def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 þ
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Check the appropriate box:
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
ROYAL GOLD, 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):
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TABLE OF CONTENTS
ROYAL GOLD,
INC.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
303/573-1660
303/595-9385 (Fax)
info@royalgold.com
(E-mail)
www.royalgold.com (Web site)
NOTICE OF 2008
ANNUAL MEETING OF STOCKHOLDERS
To Be Held
November 5, 2008
* * * *
To the Stockholders of ROYAL GOLD, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Stockholders of Royal Gold, Inc. will be held at 9:30 a.m.,
on Wednesday, November 5, 2008, at the Oxford Hotel, Sage
Room, 1600 Seventeenth Street, Denver, Colorado, USA, to:
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1.
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Elect three Class III Directors to serve until the 2011
Annual Meeting of Stockholders or until each such
directors successor is elected and qualified;
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2.
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Approve amendments to the Companys 2004 Omnibus Long-Term
Incentive Plan to increase the number of shares of common stock
reserved for issuance thereunder from 900,000 to 1,300,000 and
to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended
(Section 409A);
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3.
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Ratify the appointment of PricewaterhouseCoopers LLP as
independent registered public accountants of the Company for the
fiscal year ending June 30, 2009; and
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4.
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Transact any other business that may properly come before the
meeting and any postponements or adjournments thereof.
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All stockholders are cordially invited to attend the meeting;
however, only stockholders of record as of the close of business
on September 16, 2008, are entitled to vote at the meeting
and any postponements or adjournments thereof. It is important
that your shares are represented and voted at the Annual
Meeting. For that reason, whether or not you expect to attend in
person, please vote your shares by telephone or by Internet. If
this proxy statement was mailed to you, you may also vote by
marking, signing and returning the proxy card in the enclosed
envelope. If you do attend the Annual Meeting, you may withdraw
your proxy should you wish to vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
Karen P. Gross
Vice President & Corporate Secretary
September 23, 2008
ROYAL GOLD,
INC.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
303/573-1660
303/595-9385 (Fax)
info@royalgold.com
(E-mail)
www.royalgold.com (Web site)
PROXY
STATEMENT
2008 ANNUAL
MEETING OF STOCKHOLDERS
General
Information
This Proxy Statement is furnished to holders of Royal Gold, Inc.
(the Company) common stock, in connection with the
solicitation of proxies on behalf of the Board of Directors of
the Company, to be voted at the Annual Meeting of Stockholders
of the Company (the Annual Meeting) to be held on
Wednesday, November 5, 2008, at 9:30 a.m.
This year we are taking advantage of the new Securities and
Exchange Commission, or the SEC, rules that allow companies to
furnish proxy materials to stockholders via the Internet. If you
received a Notice of Internet Availability of Proxy Materials,
or Notice, by mail, you will not receive a printed copy of the
proxy materials, unless you specifically request one. The
Notice instructs you on how to access and review the proxy
statement and annual report as well as how to submit your proxy
over the Internet. The Notice will also identify the date, time
and location of the annual meeting; the matters to be acted upon
at the meeting and the Board of Directors recommendation
with regard to each matter; a toll-free number,
e-mail
address and a website where stockholders can request a paper or
e-mail copy
of the proxy statement, our annual report and a form of proxy
relating to the annual meeting; information on how to access the
form of proxy; and information on how to obtain directions to
attend the meeting and vote in person.
We plan to mail the Notice to stockholders on or about
September 23, 2008. A printed copy of this proxy statement
and form of proxy card will be mailed to beneficial stockholders
that hold greater than 1,000 shares of our common stock and
to all shareholders of record. We expect that mailing to begin
on or about September 23, 2008.
Stockholders
Entitled to Vote
All voting rights are vested exclusively in the holders of the
Companys common stock, par value per share $0.01
(common stock). Only stockholders of record of the
common stock at the close of business on September 16, 2008
(the record date), are entitled to vote at the
Annual Meeting and at any and all postponements and adjournments
thereof. As of the record date, there were
33,926,495 shares of common stock outstanding and entitled
to vote.
Voting Your
Shares
Each share of common stock that you own entitles you to one
vote. Your proxy card shows the number of shares of common stock
that you own.
If this proxy statement was mailed to you, you may vote your
shares by signing and returning the enclosed proxy card. You may
also vote by telephone or by the Internet by following the
telephone or Internet voting instructions that are included with
your proxy card. If you received a Notice, you may vote your
shares by telephone or by the Internet by following the
telephone or Internet voting instructions that are included with
the Notice. If you vote by telephone or the Internet, you do not
need to return your proxy card. If you vote by proxy, the
proxy holders (each or any of the individuals named
on the proxy) will vote your shares as you instruct on the
proxy. If you sign and return the proxy, but do not give
instructions on how to vote your shares, your shares will be
voted (1) FOR the election of directors as
described herein under Proposal 1
Election of Directors, (2) FOR the
approval of amendments to the Companys 2004 Omnibus
Long-Term Incentive Plan to increase the number of shares of
common stock reserved for issuance thereunder from 900,000 to
1,300,000 and to comply with the requirements of
Section 409A as described herein under
Proposal 2
1
Approval of Amendments to the Companys 2004 Omnibus
Long-Term Incentive Plan, and (3) FOR
ratification of the appointment of the Companys
independent registered public accountants described herein under
Proposal 3 Ratification of Appointment of
Independent Registered Public Accountants.
You may attend the Annual Meeting and vote in person. You will
be given a ballot when you arrive. However, if your stock is
held in the name of your broker, bank or another nominee, you
must get a signed proxy from the broker, bank or other nominee
giving you the right to vote your shares. This will be the only
way we can be sure that the broker, bank or other nominee has
not already voted your shares on your behalf.
Revocation of
Proxy or Voting Instruction Form
You may revoke your proxy at any time before the proxy is voted
at the Annual Meeting. This can be done by either submitting
another properly completed proxy card with a later date, sending
a written notice of revocation to the Corporate Secretary of the
Company with a later date or by attending the Annual Meeting and
voting in person. You should be aware that simply attending the
Annual Meeting will not automatically revoke your previously
submitted proxy; rather you must notify a Company representative
at the Annual Meeting of your desire to revoke your proxy and
vote in person. Written notice revoking a proxy should be sent
to the Corporate Secretary, Royal Gold, Inc., 1660 Wynkoop
Street, Suite 1000, Denver, Colorado 80202.
Quorum and Votes
Required to Approve Proposals
A majority of the outstanding shares of the Companys
common stock entitled to vote, represented in person or by
proxy, will constitute a quorum at a meeting of the
stockholders. Abstentions and broker non-votes will
be counted as being present in person for purposes of
determining whether there is a quorum.
With respect to Proposal 1, the election of a director will
require an affirmative vote of the majority of the votes cast
with respect to that director at a meeting at which a quorum is
present. With respect to Proposals 2 and 3, the affirmative
vote of a majority of the shares that are represented and
entitled to vote at a meeting at which a quorum is present shall
be the act of the stockholders. For Proposal 1, a
WITHHOLD vote will have the effect of an
AGAINST vote with respect to the director for whom
the vote is WITHHOLD. Abstentions will have the same
effect as a vote AGAINST Proposals 2 and 3. If
a stockholder does not give a proxy to his or her broker with
instructions as to how to vote the shares, the broker has
authority under New York Stock Exchange rules to vote those
shares for or against routine matters, such as the
election of directors and the ratification of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm. If a broker votes shares that
are unvoted by its customers for or against a
routine proposal, those shares will be counted for
the purpose of determining the outcome of such
routine proposal. If a broker chooses to leave these
shares unvoted, the shares will have no effect on
Proposal 1 and the same effect as a vote
AGAINST Proposal 3. A broker does not have
authority to vote on Proposal 2. If you do not give your
broker instruction on how to vote the shares with respect to
Proposal 2, those shares will not be counted for the
purpose of determining the outcome of Proposal 2.
Cumulative voting is not permitted for the election of
directors. 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 Annual Meeting.
Tabulation of
Votes
Votes at the Annual Meeting will be tabulated and certified by
Broadridge Financial Solutions, Inc.
Solicitation
Costs
In addition to solicitation of proxies by mail or by electronic
data transfers, the Companys directors, officers or
employees, without additional compensation, may make
solicitations by telephone, facsimile, or personal interview.
The Company has retained Laurel Hill Advisory Group to aid in
the solicitation of brokers, banks, intermediaries and other
institutional holders in the United States and Canada for a fee
of $8,000, plus reimbursement for out-of-pocket expenses. All
costs of the solicitation of proxies will be borne by the
Company. The Company will also reimburse the banks and brokers
for their reasonable out-of-pocket expenses in forwarding proxy
materials to beneficial owners of shares of common stock.
2
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows the beneficial ownership, as of
September 16, 2008, of the Companys common stock by
each director, the Companys principal executive officer,
principal financial officer and the three most highly
compensated executive officers in fiscal year 2008 (each a
named executive officer), persons 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
Companys directors and executive officers as a group.
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Name and Address
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Number of Shares of
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Percent
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of Beneficial
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Common Stock
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of
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Owner
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Beneficially Owned
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Class
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Stanley
Dempsey(1)
Executive Chairman
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
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649,608
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1.9
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%
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Tony
Jensen(2)
President, Chief Executive Officer and Director
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
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169,600
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*
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John W.
Goth(3)
Director
9157 Ranch River Circle
Highlands Ranch, CO 80126
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69,250
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*
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M. Craig
Haase(4)
Director
1622 Eagle Hill Road
Gunnison, CO 81230
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4,250
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*
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William
Hayes(5)
Director
808 Brickell Key Drive, #804
Miami, FL 33131
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0
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*
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S. Oden Howell,
Jr.(6)
Director
P.O. Box 36097
Louisville, KY 40233
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545,730
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1.6
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%
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Merritt E.
Marcus(7)
Director
1412 Mockingbird Valley Green
Louisville, KY 40207
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214,993
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*
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James W.
Stuckert(8)
Director
P.O. Box 32760
Louisville, KY 40232
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1,806,385
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5.3
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%
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Donald
Worth(9)
Director
2679 Bayview Avenue
Willowdale, Ontario M2L 1C1
Canada
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32,750
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*
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3
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Name and Address
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Number of Shares of
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Percent
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of Beneficial
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Common Stock
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of
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Owner
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Beneficially Owned
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Class
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Karen P.
Gross(10)
Vice President and Corporate Secretary
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
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224,754
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*
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William
Heissenbuttel(11)
Vice President of Corporate Development
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
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22,289
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*
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Stefan L.
Wenger(12)
Chief Financial Officer and Treasurer
1660 Wynkoop Street
Suite 1000
Denver, CO 80202
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82,037
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*
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All Directors and Executive Officers
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as a Group (13 persons)
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3,835,512
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11.3
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%
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NFJ Investment Group
L.P.(13)
2100 Ross Avenue, Suite 700
Dallas, TX 75201
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1,926,200
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5.7
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%
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Less than 1% ownership of the Companys common stock. |
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Includes options to purchase 157,500 shares of common stock
that were exercisable as of September 16, 2008, or which
become exercisable within 60 days from such date and
106,818 shares beneficially owned by certain members of
Mr. Dempseys immediate family. Mr. Dempsey
disclaims beneficial ownership of these 106,818 shares of
common stock. |
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Includes 67,500 shares of restricted stock and options to
purchase 65,000 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(3) |
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Includes 1,250 shares of restricted stock and options to
purchase 32,500 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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Includes 1,250 shares of restricted stock. |
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(5) |
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Mr. Hayes became a member of the Board of Directors
effective January 15, 2008. |
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(6) |
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Includes 1,250 shares of restricted stock and options to
purchase 37,500 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(7) |
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Includes 1,250 shares of restricted stock and options to
purchase 17,500 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(8) |
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Includes 1,250 shares of restricted stock and options to
purchase 17,500 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(9) |
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Includes 1,250 shares of restricted stock and options to
purchase 17,500 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(10) |
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Includes 27,500 shares of restricted stock and options to
purchase 117,500 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(11) |
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Includes 15,000 shares of restricted stock and options to
purchase 4,999 shares of common stock that were exercisable
as of September 16, 2008, or which become exercisable
within 60 days from such date. |
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(12) |
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Includes 36,250 shares of restricted stock and options to
purchase 34,612 shares of common stock that were
exercisable as of September 16, 2008, or which become
exercisable within 60 days from such date. |
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(13) |
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As reported by NFJ Investment Group L.P. on Schedule 13D/A
filed with the SEC on April 16, 2008. NFJ Investment Group
L.P. has sole dispositive power over 1,926,200 shares of
common stock and sole voting power over 1,895,800 shares of
common stock. |
4
PROPOSAL 1.
ELECTION OF
CLASS III DIRECTORS
The Companys 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 Companys
current Class I Directors are Messrs. Dempsey, Goth
and Jensen; the Class II Directors are Messrs. Hayes,
Marcus and Stuckert; and the Class III Directors are
Messrs. Haase, Howell and Worth. Edwin W. Peiker, Jr.
served as a Class III director until his retirement from
the Board of Directors effective July 25, 2007.
If the proxy is properly completed and received in time for the
Annual Meeting, and if the proxy does not indicate otherwise,
the represented shares will be voted FOR M. Craig Haase,
S. Oden Howell, Jr., and Donald Worth as Class III
Directors of the Company. If any of the nominees for election as
a Class III Director should refuse or be unable to serve
(an event that is not anticipated), the proxy will be voted for
a substitute nominee who is designated by the Board of
Directors. Each Class III Director elected shall serve
until the 2011 Annual Meeting, or until his successor is elected
and qualified.
The Companys Amended and Restated Bylaws
(bylaws) require that each director be elected by
the majority of votes cast at a meeting at which a quorum is
present with respect to such director in uncontested elections
(the number of shares voted for a director nominee
must exceed 50% of the votes cast with respect to that
director). In a contested election (a situation in which the
number of nominees exceeds the number of directors to be
elected), the standard for election of directors would be a
plurality of the shares represented in person or by proxy at any
such meeting and entitled to vote on the election of directors.
This years election is expected to be an uncontested
election, and the majority vote standard will apply. If a
nominee who is serving as a director is not elected at the
annual meeting, Delaware law provides that the director would
continue to serve on the Board as a holdover
director. Under the Companys bylaws, each director
nominee who is serving as a director that is not elected shall
offer to tender his or her resignation to the Board of
Directors. In that situation, the Compensation, Nominating and
Corporate Governance Committee would make a recommendation to
the Board of Directors on whether to accept or reject the
resignation, or whether to take other action. The Board of
Directors will act on the Compensation, Nominating and Corporate
Governance Committees recommendation and publicly disclose
its decision and the rationale behind it within 90 days
from the date of the certification of the election results. The
director who tenders his or her resignation will not participate
in the Board of Directors decision. If a nominee who was
not already serving as a director fails to receive a majority of
votes cast at the annual meeting, Delaware law provides that the
nominee does not serve on the Board as a holdover
director. All of the Class III director nominees are
currently serving on the Board of Directors.
Information concerning the nominees for election as directors is
set forth below under Directors and Officers.
Vote Required for Approval. Each director
must receive a majority of votes cast with respect to that
director at a meeting at which a quorum is present in order to
be elected (the number of shares voted for a
director nominee must exceed 50% of the votes cast with respect
to that director).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
EACH OF THE DIRECTOR NOMINEES.
5
DIRECTORS AND
OFFICERS
The following is information regarding the directors and
executive officers of the Company related to their names,
position with the Company, periods of service and experience.
The persons who are nominated for election as directors at the
Annual Meeting are indicated with an asterisk.
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Continuously
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Class of
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Principal Occupation During Last
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a Director
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Director/Term
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Name
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Age
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5 Years and Position with
Company
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Since
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Expires
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Stanley Dempsey
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69
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Director. Executive Chairman of the Board of Directors since
July 2006. Chairman and Chief Executive Officer of the Company
from August 1988 until June 2006. President of the Company from
May 2002 until August 2003. President and Chief Operating
Officer of the Company from July 1987 to July 1988. From 1983
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, a firm that provides
financial, management, and advisory services to the mining
industry. From 1970 through 1983, Mr. Dempsey was employed by
AMAX, Inc., a major international mining firm, serving in
various managerial and executive capacities. Mr. Dempsey is a
member of the board of directors of Taranis Resources. He is a
director of the World Gold Council, and is also involved in
various mining-related associations.
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August
1983
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I/2009
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Tony Jensen
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46
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Director. President and Chief Executive Officer of the Company
since July 2006. President and Chief Operating Officer of the
Company from August 2003 until June 2006. Mr. Jensen has over
25 years of mining industry experience, 18 with Placer Dome
Inc. His corporate and operations experience were developed both
in the United States and Chile where he occupied several senior
management positions in mine production, corporate development
and finance. Before joining the Company, he was the Mine General
Manager of the Cortez Joint Venture from August 1999 to June
2003, a mining joint venture between Barrick (formerly
Placer Dome Inc.) and Kennecott Explorations (Australia) Ltd., a
subsidiary of Rio Tinto. Mr. Jensen is a director of the
Industrial Advisory Board of the South Dakota School of Mines
and Technology, and is a member of the board of directors of the
National Mining Association, the Nevada Mining Association, and
the Colorado Mining Association.
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August
2004
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I/2009
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6
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Continuously
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Class of
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Principal Occupation During Last
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a Director
|
|
Director/Term
|
Name
|
|
Age
|
|
5 Years and Position with
Company
|
|
Since
|
|
Expires
|
|
John W. Goth
|
|
81
|
|
Director. Mr. Goth has been a consultant to the mining industry
since 1985. Mr. Goth held several senior positions at AMAX,
Inc., a major international mining firm, from April 1954 to
November 1985. Mr. Goth has been director of Behre Dolbear since
1998. He is past chairman of the Mineral Information Institute
and the Mining and Metallurgical Society of America, a former
non-executive director and director of the Denver Gold Group, a
mining-related association. He is a former director of U.S.
Gold, Magma Copper Corporation, U.S. Zeolites, and Dome Mines
Corporation.
|
|
August
1988
|
|
I/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*M. Craig Haase
|
|
65
|
|
Director. Retired mining executive. Mr. Haase served as
Director, Executive Vice President and Chief Legal Officer of
Franco-Nevada Mining Corporation, a publicly-traded precious
metals royalty company for more than 15 years prior to its
acquisition by Newmont Mining Corporation in 2002. He served as
a director of Newmont from March 2002 until he retired in May
2003. He served in a similar capacity at Euro-Nevada Mining
Corporation from 1987 to 1999 when Euro-Nevada merged with
Franco-Nevada. Mr. Haase was also Chairman and CEO for Gold
Marketing Corporation of America, Inc., a physical gold export
company, from 1994 to 2002. He received his J.D. degree from the
University of Illinois and was engaged in private practice from
1971 to 1990.
|
|
July
2007
|
|
III/2008
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuously
|
|
Class of
|
|
|
|
|
Principal Occupation During Last
|
|
a Director
|
|
Director/Term
|
Name
|
|
Age
|
|
5 Years and Position with
Company
|
|
Since
|
|
Expires
|
|
William Hayes
|
|
63
|
|
Director. Retired mining executive. Mr. Hayes served in
various management positions with Placer Dome, Inc. from 1988 to
2006. He was Executive Vice President Placer Dome Inc. for
Project Development and Corporate Affairs from 2004 to 2006.
From 2000 to 2004, he served as Executive Vice President Placer
Dome Inc. for the USA and Latin America, and from 1994 to 1999
as Executive Vice President Placer Dome Inc. for Latin America.
From 1991 to 1994, he served as Chief Executive Officer of
Mantos de Ore, Chile, at the La Coipa mine and was Chief
Financial Officer there from 1988 to 1991. Mr. Hayes served
as Vice President and Treasurer of Placer Dome from 1991 to
1994, and Vice President and Chief Financial Officer of
La Coipa mine from 1988 to 1991. From 1972 to 1987,
Mr. Hayes served in various financial positions with Exxon
Corporation. Mr. Hayes is an advisor to the Calista Native
Corporation in Alaska, and a director of Tethyan Copper Company,
a copper mining and exploration business focused in the South
Asian region and Antofogasta Minerals, and Antofogasta PLC, each
a copper mining company focused on operations in Chile.
|
|
January
2008
|
|
II/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*S. Oden Howell, Jr.
|
|
68
|
|
Director. President of Howell & Howell Contractors, Inc., a
renovation contractor, and industrial and commercial painting
contractor, since 1988. Owner of Kessinger Service Industries,
LLC, an industrial coatings contractor firm. Secretary/Treasurer
of LCM Constructors, Inc., a general construction company
located in Charleston, S.C. and Secretary/ Treasurer of SemperFi
Constructors, LLC, a service-disabled, veteran-owned small
business located in Charleston, S.C. From 1972 until 1988, Mr.
Howell was Secretary/Treasurer of Howell & Howell, Inc., an
industrial and commercial painting contractor firm. Mr. Howell
is a director of Keller Manufacturing Company and Paragon Door
Designs, Inc.
|
|
December
1993
|
|
III/2008
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuously
|
|
Class of
|
|
|
|
|
Principal Occupation During Last
|
|
a Director
|
|
Director/Term
|
Name
|
|
Age
|
|
5 Years and Position with
Company
|
|
Since
|
|
Expires
|
|
Merritt E. Marcus
|
|
74
|
|
Director. Retired. Former President and Chief Executive Officer
of Marcus Paint Company, a manufacturer of industrial liquid
coatings, and Performance Powders, LLC, a manufacturer of
industrial powder coatings, from 1983 until 2004. Mr. Marcus
served several terms as a director of the National Paint and
Coatings Association.
|
|
December
1992
|
|
II/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W. Stuckert
|
|
70
|
|
Director. Senior Executive of Hilliard, Lyons, Inc., since
2004, a full service financial asset management firm.
