(2)... 2,268,674 37.3
Piercing Pagoda, Inc.
P.O. Box 25007
Lehigh Valley, PA 18002-5007
FMR Corp. (3) 603,200 9.9
Capital Research and
Management Company
SMALLCAP World Fund, Inc.(4) 335,000 5.5
John F. Eureyecko 82,742 1.4
Barry R. Clauser(5) 61,120 1.0
Sharon J. Zondag 50,933 *
Alan R. Hoefer(6) 67,556 1.1
Mark A. Randol 24,824 *
All directors and Named 2,555,849 41.2
Officers as a group (6
persons)(2)(5)(6)
- ----------
* Less than 1%.
(1)Each stockholder possesses sole voting and investment power with respect
to the shares listed, except as otherwise noted. Shares of Common Stock
subject to options that are exercisable within 60 days of this proxy
statement are deemed beneficially owned by the person holding such
options for the purpose of computing the percentage of ownership of such
person but are not treated as outstanding for the purpose of computing
the percentage of any other person. Accordingly, the information in the
above table includes the following number of shares of Common Stock
underlying options held by the following individuals, and all directors
and Named Officers as a group, when computing the percentage ownership of
such individual, director or group: Mr. Richard H. Penske, 5,000 shares;
Mr. John F. Eureyecko, 55,000 shares; Mr. Barry R. Clauser and Ms. Sharon
J. Zondag, 32,000 shares each; Mr. Alan R. Hoefer, 8,000 and Mr. Mark A.
Randol, 6,000 shares; and all directors and Named Officers as a group,
138,000 shares.
<PAGE>
(2)Includes 41,145 shares of Common Stock held in an annuity trust of which
Mr. Penske's wife is a beneficiary and an aggregate of 85,594 shares of
Common Stock held in two annuity trusts of which Mr. Penske is a
beneficiary (collectively, the "Annuity Trusts"). Victoria L. Penske and
Crislyn A. Penske, Mr. Penske's two oldest children, are the trustees of
the Annuity Trusts. Also includes 43,774 shares of Common Stock held by
Mr. Penske's wife and an aggregate of 103,354 shares of Common Stock
divided equally among four trusts, one for the benefit of each of Mr.
Penske's four children, of which Victoria L. Penske and Crislyn A. Penske
are the trustees. Mr. Penske disclaims beneficial ownership as to all of
such shares.
(3)Based solely on the Schedule 13G, dated February 14, 1998, filed with
the Securities and Exchange Commission (the "Commission") by FMR Corp.
("FMR"). The Schedule 13G reports that each of Edward C. Johnson 3d
(Chairman and 12.0% shareholder of FMR), FMR (through its wholly owned
subsidiary, Fidelity Management & Research Company ("Fidelity"),
investment adviser to Fidelity Low Priced Stock Fund (the "Fund"), which
directly holds the shares of Common Stock listed in the table above (the
"FMR Shares")) and the Fund has sole power to dispose of the FMR Shares.
The Schedule 13G also reports that neither Mr. Johnson nor FMR has sole
power to vote the FMR Shares, which power resides with the Fund's Board
of Trustees. Fidelity votes the FMR Shares under written guidelines
established by such Board. The Schedule 13G reports the addresses of FMR,
Fidelity and the Fund as 82 Devonshire Street, Boston, Massachusetts
02109.
(4)Based solely on the Schedule 13G, dated July 9, 1998, filed with the
Commission by Capital Research and Management Company ("Capital") and
SMALLCAP World Fund, Inc. ("SMALLCAP"). The Schedule 13G reports that
Capital has sole power to dispose of the shares of Common Stock listed in
the table above (the "Capital Shares") and that SMALLCAP has sole power
to vote the Capital Shares. The Schedule 13G reports the addresses of
Capital and SMALLCAP as 333 South Hope Street, Los Angeles, CA 90071.
(5)Includes 200 shares of Common Stock held by Mr. Clauser as custodian for
his children and four shares of Common Stock held by his wife, as to all
of which shares he disclaims beneficial ownership.