Mr. Stuckert joined Hilliard, Lyons in 1962 and served in
several capacities including Chief Executive Officer prior to
being named Chairman in December 1995. He served as Chairman
from December 1995 to December 2003.
|
|
September
1989
|
|
II/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Donald Worth
|
|
76
|
|
Director. Retired. Mr. Worth is a director of Sentry Select
Capital Corporation, Cornerstone Capital Resources, Inc., and
Tiomin Resources Inc. He is also a trustee of Labrador Iron Ore
Royalty Income Fund. Mr. Worth has been involved in the mining
industry since 1949. He formerly was a mining specialist and a
vice president of Canadian Imperial Bank of Commerce (Canada)
from July 1984 to August 1997, when he retired. He is involved
with several professional associations both in Canada and the
United States.
|
|
April
1999
|
|
III/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen Gross
|
|
54
|
|
Vice President of the Company since June 1994 and Corporate
Secretary since 1989. From 1987 until 1989, Ms. Gross was the
Assistant Secretary to the Company. Ms. Gross is in charge
of investor relations, public relations and ensuring the
Companys compliance with various corporate governance
standards. Ms. Gross is involved with the National Investor
Relations Institute, the Society of Corporate Secretaries and
Governance Professionals, and is a director of the Denver Gold
Group, a mining-related association.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuously
|
|
Class of
|
|
|
|
|
Principal Occupation During Last
|
|
a Director
|
|
Director/Term
|
Name
|
|
Age
|
|
5 Years and Position with
Company
|
|
Since
|
|
Expires
|
|
William Heissenbuttel
|
|
43
|
|
Vice President of Corporate Development since February 2007.
Manager of Corporate Development from April 10, 2006 through
January 2007. Mr. Heissenbuttel brings more than
twenty years of corporate finance experience with thirteen
of those years in project and corporate finance in the metals
and mining industry. Mr. Heissenbuttel served as Senior Vice
President from February 2000 to April 2006 and Vice President
from 1999 to 2000 at N M Rothschild & Sons (Denver) Inc.
From 1994 to 1999, he served as Vice President and Group Vice
President at ABN AMRO Bank N.V. From 1987 to 1994, he was a
Senior Credit Analyst and an Associate at Chemical Bank
Manufacturers Hanover. Mr. Heissenbuttel holds a Master of
Business Administration degree with a specialization in finance
from the University of Chicago.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce C. Kirchhoff
|
|
49
|
|
Vice President and General Counsel since February 2007. Mr.
Kirchhoff has over 20 years experience representing
hardrock and industrial minerals mining companies, as well as
mineral exploration and development clients. From January 2004
through January 2007, Mr. Kirchhoff was a partner with the law
firm Carver Kirchhoff Schwarz McNab & Bailey, LLC. From
January 2003 to December 2003, Mr. Kirchhoff was a partner with
the law firm Carver & Kirchhoff, LLC, and from April 1996
through December 2002, Mr. Kirchhoff was a partner in the law
firm Alfers & Carver, LLC. Prior to private practice,
Mr. Kirchhoff was a senior attorney with Cyprus Amax
Minerals Company from June 1986 through March 1996.
Mr. Kirchhoff holds a J.D. from the University of Denver, a
Masters of Science in Mineral Economics from the Colorado School
of Mines, and a B.A. from Colorado College.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuously
|
|
Class of
|
|
|
|
|
Principal Occupation During Last
|
|
a Director
|
|
Director/Term
|
Name
|
|
Age
|
|
5 Years and Position with
Company
|
|
Since
|
|
Expires
|
|
Stefan Wenger
|
|
35
|
|
Chief Financial Officer since July 2006 and Treasurer since
August 2007. Chief Accounting Officer of the Company from April
2003 until June 2006. Mr. Wenger was with
PricewaterhouseCoopers LLP as a manager from June 2002 until
March 2003. From September 2000 until June 2002, he was a
manager with Arthur Andersen LLP. Mr. Wenger has over
13 years of experience in the mining and natural resources
industry working in various financial roles. Mr. Wenger is a
certified public accountant. He is a member of the Colorado
Society of Certified Public Accountants and the American
Institute of Certified Public Accountants.
|
|
|
|
|
MEETINGS AND
COMMITTEES OF THE BOARD
During the fiscal year ended June 30, 2008 (fiscal
year 2008), the Board of Directors held four regular
meetings, each of which included executive sessions of the
independent directors, and fifteen special meetings. Each
director attended, in person or by telephone, at least 75% of
the aggregate number of meetings of the Board of Directors and
of the Committee(s) of the Board of Directors on which he
served. It is the Companys policy that each director
attends each Annual Meeting. All directors attended last
years Annual Meeting.
Independence of
Directors
The Board of Directors has determined that each director, except
for Messrs. Dempsey and Jensen, who are officers of the
Company, is independent under the NASDAQ listing
standards. The Board of Directors has determined that the
directors designated as independent have no
relationship with the Company that would interfere with the
exercise of their independent judgment in carrying out the
responsibilities of a director.
Lead
Director
The Board of Directors has elected a lead, independent director
who presides over executive sessions of the independent
directors scheduled at each regular meeting of the Board of
Directors. This lead director position is a rotating position on
a yearly basis. The lead director chairs the executive sessions
of the independent directors and serves as liaison between the
Executive Chairman and the President and Chief Executive
Officer, and the other independent directors. Mr. S. Oden
Howell, Jr. currently serves as lead director.
Audit
Committee
The Board of Directors has a standing Audit Committee. The Audit
Committee consists of James W. Stuckert, as Chairman,
John W. Goth, and Donald Worth. All members of the Audit
Committee are independent under the NASDAQ listing standards and
Section 10A(m)(3) of the Securities Exchange Act of 1934,
as amended. The Audit Committee held six meetings during the
fiscal year. The Audit Committee Charter is available on the
Companys web site at www.royalgold.com.
The Audit Committee assists the Board of Directors in its
oversight of the integrity of the Companys financial
statements and compliance with legal and regulatory requirements
and corporate policies and controls. The Audit Committee has the
sole authority to retain and terminate the Companys
independent registered public accountants, review reports of the
independent registered public accountants,
11
approve all auditing services and related fees and the terms of
any agreements, and to pre-approve any non-audit services to be
rendered by the Companys independent registered public
accountants. The Audit Committee monitors the effectiveness of
the audit process and the Companys financial reporting,
reviews the adequacy of financial and operating controls and
evaluates the effectiveness of the Committee. The Audit
Committee is responsible for confirming the independence and
objectivity of the independent registered public accountants.
The Audit Committee reviews and approves all transactions
between the Company and parties related to the Company. The
Audit Committee discusses and reviews any transaction between
the Company and parties related to the Company and reports to
the full Board of Directors whether it has approved the
transaction. The Audit Committee is also responsible for
preparation of the annual report of the Audit Committee for
public disclosure in the Companys proxy statement. The
Board of Directors has determined that James Stuckert is an
audit committee financial expert as that term is
defined in Item 407(d) of
Regulation S-K.
As an audit committee financial expert,
Mr. Stuckert satisfies the NASDAQ financial literacy and
sophistication requirements.
Compensation,
Nominating and Corporate Governance Committee
The Board of Directors has a standing Compensation, Nominating
and Corporate Governance Committee. During fiscal year 2008, the
Compensation, Nominating and Corporate Governance Committee
consisted of John W. Goth, as Chairman, James W. Stuckert and
Mr. S. Oden Howell. Mr. Peiker retired from the Board
of Directors effective July 25, 2007, simultaneously
resigning his position on the Compensation, Nominating and
Corporate Governance Committee. On August 23, 2007,
Mr. S. Oden Howell was elected by the Board of Directors to
serve on the Compensation, Nominating and Corporate Governance
Committee. All members of the Compensation, Nominating and
Corporate Governance Committee are considered independent
directors under the NASDAQ listing standards. The Committee held
five meetings during the fiscal year. The Compensation,
Nominating and Corporate Governance Committee Charter is
available on the Companys web site at www.royalgold.com.
The Compensation, Nominating and Corporate Governance Committee
oversees the Companys compensation policies, plans and
programs and reviews and recommends the compensation to be paid
to executive officers and directors.
The Compensation, Nominating and Corporate Governance Committee
also administers and implements the Companys incentive
compensation and equity-based plans. The Compensation,
Nominating and Corporate Governance Committee is also
responsible for overseeing the preparation of the Compensation
Discussion and Analysis and preparing the report on executive
compensation for public disclosure in the Companys proxy
statement.
The Compensation, Nominating and Corporate Governance Committee
may form subcommittees and delegate to its subcommittees such
power and authority as it deems necessary or advisable. The
Compensation, Nominating and Corporate Governance Committee has
no current intention to delegate any of its authority with
respect to determining executive officer compensation to any
subcommittee. The Compensation, Nominating and Corporate
Governance Committee does not delegate its responsibilities with
respect to executive compensation to any executive officer of
the Company.
In addition to compensation matters, the Compensation,
Nominating and Corporate Governance Committee also identifies or
reviews individuals proposed to become members of the Board of
Directors and recommends director nominees. In selecting
director nominees, the Compensation, Nominating and Corporate
Governance Committee assesses the nominees independence,
as well as considers his or her experience, areas of expertise,
including experience in the mining industry, diversity,
perspective, broad business judgment and leadership, all in the
context of an assessment of the perceived needs of the Board of
Directors at that time. Further, the Compensation, Nominating
and Corporate Governance Committee will consider director
candidates recommended by stockholders using the same criteria
outlined above, provided such written recommendations are
submitted to the Corporate Secretary of the Company in
accordance with the advance notice and other provisions of the
Companys bylaws.
The Compensation, Nominating and Corporate Governance Committee
also advises the Board of Directors on various corporate
governance principles. The Compensation, Nominating and
Corporate
12
Governance Committee reviews the content and compliance with the
Companys Board of Directors Governance Guidelines
annually.
All recommendations from the Compensation, Nominating and
Corporate Governance Committee are submitted to the Board of
Directors for approval.
Compensation
Committee Interlocks and Insider Participation
During fiscal year 2008, all of the members of the Compensation,
Nominating and Corporate Governance Committee were non-employee
directors. No interlocking relationship existed between our
board of directors or our Compensation, Nominating and Corporate
Governance Committee and the board of directors or compensation
committee of any other company during fiscal year 2008.
Communication
with Directors
Any stockholder who desires to contact the Companys Board
of Directors may do so by writing to the Corporate Secretary,
Royal Gold, Inc., 1660 Wynkoop Street, Suite 1000, Denver,
Colorado 80202. Any such communication should state the number
of shares beneficially owned by the stockholder making the
communication. The Corporate Secretary will forward any such
communication to the Chairman of the Compensation, Nominating
and Corporate Governance Committee, and will forward such
communication to other members of the Board of Directors, as
appropriate, provided that such communication addresses a
legitimate business issue. Any communication relating to
accounting, auditing or fraud will be forwarded to the Chairman
of the Audit Committee.
Code of Business
Ethics and Conduct
The Company has adopted a Code of Business Ethics and Conduct
applicable to all of its directors, officers and employees,
including the Chief Executive Officer, the Chief Financial
Officer, and other persons performing financial reporting
functions. The Code is reviewed on a yearly basis. The Code is
available through the Companys web site at
www.royalgold.com. The Code is designed to deter wrongdoing and
promote (a) honest and ethical conduct; (b) full,
fair, accurate, timely and understandable disclosures;
(c) compliance with laws, rules and regulations;
(d) prompt internal reporting of Code violations; and
(e) accountability for adherence to the Code. The Company
will post on its web site any amendments to the Code.
Governance
Guidelines
In August 2007, the Board of Directors, upon recommendation from
the Compensation, Nominating and Corporate Governance Committee,
adopted Board of Directors Governance Guidelines to assist
the Board of Directors in the discharge of its duties and to
serve the interests of the Company and its stockholders. The
Directors Governance Guidelines are available on the
Companys website at www.royalgold.com.
Certain
Relationships and Related Transactions
In November 2005, the Company entered into a strategic
exploration alliance with Taranis Resources, Inc. (Taranis
Resources), a Colorado-based resource company listed on
the Toronto Stock Exchange, to pursue exploration opportunities
in Finland. As of June 30, 2008, the Company has provided
$506,404 in funding for a 2.0% net smelter return royalty and
future royalty earn-in rights. In January 2006 and in support of
the strategic exploration alliance, Mr. Dempsey, Executive
Chairman of the Company, became a director of Taranis Resources.
As a director of Taranis Resources, Mr. Dempsey is awarded
stock options under Taranis Resources stock option plan.
In January 2006, Mr. Dempsey was awarded 100,000 incentive
stock options, exercisable for a period of four and one-half
years from the date of grant, at a price of Cdn$0.35 per
share.
In July 2006, the Company entered into an agreement with
Mr. Dempsey under which any director fees, consulting fees
and other remuneration (whether in cash, securities or
otherwise) paid to Mr. Dempsey by Taranis Resources will be
remitted to the Company (the Agreement). Pursuant to
the Agreement, the Company may require Mr. Dempsey to
exercise the stock options granted to him by Taranis Resources
at any time or from time to time during the exercise period and
under the terms of the Taranis Resources stock option agreement.
If the Company requires Mr. Dempsey to exercise the stock
options, it will pay Mr. Dempsey the
13
amount necessary to exercise the stock options. The securities
gained upon exercise will be transferred to the Company. The
Company will reimburse Mr. Dempsey for incurred tax
liability, if any.
The Company currently beneficially owns 1,137,500 shares,
or 5.94%, of Taranis Resources common stock, including
100,000 stock options awarded to Mr. Dempsey that the
Company has the right to acquire.
DIRECTORS
COMPENSATION
Royal Golds compensation for non-employee directors is
designed to link rewards to business results and stockholder
returns. The Company does not have a retirement plan for
non-employee directors. Executive officers who are also
directors are not paid additional compensation for their
services on the Board.
The Compensation, Nominating and Corporate Governance Committee,
or the Committee, is responsible for evaluating and recommending
to the independent members of the Board of Directors the
compensation for non-employee directors. The independent members
of the Board of Directors make final compensation decisions. In
August 2006, the Committee engaged Frederick W. Cook &
Associates to evaluate Royal Golds compensation package
for non-employee directors. The study reviewed annual cash
retainers, fees for attending board and committee meetings, fees
for committee membership, and an annualized present value of
equity compensation and found that compensation for non-employee
directors was competitive with the benchmark peer group but some
slight improvements should be considered.
Based on the August 2006 study and the increased business
demands of the Company, the Board of Directors modified the
non-employee directors compensation in August 2007 to
increase the annual retainer for board and committee membership
and meeting fees. The Board of Directors also determined to
cease awarding stock options to non-employee directors, but to
increase annual grants of restricted stock from
1,250 shares to 2,500 shares. A new policy was also
implemented to require non-employee directors to own a minimum
of 10,000 shares of the Companys common stock. There
is no time frame in which the directors must meet these
ownership targets. Messrs. Goth, Howell, Marcus, Stuckert
and Worth have met the ownership target.
Cash
Compensation
For fiscal year 2008, each non-employee director of the Company
received an annual fee of $20,000 for service as a director and
an additional $1,000 for each Board of Directors meeting
attended, either in person or via telephone. The Chairman of the
Audit Committee received an annual fee of $6,000 and the
Chairman of the Compensation, Nominating and Corporate
Governance Committee received an annual fee of $4,000 for their
service as chairman of their respective committees. Each member
of the Audit Committee and Compensation, Nominating and
Corporate Governance Committee received $750 for each meeting
attended, either in person or via telephone. Mr. Peiker
received a one-time bonus of $35,000 in connection with his
retirement from the Board of Directors in July 2007. The Board
of Directors determined the one-time bonus was appropriate as
recognition of Mr. Peikers long standing service to
the Company, including over ten years of service as an executive
of the Company and twenty years of service on the Companys
Board of Directors.
Equity
Compensation
On November 7, 2007, each non-employee director was granted
2,500 shares of restricted stock. Half of the shares of
restricted stock vested immediately upon grant and the remaining
half of the shares of restricted stock will vest on the first
anniversary of the grant date. Non-employee directors were not
awarded stock options in fiscal year 2008.
Expenses
Non-employee directors are reimbursed for all out-of-pocket
expenses incurred in connection with the business and affairs of
the Company.
14
Fiscal Year
2008 Directors Compensation
The following table provides information regarding the
compensation of the Companys non-employee directors in
fiscal year 2008. Amounts shown for each director vary due to
service on committees or as committee chairs for all or a
portion of the year. The annual retainer for fiscal year 2008 is
paid in cash on a quarterly basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
Cash(1)
|
|
|
Awards(2)
|
|
|
Awards(3)
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
John W. Goth
|
|
$
|
41,000
|
|
|
$
|
65,435
|
|
|
$
|
3,834
|
|
|
$
|
|
|
|
$
|
110,269
|
|
M. Craig Haase
|
|
$
|
31,750
|
|
|
$
|
61,359
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
93,109
|
|
William
Hayes(4)
|
|
$
|
11,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
11,000
|
|
S. Oden Howell
|
|
$
|
34,250
|
|
|
$
|
65,435
|
|
|
$
|
3,834
|
|
|
$
|
|
|
|
$
|
103,519
|
|
Merritt Marcus
|
|
$
|
31,750
|
|
|
$
|
65,435
|
|
|
$
|
3,834
|
|
|
$
|
|
|
|
$
|
101,019
|
|
James Stuckert
|
|
$
|
44,000
|
|
|
$
|
65,435
|
|
|
$
|
3,834
|
|
|
$
|
|
|
|
$
|
113,269
|
|
Donald Worth
|
|
$
|
34,750
|
|
|
$
|
65,435
|
|
|
$
|
3,834
|
|
|
$
|
|
|
|
$
|
104,019
|
|
Edwin
Peiker(5)
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|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
|
|
|
(1) |
|
Non-employee directors received an annual cash retainer for
service on our Board of Directors of $20,000, and an additional
$1,000 for each Board of Directors meeting attended.
Mr. Stuckert received an additional annual retainer of
$6,000 for service as the Chairman of the Audit Committee.
Mr. Goth received an additional annual retainer of $4,000
for service as the Chairman of the Compensation, Nominating and
Corporate Governance Committee. Messrs. Howell, Goth,
Stuckert and Worth each received an additional $750 for each
committee meeting attended. |
|
(2) |
|
The amounts shown represent the portion of fair value of
restricted stock awards that vest on continued service
recognized during fiscal year 2008 for financial statement
reporting purposes in accordance with SFAS 123R. Amounts
shown do not represent cash payments made to the individuals,
amounts realized or amounts that may be realized. Refer to
Note 8 to the Companys Consolidated Financial
Statements contained in the Companys 2008 Annual Report on
Form 10-K
filed with the SEC on August 20, 2008, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on August 22, 2008, for a discussion of
the assumptions used in valuation of the restricted stock
awards. In accordance with SFAS 123R, the grant date fair
value for each restricted stock award in fiscal year 2008 was
$29.75. Restricted stock awards related to continued service for
non-employee directors vest 50% immediately upon grant and 50%
on the first anniversary of the grant. As of June 30, 2008,
Messrs. Goth, Haase, Hayes, Howell, Marcus, Stuckert and
Worth each owned, in the aggregate, 1,250, 1,250, 0, 1,250,
1,250, 1,250 and 1,250 shares of restricted stock,
respectively. |
|
(3) |
|
Amounts shown reflect the portion of fair value of stock option
awards recognized during fiscal years 2008 for financial
statement reporting purposes in accordance with SFAS 123R,
using the Black-Scholes-Merton option-pricing. Amounts shown do
not represent cash payments made to the individuals, amounts
realized or amounts that may be realized. Refer to Note 8
to the Companys Consolidated Financial Statements
contained in the Companys 2008 Annual Report on
Form 10-K
filed with the SEC on August 20, 2008, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on August 22, 2008, for a discussion of
the assumptions used in valuation of stock option awards. No
stock option awards were granted to
non-employee
directors during fiscal year 2008. Stock option awards for
non-employee directors vest 50% immediately upon grant and 50%
on the first anniversary of the grant. As of June 30, 2008,
Messrs. Goth, Haase, Hayes, Howell, Marcus, Stuckert and
Worth each owned, in the aggregate, 32,500, 0, 0, 37,500,
17,500, 17,500 and 17,500 stock options, respectively. |
|
(4) |
|
Mr. Hayes joined the Board of Directors effective
January 15, 2008. |
|
(5) |
|
Mr. Peiker retired from the Board of Directors effective
July 25, 2007. Mr. Peiker was given a one time bonus
of $35,000 in connection with his retirement as recognition for
his service to the Company. All of Mr. Peikers shares
of restricted stock and unexercisable stock options on the date
of his retirement were forfeited upon his retirement.
Mr. Peikers exercisable stock options on the date of
his retirement remained exercisable for 90 days following
July 25, 2007. Mr. Peiker exercised all of his stock
options in September 2007. |
15
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys officers and directors, and
persons who own more than 10% of a registered class of the
Companys 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 and written
representations from certain 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 met for fiscal year 2008, and all
transactions are reflected in this Proxy Statement.
EXECUTIVE
COMPENSATION
Compensation,
Nominating and Corporate Governance Committee Report
The information contained in the following Compensation,
Nominating and Corporate Governance Committee Report shall not
be deemed soliciting material or filed
with the SEC, nor shall such information be incorporated by
reference into a future filing under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent the Company specifically incorporates this
Report by reference therein.
The Compensation, Nominating and Corporate Governance Committee
of the Board of Directors has reviewed and discussed with
management the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K.
Based on such review and discussion, the Compensation,
Nominating and Corporate Governance Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis
be included in this Proxy Statement.
This Report has been submitted by the following members of the
Compensation, Nominating and Corporate Governance Committee of
the Board of Directors:
John W. Goth, Chairman
S. Oden Howell, Jr.
James W. Stuckert
Compensation
Discussion and Analysis
Overview
The Compensation, Nominating and Corporate Governance Committee
(the Committee) is responsible for, among other
things, setting and administering the policies that govern the
compensation for the executive officers of the Company. The
Committee evaluates the performance of management and recommends
to the full Board of Directors the compensation level for all
officers and key employees. The Committee also administers the
Companys 2004 Omnibus Long-Term Incentive Plan and
recommends levels of equity awards such as stock options,
restricted stock and performance stock awards to executive
officers and key employees to the full Board of Directors. The
Committee is composed entirely of independent outside
directors, as defined under Section 162(m) of the
Internal Revenue Code, and each member is independent under the
applicable rules of the NASDAQ. Final compensation decisions are
made by the independent members of the Board of Directors based
on the recommendations of the Committee.
Compensation
Philosophy and Objectives
Royal Golds general compensation philosophy is focused on
paying a competitive salary and providing attractive long-term
incentives to reward growth and to link management interests
with stockholder interests. The Committee believes that bonus
and long-term incentives are critical to the sustainability and
continuity of the Companys business and that such
incentives support executive retention and avoid short-term
windfalls.
16
The Committee specifically believes that the compensation
philosophy and programs of Royal Gold should:
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link rewards to individual performance, business results and
stockholder returns;
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encourage creation of long-term stockholder value and
achievement of strategic objectives;
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target management salary range structures and award
opportunities at or slightly above the market median, with
opportunity to receive total direct compensation in the upper
quartile for superior results;
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maintain an appropriate balance between base salary, annual
bonuses and long-term incentives; and
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attract and retain the highest caliber personnel on a long-term
basis.
|
Royal Gold employs sixteen employees and places primary
importance on the talent of those employees to manage and grow
the Company. Based on the small number of employees, Royal
Golds executives are required to be multi-disciplined,
self-reliant, and highly experienced. The Committee feels the
loss of Royal Golds executive talent would be a
significant threat for the Company, requiring the Company to
target total direct compensation in the upper quartile of its
peer group companies in the United States and Canada engaged in
either the mining or exploration of precious metals or in the
acquisition or management of interests in mining operations. In
determining specific compensation amounts for executives, the
Committee considers such factors as (1) experience;
(2) individual performance; (3) tenure; (4) role
in achieving corporate objectives; and (5) compensation
compared to the Companys other officers and to the
Companys peer group.
Role of
Management
Corporate goals and objectives are established by the Committee
with recommendations by the President and Chief Executive
Officer and reviewed annually with the Board of Directors. Each
executive officer completes annually a self-assessment of his or
her individual performance and contributions to the
Companys corporate goals and objectives, which is reviewed
with Royal Golds President and Chief Executive Officer.
Based on such annual reviews and the Companys compensation
objectives, the President and Chief Executive Officer
recommends annual bonus awards and long-term incentive awards to
the Committee. The Committee considers the President and Chief
Executive Officers recommendations in making annual bonus
and long-term incentive award recommendations to the Board of
Directors. The Committee conducts an annual review of the
President and Chief Executive Officers performance and all
recommendations relating to the President and Chief Executive
Officers compensation are made by the Committee
independent from members of management.
Role of
Compensation Consultants and Evaluation of Compensation
Package
The Committee has sought and received advice from independent
compensation and benefits consultants as necessary or useful to
conduct a review of the Companys compensation position.
The Committees goals in utilizing compensation and
benefits consultants is to maintain total direct compensation
near the 75th percentile and base salary above the
50th percentile. The Committee also reviews cost of living
increases as a separate factor in salary increases, and utilizes
the U.S. Department of Labor, Bureau of Labor Statistics
Consumer Price Index to determine the level salaries should be
increased to reflect cost of living increases.
In August 2006, the Committee engaged Frederic W. Cook to
conduct an extensive study of the Companys compensation
package, including comparing the compensation package to Royal
Golds benchmark peer group of companies in the
U.S. and Canada engaged in either the mining or exploration
of precious metals or in the acquisition and management of
interests in mining operations. The benchmark peer group
consisted of 15 companies: Barrick Gold, Newmont Mining,
Goldcorp, Freeport McMoran Copper and Gold, Glamis Gold,
Agnico-Eagle Mines, Kinross Gold, Meridian Gold, Yamana Gold,
IAMGOLD, Pan American Silver, Coeur dAlene Mines,
Golden Star Resources, Vista Gold and International Royalty
Corporation.
17
The study reviewed the Companys base salaries, annual
bonuses, benefits, non-cash compensation, and long-term
incentives in comparison with the benchmark group and provided a
review of the competitiveness, fairness, and effectiveness of
each component of compensation and an evaluation of individual
total compensation. The study found that the salaries of the
named executive officers were in the 16th percentile of the
benchmark group, salaries plus bonuses were at the
26th percentile, long-term incentives averaged in the
63rd percentile, and total direct compensation (salary,
bonus, and long-term incentives) were in the
54th percentile.
The Committee felt the evaluation by Frederick W. Cook was based
on a peer group of companies that, based on market
capitalization, was not entirely appropriate for Royal
Golds executive compensation evaluation purposes.
Nonetheless, based on the evaluation, the Committee concluded
that it was necessary to increase the cash compensation for
management in fiscal year 2008 to reinforce the key objectives
of attracting and retaining key executives at what was a very
competitive time in the mining industry. The Committee approved
and recommended base salary increases for the named executive
officers of 6.2% on average for fiscal year 2008, which
included a 3.5% adjustment for cost of living increases. Based
on this, the Committee recommended, and the independent
directors of the Board of Directors approved, an increase in
base salary of $6,500, $21,000, $15,000, $15,000 and $12,500 for
Messrs. Dempsey, Jensen, Wenger, Ms. Gross and
Mr. Heissenbuttel, respectively, for fiscal year 2008.
In July 2007, the Committee engaged Frederick W. Cook again to
conduct a study of the Companys compensation package as
modified by the salary increases. Frederick W. Cook was asked to
use a benchmark peer group of companies in the U.S. and
Canada engaged in either the mining or exploration of precious
metals or in the acquisition and management of interests in
mining operations that excluded the largest market capitalized
companies. In response to the Committees request,
Frederick W. Cook used a smaller benchmark peer group
consisting of 10 companies: Agnico-Eagle Mines, Meridian
Gold, Yamana Gold, IAMGOLD, Silver Wheaton, Pan American
Silver, Coeur dAlene Mines, Golden Star Resources, Hecla
Mining and International Royalty Corporation.
The results of the July 2007 study showed that executive officer
salaries were in the 32nd percentile, salaries plus bonuses
were in the 45th percentile, long-term incentives were near
the 83rd percentile, and total direct compensation (salary,
bonus, and long-term incentives) was in the 69th percentile
of the benchmark peer group.
The Committee concluded that executive compensation packages for
the Companys executive officers were approaching an
appropriate mix of competitive salary and bonus incentives as
well as long-term incentives to motivate executives to achieve
positive businesses results and increase shareholder value and
that the July 2007 study should be used to determine appropriate
long-term incentive awards for fiscal 2008, as discussed further
below, and total compensation for fiscal 2009. The Committee
also felt that methodical adjustments be made over the next few
years, instead of a lump sum
catch-up,
for those individuals whose salaries fall below the
50th percentile.
Subsequent
Evaluations
The Committee used the July 2007 study to review and provide
guidance for certain executive compensation changes for upcoming
fiscal year 2009. In order to develop compensation changes
consistent with the Companys geographical market, the
Committee also consulted with the Mountain States Employers
Council, or the MSEC, and utilized the U.S. Department of
Labor, Bureau of Labor Statistics Consumer Price Index to
determine whether salary increases should be made to reflect
cost of living increases.
The MSECs 2007 survey for calendar 2008 compensation
trends indicated projections for average exempt salary increases
specific to the mining industry of 4.8% while mining executive
and other officer salaries were projected to increase 7.3%. The
U.S. Department of Labor, Bureau of Labor Statistics
Consumer Price Index stated that consumer prices for all goods
nationwide have increased 4.0% from March 2007 compared to March
2008.
Based on the 2007 study, the Committee concluded that the
Companys overall compensation package is well positioned
at the 70% level, but that some salary adjustments should be
made in order to reflect salary increases expected for mining
executives and officers in the Companys geographic region
and cost of living increases.
18
The Committee approved and recommended to the Board of Directors
base salary increases of 7.4% on average, including a 4.0%
adjustment for cost of living increases, for fiscal year 2009.
Based on this, the Committee recommended, and the independent
members of the Board of Directors approved, an increase in base
salary of $7,500, $33,500, $12,000, $12,000 and $19,500 for
Messrs. Dempsey, Jensen, Wenger, Ms. Gross and
Mr. Heissenbuttel, respectively, for the fiscal year ending
June 30, 2009.
Components
of Executive Compensation
Royal Golds compensation program consists of base pay,
annual cash bonuses, long-term incentives and benefits. The
Company believes perquisites for executives should be extremely
limited in scope and value and, therefore, generally does not
provide perquisites or other special benefits to executive
officers that are not available to all employees. The Committee
attempts to pay competitively in the aggregate as well as
deliver an appropriate balance between fixed compensation (base
salary, bonuses and benefits) versus variable compensation
(long-term incentives). Consistent with the Companys
philosophy of attracting and retaining its executive talent, the
Committee emphasizes long-term incentives over fixed
compensation as components of the executive compensation
package. The relative portions of fixed compensation and
long-term incentives varies for each named executive officer,
but generally is intended to provide a significant portion of
the executives compensation through long-term incentives.
Employment
Agreements
Royal Gold had previously entered into employment agreements
with Messrs. Dempsey and Wenger and Ms. Gross. Each
employment agreement was for a one year employment term that
automatically extended without further action by the employee
for successive one year periods unless the Company delivered a
written notice of involuntary termination with 90 days
prior notice. Each of the employment agreements provided for
post-termination benefits of one year of severance in the event
of a voluntary termination by the executive for good
reason after a change of control of Royal Gold
and six months severance in the event of death or
disability. Until September 14, 2008, the
Company had not entered into an employment agreement with
Mr. Jensen, the Companys President and Chief
Executive Officer or Mr. Heissenbuttel, Vice President of
Corporate Development.
In May 2008, the Committee, as part of its ongoing review of the
Companys executive compensation package, determined that
to remain competitive with its peer companies, the Company
should offer and enter into an employment agreement with
Mr. Jensen, providing, among other things, severance
benefits. The Committee retained Frederick W. Cook to conduct a
review of a wide range of employment agreements and to provide
advice on developing an employment agreement and severance
benefits to be offered to Mr. Jensen. The Committee and
Frederick W. Cook also reviewed the then-existing employment
agreements with Mr. Dempsey, Mr. Wenger and
Ms. Gross to determine if modifications were necessary to
provide competitive compensation and severance benefits within
the industry.
Based on its review, the Committee approved and recommended to
the Board of Directors employment agreements to be offered to
the named executive officers that provided for severance
benefits to Mr. Jensen and Mr. Heissenbuttel, neither
of whom had previously entered into employment agreements, and
increased severance benefits to Mr. Dempsey,
Mr. Wenger and Ms. Gross over those provided under
each of their then-existing employment agreements. The
independent members of the Board of Directors approved the new
employment agreements, and each of Messrs. Dempsey, Jensen,
Wenger, and Ms. Gross accepted and entered into the
employment agreements offered by the Company on
September 15, 2008. Mr. Heissenbuttel did not enter
into an employment agreement.
Pursuant to Mr. Jensens employment agreement,
Mr. Jensen will receive severance compensation upon an
involuntary termination of employment without Cause,
a voluntary termination of employment for Good
Reason, or if the Company elects not to renew the
employment term during the
four-year
renewal period of the employment agreement for a period of one
year. If such termination or
non-renewal
is within two years after a change of control,
Mr. Jensen will be entitled to two and one-half times his
then base salary, two and one-half times his average annual cash
incentive bonus for the prior three fiscal years and
continued employee benefits for twelve months.
19
Pursuant to the employment agreements with Mr. Dempsey,
Mr. Wenger and Ms. Gross, each such executive will
receive severance compensation upon an involuntary termination
of his or her employment without Cause, a voluntary
termination of his or her employment for Good
Reason, or if the Company elects not to renew his or her
employment term during the four-year renewal period of his or
her employment agreement for a period of one year. If such
termination or non-renewal is within two years after a
change of control, the executive will be entitled to
one and one-half times his or her then base salary, one and
one-half times his or her average annual cash incentive bonus
for the prior three fiscal years and continued employee benefits
for twelve months.
The employment agreements, and benefits payable thereunder, with
each of Messrs. Jensen, Dempsey and Wenger and
Ms. Gross are described in further detail in the section
titled Potential Payments Upon Termination or
Change-in-Control
on page 29.
Base
Salary
Base salary is the fixed cash amount paid to an officer on a
fiscal year cycle. Increases in cost of living are considered
and will be added to the base salary levels at the prevailing
rate, if appropriate. Actual salaries vary by individual and are
based on sustained performance toward achievement of the
Companys goals and objectives, experience and current
salary. The Committee believes that salaries should be adjusted
as necessary in order to maintain competitiveness within the
mining industry. Due to the Companys emphasis on long-term
incentives, individual salaries are intended to be around the
50th percentile of the Companys benchmark peer group
for each position, including the position of the President and
Chief Executive Officer. Based on the August 2006 study,
the Committee determined that base salary compensation, which
was in the 16th percentile of the benchmark peer group used
in that study, was adequate for fiscal year 2007 as a component
of total compensation, which was in the 63rd percentile of
the benchmark peer group, but required adjustment for fiscal
year 2008. After such adjustments were made, the Committee
determined that the base salary compensation, which was in the
32nd percentile based on the peer group used in the July
2007 study, and the total direct compensation, which was at the
70th percentile, obtained a position within the range of
the benchmark peer group that would be competitive to retain
executives but further adjustment to cash compensation would be
considered in the future. Base salary figures for each of the
named executive officers are shown in the Summary Compensation
Table. In the latter part of fiscal year 2008, the Committee
again reviewed base salaries and determined that changes were
necessary for fiscal year 2009 as described above. The
independent members of the Board of Directors approved salaries
for fiscal year 2009 for each of Messrs. Dempsey, Jensen,
Wenger, Heissenbuttel and Ms. Gross in the amount of
$194,000, $374,500, $182,000, $182,000, and $182,000,
respectively.
Annual Cash
Bonuses
Annual cash bonus awards are discretionary and are based on
individual and corporate performance, returns to shareholders,
the Companys ability to pay, and general practices in the
mining industry. Bonuses are designed to balance rewards for
exceptional performance, personal contributions, and to tie
accountability with actual performance. Annual bonuses are
recommended to the Committee by the Companys President and
Chief Executive Officer based on annual reviews of each
executive officers performance and contribution to the
Companys corporate goals and objectives. The Company does
not utilize a formula to determine the amount of bonus awards or
the amount of bonus awards as a percentage of base salary, but
instead looks to qualitative considerations in evaluating each
executive. The Committee reviews the recommendations and the
individual performance of each executive officer and recommends
bonus awards to the independent members of the Board of
Directors in November following the end of the prior fiscal
year. Bonuses are paid at the beginning of the next calendar
year. At this time, the amount of annual cash bonuses for fiscal
year 2008 for each of the named executive officers is not
determinable but, in fiscal year 2007, annual cash bonus awards
for the named executive officers ranged from 53% to 63% of base
salary.
Long-Term
Incentives
The Companys 2004 Omnibus Long-Term Incentive Plan
(LTIP) permits the award of various types of
stock-based incentives. Grants are typically in the form of
incentive and non-qualified stock options,
20
shares of restricted stock and performance stock awards that
vest based on the achievement of performance objectives. The
LTIP is designed to balance short-term performance with the need
for sustainable results, to align the interests of management
with stockholders, and to provide each executive officer with a
significant incentive to manage the Company from the perspective
of an owner with an equity stake in the business. The LTIP
compensation is intended to drive future performance of
employees by potentially delivering a significant portion of
each executive officers total compensation at a future
date. The amount of each incentive award is driven by the
Companys interest in retaining the individual as an
employee, an individuals relative level in the Company,
and his or her ability to impact corporate goals. With respect
to equity awards made in fiscal year 2008, the Committee looked
to the individuals contribution across six elements to
determine the amount and form of equity awards: (1) the
Companys financial growth, (2) cost containment,
(3) financial strength, (4) protection of assets,
(5) governance, and (6) marketing. The amount and form
of equity awards were determined based on each named executive
officers contributions to each of these six elements.
The amount and form of equity awards for each named executive
officer are determined by the Committee based on recommendations
by the President and Chief Executive Officer and recommended by
the Committee to the independent members of the Board of
Directors in November and awards are granted at that time. The
Company does not utilize predetermined levels of LTIP awards as
a percentage of base salary, but instead evaluates each
executives contribution to the six elements stated above,
or other elements that the Committee may utilize to evaluate
executives in the future. Members of Royal Golds
management do not have authority to make off-cycle or ad-hoc
equity grants. In the event of a new hire grant, concurrence is
obtained prior to any grant being made either through approval
at a regularly scheduled Board of Directors meeting or by
unanimous written consent.
Stock
Options
The Company grants stock options as part of its LTIP. Stock
options are considered long-term awards that are intended to
drive shareholder value and align management with shareholders
with regard to share price appreciation. Stock options are
granted once a year as recommended by the Committee to the
independent members of the Board of Directors in November. The
exercise price of options is based on the closing price of the
Companys common stock on the NASDAQ Global Select Market
on the date of grant. Options have 10 year terms. For all
of the named executive officers, other than Mr. Dempsey and
Ms. Gross, stock options vest in equal annual increments
over three years. Stock options granted to Mr. Dempsey and
Ms. Gross vest one year from the grant date. The Committee
recommended and the independent members of the Board of
Directors approved a shorter vesting schedule for
Mr. Dempsey and Ms. Gross to reward their long
standing service with the Company that has continued for more
than 20 years and because both Mr. Dempsey and
Ms. Gross have exceeded the stock ownership levels
determined for each of them pursuant to the Companys stock
ownership program described below.
Restricted
Stock
The Companys LTIP also allows for the issuance of
restricted stock awards. Restricted stock awards are focused on
retention and long-term commitment of executives. Restricted
stock awards are granted to officers and certain other
employees. Shares of restricted stock are granted once a year as
recommended by the Committee to the independent members of the
Board of Directors in November. Shares of restricted stock are
considered issued and outstanding with respect to which
executives may vote and may receive dividends paid in the
ordinary course to other Royal Gold stockholders. Dividends are
calculated at the same rate as paid to other stockholders. Royal
Gold has paid a cash dividend on its common stock for each
fiscal year beginning in fiscal year 2000. Royal Gold currently
plans to pay a dividend on a calendar year basis, subject to the
discretion of the Board of Directors.
Restricted stock awards vest in equal one-third increments
beginning on the fourth anniversary of the restricted stock
grant date, with full vesting six years from the date of grant.
The Committee has determined that delaying the vesting of
restricted stock awards until the fourth anniversary of the
grant date improves the retention value of the awards.
21
Performance
Awards
The Company also grants performance awards under the LTIP.
Performance awards, which are also referred to as performance
shares or performance stock awards in this Proxy Statement, are
intended to provide significant incentive to obtain long-term,
non-dilutive growth performance. The portion of each executive
officers total compensation in the form of performance
shares varies for each officer. In awarding performance shares
to any executive officer, the Committee considers the executive
officers responsibilities with the Company and the
executive officers ability to influence or meet the
performance objectives. Performance shares can only be earned if
either one of two defined multi-year performance goals are met
within five years of the date of grant. If the performance goals
are not earned by the end of the five year period, the
performance shares will be forfeited. Performance shares granted
may vest upon meeting one of two defined performance goals:
(1) growth of free cash flow per share on a trailing twelve
month basis; and (2) growth of royalty ounces in reserve
per share on an annual basis. The Committee believes that free
cash flow per share is an important indicator of the
Companys financial health and growth. The Company defines
free cash flow, a non-GAAP financial measure, as operating
income plus depreciation, depletion and amortization, non-cash
charges and impairment of mining assets, if any, less minority
interest in income of consolidated subsidiary. The Committee
strives to establish performance goals that are challenging to
meet and would provide significant stockholder value, if
achieved. Performance shares may vest in 25% increments upon
meeting 25%, 50%, 75% and 100% of performance goals. Performance
shares will vest upon the Committees determination that
such 25% increment of the performance goals has been met.
Performance shares are not considered issued and outstanding
shares with respect to which executives may vote or receive
dividends. Performance shares are settled with shares of the
Companys common stock when they vest.
As of June 30, 2008, 50% of the performance targets set for
the performance shares awarded in fiscal year 2007 were met and,
as a result, 50% of the performance shares vested and were
settled with common stock. As of August 19, 2008, an
additional 25% of the performance targets set for the
performance shares awarded in fiscal year 2007 were met and, as
a result, an additional 25% of the performance shares awarded in
fiscal year 2007 will vest and be settled with common stock. As
of the record date, none of the performance shares awarded in
fiscal year 2008 have vested. Solely for purposes of
SFAS 123R recognition of compensation expense, as of
June 30, 2008, management determined that it is probable
that 25% of the performance shares granted in fiscal year 2008
will vest. However, performance shares will not vest until
performance objectives are actually met as determined by the
Committee.
Benefit
Programs
Benefit programs for the executive officers are generally common
in design and purpose to those for the broad-base of employees
in the United States. The Company also maintains a Simplified
Employee Pension Plan, known as a Salary Reduction/Simplified
Employee Pension Plan (SARSEP Plan) in which all
employees are eligible to participate. This plan was chosen
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. The SARSEP Plan
allows employees to reduce their pre-tax salary and to put this
money into a tax deferred investment plan. This is a voluntary
plan. Individuals may make contributions of up to the lesser of
(i) 25% of their aggregate annual salary and bonus, or
(ii) $15,500, or if the employee is over age 50,
$20,500, for calendar 2008. The Company will match 100% of the
individuals contribution, up to 7% of an individuals
annual salary and bonus. Those that do not participate in the
SARSEP Plan will receive a 3% employer contribution in
accordance with the Plan. Employer contributions are immediately
100% vested. Total employee and employer contributions may not
exceed the smaller of $46,000 for calendar 2008 or 25% of
aggregate annual salary and bonus for any individual.