(6)Includes 4,000 shares of Common Stock held by a trust for the benefit of
one of Mr. Hoefer's children of which he is the trustee, 300 shares of
Common Stock held by his wife and 11,000 shares of Common Stock held by a
charitable foundation of which Mr. Hoefer is a trustee, as to all of
which shares he disclaims beneficial ownership.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the regulations thereunder, require the Company's
officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities (collectively, the
"reporting persons") to file reports of ownership and changes in ownership
with the Commission and to furnish the Company with copies of these
reports. Based on the Company's review of the copies of these reports
received by it, and written representations received from reporting
persons, the Company believes that all filings required to be made by the
reporting persons during the 1998 fiscal year and prior fiscal years were
made on a timely basis, except that: Richard H. Penske did not include in
his report on Form 5 for fiscal year 1998 one transaction relating to the
acquisition in June 1997 of options to acquire 25,000 shares of Common
Stock (such transaction has since been reported by way of amendment to such
report on Form 5); John F. Eureyecko did not file on a timely basis a
report on Form 5 for each of fiscal years 1997 and 1998 with respect to one
transaction in each such fiscal year relating to the acquisition of options
to purchase 25,000 shares of Common Stock; each of Alan R. Hoefer and Mark
A. Randol did not file on a timely basis a report on Form 5 for each of
fiscal years 1997 and 1998 with respect to one transaction in each such
fiscal year relating to the acquisition of options to purchase 2,000 shares
of Common Stock; each of Barry R. Clauser and Sharon J. Zondag did not file
on a timely basis a report on Form 5 for each of fiscal years 1997 and 1998
with respect to one transaction in each such fiscal year relating to the
acquisition of options to purchase 10,000 and 15,000 shares of Common
Stock, respectively; and Brandon R. Lehman did not file on a timely basis a
report on Form 5 for fiscal year 1997 with respect to one transaction in
such fiscal year relating to the acquisition of options to purchase 4,000
shares of Common Stock. In addition, John F. Eureyecko amended his report
on Form 4 for March 1998, and Sharon J. Zondag amended her report on Form 4
for February 1997, to correct the number of shares listed in the total
holdings column of each such report to reflect, among certain other things,
purchases under the Company's Employee Stock Purchase Plan.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTOR
At the Meeting, the stockholders will elect one director to hold
office until the 2001 Annual Meeting of Stockholders and until his
successor has been duly elected and qualified. The Company's Board of
Directors is divided into three classes serving staggered three-year terms,
with the term of one class of directors expiring each year. The director
whose term of office expires at the Meeting is Mark A. Randol.
The Board of Directors has nominated Mr. Randol to serve as director
until the 2001 Annual Meeting of Stockholders and until his successor has
been duly elected and qualified. Such nominee has indicated a willingness
to continue to serve as director. Should the nominee become unavailable to
accept election as a director, the persons named in the enclosed proxy will
vote the shares which such proxy represents for the election of such other
person as the Board of Directors may recommend. Unless contrary
instructions are given on the proxy, the shares represented by a properly
executed proxy will be voted "FOR" the election of Mr. Randol. A plurality
of the votes cast is required for the election of directors.
The nominee for election as the director to be elected at the Meeting
and the directors whose terms of office continue after the Meeting,
together with certain information about them, are set forth below:
Term
Name Age Expires Positions with Company
Mark A. Randol 63 1998 Director +
John F. Eureyecko 49 1999 President, Chief
Operating Officer,
Secretary and Director
Richard H. Penske 55 2000 Chairman of the Board and
Chief Executive Officer
Alan R. Hoefer 64 2000 Director +
----------
+ Member of the Audit and Compensation Committees.
Richard H. Penske has served the Company and its predecessor in various
capacities for more than 25 years. Mr. Penske served as President of the
Company from 1980 to June 1996, and has served as the Chief Executive Officer
since 1986. Mr. Penske has served as a director of the Company since 1978.
Alan R. Hoefer has served as a director of the Company since March 1994.
Since August 1988, Mr. Hoefer has been the Managing General Partner of Alan
Hoefer & Co., a private investment banking firm.
Mark A. Randol has served as a director of the Company since March 1994.
Mr. Randol is currently self-employed as a commercial real estate
consultant. From 1979 to March 1998, Mr. Randol served as the President of
Forest City Management, Inc., a real estate development company.
John F. Eureyecko joined the Company in October 1991 and has served as
President and Chief Operating Officer since June 1996. Mr. Eureyecko had
previously served as Executive Vice President from January 1992 to June 1996
and as Chief Financial Officer from February 1994 to June 1996. Mr.
Eureyecko was elected as Secretary in January 1992 and as a director in
March 1994. Mr. Eureyecko joined the Company with 18 years experience at
Triangle Building Supplies and Lumber Co., a building materials retailer,
where he last served as Senior Vice President and General Manager.
<PAGE>
Meetings and Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Compensation
Committee. Messrs. Hoefer and Randol serve as members of both the Audit
Committee and the Compensation Committee. The functions of the Audit
Committee, which held one meeting during fiscal 1998, include reviewing the
scope and results of the annual audit, internal accounting procedures and
certain other questions of accounting policy. The functions of the
Compensation Committee, which acted by unanimous consent in writing on six
occasions during fiscal 1998, include considering and determining all
compensation matters relating to the Company's executive officers.
The Board of Directors held one meeting, and acted by unanimous
consent in writing on five occasions, during fiscal 1998. Each director
attended at least 75% of the aggregate number of meetings of the Board of
Directors and committees on which the director served.
Compensation of Directors
Members of the Board of Directors who are not employees of the Company
are compensated at the annual rate of 8,000. Non-employee directors will
also receive 1,000 for each meeting of the Board of Directors which they
attend and, if not held in conjunction with a Board meeting, a fee of 1,000
for each meeting of a committee of the Board of Directors which they attend.
The Company also reimburses all directors for their expenses in connection
with their activities as directors of the Company. Directors who are also
employees of the Company do not receive any compensation for serving on the
Board of Directors. Pursuant to the Company's 1994 Stock Option Plan, each
director who is a member of the Compensation Committee also receives an
annual grant of ten year options to purchase 2,000 shares of Common Stock at
the fair market value on the date of grant, becoming exercisable on the
first anniversary of the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING "FOR" THE NOMINEE FOR DIRECTOR
PROPOSAL TWO
APPROVAL OF THE COMPANY'S INDEPENDENT AUDITORS
The Company's Board of Directors recommends that the stockholders
consider and approve a proposal to select KPMG Peat Marwick LLP, which
served as the Company's independent public auditors for the last fiscal
year, to serve as the Company's independent public auditors for the current
fiscal year. If the stockholders fail to approve the selection of such
auditors, the Board of Directors will reconsider the selection.
A representative of KPMG Peat Marwick LLP is expected to be present at
the Meeting. Such representative will have the opportunity to make a
statement if he desires to do so and will be available to respond to
appropriate questions of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING "FOR" THE PROPOSAL TO APPROVE
KPMG PEAT MARWICK LLP AS THE
COMPANY'S INDEPENDENT AUDITORS
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during fiscal 1996, fiscal 1997 and fiscal 1998 for the Chief
Executive Officer of the Company and the other executive officers of the
Company whose total annual salary, bonus and other compensation for fiscal
1998 exceeded $100,000 (the "Named Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation
Shares
Name and Principal Fiscal Annual Compensation Underlying All Other
Position Year Salary Bonus Options Compensation
<S> <C> <C> <C> <C> <C>
Richard H.Penske 1998 $199,235 $100,000 25,000 $51,396(1)
Chief Executive 1997 181,491 90,000 -0- 50,323(1)
Officer 1996 157,308 60,000 -0- 48,764(1)
John F Eureyecko 1998 $222,057 $105,000 25,000 $7,255(2)
President 1997 180,498 88,000 50,000 5,139(2)
1996 157,308 55,000 -0- 4,995(2)
Sharon J. Zondag 1998 $128,050 $45,000 15,000 $5,405(2)
Senior Vice 1997 113,243 35,000 10,000 4,070(2)
President 1996 98,269 22,000 -0- 3,393(2)
Store Operations
Barry R. Clauser 1998 $128,495 $38,000 15,000 $5,247(2)
Senior Vice 1997 113,158 30,000 10,000 3,907(2)
President 1996 97,692 15,000 -0- 3,425(2)
Merchandise Operations
</TABLE>
- ----------
(1)The compensation reported represents: (i) the Company's contributions
and matching payments under the Company's Retirement and Savings Plan in
the aggregate amounts of 6,601 in fiscal 1998, 5,013 in fiscal 1997 and
4,590 in fiscal 1996; (ii) the premiums on a life insurance policy on the
life on Mr. Penske, of which Mr. Penske's wife is the sole beneficiary,
which were 3,409 in fiscal 1998, 3,119 in fiscal 1997 and 2,803 in fiscal
1996; and (iii) the amount, on a term loan approach, of the benefit of
the whole-life portion of the premiums for a split dollar life insurance
policy paid by the Company projected on an actuarial basis which was
41,386 in fiscal 1998, 42,191 in fiscal 1997 and 41,371 in fiscal 1996.