Perquisites
The Company believes perquisites for executives should be
extremely limited in scope and value and, therefore, generally
does not provide perquisites or other special benefits to
executive officers that are not available to all employees.
22
Executive
Stock Ownership
Royal Gold has adopted a stock ownership program to encourage
its executive officers to achieve and maintain a minimum
investment in the Companys common stock at levels set by
the Committee. The program provides incentives for these
officers to focus on improving long-term shareholder value and
linking the interest of management and stockholders. Royal
Golds executive stock ownership program requires all of
the Companys executive officers to own a number of shares
that is a multiple of base salary. Unexercised stock options,
shares of restricted stock and unearned performance shares are
not considered owned for purposes of the program. The multiple
for the President and Chief Executive Officer is four times base
salary, and the multiple for all other executive officers is two
times base salary. There is no time frame in which the executive
officers must meet ownership targets. The program requires each
executive officer to hold an aggregate of fifty percent (50%) of
the shares of stock acquired pursuant to any option grant,
restricted stock grant, or performance share grant until such
executive officer reaches his or her ownership target. This
holding requirement is determined after liquidation of shares of
stock required for tax withholdings. Mr. Dempsey and
Ms. Gross have exceeded their stock ownership targets.
Post-Termination
Compensation
The Company does not provide pension or other retirement
benefits apart from the SARSEP plan described above. The Company
provides certain post-termination benefits pursuant to the terms
of employment agreements and the LTIP, described below under the
section titled Potential Payments Upon Termination or
Change-in-Control
on page 29. In connection with the Committees review
of employment agreements and severance benefits described above,
the Committee reviewed the change of control benefits provided
to its executives under the LTIP. The Committee determined that
in order to provide competitive post-termination benefits,
executives should receive acceleration of equity incentive
awards in addition to the additional severance benefits offered
in the new employment agreements. The Committee recommended, and
the independent members of the Board of Directors approved,
Award Modification Agreements for each of Messrs. Dempsey,
Jensen and Wenger and Ms. Gross modifying the terms of
stock option, restricted stock and performance stock awards
granted to them under the LTIP prior to the effective date of
the Award Modification Agreement. The Award Modification
Agreements provide accelerated vesting upon certain
post-termination circumstances, including in connection with a
change of control. Terms of the Award Modification Agreements
are described further in the section titled Potential
Payments Upon Termination or
Change-in-Control
on page 29. Messrs. Dempsey, Jensen and Wenger and
Ms. Gross each entered into an Award Modification Agreement
on September 15, 2008.
2008 SUMMARY
COMPENSATION TABLE
The following table provides information regarding the
compensation of the Companys named executive officers for
fiscal years 2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
Name and
|
|
Year
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
|
|
Awards(3)
|
|
|
Awards(4)
|
|
|
Compensation(5)
|
|
|
Total
|
|
Principal Position
|
|
(Fiscal)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Stanley Dempsey
|
|
|
2008
|
|
|
$
|
186,500
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
525,612
|
|
|
$
|
21,331
|
|
|
$
|
733,443
|
|
Executive Chairman
|
|
|
2007
|
|
|
$
|
180,000
|
|
|
$
|
95,000
|
|
|
$
|
73,788
|
|
|
$
|
472,978
|
|
|
$
|
23,193
|
|
|
$
|
884,959
|
|
Tony Jensen
|
|
|
2008
|
|
|
$
|
341,000
|
|
|
$
|
|
|
|
$
|
453,941
|
|
|
$
|
198,807
|
|
|
$
|
35,826
|
|
|
$
|
1,029,574
|
|
President and Chief Executive Officer
|
|
|
2007
|
|
|
$
|
320,000
|
|
|
$
|
200,000
|
|
|
$
|
590,106
|
|
|
$
|
181,972
|
|
|
$
|
29,469
|
|
|
$
|
1,321,547
|
|
Stefan Wenger
|
|
|
2008
|
|
|
$
|
169,019
|
|
|
$
|
|
|
|
$
|
236,228
|
|
|
$
|
127,260
|
|
|
$
|
18,638
|
|
|
$
|
551,145
|
|
Chief Financial Officer and Treasurer
|
|
|
2007
|
|
|
$
|
155,000
|
|
|
$
|
85,000
|
|
|
$
|
304,310
|
|
|
$
|
124,592
|
|
|
$
|
16,836
|
|
|
$
|
685,738
|
|
Karen P. Gross
|
|
|
2008
|
|
|
$
|
170,000
|
|
|
$
|
|
|
|
$
|
203,009
|
|
|
$
|
164,253
|
|
|
$
|
21,794
|
|
|
$
|
559,056
|
|
Vice President and Corporate
|
|
|
2007
|
|
|
$
|
155,000
|
|
|
$
|
90,000
|
|
|
$
|
249,828
|
|
|
$
|
174,768
|
|
|
$
|
20,627
|
|
|
$
|
690,223
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Heissenbuttel(6)
|
|
|
2008
|
|
|
$
|
162,500
|
|
|
$
|
|
|
|
$
|
157,107
|
|
|
$
|
39,221
|
|
|
$
|
15,406
|
|
|
$
|
374,234
|
|
Vice President of Corporate
|
|
|
2007
|
|
|
$
|
135,000
|
|
|
$
|
95,000
|
|
|
$
|
152,294
|
|
|
$
|
26,942
|
|
|
$
|
9,071
|
|
|
$
|
418,307
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Salaries are subject to annual review and adjustment by the
Compensation, Nominating and Corporate Governance Committee as
approved by the Board of Directors. In July 2008, the Board of
Directors |
23
|
|
|
|
|
approved salaries for fiscal year 2009 for Messrs. Dempsey,
Jensen, Wenger and Heissenbuttel and Ms. Gross in the
amount of $194,000, $374,500, $182,000, $182,000 and $182,000,
respectively. |
|
(2) |
|
Bonus award amounts for fiscal year 2008 are not determinable as
of the date of this Proxy Statement. Amounts of bonus awards for
fiscal year 2008 will be determined in November 2008 and paid in
January 2009. Amounts of bonus awards for fiscal year 2007 were
determined in November 2007 and were paid in January 2008. |
|
(3) |
|
Amounts shown reflect the portion of fair value of restricted
stock awards that vest on continued service and performance
stock awards that vest based on achievement of predetermined
performance goals recognized during fiscal years 2008 and 2007
for financial statement reporting purposes in accordance with
SFAS 123R. Amounts shown do not represent cash payments
made to the individuals, amounts realized or amounts that may be
realized. Refer to Note 8 to the Companys
Consolidated Financial Statements contained in the
Companys 2008 Annual Report on
Form 10-K
filed with the SEC on August 20, 2008, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on August 22, 2008, for a discussion of
the assumptions used in valuation of the restricted stock and
performance stock awards. |
|
(4) |
|
Amounts shown reflect the portion of fair value of stock option
awards recognized during fiscal years 2008 and 2007 for
financial statement reporting purposes in accordance with
SFAS 123R, using the Black-Scholes-Merton option-pricing
model. Amounts shown do not represent cash payments made to the
individuals, amounts realized or amounts that may be realized.
Refer to Note 8 to the Companys Consolidated
Financial Statements contained in the Companys 2008 Annual
Report on
Form 10-K
filed with the SEC on August 20, 2008, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on August 22, 2008, for a discussion of
the assumptions used in valuation of stock option awards. |
|
(5) |
|
All Other Compensation includes the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death &
|
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
Employer
|
|
|
Dismemberment
|
|
|
Disability
|
|
|
Total
|
|
|
|
Year
|
|
|
SARSEP
|
|
|
Insurance
|
|
|
Insurance
|
|
|
All Other
|
|
Name
|
|
(Fiscal)
|
|
|
Contributions
|
|
|
Premiums
|
|
|
Premiums
|
|
|
Compensation
|
|
|
Stanley Dempsey
|
|
|
2008
|
|
|
$
|
19,705
|
|
|
$
|
801
|
|
|
$
|
825
|
|
|
$
|
21,331
|
|
|
|
|
2007
|
|
|
$
|
21,565
|
|
|
$
|
803
|
|
|
$
|
825
|
|
|
$
|
23,193
|
|
Tony Jensen
|
|
|
2008
|
|
|
$
|
34,299
|
|
|
$
|
702
|
|
|
$
|
825
|
|
|
$
|
35,826
|
|
|
|
|
2007
|
|
|
$
|
27,942
|
|
|
$
|
702
|
|
|
$
|
825
|
|
|
$
|
29,469
|
|
Stefan Wenger
|
|
|
2008
|
|
|
$
|
17,111
|
|
|
$
|
702
|
|
|
$
|
825
|
|
|
$
|
18,638
|
|
|
|
|
2007
|
|
|
$
|
15,426
|
|
|
$
|
585
|
|
|
$
|
825
|
|
|
$
|
16,836
|
|
Karen P. Gross
|
|
|
2008
|
|
|
$
|
18,200
|
|
|
$
|
702
|
|
|
$
|
2,892
|
|
|
$
|
21,794
|
|
|
|
|
2007
|
|
|
$
|
17,150
|
|
|
$
|
702
|
|
|
$
|
2,775
|
|
|
$
|
20,627
|
|
William Heissenbuttel
|
|
|
2008
|
|
|
$
|
13,879
|
|
|
$
|
702
|
|
|
$
|
825
|
|
|
$
|
15,406
|
|
|
|
|
2007
|
|
|
$
|
7,696
|
|
|
$
|
632
|
|
|
$
|
743
|
|
|
$
|
9,071
|
|
|
|
|
|
|
The Company provides SARSEP and life and disability benefits to
all of its employees. Ms. Gross receives additional
disability benefits pursuant to a previous benefits package. The
Company matches employee contributions to the SARSEP, up to 7%
of an individuals aggregate annual salary and bonus. |
|
(6) |
|
Mr. Heissenbuttel was appointed Vice President of Corporate
Development effective February 15, 2007. Prior to being
appointed Vice President of Corporate Development,
Mr. Heissenbuttel served as the Manager of Corporate
Development. The fiscal year 2007 salary amount shown reflects
Mr. Heissenbuttels salary paid for the entire fiscal
year. |
24
GRANTS OF
PLAN-BASED AWARDS IN FISCAL YEAR 2008
This table provides information regarding incentive awards and
other stock-based awards granted during fiscal year 2008 to the
named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
Option Awards:
|
|
|
Exercise
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Fair Value
|
|
|
|
|
|
|
Under Equity
|
|
|
Shares of
|
|
|
Securities
|
|
|
Prices of
|
|
|
of Stock and
|
|
|
|
|
|
|
Incentive Plan
Awards(1)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units(2)
|
|
|
Options(3)
|
|
|
Awards(4)
|
|
|
Awards(5)
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/sh)
|
|
|
($)
|
|
|
Stanley Dempsey
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
$
|
29.75
|
|
|
$
|
512,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony Jensen
|
|
|
11/7/2007
|
|
|
|
3,750
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
446,250
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
$
|
595,000
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
29.75
|
|
|
$
|
192,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stefan Wenger
|
|
|
11/7/2007
|
|
|
|
1,875
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
223,125
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
297,500
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
29.75
|
|
|
$
|
128,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen P. Gross
|
|
|
11/7/2007
|
|
|
|
1,250
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
148,750
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
297,500
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
$
|
29.75
|
|
|
$
|
160,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William Heissenbuttel
|
|
|
11/7/2007
|
|
|
|
1,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
223,125
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
297,500
|
|
|
|
|
11/7/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
29.75
|
|
|
$
|
128,200
|
|
|
|
|
(1) |
|
Represents performance stock awards that will vest upon
achievement of target performance objectives within five years
of the grant. If target performance objectives are not met
within five years of the grant, the performance stock awards
will be forfeited. If target performance objectives are met at
any time during the five year period, up to 100% of the
performance stock awards will vest. Interim amounts may vest in
25% increments upon achievement of 25%, 50%, 75% and 100%
of the target objectives. Amounts shown in the
Threshold column represent minimum achievement of
25% of the target objectives. Amounts shown in the
Target column and Maximum column
represent maximum achievement of 100% of the target objectives.
Each performance stock award, if earned, will be settled with a
share of Royal Gold common stock. The closing price of Royal
Golds common stock on the NASDAQ Global Select Market on
the date of grant was $29.75. Performance targets are based on
growth of free cash flow on a trailing twelve month basis and
growth of royalty ounces in reserve per share on an annual
basis. Performance stock awards will not vest until performance
targets are actually met. Performance stock awards are not
issued and outstanding shares upon which the named executive
officer may vote or receive dividends. |
|
(2) |
|
Represents shares of restricted stock that vest on continued
service. The closing price of Royal Golds common stock on
the NASDAQ Global Select Market on the date of grant was $29.75.
Shares of restricted stock vest ratably over three years
commencing on the fourth anniversary of the grant date.
Accordingly, one-third of the awarded shares will vest on
November 7 of each of the years 2011, 2012 and 2013. Shares of
restricted stock are issued and outstanding shares of common
stock which have voting rights and upon which the named
executive officers received dividends calculated at the same
rate as paid to other stockholders. Royal Gold has paid a cash
dividend on its common stock for each fiscal year beginning in
fiscal year 2000. |
|
(3) |
|
Stock option awards granted to Messrs. Jensen, Wenger and
Heissenbuttel vest ratably over three years commencing on the
first anniversary of the grant date and accordingly, one-third
of the stock options will become exercisable on November 7 of
each of the years 2008, 2009 and 2010. Stock options granted to
Mr. Dempsey and Ms. Gross vest entirely on the first
anniversary of the grant date and, accordingly, will become
exercisable on November 7, 2008. |
25
|
|
|
(4) |
|
Exercise or base price is the closing price of the
Companys common stock on the NASDAQ Global Select Market
on the grant date. |
|
(5) |
|
Amounts shown represent the total fair value of awards
calculated as of the grant date in accordance with
SFAS 123R and do not represent cash payments made to the
individuals, amounts realized or amounts that may be realized.
For restricted stock and performance stock awards, grant date
fair value is calculated using the closing price of the
Companys common stock on the date of grant. For stock
option awards, grant date fair value is calculated using the
Black-Scholes-Merton option-pricing model on the date of grant.
In accordance with SFAS 123R, the grant date fair value for
stock option awards granted on November 7, 2007 was $12.82
and the grant date fair value for performance stock awards and
restricted stock granted on November 7, 2007 was $29.75.
Refer to Note 8 to the Companys Consolidated
Financial Statements contained in the Companys 2008 Annual
Report on
Form 10-K
filed with the SEC on August 20, 2008, as amended by
Amendment No. 1 to the
Form 10-K
filed with the SEC on August 22, 2008, for a discussion of
the assumptions used in valuation of plan-based awards. |
26
2008 OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
This table provides information about the outstanding stock
options, shares of restricted stock and performance stock awards
for each of the named executive officers as of June 30,
2008.
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Payout Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
of Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
of Shares
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
or Units
|
|
|
Units or
|
|
|
Other
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Units
|
|
|
of Stock
|
|
|
Other Rights
|
|
|
Rights
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
|
Options(1)
(#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Not
Vested(2)
|
|
|
Not
Vested(3)
|
|
|
Not
Vested(4)
|
|
|
Not
Vested(5)
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Stanley Dempsey
|
|
|
50,000
|
|
|
|
|
|
|
$
|
20.08
|
|
|
|
5/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,500
|
|
|
|
|
|
|
$
|
22.22
|
|
|
|
11/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
$
|
28.78
|
|
|
|
11/7/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(6)
|
|
$
|
29.75
|
|
|
|
11/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony Jensen
|
|
|
10,000
|
|
|
|
|
|
|
$
|
12.55
|
|
|
|
5/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
17.38
|
|
|
|
11/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
5,000
|
(7)
|
|
$
|
22.22
|
|
|
|
11/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
10,000
|
(8)
|
|
$
|
28.78
|
|
|
|
11/7/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(9)
|
|
$
|
29.75
|
|
|
|
11/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(10)
|
|
$
|
392,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(11)
|
|
$
|
470,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(12)
|
|
$
|
627,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(13)
|
|
$
|
627,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(14)
|
|
$
|
235,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(15)
|
|
$
|
470,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stefan Wenger
|
|
|
4,980
|
|
|
|
|
|
|
$
|
20.08
|
|
|
|
5/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,633
|
|
|
|
|
|
|
$
|
17.38
|
|
|
|
11/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
|
3,334
|
(7)
|
|
$
|
22.22
|
|
|
|
11/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,333
|
|
|
|
6,667
|
(8)
|
|
$
|
28.78
|
|
|
|
11/7/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(9)
|
|
$
|
29.75
|
|
|
|
11/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
(10)
|
|
$
|
196,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(11)
|
|
$
|
313,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(12)
|
|
$
|
313,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(13)
|
|
$
|
313,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
(14)
|
|
$
|
117,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(15)
|
|
$
|
235,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen P. Gross
|
|
|
10,000
|
|
|
|
|
|
|
$
|
2.875
|
|
|
|
6/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
10.17
|
|
|
|
5/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
20.08
|
|
|
|
5/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
$
|
12.55
|
|
|
|
5/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
$
|
17.38
|
|
|
|
11/10/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
$
|
22.22
|
|
|
|
11/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
$
|
28.78
|
|
|
|
11/7/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(6)
|
|
$
|
29.75
|
|
|
|
11/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(11)
|
|
$
|
235,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(12)
|
|
$
|
313,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(13)
|
|
$
|
313,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
(14)
|
|
$
|
78,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(15)
|
|
$
|
156,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William Heissenbuttel
|
|
|
833
|
|
|
|
1,667
|
(8)
|
|
$
|
28.78
|
|
|
|
11/7/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(9)
|
|
$
|
29.75
|
|
|
|
11/7/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(12)
|
|
$
|
156,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(13)
|
|
$
|
313,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
(14)
|
|
$
|
117,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(15)
|
|
$
|
235,200
|
|
|
|
|
(1) |
|
Figures represent shares of common stock underlying stock
options. Stock options awarded to Messrs. Jensen, Wenger
and Heissenbuttel vest ratably over three years commencing on
the first |
27
|
|
|
|
|
anniversary of the grant date. Stock options granted to
Mr. Dempsey and Ms. Gross vest entirely on the first
anniversary of the grant date. |
|
(2) |
|
Represents shares of restricted stock that vest based on
continued service. Shares of restricted stock vest ratably over
three years commencing on the fourth anniversary of the grant
date. |
|
(3) |
|
Market value is based on a stock price of $31.36, the closing
price of Royal Golds common stock on the NASDAQ Global
Select Market on June 30, 2008, and the outstanding number
of shares of restricted stock. |
|
(4) |
|
Represents performance stock awards that will vest upon
achievement of target performance objectives within five years
of the grant. If target performance objectives are not met
within five years of the grant, the performance stock awards
will be forfeited. If target performance objectives are met at
any time during the five year period, 100% of the performance
stock awards will vest. Interim amounts may vest in 25%
increments upon achievement of 25%, 50%, 75% and 100% of the
target objectives. Each performance stock award, if earned, will
be settled with a share of Royal Gold common stock. Performance
targets are based on growth of free cash flow on a trailing
twelve month basis and growth of royalty ounces in reserve per
share on an annual basis. |
|
(5) |
|
Payout value is based on a stock price of $31.36, the closing
price on NASDAQ Global Select Market on June 30, 2008, and
assuming 100% of the performance stock awards shown will vest
based on the achievement of target performance objectives.
Amounts indicated are not necessarily indicative of the amounts
that may be realized by the named executive officers. |
|
(6) |
|
Unexercisable stock options will become exercisable on
November 7, 2008. |
|
(7) |
|
Unexercisable stock options will become exercisable on
November 8, 2008. |
|
(8) |
|
One-half of the unexercisable stock options will become
exercisable on November 7, 2008, and the remaining one-half
of the unexercisable stock options will become exercisable on
November 7, 2009. |
|
(9) |
|
One-third of the unexercisable stock options will become
exercisable on each of November 7, 2008, 2009 and 2010. |
|
(10) |
|
Shares will vest ratably on November 10, 2008, 2009 and
2010. |
|
(11) |
|
Shares will vest ratably on November 8, 2009, 2010 and 2011. |
|
(12) |
|
Shares will vest ratably on November 7, 2010, 2011 and 2012. |
|
(13) |
|
Shares will vest ratably on November 7, 2011, 2012 and 2013. |
|
(14) |
|
Awards will expire on November 7, 2011 if the vesting
requirements are not met. See note (4) above. As of
August 19, 2008, an increment of 25% of the target
performance objectives were met and Mr. Jensen,
Mr. Wenger, Ms. Gross and Mr. Heissenbuttel are
entitled to receive 3,750, 1,875, 1,250 and 1,875 shares of
common stock upon settlement of the performance shares. The
closing price of Royal Golds common stock on the NASDAQ
Global Select Market on August 19, 2008 was $34.24. |
|
(15) |
|
Awards will expire on November 7, 2012 if the vesting
requirements are not met. See note (4) above. Solely for
purposes of SFAS 123R purposes, as of June 30, 2008,
it was determined by management that it is probable 25% of these
awards will be earned and paid out during fiscal year 2009.
However, performance stock awards will not vest until
performance targets are actually met, as determined by the
Committee. |
28
FISCAL YEAR 2008
OPTION EXERCISES AND STOCK VESTED
This table provides information on option exercise and the
vesting of shares of restricted stock or performance stock
awards for each of the named executive officers during fiscal
year 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value Realized
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
on
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
Exercise(1)
|
|
|
on
Vesting(2)
|
|
|
on
Vesting(3)
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Stanley Dempsey
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Tony Jensen
|
|
|
|
|
|
$
|
|
|
|
|
3,750
|
|
|
$
|
102,863
|
|
Stefan Wenger
|
|
|
|
|
|
$
|
|
|
|
|
1,875
|
|
|
$
|
51,431
|
|
Karen P. Gross
|
|
|
20,500
|
|
|
$
|
506,043
|
|
|
|
1,250
|
|
|
$
|
34,288
|
|
William Heissenbuttel
|
|
|
|
|
|
$
|
|
|
|
|
1,875
|
|
|
$
|
51,431
|
|
Bruce C. Kirchhoff
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Value realized upon exercise of stock options was computed by
calculating the closing price of the underlying Royal Gold
common stock on the date of exercise less the exercise price of
the option, multiplied by the number of shares underlying the
options exercised. |
|
(2) |
|
Amounts shown represent the number of performance stock awards
that vested on August 23, 2007, and the shares of common
stock acquired by the named executive officer upon the
settlement of the vested performance stock awards, as approved
by the Compensation, Nominating and Corporate Governance
Committee, due to the Company achieving certain performance
objectives. The Company settles vested performance shares with
shares of the Companys common stock. |
|
(3) |
|
Value realized upon vesting of performance stock awards was
computed by calculating the closing price of the underlying
Royal Gold common stock on the NASDAQ Global Select Market on
the date that the performance stock awards vested, multiplied by
the number of performance stock awards that vested. Performance
stock awards represented in the table vested on August 23,
2007. The closing price of the Companys common stock on
NASDAQ Global Select Market on the vesting date was $27.43. |
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
Employment
Agreements
Each of the employment agreements with Messrs. Dempsey,
Jensen and Wenger and Ms. Gross provide post-termination
benefits and benefits upon a change of control. Pursuant to
Mr. Jensens employment agreement, Mr. Jensen
will continue to serve as the Companys President and Chief
Executive Officer and the Companys Board of Directors will
continue to nominate Mr. Jensen for re-election as
director. The employment agreement has a one-year term, which
will automatically renew for four consecutive one-year periods
unless either the Company or Mr. Jensen timely elects for
non-renewal. Pursuant to the employment agreement,
Mr. Jensen will receive severance compensation upon an
involuntary termination of employment without Cause,
a voluntary termination of employment for Good
Reason, or if the Company elects not to renew the
employment term during the four-year renewal period. If such
termination or non-renewal does not occur within two years after
a change of control, then Mr. Jensen will be
entitled to one times his then base salary. If such termination
or non-renewal occurs within two years after a Change of
Control, then Mr. Jensen will be entitled to two and
one-half times his then base salary, two and one-half times his
average annual cash incentive bonus for the prior three fiscal
years and continued employee benefits for twelve months. The
employment agreement restricts Mr. Jensen from competing
against the Company or soliciting the Companys employees,
customers or business relationships for a period of twelve
months following termination of his employment with the Company.
Pursuant to individual employment agreements, Mr. Dempsey,
Mr. Wenger and Ms. Gross will continue to serve as the
Companys Executive Chairman, Chief Financial Officer and
Treasurer, and Vice President and Corporate Secretary,
respectively. Each employment agreement has a one-year term,
which will automatically renew for four consecutive one-year
periods unless either the Company or the executive timely elects
for non-renewal. Pursuant to each employment agreement, the
executive will
29
receive severance compensation upon an involuntary termination
of employment without Cause, a voluntary termination
of employment for Good Reason, or if the Company
elects not to renew the employment term during the four-year
renewal period. If such termination or non-renewal does not
occur within two years after a Change of Control,
then the executive will be entitled to one times his or her then
base salary. If such termination or non-renewal occurs within
two years after a Change of Control, the executive
will be entitled to one and one-half times his or her then base
salary, one and one-half times his or her average annual cash
incentive bonus for the prior three fiscal years and continued
employee benefits for twelve months. The employment agreement
restricts each executive from competing against the Company or
soliciting the Companys employees, customers or business
relationships for a period of twelve months following
termination of his or her employment with the Company.
Under the employment agreement with Messrs. Dempsey, Jensen
and Wenger, and Ms. Gross, Cause is defined as
(i) guilty verdict of fraud, theft, embezzlement or
misappropriation against the Company; (ii) guilty verdict
of a felony or any other crime involving moral turpitude;
(iii) compromise of Company proprietary and confidential
information or gross or willful misconduct that causes
substantial and material harm to the Company, or
(iv) material uncured breach of the employment agreement.
Good Reason is defined as the timely noticed and
uncured occurrence of any of the following circumstances:
(i) any material adverse change in the executives
title or responsibilities with the Company; (ii) any
material reduction in the executives base salary;
(iii) receipt of notice of relocation of more than fifty
miles from the job-site immediately prior to the effective date
of the employment agreement, or (iv) if a Change of Control
has occurred, failure to provide for the executives
participation in compensation plans that are not less than those
provided by the Company to similarly situated executive officers
and those provided for under any plans in which the executive
was participating immediately prior to the date on which a
Change of Control occurs. Change of Control means
any of the following: (i) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the
Company in which the Company is not the surviving entity;
(ii) a sale of substantially all of the assets of the
Company to another person or entity; (iii) any transaction
which results in any person or entity (other than persons who
are stockholders or affiliates immediately prior to the
transaction) owning fifty percent (50%) or more of the combined
voting power of all classes of stock of the Company, or
(iv) during any period of two consecutive years, a change
in the majority membership on the Board of Directors members,
except as approved by the majority of directors then still in
office.
2004 Omnibus
Long-Term Incentive Plan
The Companys restricted stock agreement, performance share
agreement, and stock option agreement, for both incentive stock
options and non-qualified stock options, under the LTIP provide
that in the event of an Involuntary Termination
within one year in connection with a Corporate
Transaction, all outstanding shares of restricted stock,
performance shares and stock options will be immediately vested.
Corporate Transaction means (i) the dissolution
or liquidation of the Company or a merger, consolidation, or
reorganization of the Company in which the Company is not the
surviving entity, (ii) a sale of substantially all of the
assets of the Company, or (iii) any transaction which
results in change in the majority voting power in the Company.
Involuntary Termination means involuntary discharge
for reasons other than Cause or voluntary
resignation from the Company following (i) a material
adverse change in the executives title or responsibilities
with the Company, (ii) a material reduction in the
executives base salary, or (iii) relocation of more
than 50 miles. The Companys restricted stock
agreement under the LTIP also provides that all unvested shares
of restricted stock will become immediately vested upon a
termination, other than for Cause, after
15 years of service.
Pursuant to the Award Modification Agreement entered into with
Messrs. Dempsey, Jensen and Wenger and Ms. Gross, each
executive will be entitled to accelerated vesting of stock
options, shares of restricted stock and performance stock awards
that were granted prior to the effective date of the Award
Modification Agreements upon an involuntary termination of
employment without Cause, a voluntary termination of
employment for Good Reason, or if the Company elects
not to renew the employment term during the four year renewal
period under the employment agreement with each Grantee. If such
termination or non-renewal does not occur within two years after
a Change of Control, then upon such termination or
non-renewal (i) all stock options will become immediately
exercisable, (ii) a pro-rated portion of each grant of
shares of restricted stock will vest based on the period of
employment from the date of grant to
30
the date of termination or non-renewal, and (iii) all or a
portion of the performance stock awards will fully vest based on
the number of performance stock awards to which the executive
would have been entitled, taking into account the Companys
performance through the last day of the fiscal quarter in which
the termination or non-renewal takes place determined in
accordance with the Companys practices with respect to
performance stock awards. If such termination or non-renewal
occurs within two years after a change of control,
then upon such termination or non-renewal all stock options will
become immediately exercisable and all shares of restricted
stock and performance stock awards will fully vest.
Cause, Good Reason, and Change of
Control are as defined under the executives
employment agreement and are described further above under the
section titled Employment Agreements immediately
above.
Other Employee
Benefits
The Company provides life insurance benefits of $150,000 to all
of its employees. The Company also provides long-term disability
coverage to all of its employees that provides for 60% of
monthly salary protection up to $7,000 a month until
age 65. Each of the named executive officers shown below
would be entitled to these amounts upon termination for death or
disability.
The table below shows for each of our named executive officers
the estimated payments and benefits that would be provided as a
result of termination or a
change-in-control
of the Company. Calculations for this table assume that the
triggering event took place on June 30, 2008, the last
business day of our 2008 fiscal year, except as noted. Salary
and bonus calculations for Messrs. Dempsey, Jensen and
Wenger and Ms. Gross are based on employment agreements
entered into on September 15, 2008. Calculations for
amounts shown for awards under the Companys LTIP are based
on the closing price of the Companys common stock on
NASDAQ Global Select Market on June 30, 2008, which was
$31.36 and, for Messrs. Dempsey, Jensen Wenger and
Ms. Gross, other than as noted, based on acceleration
benefits provided under Award Modification Agreements entered
into on September 15, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
2004 LTIP
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
Performance
|
|
|
|
|
Salary/
|
|
Insurance
|
|
Restricted
|
|
Stock
|
|
Stock
|
|
|
|
|
Bonus
|
|
Continuation
|
|
Stock
|
|
Options
|
|
Awards
|
|
Total
|
|
Stanley Dempsey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement
|
|
$
|
194,000
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
64,400
|
(2)
|
|
$
|
|
|
|
$
|
258,400
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement with Change of
Control
|
|
$
|
513,500
|
(1)
|
|
$
|
15,623
|
(1)
|
|
$
|
|
|
|
$
|
64,400
|
(2)
|
|
$
|
|
|
|
$
|
593,523
|
|
Tony Jensen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement
|
|
$
|
374,500
|
(1)
|
|
$
|
|
|
|
$
|
497,808
|
(3)
|
|
$
|
633,250
|
(2)
|
|
$
|
117,600
|
(4)
|
|
$
|
1,623,158
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement with Change of
Control
|
|
$
|
1,348,750
|
(1)
|
|
$
|
20,772
|
(1)
|
|
$
|
2,116,800
|
(2)
|
|
$
|
633,250
|
(2)
|
|
$
|
705,600
|
(4)
|
|
$
|
4,825,172
|
|
Stefan Wenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement
|
|
$
|
182,000
|
(1)
|
|
$
|
|
|
|
$
|
376,666
|
(3)
|
|
$
|
254,622
|
(2)
|
|
$
|
58,800
|
(4)
|
|
$
|
872,088
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement with Change of
Control
|
|
$
|
379,000
|
(1)
|
|
$
|
20,772
|
(1)
|
|
$
|
1,136,800
|
(2)
|
|
$
|
254,622
|
(2)
|
|
$
|
352,800
|
(4)
|
|
$
|
2,143,994
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
2004 LTIP
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
Performance
|
|
|
|
|
Salary/
|
|
Insurance
|
|
Restricted
|
|
Stock
|
|
Stock
|
|
|
|
|
Bonus
|
|
Continuation
|
|
Stock
|
|
Options
|
|
Awards
|
|
Total
|
|
Karen P. Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement
|
|
$
|
182,000
|
(1)
|
|
$
|
|
|
|
$
|
862,400
|
(5)
|
|
$
|
20,125
|
(2)
|
|
$
|
39,200
|
(4)
|
|
$
|
1,103,725
|
|
Involuntary Termination, Voluntary Termination for Good Reason
or Company Non-Renewal of Employment Agreement with Change of
Control
|
|
$
|
403,000
|
(1)
|
|
$
|
17,807
|
(1)
|
|
$
|
862,400
|
(2)
|
|
$
|
20,125
|
(2)
|
|
$
|
235,200
|
(4)
|
|
$
|
1,538,532
|
|
William
Heissenbuttel(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary or Voluntary Termination
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Involuntary Termination with Change of Control
|
|
$
|
|
|
|
$
|
|
|
|
$
|
470,400
|
|
|
$
|
22,550
|
|
|
$
|
352,800
|
|
|
$
|
845,750
|
|
|
|
|
(1) |
|
Amounts shown are based on employment agreements entered into
with Messrs. Jensen, Dempsey and Wenger and Ms. Gross
on September 15, 2008. |
|
(2) |
|
Amounts shown are based on Award Modification Agreements entered
into with Messrs. Jensen, Dempsey and Wenger and
Ms. Gross on September 15, 2008. |
|
(3) |
|
Amounts shown are based on Award Modification Agreements entered
into with Messrs. Jensen, Dempsey and Wenger and
Ms. Gross on September 15, 2008. Amounts shown for
Involuntary Termination, Voluntary Termination for Good
Reason or Company Non-Renewal of Employment Agreement are
based on a pro-rated number of shares of restricted stock that
will vest based on the length of the named executive
officers service from the date of grant to the date of
termination. Amounts calculated are based on a termination date
of June 30, 2008, though Award Modification Agreements were
entered into on September 15, 2008. |
|
(4) |
|
Amounts shown are based on Award Modification Agreements entered
into with Messrs. Jensen, Dempsey and Wenger and
Ms. Gross on September 15, 2008. Amounts shown for
Involuntary Termination, Voluntary Termination for Good
Reason or Company Non-Renewal of Employment Agreement are
based on the Companys achievement of target performance
objectives through the end of the fiscal quarter in which the
termination took place, in this case as of June 30, 2008,
though Award Modification Agreements were entered into on
September 15, 2008. |
|
(5) |
|
Amount based on the restricted stock agreement under the
Companys LTIP that provides accelerated vesting for all
shares of restricted stock in the event of a termination without
cause after 15 years of service with the Company. As of
June 30, 2008, Ms. Grosss service to the Company
exceeded 15 years. |
|
(6) |
|
Mr. Heissenbuttel did not enter into an employment
agreement with the Company and is not entitled to
post-termination benefits in the event of involuntary or
voluntary termination other than life insurance and long-term
disability benefits provided to all employees in the event of
death or disability described further above. Amounts shown for
Mr. Heissenbuttel are based on acceleration benefits under
the Companys LTIP that provides for acceleration of
restricted stock, stock options and performance stock upon an
Involuntary Termination after a Corporate
Transaction as further described above. |
32
Equity
Compensation Plan Information
The following table sets forth information concerning shares of
common stock that are authorized and available for issuance
under the Companys equity compensation plans as of
June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
Available
|
|
|
|
Number of
|
|
|
|
|
|
for Future
|
|
|
|
Securities to
|
|
|
Weighted-
|
|
|
Issuance
|
|
|
|
be Issued Upon
|
|
|
Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price
|
|
|
Compensation
|
|
|
|
Outstanding
|
|
|
of Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Securities Reflected
|
|
|
|
and Rights
|
|
|
and Rights
|
|
|
in Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by
stockholders(1)
|
|
|
652,714(2
|
)
|
|
$
|
21.65(3
|
)
|
|
|
70,567
|
|
Equity compensation plans not approved by
stockholders(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
652,714
|
|
|
$
|
21.65
|
|
|
|
70,567
|
|
|
|
|
(1) |
|
Represents the Companys 2004 Omnibus Long-Term Incentive
Plan. |
|
(2) |
|
Includes 66,000 shares of common stock issuable upon the
vesting of performance stock awards that vest upon the
achievement of target performance objectives within five years
of the grant, but does not include 193,250 shares of
restricted stock outstanding pursuant to the equity compensation
plan. |
|
(3) |
|
Weighted-average exercise price does not take into account
shares of common stock issuable upon vesting of performance
stock awards, which do not have exercise prices. |
|
(4) |
|
The Company does not maintain equity compensation plans that
have not been approved by its stockholders. |
33
PROPOSAL 2.
APPROVAL OF
AMENDMENTS TO THE COMPANYS 2004 OMNIBUS
LONG-TERM INCENTIVE PLAN
We are asking our stockholders to approve amendments to our 2004
Omnibus Long-Term Incentive Plan (the Plan)
(1) to increase the number of shares of common stock
reserved for issuance thereunder from 900,000 to
1,300,000 shares and (2) to comply with the
requirements of Section 409A of the Internal Revenue Code
of 1986, as amended (Section 409A). The Board
of Directors adopted, subject to stockholder approval, the
amendments described above on May 20, 2008. Below is a
summary of the principal provisions of the Plan, assuming
approval of the above amendment, which summary is qualified in
its entirety by reference to the full text of the Plan, as
amended, attached hereto as Appendix A.
The Board of Directors approved the Plan on October 6,
2004. Our stockholders approved the Plan on November 10,
2004 with 900,000 shares of our common stock available for
issuance thereunder and 450,000 of the 900,000 shares of
our common stock available for issuance pursuant to awards other
than options or stock appreciation rights.
The Board of Directors believes that granting restricted stock,
performance stock, stock options and other awards is necessary
for us to attract and retain the services of well-qualified
employees and advisors, including officers and directors who
will contribute to our success. Our general compensation
philosophy is focused on providing attractive leverage in
long-term incentives to reward growth and to link management
interests with stockholder interests. We encourage maximum
effort from our employees and directors by offering those
persons an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the
Company. We currently award restricted stock, performance stock
and stock options under the Plan. As of September 16, 2008,
there were 70,567 shares available for issuance under the
Plan and 57,250 shares available for issuance pursuant to
awards other than options or stock appreciation rights.
Accordingly, unless our stockholders approve the increase in
shares reserved for issuance under the Plan, we will be limited
in our ability to make equity awards to our employees and
directors.
Unless otherwise indicated, properly executed proxies will be
voted in favor of Proposal 2 to approve the amendments to
the Plan.
Description of
the Plan
A description of the provisions of the Plan is set forth below.
This summary is qualified in its entirety by the detailed
provisions of the Plan as amended, a copy of which is attached
as Appendix A to this Proxy Statement.
Administration. The Board of Directors has the
power and authority related to administering the Plan. The Board
of Directors has delegated its authority, and currently the
Compensation, Nominating and Corporate Governance Committee (the
Committee) is responsible for administering the
Plan, including making determinations that the Board is
permitted to make under the Plan. Subject to the terms of the
Plan, the Committee may select participants to receive awards,
determine the types of awards and terms and conditions of
awards, and interpret provisions of the Plan.
Common Stock Reserved for Issuance under the
Plan. If the above described amendment to the
Plan is approved, the aggregate number of shares of common stock
available for issuance under the Plan shall be 1,300,000 and the
aggregate number of shares of common stock available for
issuance pursuant to awards other than options or stock
appreciation rights shall be 650,000. The common stock issued or
to be issued under the Plan consists of authorized but unissued
shares and treasury shares. If any shares covered by an award
are not purchased or are forfeited, or if an award otherwise
terminates without delivery of any common stock, then the number
of shares of common stock counted against the aggregate number
of shares available under the Plan with respect to the award
will, to the extent of any such forfeiture or termination, again
be available for making awards under the Plan. The number of
shares reserved for issuance under the Plan will be increased by
the number of shares of common stock repurchased with the
proceeds from any option
34
exercises. The number of shares added pursuant to stock
repurchases with option proceeds shall not exceed the total
amount of such option proceeds divided by the fair market value
of the common stock on the date of the exercise of the
applicable option. For this purpose, option proceeds include the
cash paid for the option price and the tax benefit to the
Company of such option exercise.
Eligibility. Awards may be made under the Plan
to employees and directors of or consultants to the Company or
any of our affiliates, including any such employee who is an
officer or director of the Company or of any affiliate, and to
any other individual whose participation in the Plan is
determined to be in the best interest of the Company by the
Board of Directors. As of the Record Date, the Company has
sixteen employees and seven non-employee directors, all of whom
are eligible to participate in the Plan.
Amendment or Termination of the Plan. The
Board of Directors may terminate or amend the Plan at any time
and for any reason. The Plan shall terminate in any event ten
years after its effective date. The Committee may also amend,
suspend or terminate the Plan as to any shares of common stock
as to which awards have not been made. Amendments will be
contingent on stockholder approval to the extent stated by the
Board of Directors or required by applicable law or applicable
stock exchange listing requirements.
Awards under the Plan
Options and SARs. The Plan permits the
granting of options to purchase shares of common stock intended
to qualify as incentive stock options under the Internal Revenue
Code, stock options that do not qualify as incentive stock
options and stock appreciation rights. Stock appreciation rights
(SARs) may be granted in conjunction with all or
part of an option award, at any time during the term of the
option, or any other award or without regard to an option or
other award.
The exercise price of each option may not be less than 100% of
the fair market value of our common stock underlying the options
on the date of grant. The fair market value is determined as the
closing price of the common stock on The NASDAQ Stock Market on
the grant date. In the case of certain 10% stockholders who
receive incentive stock options, the exercise price may not be
less than 110% of the fair market value of the common stock on
the date of grant. An exception to these requirements is made
for options that the Company grants in substitution for options
held by employees of companies that the Company acquires. In
such a case the exercise price is adjusted to preserve the
economic value of the employees stock option from his or
her former employer.
The grant price of each SAR shall be determined by the Committee
or the Board and set forth in the award agreement. The grant
price may be the fair market value of our common stock
underlying the SAR on the date of grant or may vary in
accordance with a predetermined formula while the SAR is
outstanding. The fair market value is the closing price of the
common stock on The Nasdaq Stock Market on the determination
date.
The term of each stock option is fixed by the Compensation,
Nominating and Corporate Governance Committee and may not exceed
ten years from the date of grant or five years from the date of
grant for incentive stock options awarded to 10% stockholders.
The vesting schedule of options is determined by the Board of
Directors and stated in the option award agreement, including in
the case of retirement, death, disability or other termination
of employment.
An option may be exercised by notice to the Company and payment
in full of the option price plus any withholding taxes. The
optionee may pay the exercise price of an option by cash,
certified check, by tendering shares of common stock (which if
acquired from the Company have been held by the optionee for at
least six months), or by means of a broker-assisted cashless
exercise. The minimum number of shares of common stock with
respect to which an option may be exercised is the lesser of
100 shares or the maximum available for purchase under the
option.
Stock options granted under the Plan may not be sold,
transferred, pledged or assigned other than by will or under
applicable laws of descent and distribution. However, the
Company may permit limited transfers of non-qualified options
for the benefit of immediate family members of grantees to help
with estate planning concerns.
35
The Compensation, Nominating and Corporate Governance Committee
shall determine the exercise and other terms of SARs, including
whether SARs may become exercisable based on achievement of
performance goals
and/or
future service requirements.
Stock options and SARs may not be repriced absent stockholder
approval. This provision applies to both direct repricings
(lowering the exercise price of an outstanding grant) and
indirect repricings (canceling an outstanding grant and granting
a replacement grant with a lower exercise price).
Restricted Stock and Restricted Stock
Units. Awards of shares of restricted stock and
restricted stock units may be made at no cost or for a purchase
price determined by the Compensation, Nominating and Corporate
Governance Committee. The Compensation, Nominating and Corporate
Governance Committee may establish a period of time during which
shares of restricted stock and restricted stock units are
subject to restrictions, which may include both the passage of
time or the satisfaction of corporate or individual performance
objectives, provided however that, except for certain
circumstances, restricted stock that vests solely on the basis
of the passage of time may not vest in full in less than three
years and restricted stock for which vesting may be accelerated
by achieving performance targets may not vest in full in less
than one year. Holders of restricted stock have the same voting
and dividend rights with respect to such shares of restricted
stock as other stockholders of the Company. Holders of
restricted stock units have no rights as stockholders of the
Company.
Performance and Annual Incentive Awards. The
right of a grantee to exercise or receive a grant or a
settlement of any award under the Plan may be subject to such
performance conditions as may be specified by the Board. If and
to the extent such performance based awards are intended to
qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code, any authority
relating to the performance award shall be exercised by the
Committee and not the Board. It is the intent of the Company
that Performance Awards and Annual Incentive Awards awarded
under the Plan constitute performance-based
compensation under Section 162(m) of the Internal
Revenue Code. Performance goals consist of one more business
criteria and a targeted level or levels of performance with
respect to each such criteria as established by the Committee
and otherwise meeting the requirements of Section 162(m) of
the Internal Revenue Code. Performance goals are established no
later than 90 days after the beginning of any performance
period applicable to the performance or annual incentive award,
as required by Section 162(m) of the Internal Revenue Code,
or at such other date as may be required or permitted for
performance-based compensation under
Section 162(m) of the Internal Revenue Code.
One or more of the following business criteria are used
exclusively by the Committee in establishing performance goals
for Performance of Annual Incentive Awards: total stockholder
return; total stockholder return as compared to total return (on
a comparable basis) of a publicly available index such as, but
not limited to, the Standard & Poors 500 Stock
Index; net income; pretax earnings; earnings before interest
expense, taxes, depreciation and amortization; pretax operating
earnings after interest expense and before bonuses, service fees
and extraordinary or special items; operating margin; earnings
per share; return on equity; return on capital; return on
investment; operating earnings; working capital; ratio of debt
to stockholders equity; revenue; and free cash flow and
free cash flow per share. Business criteria may be measured on
an absolute entity, subsidiary or business unit basis or on a
relative basis to peer companies, and on a GAAP or non-GAAP
basis.
Settlement of Performance or Annual Incentive awards may be in
cash, shares of common stock or other property, in the
discretion of the Committee. All determinations by the Committee
as to the achievement of performance goals shall be made in
writing in the case of any award intended to qualify as
performance-based compensation under
Section 162(m) of the Internal Revenue Code.
Other Awards. The Compensation, Nominating and
Corporate Governance Committee may also award unrestricted
shares of common stock to participants in recognition of past
services or other valid consideration, in lieu of cash
compensation to be paid to participants and dividend equivalent
rights entitling the recipient to receive credits for dividends
that would be paid if the recipient had held a specified number
of shares of common stock.
36
Limitations on Awards. The maximum number of
shares of common stock subject to options or SARs that can be
awarded under the Plan to any person is 100,000 per year. The
maximum number of shares of common stock that can be awarded
under the Plan to any person, other than pursuant to an option
or SAR, is 100,000 per year. The maximum amount that may be
earned as an annual incentive award or other cash award in any
fiscal year by any one person is $1,000,000 and the maximum
amount that may be earned as a performance award or other cash
award in respect of a performance period by any one person is
$2,000,000.
Effect of Certain Corporate
Transactions. Change of control transactions,
transactions involving the sale of substantially all of the
assets of the Company and the dissolution or liquidation of the
Company or a merger, consolidation or a reorganization of the
Company in which the Company is not the surviving entity will
result in the acceleration of the awards under the Plan unless
the successor assumes the awards or substitutes the awards for
equivalent awards.
Adjustments for Stock Dividends and Similar
Events. The Committee will make proportional
adjustments in outstanding awards and the number of shares
available for issuance under the Plan, including the individual
limitations on awards, to reflect recapitalization,
reclassification, stock split, exchange of shares, common stock
dividends, and other similar events.
Federal Income
Tax Consequences
Incentive Stock Options. The grant of an
option will not be a taxable event for the grantee or for the
Company. A grantee will not recognize taxable income upon
exercise of an incentive stock option (except that the
alternative minimum tax may apply), and any gain realized upon a
disposition of our common stock received pursuant to the
exercise of an incentive stock option will be taxed as long-term
capital gain if the grantee holds the shares of common stock for
at least two years after the date of grant and for one year
after the date of exercise (the holding period
requirement). The Company will not be entitled to any
business expense deduction with respect to the exercise of an
incentive stock option, except as discussed below.
For the exercise of an option to qualify for the foregoing tax
treatment, the grantee generally must be a Company employee or
an employee of a subsidiary of the Company from the date the
option is granted through a date within three months before the
date of exercise of the option.
If all of the foregoing requirements are met except the holding
period requirement mentioned above, the grantee will recognize
ordinary income upon the disposition of the common stock in an
amount generally equal to the excess of the fair market value of
the common stock at the time the option was exercised over the
option exercise price (but not in excess of the gain realized on
the sale). The balance of the realized gain, if any, will be
capital gain. The Company will be allowed a business expense
deduction to the extent the grantee recognizes ordinary income,
subject to the Companys compliance with
Section 162(m) of the Internal Revenue Code and to certain
reporting requirements.
Non-Qualified Options. The grant of an option
will not be a taxable event for the grantee or the Company. Upon
exercising a non-qualified option, a grantee will recognize
ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the common stock on
the date of exercise. Upon a subsequent sale or exchange of
shares acquired pursuant to the exercise of a non-qualified
option, the grantee will have taxable capital gain or loss,
measured by the difference between the amount realized on the
disposition and the tax basis of the shares of common stock
(generally, the amount paid for the shares plus the amount
treated as ordinary income at the time the option was exercised).
If the Company complies with applicable reporting requirements
and with the restrictions of Section 162(m) of the Internal
Revenue Code, it will be entitled to a business expense
deduction in the same amount and generally at the same time as
the grantee recognizes ordinary income.
A grantee who has transferred a non-qualified stock option to a
family member by gift will realize taxable income at the time
the non-qualified stock option is exercised by the family
member. The grantee will be subject to withholding of income and
employment taxes at that time. The family members tax
basis in the shares of common stock will be the fair market
value of the shares of common stock on the date the option is
exercised. The transfer of vested non-qualified stock options
will be treated as a completed gift for gift and
37
estate tax purposes. Once the gift is completed, neither the
transferred options nor the shares acquired on exercise of the
transferred options will be includable in the grantees
estate for estate tax purposes.
In the event a grantee transfers a non-qualified stock option to
his or her ex-spouse incident to the grantees divorce,
neither the grantee nor the ex-spouse will recognize any taxable
income at the time of the transfer. In general, a transfer
is made incident to divorce if the transfer occurs
within one year after the marriage ends or if it is related to
the end of the marriage (for example, if the transfer is made
pursuant to a divorce order or settlement agreement). Upon the
subsequent exercise of such option by the ex-spouse, the
ex-spouse will recognize taxable income in an amount equal to
the difference between the exercise price and the fair market
value of the shares of common stock at the time of exercise. Any
distribution to the ex-spouse as a result of the exercise of the
option will be subject to employment and income tax withholding
at this time.
Restricted Stock. A grantee who is awarded
restricted stock will not recognize any taxable income for
federal income tax purposes in the year of the award, provided
that the shares of common stock are subject to restrictions
(that is, the restricted stock is nontransferable and subject to
a substantial risk of forfeiture). However, the grantee may
elect under Section 83(b) of the Internal Revenue Code to
recognize compensation income in the year of the award in an
amount equal to the fair market value of the common stock on the
date of the award (less the purchase price, if any), determined
without regard to the restrictions. If the grantee does not make
such a Section 83(b) election, the fair market value of the
common stock on the date the restrictions lapse (less the
purchase price, if any) will be treated as compensation income
to the grantee and will be taxable in the year the restrictions
lapse and dividends paid while the common stock is subject to
restrictions will be subject to withholding taxes. If the
Company complies with applicable reporting requirements and with
the restrictions of Section 162(m) of the Internal Revenue
Code, it will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Stock Units. There are no immediate tax
consequences of receiving an award of stock units under the
Plan. A grantee who is awarded stock units will be required to
recognize ordinary income in an amount equal to the fair market
value of shares issued to such grantee at the end of the
restriction period or, if later, the payment date. If the
Company complies with applicable reporting requirements and with
the restrictions of Section 162(m) of the Internal Revenue
Code, it will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Dividend Equivalent Rights. Participants who
receive dividend equivalent rights will be required to recognize
ordinary income in an amount distributed to the grantee pursuant
to the award. If the Company complies with applicable reporting
requirements and with the restrictions of Section 162(m) of
the Internal Revenue Code, it will be entitled to a business
expense deduction in the same amount and generally at the same
time as the grantee recognizes ordinary income.
Stock Appreciation Rights. There are no
immediate tax consequences of receiving an award of SARs under
the Plan. Upon exercising a SAR, a grantee will recognize
ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the common stock on
the date of exercise. If the Company complies with applicable
reporting requirements and with the restrictions of
Section 162(m) of the Internal Revenue Code, it will be
entitled to a business expense deduction in the same amount and
generally at the same time as the grantee recognizes ordinary
income.
Performance and Annual Incentive Awards. The
award of a performance or annual incentive award will have no
federal income tax consequences for the Company or for the
grantee. The payment of the award is taxable to a grantee as
ordinary income. If the Company complies with applicable
reporting requirements and with the restrictions of
Section 162(m) of the Internal Revenue Code, it will be
entitled to a business expense deduction in the same amount and
generally at the same time as the grantee recognizes ordinary
income.
Unrestricted Common Stock. Participants who
are awarded unrestricted common stock will be required to
recognize ordinary income in an amount equal to the fair market
value of the shares of common stock on the date of the award,
reduced by the amount, if any, paid for such shares. If the
Company complies with applicable reporting requirements and with
the restrictions of Section 162(m) of the Internal Revenue
38
Code, it will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Section 162(m) of the Internal Revenue
Code. Section 162(m) of the Internal Revenue
Code limits publicly-held companies such as the Company to an
annual deduction for federal income tax purposes of $1,000,000
for compensation paid to their covered employees. However,
qualified performance-based compensation is excluded
from this limitation. The Board has attempted to structure the
Plan to permit the Committee to grant awards that qualify as
performance-based compensation for purposes of
satisfying the conditions of Section 162(m) as described
further above such that remuneration attributable to such awards
will not be subject to the $1,000,000 limitation of
Section 162(m).
New Plan
Benefits
All future grants under the Plan are within the discretion of
the Board of Directors or the Compensation, Nominating and
Corporate Governance Committee. The number, types and benefits
of awards that will be granted under the Plan in the future are
not determinable.
Vote Required for Approval. The affirmative
vote of a majority of the shares that are represented and
entitled to vote at a meeting at which a quorum is present is
required to approve the amendments to the Companys 2004
Omnibus Long-Term Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE PROPOSAL TO
APPROVE THE AMENDMENTS TO THE COMPANYS 2004 OMNIBUS
LONG TERM INCENTIVE PLAN.
39
AUDIT COMMITTEE
AND RELATED MATTERS
The information contained in the following Audit Committee
Report shall not be deemed soliciting material or
filed with the SEC, nor shall such information be
incorporated by reference into a future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically
incorporates this Report by reference therein.
Audit Committee
Report
The Companys Audit Committee is comprised of three members
who are independent within the meaning of such term
under Rule 4200(a)(15) of the NASD listing standards and
the meaning of such term under the Sarbanes-Oxley Act of 2002
and regulations promulgated under the Act. Each member of the
Audit Committee is able to read and understand fundamental
financial statements and at least one member has past employment
experience in finance or accounting or other comparable
experience. The Audit Committee actively oversees the
Companys financial condition and results of operations.
The main function of the Audit Committee is to ensure that
effective accounting policies are implemented and that internal
controls are put in place in order to deter fraud, anticipate
financial risks and promote accurate, high quality and timely
disclosure of financial and other material information to the
public markets, the Board of Directors and the stockholders. The
Audit Committee also reviews and recommends to the Board of
Directors the approval of the annual financial statements and
provides a forum, independent of management, where the
Companys independent registered public accounting firm can
communicate any issues of concern.
The independent members of the Audit Committee believe that the
present composition of the Committee accomplishes all of the
necessary goals and functions of an audit committee as
recommended by the Blue Ribbon Committee on Improving the
Effectiveness of Corporate Audit Committees and adopted by the
U.S. stock exchanges and the Securities and Exchange
Commission. The Audit Committee Charter is available on the
Companys web site at www.royalgold.com. The Audit
Committee Charter specifies the scope of the Audit
Committees responsibilities and how it should carry out
those responsibilities.
The Audit Committee has reviewed and discussed the audited
financial statements of the Company for the fiscal year ended
June 30, 2008, with the Companys management. The
Audit Committee has discussed with PricewaterhouseCoopers LLP,
the Companys independent registered public accountants,
the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees), as
amended by Statement on Auditing Standards No. 90 (Audit
Committee Communications). The Audit Committee has also received
the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards
Board Standard No. 1 (Independence Discussion with Audit
Committees) and the Audit Committee has discussed the
independence of PricewaterhouseCoopers LLP with the Company.
Based on the review and discussions with the Companys
auditors, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in
the Companys Annual Report on
Form 10-K
for the fiscal year ended June 30, 2008, for filing with
the U.S. Securities and Exchange Commission.
This Report has been submitted by the following members of the
Audit Committee of the Board of Directors:
James W. Stuckert, Chairman
John W. Goth
Donald Worth
40
PROPOSAL 3.
RATIFICATION OF
APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee and the Board of Directors are seeking
stockholder ratification of its appointment of
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, to audit the consolidated financial statements
of the Company for the fiscal year ending June 30, 2009.
The ratification of the appointment of PricewaterhouseCoopers
LLP is being submitted to the stockholders because the Audit
Committee and the Board of Directors believes this to be good
corporate practice. Should the stockholders fail to ratify this
appointment, the Audit Committee will review the matter.
Representatives of PricewaterhouseCoopers LLP are expected to
attend the Annual Meeting. 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.
Fees for services rendered by PwC for the fiscal years ended
June 30, 2008 and June 30, 2007 are as follows:
Audit Fees. Fees were $495,668 and $719,970
for the years ended June 30, 2008 and 2007, respectively.
Included in this category are fees associated with the audit of
the Companys annual financial statements and review of
quarterly statements, issuance of consents, comfort letter and
procedures, and review of documents filed with the Securities
and Exchange Commission. Audit fees also include fees associated
with the audit of managements assessment and operating
effectiveness of the Sarbanes Oxley Act, Section 404,
internal control reporting requirements.
Audit-Related Fees. Fees were $0 for the years
ended June 30, 2008 and 2007.
Tax Fees. Fees were $0 for the years ended
June 30, 2008 and 2007.
All Other Fees. Fees were $0 and $1,616 for
the years ended June 30, 2008 and 2007, respectively. All
other fees for the fiscal year ended June 30, 2007, include
the Companys annual subscription to PwC on-line accounting
research product.
Pre-Approval
Policies and Procedures
The Audit Committee has adopted a policy that requires advance
approval for all audit, audit-related, tax services, and other
services performed by the independent registered public
accounting firm. The policy provides for pre-approval by the
Audit Committee of specifically defined audit and non-audit
services. Unless the specific service has been previously
pre-approved with respect to that year, the Audit Committee must
approve the permitted service before the independent auditor is
engaged to perform it. The Audit Committee has delegated to the
Chairman of the Audit Committee authority to approve certain
permitted services, provided that the Chairman reports any such
decisions to the Audit Committee at its next scheduled meeting.
The Audit Committee pre-approved all of the services described
above for the Companys 2008 fiscal year.
Vote Required for Approval. The affirmative
vote of a majority of the shares that are represented and
entitled to vote at a meeting at which a quorum is present is
required to ratify the appointment of PricewaterhouseCoopers LLP.
THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS OF THE
COMPANY.
41
OTHER
MATTERS
The Board of Directors knows of no other matters to be brought
before the Annual Meeting. However, if other matters should come
before the Annual Meeting, it is the intention of each person
named in the proxy to vote such proxy in accordance with his own
judgment on such matters.
Stockholder
Proposals
Stockholder proposals intended to be presented at the 2009
Annual Meeting of Stockholders and to be included in the
Companys proxy materials for the 2009 Annual Meeting of
Stockholders must be received by the Company at its principal
executive office in Denver, Colorado, by June 18, 2009,
if such proposals are to be considered timely and included
in the proxy materials. The inclusion of any stockholder
proposal in the proxy materials for the 2009 Annual Meeting of
Stockholders will be subject to applicable rules of the
Securities and Exchange Commission.
Stockholders may present proposals that are proper subjects for
consideration at the annual meeting even if the proposal is not
submitted by the deadline for inclusion in the proxy materials.
To do so, the proposal must be received not less than 90 but no
more than 120 days prior to the date of the 2009 Annual
Meeting of Stockholders; provided, however, that if notice or
public disclosure of the date of the 2009 Annual Meeting of
Stockholders is not made at least 100 days prior to the
date of the meeting, notice by the stockholder must be received
no later than the close of business on the tenth day following
the date the notice of the 2009 Annual Meeting of Stockholders
was mailed or public disclosure was made.
Proxies for the 2009 Annual Meeting of Stockholders will confer
discretionary authority to vote with respect to all proposals of
which the Company does not receive proper notice by
September 1, 2009.
BY ORDER OF THE BOARD OF DIRECTORS
Karen P. Gross
Vice President & Corporate Secretary
Denver, Colorado
September 23, 2008
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
including financial statements and any required financial
statement schedules, as filed with the Securities and Exchange
Commission for the fiscal year ended June 30, 2008.
Requests for a copy of the Annual Report should be mailed,
faxed, or sent via
e-mail to
Karen P. Gross, Vice President & Corporate Secretary,
Royal Gold, Inc., 1660 Wynkoop Street, Suite 1000,
Denver, Colorado
80202-1132,
303-595-9385
(fax), or kgross@royalgold.com.
42
Appendix A
ROYAL GOLD,
INC.
2004 OMNIBUS
LONG-TERM INCENTIVE PLAN
Adopted on November 10, 2004, as amended
Royal Gold, Inc., a Delaware corporation (the
Company), sets forth herein the terms of its 2004
Omnibus Long-Term Incentive Plan (the Plan), as
follows:
The Plan is intended to enhance the Companys and its
Affiliates (as defined herein) ability to attract and
retain highly qualified officers, directors, key employees, and
other persons, and to motivate such officers, directors, key
employees, and other persons to serve the Company and its
Affiliates and to expend maximum effort to improve the business
results and earnings of the Company, by providing to such
persons an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the
Company. To this end, the Plan provides for the grant of stock
options, stock appreciation rights, restricted stock, stock
units, unrestricted stock, dividend equivalent rights and cash
awards. Any of these awards may, but need not, be made as
performance incentives to reward attainment of annual or
long-term performance goals in accordance with the terms hereof.
Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein.
For purposes of interpreting the Plan and related documents
(including Award Agreements), the following definitions shall
apply:
2.1 Affiliate means, with respect
to the Company, any company or other trade or business that
controls, is controlled by or is under common control with the
Company within the meaning of Rule 405 of Regulation C
under the Securities Act, including, without limitation, any
Subsidiary.
2.2 Annual Incentive Award means
an Award made subject to attainment of performance goals (as
described in Section 14) over a performance period
of up to one year (the fiscal year, unless otherwise specified
by the Committee).
2.3 Award means a grant of an
Option, Stock Appreciation Right, Restricted Stock, Unrestricted
Stock, Stock Unit, Dividend Equivalent Rights, or cash award
under the Plan.
2.4 Award Agreement means the
written agreement between the Company and a Grantee that
evidences and sets out the terms and conditions of an Award.
2.5 Benefit Arrangement shall have
the meaning set forth in Section 15 hereof.
2.6 Board means the Board of
Directors of the Company.
2.7 Cause means, as determined by
the Board and unless otherwise provided in an applicable
agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the
performance of duties; (ii) conviction of a criminal
offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment,
consulting or other services, confidentiality, intellectual
property or non-competition agreements, if any, between the
Service Provider and the Company or an Affiliate.
2.8 Code means the Internal
Revenue Code of 1986, as now in effect or as hereafter amended.
2.9 Committee means a committee
of, and designated from time to time by resolution of, the
Board, which shall be constituted as provided in
Section 3.2.
2.10 Company means Royal Gold, Inc.
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2.11 Corporate Transaction means
(i) the dissolution or liquidation of the Company or a
merger, consolidation, or reorganization of the Company with one
or more other entities in which the Company is not the surviving
entity, (ii) a sale of substantially all of the assets of
the Company to another person or entity, or (iii) any
transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity)
which results in any person or entity (other than persons who
are stockholders or Affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of
all classes of stock of the Company.
2.12 Covered Employee means a
Grantee who is a Covered Employee within the meaning of
Section 162(m)(3) of the Code.
2.13 Disability means the Grantee
is unable to perform each of the essential duties of such
Grantees position by reason of a medically determinable
physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous
period of not less than 12 months; provided, however, that,
with respect to rules regarding expiration of an Incentive Stock
Option following termination of the Grantees Service,
Disability shall mean the Grantee is unable to engage in any
substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months.
2.14 Dividend Equivalent Right
means a right, granted to a Grantee under Section 13
hereof, to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.
2.15 Effective Date means
October 6, 2004, the date the Plan is approved by the Board.
2.16 Exchange Act means the
Securities Exchange Act of 1934, as now in effect or as
hereafter amended.
2.17 Fair Market Value means the
value of a share of Stock, determined as follows: if on the
Grant Date or other determination date the Stock is listed on an
established national or regional stock exchange, is admitted to
quotation on The Nasdaq Stock Market, Inc. or is publicly traded
on an established securities market, the Fair Market Value of a
share of Stock shall be the closing price of the Stock on such
exchange or in such market (if there is more than one such
exchange or market the Board shall determine the appropriate
exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low
sale prices on such trading day) or, if no sale of Stock is
reported for such trading day, on the next preceding day on
which any sale shall have been reported. If the Stock is not
listed on such an exchange, quoted on such system or traded on
such a market, Fair Market Value shall be the value of the Stock
as determined by the Board in good faith.
2.18 Family Member means a person
who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother, sister,
brother-in-law,
or
sister-in-law,
including adoptive relationships, of the Grantee, any person
sharing the Grantees household (other than a tenant or
employee), a trust in which any one or more of these persons
have more than fifty percent of the beneficial interest, a
foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity
in which one or more of these persons (or the Grantee) own more
than fifty percent of the voting interests.
2.19 Grant Date means, as
determined by the Board, the latest to occur of (i) the
date as of which the Board approves an Award, (ii) the date
on which the recipient of an Award first becomes eligible to
receive an Award under Section 6 hereof, or
(iii) such other date as may be specified by the Board.
2.20 Grantee means a person who
receives or holds an Award under the Plan.
2.21 Incentive Stock Option means
an incentive stock option within the meaning of
Section 422 of the Code, or the corresponding provision of
any subsequently enacted tax statute, as amended from time to
time.
2.22 Non-qualified Stock Option
means an Option that is not an Incentive Stock Option.
2.23 Option means an option to
purchase one or more shares of Stock pursuant to the Plan.
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2.24 Option Price means the
exercise price for each share of Stock subject to an Option.
2.25 Option Proceeds means, with
respect to an Option, the sum of (i) the Option Price paid
in cash, if any, to purchase shares of Stock under such Option,
plus (ii) the value of all Federal, state, and local
deductions to which the Company is entitled with respect to the
exercise of such Option determined using the highest Federal tax
rate applicable to corporations and a blended tax rate for state
and local taxes based on the jurisdictions in which the Company
does business and giving effect to the deduction of state and
local taxes for Federal tax purposes.
2.26 Other Agreement shall have
the meaning set forth in Section 15 hereof.
2.27 Outside Director means a
member of the Board who is not an officer or employee of the
Company.
2.28 Performance Award means an
Award made subject to the attainment of performance goals (as
described in Section 14) over a performance period
of up to ten (10) years.
2.29 Plan means this Royal Gold,
Inc. 2004 Omnibus Long-Term Incentive Plan.
2.30 Purchase Price means the
purchase price for each share of Stock pursuant to a grant of
Restricted Stock or Unrestricted Stock.
2.31 Reporting Person means a
person who is required to file reports under Section 16(a)
of the Exchange Act.
2.32 Restricted Stock means shares
of Stock, awarded to a Grantee pursuant to Section 10
hereof.
2.33 SAR Exercise Price means the
per share exercise price of an SAR granted to a Grantee under
Section 9 hereof.
2.34 Securities Act means the
Securities Act of 1933, as now in effect or as hereafter amended.
2.35 Service means service as a
Service Provider to the Company or an Affiliate. Unless
otherwise stated in the applicable Award Agreement, a
Grantees change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee
continues to be a Service Provider to the Company or an
Affiliate. Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the
Plan shall be determined by the Board, which determination shall
be final, binding and conclusive.
2.36 Service Provider means an
employee, officer or director of the Company or an Affiliate, or
a consultant or adviser currently providing services to the
Company or an Affiliate.
2.37 Stock means the common stock,
par value $.01 per share, of the Company.
2.38 Stock Appreciation Right or
SAR means a right granted to a Grantee under
Section 9 hereof.
2.39 Stock Unit means a
bookkeeping entry representing the equivalent of shares of
Stock, awarded to a Grantee pursuant to Section 10
hereof.
2.40 Subsidiary means any
subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.
2.41 Termination Date means the
date upon which an Option shall terminate or expire, as set
forth in Section 8.3 hereof.
2.42 Ten Percent Stockholder
means an individual who owns more than ten percent (10%) of
the total combined voting power of all classes of outstanding
stock of the Company, its parent or any of its Subsidiaries. In
determining stock ownership, the attribution rules of
Section 424(d) of the Code shall be applied.
2.43 Unrestricted Stock means an
Award pursuant to Section 11 hereof.
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3.
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ADMINISTRATION OF
THE PLAN
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3.1. Board.
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the
Companys certificate of incorporation and by-laws and
applicable law. The Board shall have full power and authority to
take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement,
and shall have full power and authority to take all such other
actions and make all such other determinations not inconsistent
with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions
and determinations shall be by the affirmative vote of a
majority of the members of the Board present at a meeting or by
unanimous consent of the Board executed in writing in accordance
with the Companys certificate of incorporation and by-laws
and applicable law. The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award
Agreement shall be final, binding and conclusive.
3.2. Committee.
The Board from time to time may delegate to the Committee such
powers and authorities related to the administration and
implementation of the Plan, as set forth in Section 3.1
above and other applicable provisions, as the Board shall
determine, consistent with the certificate of incorporation and
by-laws of the Company and applicable law.
(i) Except as provided in Subsection (ii) and except
as the Board may otherwise determine, the Committee, if any,
appointed by the Board to administer the Plan shall consist of
two or more Outside Directors of the Company who:
(a) qualify as outside directors within the
meaning of Section 162(m) of the Code and who (b) meet
such other requirements as may be established from time to time
by the Securities and Exchange Commission for plans intended to
qualify for exemption under
Rule 16b-3
(or its successor) under the Exchange Act and who comply with
the independence requirements of the stock exchange on which the
Common Stock is listed.
(ii) The Board may also appoint one or more separate
committees of the Board, each composed of one or more directors
of the Company who need not be Outside Directors, who may
administer the Plan with respect to employees or other Service
Providers who are not officers or directors of the Company, may
grant Awards under the Plan to such employees or other Service
Providers, and may determine all terms of such Awards.
In the event that the Plan, any Award or any Award Agreement
entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken
or such determination may be made by the Committee if the power
and authority to do so has been delegated to the Committee by
the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and
conclusive. To the extent permitted by law, the Committee may
delegate its authority under the Plan to a member of the Board.
3.3. Terms
of Awards.
Subject to the other terms and conditions of the Plan, the Board
shall have full and final authority to:
(i) designate Grantees,
(ii) determine the type or types of Awards to be made to a
Grantee,
(iii) determine the number of shares of Stock to be subject
to an Award,
(iv) establish the terms and conditions of each Award
(including, but not limited to, the exercise price of any
Option, the nature and duration of any restriction or condition
(or provision for lapse thereof) relating to the vesting,
exercise, transfer, or forfeiture of an Award or the shares of
Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options),
(v) prescribe the form of each Award Agreement evidencing
an Award, and
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(vi) amend, modify, or supplement the terms of any
outstanding Award. Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to modify Awards to eligible
individuals who are foreign nationals or are individuals who are
employed outside the United States to recognize differences in
local law, tax policy, or custom.
As a condition to any subsequent Award, the Board shall have the
right, at its discretion, to require Grantees to return to the
Company Awards previously made under the Plan. Subject to the
terms and conditions of the Plan, any such new Award shall be
upon such terms and conditions as are specified by the Board at
the time the new Award is made. The Board shall have the right,
in its discretion, to make Awards in substitution or exchange
for any other award under another plan of the Company, any
Affiliate, or any business entity to be acquired by the Company
or an Affiliate. The Company may retain the right in an Award
Agreement to cause a forfeiture of the gain realized by a
Grantee on account of actions taken by the Grantee in violation
or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any
Affiliate thereof or any confidentiality obligation with respect
to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the
extent specified in such Award Agreement applicable to the
Grantee. Furthermore, the Company may annul an Award if the
Grantee is an employee of the Company or an Affiliate thereof
and is terminated for Cause as defined in the applicable Award
Agreement or the Plan, as applicable. The grant of any Award
shall be contingent upon the Grantee executing the appropriate
Award Agreement.
Notwithstanding the foregoing, no amendment or modification may
be made to an outstanding Option or SAR which reduces the Option
Price or SAR Exercise Price, either by lowering the Option Price
or SAR Exercise Price or by canceling the outstanding Option or
SAR and granting a replacement Option or SAR with a lower
exercise price without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to
outstanding Options and SARs pursuant to Section 17.
3.4. Deferral
Arrangement.
The Board may permit or require the deferral of any award
payment into a deferred compensation arrangement, subject to
such rules and procedures as it may establish, which may include
provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred
Stock equivalents and restricting deferrals to comply with
hardship distribution rules affecting 401(k) plans. Any such
deferrals shall be made in compliance with Code Section 409A.
3.5. No
Liability.
No member of the Board or of the Committee shall be liable for
any action or determination made in good faith with respect to
the Plan or any Award or Award Agreement.
3.6. Book
Entry.
Notwithstanding any other provision of this Plan to the
contrary, the Company may elect to satisfy any requirement under
this Plan for the delivery of stock certificates through the use
of book-entry.
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4.
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STOCK SUBJECT TO
THE PLAN
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Stock issued or to be issued under the Plan shall be authorized
but unissued shares; or, to the extent permitted by applicable
law, issued shares that have been reacquired by the Company.
Subject to adjustment as provided in Section 17
hereof, the number of shares of Stock available for issuance
under the Plan shall be the sum of one million three hundred
thousand (1,300,000), and any shares of Stock available for
grant (including shares which become available due to
forfeitures of outstanding awards) under the Companys
Equity Incentive Plan. Notwithstanding the preceding sentence
and also subject to adjustment as provided in Section 17
hereof, the aggregate number of shares of Stock which
cumulatively may be available for issuance pursuant to Awards
other than Awards of Options or SARs shall not exceed six
hundred fifty thousand (650,000), and the aggregate number of
shares of Stock that may be issued under the Plan shall not
exceed one million three hundred thousand (1,300,000). If any
shares covered by an Award are not
A-5
purchased or are forfeited, or if an Award otherwise terminates
without delivery of any Stock subject thereto, then the number
of shares of Stock counted against the aggregate number of
shares available under the Plan with respect to such Award
shall, to the extent of any such forfeiture or termination,
again be available for making Awards under the Plan. If the
Option Price of any Option granted under the Plan, or if
pursuant to Section 18.3 the withholding obligation
of any Grantee with respect to an Option or other Award, is
satisfied by tendering shares of Stock to the Company (by either
actual delivery or by attestation) or by withholding shares of
Stock, the number of shares of Stock issued net of the shares of
Stock tendered or withheld shall be deemed delivered for
purposes of determining the maximum number of shares of Stock
available for delivery under the Plan. The number of shares of
Stock reserved under this Section 4 shall be
increased by the number of any shares of Stock that are
repurchased by the Company with Option Proceeds in respect of
the exercise of an Option; provided, however, that the number of
shares of Stock contributed to the number of shares reserved
under this Section 4 in respect of the use of Option
Proceeds for repurchase shall not be greater than: (A) the
amount of such Option Proceeds divided by, (B) the Fair
Market Value on the date of exercise of the applicable Option.
The Board shall have the right to substitute or assume Awards in
connection with mergers, reorganizations, separations, or other
transactions to which Section 424(a) of the Code applies,
provided such substitutions and assumptions are permitted by
Section 424 of the Code and the regulations promulgated
thereunder. The number of shares of Stock reserved pursuant to
Section 4 may be increased by the corresponding
number of Awards assumed and, in the case of a substitution, by
the net increase in the number of shares of Stock subject to
Awards before and after the substitution.
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5.
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EFFECTIVE DATE,
DURATION AND AMENDMENTS
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5.1. Effective
Date.
The Plan shall be effective as of the Effective Date, subject to
approval of the Plan by the Companys stockholders within
one year of the Effective Date. Upon approval of the Plan by the
stockholders of the Company as set forth above, all Awards made
under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the
Plan on the Effective Date. If the stockholders fail to approve
the Plan within one year after the Effective Date, any Awards
made hereunder shall be null and void and of no effect.
5.2. Term.
The Plan shall terminate automatically ten (10) years after
its adoption by the Board and may be terminated on any earlier
date as provided in Section 5.3.
5.3. Amendment
and Termination of the Plan.
The Board may, at any time and from time to time, amend,
suspend, or terminate the Plan as to any shares of Stock as to
which Awards have not been made. An amendment shall be
contingent on approval of the Companys stockholders to the
extent stated by the Board, required by applicable law or
required by applicable stock exchange listing requirements.
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6.
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AWARD ELIGIBILITY
AND LIMITATIONS
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6.1. Service
Providers and Other Persons.
Subject to this Section 6, Awards may be made under
the Plan to: (i) any Service Provider to the Company or of
any Affiliate, including any Service Provider who is an officer
or director of the Company, or of any Affiliate, as the Board
shall determine and designate from time to time, (ii) any
Outside Director, and (iii) any other individual whose
participation in the Plan is determined to be in the best
interests of the Company by the Board.
6.2. Successive
Awards.
An eligible person may receive more than one Award, subject to
such restrictions as are provided herein.
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6.3. Limitation
on Shares of Stock Subject to Awards and Cash Awards.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act:
(i) the maximum number of shares of Stock subject to
Options or SARs that can be awarded under the Plan to any person
eligible for an Award under Section 6 hereof is one
hundred thousand (100,000) per calendar year;
(ii) the maximum number of shares that can be awarded under
the Plan, other than pursuant to an Option or SARs, to any
person eligible for an Award under Section 6 hereof
is one hundred thousand (100,000) per calendar year; and
(iii) the maximum amount that may be earned as an Annual
Incentive Award or other cash Award in any calendar year by any
one Grantee shall be $1,000,000, and the maximum amount that may
be earned as a Performance Award or other cash Award in respect
of a performance period by any one Grantee shall be $2,000,000.
The preceding limitations in this Section 6.3 are
subject to adjustment as provided in Section 17
hereof.
6.4. Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the
Board, be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Affiliate,
or any business entity to be acquired by the Company or an
Affiliate, or any other right of a Grantee to receive payment
from the Company or any Affiliate. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an
Award is granted in substitution or exchange for another Award,
the Board shall require the surrender of such other Award in
consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in
lieu of cash amounts payable under other plans of the Company or
any Affiliate, in which the value of Stock subject to the Award
is equivalent in value to the cash compensation (for example,
Stock Units or Restricted Stock), or in which the Option Price,
grant price or purchase price of the Award in the nature of a
right that may be exercised is equal to the Fair Market Value of
the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an Option Price
discounted by the amount of the cash compensation
surrendered).
Each Award granted pursuant to the Plan shall be evidenced by an
Award Agreement, in such form or forms as the Board shall from
time to time determine. Award Agreements granted from time to
time or at the same time need not contain similar provisions but
shall be consistent with the terms of the Plan. Each Award
Agreement evidencing an Award of Options shall specify whether
such Options are intended to be Non-qualified Stock Options or
Incentive Stock Options, and in the absence of such
specification such options shall be deemed Non-qualified Stock
Options.
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8.
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TERMS AND
CONDITIONS OF OPTIONS
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8.1. Option
Price.
The Option Price of each Option shall be fixed by the Board and
stated in the Award Agreement evidencing such Option. The Option
Price of each Option shall be at least the Fair Market Value on
the Grant Date of a share of Stock; provided, however,
that in the event that a Grantee is a Ten
Percent Stockholder, the Option Price of an Option granted
to such Grantee that is intended to be an Incentive Stock Option
shall be not less than 110 percent of the Fair Market Value
of a share of Stock on the Grant Date. In no case shall the
Option Price of any Option be less than the par value of a share
of Stock.
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8.2. Vesting.
Subject to Sections 8.3 and 17.3 hereof, each
Option granted under the Plan shall become exercisable at such
times and under such conditions as shall be determined by the
Board and stated in the Award Agreement. For purposes of this
Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest
whole number. No Option shall be exercisable in whole or in part
prior to the date the Plan is approved by the Stockholders of
the Company as provided in Section 5.1 hereof.
8.3. Term.
Each Option granted under the Plan shall terminate, and all
rights to purchase shares of Stock thereunder shall cease, upon
the expiration of ten years from the date such Option is
granted, or under such circumstances and on such date prior
thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option
(the Termination Date); provided, however,
that in the event that the Grantee is a Ten
Percent Stockholder, an Option granted to such Grantee that
is intended to be an Incentive Stock Option shall not be
exercisable after the expiration of five years from its Grant
Date.
8.4. Termination
of Service.
Each Award Agreement shall set forth the extent to which the
Grantee shall have the right to exercise the Option following
termination of the Grantees Service. Such provisions shall
be determined in the sole discretion of the Board, need not be
uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of
Service.
8.5. Limitations
on Exercise of Option.
Notwithstanding any other provision of the Plan, in no event may
any Option be exercised, in whole or in part, prior to the date
the Plan is approved by the stockholders of the Company as
provided herein or after the occurrence of an event referred to
in Section 17 hereof which results in termination of
the Option.
8.6. Method
of Exercise.
An Option that is exercisable may be exercised by the
Grantees delivery to the Company of written notice of
exercise on any business day, at the Companys principal
office, on the form specified by the Company. Such notice shall
specify the number of shares of Stock with respect to which the
Option is being exercised and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is
being exercised plus the amount (if any) of federal
and/or other
taxes which the Company may, in its judgment, be required to
withhold with respect to an Award. The minimum number of shares
of Stock with respect to which an Option may be exercised, in
whole or in part, at any time shall be the lesser of
(i) 100 shares or such lesser number set forth in the
applicable Award Agreement and (ii) the maximum number of
shares available for purchase under the Option at the time of
exercise.
8.7. Rights
of Holders of Options.
Unless otherwise stated in the applicable Award Agreement, an
individual holding or exercising an Option shall have none of
the rights of a stockholder (for example, the right to receive
cash or dividend payments or distributions attributable to the
subject shares of Stock or to direct the voting of the subject
shares of Stock ) until the shares of Stock covered thereby are
fully paid and issued to him. Except as provided in
Section 17 hereof, no adjustment shall be made for
dividends, distributions or other rights for which the record
date is prior to the date of such issuance.
8.8. Delivery
of Stock Certificates.
Promptly after the exercise of an Option by a Grantee and the
payment in full of the Option Price, such Grantee shall be
entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject
to the Option.
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8.9. Transferability
of Options.
Except as provided in Section 8.10, during the
lifetime of a Grantee, only the Grantee (or, in the event of
legal incapacity or incompetency, the Grantees guardian or
legal representative) may exercise an Option. Except as provided
in Section 8.10, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution.
8.10. Family
Transfers.
If authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of an Option which is not
an Incentive Stock Option to any Family Member. For the purpose
of this Section 8.10, a not for value
transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of
marital property rights; or (iii) a transfer to an entity
in which more than fifty percent of the voting interests are
owned by Family Members (or the Grantee) in exchange for an
interest in that entity. Following a transfer under this
Section 8.10, any such Option shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of
transferred Options are prohibited except to Family Members of
the original Grantee in accordance with this
Section 8.10 or by will or the laws of descent and
distribution. The events of termination of Service of
Section 8.4 hereof shall continue to be applied with
respect to the original Grantee, following which the Option
shall be exercisable by the transferee only to the extent, and
for the periods specified, in Section 8.4.
8.11. Limitations
on Incentive Stock Options.
An Option shall constitute an Incentive Stock Option only
(i) if the Grantee of such Option is an employee of the
Company or any Subsidiary of the Company; (ii) to the
extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of
Stock with respect to which all Incentive Stock Options held by
such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the
Grantees employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options
into account in the order in which they were granted.
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9.
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TERMS AND
CONDITIONS OF STOCK APPRECIATION RIGHTS
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9.1. Right
to Payment.
An SAR shall confer on the Grantee to whom it is granted a right
to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise
over (B) the grant price of the SAR as determined by the
Board. The Award Agreement for an SAR shall specify the grant
price of the SAR, which may be fixed at the Fair Market Value of
a share of Stock on the date of grant or may vary in accordance
with a predetermined formula while the SAR is outstanding. SARs
may be granted in conjunction with all or part of an Option
granted under the Plan or at any subsequent time during the term
of such Option, in conjunction with all or part of any other
Award or without regard to any Option or other Award.
9.2. Other
Terms.
The Board shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under which an
SAR may be exercised in whole or in part (including based on
achievement of performance goals
and/or
future service requirements), the time or times at which SARs
shall cease to be or become exercisable following termination of
Service or upon other conditions, the method of exercise, method
of settlement, form of consideration payable in settlement,
method by or forms in which Stock will be delivered or deemed to
be delivered to Grantees, whether or not an SAR shall be in
tandem or in combination with any other Award, and any other
terms and conditions of any SAR.
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10.
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TERMS AND
CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS
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10.1. Grant
of Restricted Stock or Stock Units.
Awards of Restricted Stock or Stock Units may be made for no
consideration (other than par value of the shares which is
deemed paid by Services already rendered).
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10.2. Restrictions.
At the time a grant of Restricted Stock or Stock Units is made,
the Board may, in its sole discretion, establish a period of
time (a restricted period) applicable to such
Restricted Stock or Stock Units. Each Award of Restricted Stock
or Stock Units may be subject to a different restricted period.
The Board may, in its sole discretion, at the time a grant of
Restricted Stock or Stock Units is made, prescribe restrictions
in addition to or other than the expiration of the restricted
period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any
portion of the Restricted Stock or Stock Units in accordance
with Section 14.1 and 14.2. Notwithstanding
the foregoing and except in the case of accelerated vesting for
Grantees whose age plus years of Service total at least
sixty-five (65), (i) Restricted Stock that vests solely by
the passage of time shall not vest in full in less than three
(3) years from the Grant Date and (ii) Restricted
Stock for which vesting may be accelerated by achieving
performance targets shall not vest in full in less than one
(1) year from the Grant Date. Neither Restricted Stock nor
Stock Units may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the restricted period
or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock or
Stock Units.
10.3. Restricted
Stock Certificates.
The Company shall issue, in the name of each Grantee to whom
Restricted Stock has been granted, stock certificates
representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after
the Grant Date. The Board may provide in an Award Agreement that
either (i) the Secretary of the Company shall hold such
certificates for the Grantees benefit until such time as
the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such
certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate
reference to the restrictions imposed under the Plan and the
Award Agreement.
10.4. Rights
of Holders of Restricted Stock.
Unless the Board otherwise provides in an Award Agreement,
holders of Restricted Stock shall have the right to vote such
Stock and the right to receive any dividends declared or paid
with respect to such Stock. The Board may provide that any
dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting
conditions and restrictions applicable to such Restricted Stock.
All distributions, if any, received by a Grantee with respect to
Restricted Stock as a result of any stock split, stock dividend,
combination of shares, or other similar transaction shall be
subject to the restrictions applicable to the original Grant.
10.5. Rights
of Holders of Stock Units.
10.5.1. Voting
and Dividend Rights.
Unless the Board otherwise provides in an Award Agreement,
holders of Stock Units shall have no rights as stockholders of
the Company. The Board may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock
Units shall be entitled to receive, upon the Companys
payment of a cash dividend on its outstanding Stock, a cash
payment for each Stock Unit held equal to the per-share dividend
paid on the Stock. Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Stock
Units at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend is paid.
10.5.2. Creditors
Rights.
A holder of Stock Units shall have no rights other than those of
a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.
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10.6. Termination
of Service.
Unless the Board otherwise provides in an Award Agreement or in
writing after the Award Agreement is issued, upon the
termination of a Grantees Service, any Restricted Stock or
Stock Units held by such Grantee that have not vested, or with
respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Stock Units, the Grantee shall
have no further rights with respect to such Award, including but
not limited to any right to vote Restricted Stock or any right
to receive dividends with respect to shares of Restricted Stock
or Stock Units.
10.7. Purchase
of Restricted Stock.
The Grantee shall be required, to the extent required by
applicable law, to purchase the Restricted Stock from the
Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any,
specified in the Award Agreement relating to such Restricted
Stock. The Purchase Price shall be payable in a form described
in Section 12 or, in the discretion of the Board, in
consideration for past Services rendered to the Company or an
Affiliate.
10.8. Delivery
of Stock.
Upon the expiration or termination of any restricted period and
the satisfaction of any other conditions prescribed by the
Board, the restrictions applicable to shares of Restricted Stock
or Stock Units settled in Stock shall lapse, and, unless
otherwise provided in the Award Agreement, a stock certificate
for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantees beneficiary
or estate, as the case may be.
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11.
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TERMS AND
CONDITIONS OF UNRESTRICTED STOCK AWARDS
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The Board may, in its sole discretion, grant (or sell at par
value or such other higher purchase price determined by the
Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any
restrictions (Unrestricted Stock) under the Plan.
Unrestricted Stock Awards may be granted or sold as described in
the preceding sentence in respect of past services and other
valid consideration, or in lieu of, or in addition to, any cash
compensation due to such Grantee.
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12.
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FORM OF
PAYMENT FOR OPTIONS AND RESTRICTED STOCK
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12.1. General
Rule.
Payment of the Option Price for the shares purchased pursuant to
the exercise of an Option or the Purchase Price for Restricted
Stock shall be made in cash or in cash equivalents acceptable to
the Company.
12.2. Surrender
of Stock.
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock may be made
all or in part through the tender to the Company of shares of
Stock, which shares, if acquired from the Company and if so
required by the Company, shall have been held for at least six
months at the time of tender and which shall be valued, for
purposes of determining the extent to which the Option Price or
Purchase Price has been paid thereby, at their Fair Market Value
on the date of exercise or surrender.
12.3. Cashless
Exercise.
With respect to an Option only (and not with respect to
Restricted Stock), to the extent permitted by law and to the
extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option
may be made all or in part by delivery (on a form acceptable to
the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell shares of Stock and to
deliver all or part of the sales proceeds to the Company in
payment of the Option Price and any withholding taxes described
in Section 18.3.
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12.4. Other
Forms of Payment.
To the extent the Award Agreement so provides, payment of the
Option Price for shares purchased pursuant to exercise of an
Option or the Purchase Price for Restricted Stock may be made in
any other form that is consistent with applicable laws,
regulations and rules.
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13.
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TERMS AND
CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS
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13.1. Dividend
Equivalent Rights.
A Dividend Equivalent Right is an Award entitling the recipient
to receive credits based on cash distributions that would have
been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such
shares had been issued to and held by the recipient. A Dividend
Equivalent Right may be granted hereunder to any Grantee as a
component of another Award or as a freestanding award. The terms
and conditions of Dividend Equivalent Rights shall be specified
in the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed
to be reinvested in additional shares of Stock, which may
thereafter accrue additional equivalents. Any such reinvestment
shall be at Fair Market Value on the date of reinvestment.
Dividend Equivalent Rights may be settled in cash or Stock or a
combination thereof, in a single installment or installments,
all determined in the sole discretion of the Board. A Dividend
Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled
upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under
the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain
terms and conditions different from such other award.
13.2. Termination
of Service.
Except as may otherwise be provided by the Board either in the
Award Agreement or in writing after the Award Agreement is
issued, a Grantees rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate
upon the Grantees termination of Service for any reason.
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14.
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TERMS AND
CONDITIONS OF PERFORMANCE AND ANNUAL INCENTIVE AWARDS
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14.1. Performance
Conditions.
The right of a Grantee to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject
to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of
performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to
performance conditions, except as limited under
Sections 14.2 hereof in the case of a Performance Award or
Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code
Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m), shall be exercised by the
Committee and not the Board.
14.2. Performance
or Annual Incentive Awards Granted to Designated Covered
Employees.
If and to the extent that the Committee determines that a
Performance or Annual Incentive Award to be granted to a Grantee
who is designated by the Committee as likely to be a Covered
Employee should qualify as performance-based
compensation for purposes of Code Section 162(m), the
grant, exercise
and/or
settlement of such Performance or Annual Incentive Award shall
be contingent upon achievement of pre-established performance
goals and other terms set forth in this Section 14.2.
14.2.1. Performance
Goals Generally.
The performance goals for such Performance or Annual Incentive
Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with
this Section 14.2. Performance goals shall be
objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the
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requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals
being substantially uncertain. The Committee may
determine that such Performance or Annual Incentive Awards shall
be granted, exercised
and/or
settled upon achievement of any one performance goal or that two
or more of the performance goals must be achieved as a condition
to grant, exercise
and/or
settlement of such Performance or Annual Incentive Awards.
Performance goals may differ for Performance or Annual Incentive
Awards granted to any one Grantee or to different Grantees.
14.2.2. Business
Criteria.
One or more of the following business criteria for the Company,
on a consolidated basis,
and/or
specified subsidiaries or business units of the Company (except
with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance or Annual
Incentive Awards: (1) total stockholder return;
(2) such total stockholder return as compared to total
return (on a comparable basis) of a publicly available index
such as, but not limited to, the Standard &
Poors 500 Stock Index; (3) net income;
(4) pretax earnings; (5) earnings before interest
expense, taxes, depreciation and amortization; (6) pretax
operating earnings after interest expense and before bonuses,
service fees, and extraordinary or special items;
(7) operating margin; (8) earnings per share;
(9) return on equity; (10) return on capital;
(11) return on investment; (12) operating earnings;
(13) working capital; (14) ratio of debt to
stockholders equity; (15) revenue and (16) free
cash flow and free cash flow per share. Business criteria may be
measured on an absolute basis or on a relative basis (i.e.,
performance relative to peer companies) and on a GAAP or
non-GAAP basis.
14.2.3. Timing
For Establishing Performance Goals.
Performance goals shall be established not later than
90 days after the beginning of any performance period
applicable to such Performance or Annual Incentive Awards, or at
such other date as may be required or permitted for
performance-based compensation under Code
Section 162(m).
14.2.4. Performance
or Annual Incentive Award Pool.
The Committee may establish a Performance or Annual Incentive
Award pool, which shall be an unfunded pool, for purposes of
measuring Company performance in connection with Performance or
Annual Incentive Awards.
14.2.5. Settlement
of Performance or Annual Incentive Awards; Other
Terms.
Settlement of such Performance or Annual Incentive Awards shall
be in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance or Annual Incentive
Awards. The Committee shall specify the circumstances in which
such Performance or Annual Incentive Awards shall be paid or
forfeited in the event of termination of Service by the Grantee
prior to the end of a performance period or settlement of
Performance Awards.
14.3. Written
Determinations.
All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards,
and the amount of any Annual Incentive Award pool or potential
individual Annual Incentive Awards and the amount of final
Annual Incentive Awards, shall be made in writing in the case of
any Award intended to qualify under Code Section 162(m). To
the extent required to comply with Code Section 162(m), the
Committee may delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards.
14.4. Status
of Section 14.2 Awards Under Code
Section 162(m).
It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 14.2 hereof granted
to persons who are designated by the Committee as likely to be
Covered Employees within the meaning of Code Section 162(m)
and regulations thereunder shall, if so designated by
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the Committee, constitute qualified performance-based
compensation within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the
terms of Section 14.2, including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a
manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Grantee will be
a Covered Employee with respect to a fiscal year that has not
yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee, at the
time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards
does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to
conform to such requirements.
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15.
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PARACHUTE
LIMITATIONS
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Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter
entered into by a Grantee with the Company or any Affiliate,
except an agreement, contract, or understanding hereafter
entered into that expressly modifies or excludes application of
this paragraph (an Other Agreement), and
notwithstanding any formal or informal plan or other arrangement
for the direct or indirect provision of compensation to the
Grantee (including groups or classes of Grantees or
beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of
a benefit to or for the Grantee (a Benefit
Arrangement), if the Grantee is a disqualified
individual, as defined in Section 280G(c) of the
Code, any Option, Restricted Stock or Stock Unit held by that
Grantee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting,
payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Grantee under this Plan to be
considered a parachute payment within the meaning of
Section 280G(b)(2) of the Code as then in effect (a
Parachute Payment) and (ii) if, as a
result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Grantee from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would
be less than the maximum after-tax amount that could be received
by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of
any such right to exercise, vesting, payment, or benefit under
this Plan, in conjunction with all other rights, payments, or
benefits to or for the Grantee under any Other Agreement or any
Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute Payment under this Plan that would
have the effect of decreasing the after-tax amount received by
the Grantee as described in clause (ii) of the preceding
sentence, then the Grantee shall have the right, in the
Grantees sole discretion, to designate those rights,
payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so
as to avoid having the payment or benefit to the Grantee under
this Plan be deemed to be a Parachute Payment, provided,
however, that in order to comply with Code Section 409A,
the reduction or elimination will be performed in the order in
which each dollar of value subject to an Award reduces the
Parachute Payment to the greatest extent.
16.1. General.
The Company shall not be required to sell or issue any shares of
Stock under any Award if the sale or issuance of such shares
would constitute a violation by the Grantee, any other
individual exercising an Option, or the Company of any provision
of any law or regulation of any governmental authority,
including without limitation any federal or state securities
laws or regulations. If at any time the Company shall determine,
in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any
securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with,
the issuance or purchase of shares hereunder, no shares of Stock
may be issued or sold to the Grantee or any other individual
exercising an Option pursuant to such Award unless such listing,
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registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Specifically, in
connection with the Securities Act, upon the exercise of any
Option or the delivery of any shares of Stock underlying an
Award, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such
Award, the Company shall not be required to sell or issue such
shares unless the Board has received evidence satisfactory to it
that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from
registration under the Securities Act. Any determination in this
connection by the Board shall be final, binding, and conclusive.
The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act.
The Company shall not be obligated to take any affirmative
action in order to cause the exercise of an Option or the
issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an
Option shall not be exercisable until the shares of Stock
covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances
in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the
availability of such an exemption.
16.2. Rule 16b-3.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the
intent of the Company that Awards pursuant to the Plan and the
exercise of Options granted hereunder will qualify for the
exemption provided by
Rule 16b-3
under the Exchange Act. To the extent that any provision of the
Plan or action by the Board does not comply with the
requirements of
Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law
and deemed advisable by the Board, and shall not affect the
validity of the Plan. In the event that
Rule 16b-3
is revised or replaced, the Board may exercise its discretion to
modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
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17.
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EFFECT OF CHANGES
IN CAPITALIZATION
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17.1. Changes
in Stock.
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged
for a different number or kind of shares or other securities of
the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of
shares for which grants of Options and other Awards may be made
under the Plan shall be adjusted proportionately and accordingly
by the Company. In addition, the number and kind of shares for
which Awards are outstanding shall be adjusted proportionately
and accordingly so that the proportionate interest of the
Grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any
such adjustment in outstanding Options or SARs shall not change
the aggregate Option Price or SAR Exercise Price payable with
respect to shares that are subject to the unexercised portion of
an outstanding Option or SAR, as applicable, but shall include a
corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per share. The conversion of any convertible
securities of the Company shall not be treated as an increase in
shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution
to the Companys stockholders of securities of any other
entity or other assets (including an extraordinary cash dividend
but excluding a non-extraordinary dividend payable in cash or in
stock of the Company) without receipt of consideration by the
Company, the Company may, in such manner as the Company deems
appropriate, adjust (i) the number and kind of shares
subject to outstanding Awards
and/or
(ii) the exercise price of outstanding Options and Stock
Appreciation Rights to reflect such distribution.
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17.2. Reorganization
in Which the Company Is the Surviving Entity Which does not
Constitute a Corporate Transaction.
Subject to Section 17.3 hereof, if the Company shall
be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities
which does not constitute a Corporate Transaction, any Option or
SAR theretofore granted pursuant to the Plan shall pertain to
and apply to the securities to which a holder of the number of
shares of Stock subject to such Option or SAR would have been
entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of
the Option Price or SAR Exercise Price per share so that the
aggregate Option Price or SAR Exercise Price thereafter shall be
the same as the aggregate Option Price or SAR Exercise Price of
the shares remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation. Subject
to any contrary language in an Award Agreement evidencing an
Award, any restrictions applicable to such Award shall apply as
well to any replacement shares received by the Grantee as a
result of the reorganization, merger or consolidation. In the
event of a transaction described in this Section 17.2,
Stock Units shall be adjusted so as to apply to the securities
that a holder of the number of shares of Stock subject to the
Stock Units would have been entitled to receive immediately
following such transaction.
17.3. Corporate
Transaction.
Subject to the exceptions set forth in the last sentence of this
Section 17.3 and the last sentence of
Section 17.4:
(i) upon the occurrence of a Corporate Transaction, all
outstanding shares of Restricted Stock and all Stock Units shall
be deemed to have vested, and all restrictions and conditions
applicable to such shares of Restricted Stock shall be deemed to
have lapsed and the shares of stock subject to such Stock Units
shall be delivered, immediately prior to the occurrence of such
Corporate Transaction, and
(ii) either of the following two actions shall be taken:
(A) fifteen days prior to the scheduled consummation of a
Corporate Transaction, all Options and SARs outstanding
hereunder shall become immediately exercisable and shall remain
exercisable for a period of fifteen days, or
(B) the Board may elect, in its sole discretion, to cancel
any outstanding Awards of Options, Restricted Stock, Stock Units
and/or SARs
and pay or deliver, or cause to be paid or delivered, to the
holder thereof an amount in cash or securities having a value
(as determined by the Board acting in good faith), in the case
of Restricted Stock or Stock Units, equal to the formula or
fixed price per share paid to holders of shares of Stock and, in
the case of Options or SARs, equal to the product of the number
of shares of Stock subject to the Option or SAR (the Award
Shares) multiplied by the amount, if any, by which
(I) the formula or fixed price per share paid to holders of
shares of Stock pursuant to such transaction exceeds
(II) the Option Price or SAR Exercise Price applicable to
such Award Shares.
With respect to the Companys establishment of an exercise
window, (i) any exercise of an Option or SAR during such
fifteen-day
period shall be conditioned upon the consummation of the event
and shall be effective only immediately before the consummation
of the event, and (ii) upon consummation of any Corporate
Transaction the Plan, and all outstanding but unexercised
Options and SARs shall terminate. The Board shall send written
notice of an event that will result in such a termination to all
individuals who hold Options and SARs not later than the time at
which the Company gives notice thereof to its stockholders.
This Section 17.3 shall not apply to any Corporate
Transaction to the extent that provision is made in writing in
connection with such Corporate Transaction for the assumption or
continuation of the Options, SARs, Restricted Stock and Stock
Units theretofore granted, or for the substitution for such
Options, SARs, Restricted Stock and Stock Units for new common
stock options and stock appreciation rights and new common stock
restricted stock and stock units relating to the stock of a
successor entity, or a parent or subsidiary thereof, with
appropriate adjustments as to the number of shares (disregarding
any consideration that is not common stock) and option and stock
appreciation right exercise prices, in which event the Plan,
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Options, SARs, Restricted Stock and Stock Units theretofore
granted shall continue in the manner and under the terms so
provided.
17.4. Adjustments.
Adjustments under this Section 17 related to shares
of Stock or securities of the Company shall be made by the
Board, whose determination in that respect shall be final,
binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated
in each case by rounding downward to the nearest whole share.
The Board shall determine the effect of a Corporate Transaction
upon Awards other than Options, SARs, Stock Units and Restricted
Stock, and such effect shall be set forth in the appropriate
Award Agreement. The Board may provide in the Award Agreements
at the time of grant, or any time thereafter with the consent of
the Grantee, for different provisions to apply to an Award in
place of those described in Sections 17.1, 17.2 and
17.3.
17.5. No
Limitations on Company.
The making of Awards pursuant to the Plan shall not affect or
limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of
its capital or business structure or to merge, consolidate,
dissolve, or liquidate, or to sell or transfer all or any part
of its business or assets.
18.1. Disclaimer
of Rights.
No provision in the Plan or in any Award or Award Agreement
shall be construed to confer upon any individual the right to
remain in the employ or service of the Company or any Affiliate,
or to interfere in any way with any contractual or other right
or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or
to terminate any employment or other relationship between any
individual and the Company. In addition, notwithstanding
anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Award granted under
the Plan shall be affected by any change of duties or position
of the Grantee, so long as such Grantee continues to be a
director, officer, consultant or employee of the Company or an
Affiliate. The obligation of the Company to pay any benefits
pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan
shall in no way be interpreted to require the Company to
transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any Grantee or
beneficiary under the terms of the Plan.
18.2. Nonexclusivity
of the Plan.
Neither the adoption of the Plan nor the submission of the Plan
to the stockholders of the Company for approval shall be
construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive
compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or
specifically to a particular individual or particular
individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.
18.3. Withholding
Taxes.
The Company or an Affiliate, as the case may be, shall have the
right to deduct from payments of any kind otherwise due to a
Grantee any federal, state, or local taxes of any kind required
by law to be withheld with respect to the vesting of or other
lapse of restrictions applicable to an Award or upon the
issuance of any shares of Stock upon the exercise of an Option
or pursuant to an Award. At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the Affiliate,
as the case may be, any amount that the Company or the Affiliate
may reasonably determine to be necessary to satisfy such
withholding obligation. Subject to the prior approval of the
Company or the Affiliate, which may be withheld by the Company
or the Affiliate, as the case may be, in its sole discretion,
the Grantee may elect to satisfy such obligations, in whole
A-17
or in part, (i) by causing the Company or the Affiliate to
withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or the Affiliate shares
of Stock already owned by the Grantee. The shares of Stock so
delivered or withheld shall have an aggregate Fair Market Value
equal to such withholding obligations. In no case shall the
shares withheld or delivered exceed the minimum required
federal, state, and FICA statutory withholding rates. The Fair
Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the
Affiliate as of the date that the amount of tax to be withheld
is to be determined. A Grantee who has made an election pursuant
to this Section 18.3 may satisfy his or her
withholding obligation only with shares of Stock that are not
subject to any repurchase, forfeiture, unfulfilled vesting, or
other similar requirements.
18.4. Captions.
The use of captions in this Plan or any Award Agreement is for
the convenience of reference only and shall not affect the
meaning of any provision of the Plan or such Award Agreement.
18.5. Other
Provisions.
Each Award granted under the Plan may contain such other terms
and conditions not inconsistent with the Plan as may be
determined by the Board, in its sole discretion.
18.6. Number
and Gender.
With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the
feminine gender, etc., as the context requires.
18.7. Severability.
If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof
shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other
jurisdiction.
18.8. Governing
Law.
The validity and construction of this Plan and the instruments
evidencing the Award hereunder shall be governed by the laws of
the State of Delaware, other than any conflicts or choice of law
rule or principle that might otherwise refer construction or
interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other
jurisdiction.
Section 18.9.
Section 409A
The Board intends to comply with Code Section 409A, or an
exemption to Code Section 409A, with regard to Grants
hereunder that constitute nonqualified deferred compensation
within the meaning of Code Section 409A. To the extent that
the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain nonqualified deferred
compensation plans pursuant to Code Section 409A as a
result of any provision of any Grant granted under this Plan,
such provision shall be deemed amended to the minimum extent
necessary to avoid application of such additional tax. The
nature of any such amendment shall be determined by the Board.
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VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you access the web ROYAL GOLD, INC. site and
follow the instructions to obtain your records and to create an 1660 WYNKOOP ST, #1000 electronic
voting instruction form. DENVER, CO 80202-1132 ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER
COMMUNICATIONS If you would like to reduce the costs incurred by Royal Gold, Inc. in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that you agree to
receive or access stockholder communications electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Royal Gold, Inc., c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: ROYLG1 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED. ROYAL GOLD, INC. For Withhold For All To withhold
authority to vote for any individual All All Except nominee(s), mark For All Except and write the
The Board of Directors recommends a vote number(s) of the nominee(s) on the line below. FOR
Proposals 1, 2 and 3. Vote on Directors 0 0 0 1. PROPOSAL to elect as