(2)The compensation reported represents the Company's contribution and
matching payments under the Company's Retirement and Savings Plan.
<PAGE>
Stock Option Exercises and Holdings
The following table contains information concerning the stock option
grants made to each of the Named Officers in fiscal 1998:
Option Grants in Fiscal 1998
<TABLE>
<CAPTION>
Individual Grants
% of Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Annual Rates of Stock
Underlying Employees Exercise Price Appreciation
Options in Fiscal Price Per Expiration for Option Term(2)
Named Officer Granted(1) 1998 Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Richard H. Penske 25,000(3) 17% $27.36 June 25, 2007 $430,164 $1,090,120
John F.Eureyecko 25,000(3) 17 24.88 June 25, 2007 391,172 991,308
Sharon J. Zondag 15,000(3) 10 24.88 June 25, 2007 243,703 594,785
Barry R. Clauser 15,000(3) 10 24.88 June 25, 2007 243,703 594,785
</TABLE>
- ----------
(1)Numbers shown represent options granted under the 1994 Stock Option Plan
to purchase Common Stock.
(2)Future value of current-year grants assuming appreciation in the market
value of the Common Stock of 5% and 10% per year over the ten-year option
period. The actual value realized may be greater than or less than
potential realizable values set forth in the table.
(3)One-fifth of these options were exercisable on June 25, 1998 and the
remaining four-fifths are exercisable in four equal installments on the
subsequent four anniversaries of such date.
The following table provides information related to options exercised
during fiscal 1998 by each of the Named Officers and the number and value of
options held at March 31, 1998 by such individuals:
Aggregated Option Exercises in Fiscal 1998 and Option Values at March 31, 1998
<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercise Value of Unexercised
Shares Options at In-the-Money Options at
Acquired Value March 31, 1998 March 31, 1998
Named Officer on Exercise Realize Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Richard H.Penske -- -- -- 25,000 -- $97,175
John F.Eureyecko -- -- 40,000 60,000 $690,000 493,160
Sharon J. Zondag -- -- 24,000 26,000 502,000 267,375
Barry R. Clauser -- -- 24,000 26,000 502,000 267,375
</TABLE>
<PAGE>
Report of the Compensation Committee
The Compensation Committee of the Board of Directors, consisting
entirely of non-employee directors, is responsible for reviewing and
approving the Company's compensation policies and the compensation paid to
executive officers. The Company's compensation policies are structured to
enable the Company to attract, retain and motivate highly qualified
executive officers to contribute to the Company's goals and objectives and
its overall financial success. In determining executive compensation, the
Compensation Committee reviews and evaluates information supplied by
management and bases decisions both on the Company's performance and on the
individual's contribution and performance. The compensation of executive
officers includes salary and incentive compensation. The Chief Executive
Officer's compensation for fiscal 1998 was based on the same guidelines set
forth in this report for executive officers in general.
Salary
The Compensation Committee reviews the salary of each executive
officer in relation to the salary paid to him or her in the previous year
and with regard to general industry conditions or trends. The salaries are
set at levels intended to reward achievement of individual and company
goals and to motivate and retain highly qualified executives whom the
Compensation Committee believe are important to the continued success of
the Company. While the Compensation Committee's decisions are largely
subjective rather than based on formulas, the Compensation Committee does
consider various measures of the financial condition of the Company in
absolute terms and in relation to internal performance goals.
Incentive Compensation
The Compensation Committee believes that incorporating annual
incentive compensation into the total compensation of executive officers
encourages the executives to have the common goal of achieving the
Company's economic and strategic objectives. As with salary considerations,
the Compensation Committee bases its decisions regarding incentive
compensation, which may take the form of cash bonuses, grants of stock
options or grants of restricted stock, on both corporate and individual
performance. Decisions are made on a subjective basis and are not based on
formulas.
Summary
As described above, the Compensation Committee believes that its
policies and actions have motivated and rewarded, and will continue to
motivate and reward, the executive officers who contribute to the Company's
financial performance and increase the Company's value to Stockholders.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Alan R. Hoefer and Mark A. Randol
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative
total stockholder return on the Common Stock from the commencement of
public trading of the Common Stock on October 13, 1994 through March 31,
1998, and the cumulative total return on the S & P 500 Index and the Dow
Jones Specialty Retail Index during such period. The comparison assumes
$100 was invested on October 13, 1994 in the Company's Common Stock and in
each of the foregoing indices and assumes the reinvestment of any
dividends.
<TABLE>
<CAPTION>
10/13/94 12/30/94 6/30/95 12/29/95 3/29/96 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Piercing $100 $97 $97 $164 $139 $168 $202 $220 $230 $228 $289 $261 $284
Pagoda, Inc.
S&P 500 100 100 120 138 145 151 156 169 174 204 219 226 257
Dow Jones 100 96 98 100 111 120 123 114 112 132 145 146 172
Specialty Retail
</TABLE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at the address
appearing on the first page of this proxy statement by April 7, 1999 in
order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to that meeting.
A stockholder of the Company may wish to have a proposal presented at
the 1999 Annual Meeting of Stockholders, but not to have such proposal
included in the Company's proxy statement and form of proxy relating to
that meeting. If notice of any such proposal is not received by the Company
at the address appearing on the first page of this proxy statement by a
date falling between June 19, 1999 and July 19, 1999, inclusive, then such
proposal shall be deemed "untimely" for purposes of Rule 14a-4(c)
promulgated under the Exchange Act and, therefore, the Company will have
the right to exercise discretionary voting authority with respect to such
proposal.
<PAGE>
SOLICITATION OF PROXIES
The enclosed form of proxy is being solicited on behalf of the
Company's Board of Directors. The Company will bear the cost of the
solicitation of the Board of Directors' proxies for the Meeting, including
the cost of preparing, assembling and mailing proxy materials, the handling
and tabulation of proxies received, and charges of brokerage houses and
other institutions, nominees and fiduciaries in forwarding such materials
to beneficial owners.
In addition to the mailing of the proxy material, such solicitation
may be made in person or by telephone, telegraph or telecopy by directors,
officers or regular employees of the Company, or by a professional proxy
solicitation organization engaged by the Company.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH
PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO) AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN
REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS, AT THE ADDRESS OF THE
COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
Piercing Pagoda, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Piercing Pagoda, Inc. (the "Company")
hereby appoints Richard H. Penske and John F. Eureyecko, and each of them
acting individually, with full power of substitution, to act as attorneys
and proxies for the undersigned and to vote all shares of stock of the
Company which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held at
The Holiday Inn, Gateway Conference Center, Routes 512 & 22 in Bethlehem,
Pennsylvania, on Wednesday, September 16, 1998, at 10:00 a.m., and at any
adjournment or postponement thereof, provided that said proxies are
authorized and directed to vote as indicated with respect to the matters
set forth on the opposite side of this Proxy.
UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE NOMINEE
OF THE BOARD OF DIRECTORS IN THE ELECTION OF ONE DIRECTOR WHOSE TERM OF
OFFICE WILL EXTEND UNTIL THE 2001 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL
HIS SUCCESSOR IS DULY ELECTED AND QUALIFIED, AND "FOR" THE APPROVAL OF KPMG
PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT
FISCAL YEAR ENDING MARCH 31, 1999. This Proxy also delegates discretionary
authority to vote with respect to any other business which may properly
come before the meeting and any adjournment or postponement thereof.
(Please sign and date on reverse side)
- ------------------------------------------------------------------------------
1. Election of Directors.
FOR WITHHOLD
Mark A. Randol /---/ /---/
FOR AGAINST ABSTAIN
2. Ratification of the appointment of /---/ /---/ /---/
KPMG Peat Marwick LLP as the
Company's independent public auditors.
The undersigned hereby acknowledges receipt of Notice of Annual Meeting,
Proxy Statement and Annual Report.
PLEASE SIGN, DATE AND RETURN IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
Signature(s)________________________________Date:________________, 1998
NOTE: Please sign this proxy exactly as name(s) appears in address. When
signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your titles as such and, if the signer is a corporation, please
sign with full corporate name by duly authorized officer or officers and
affix the corporate seal. Where stock is issued in the name of two or more
persons, all such persons should sign.
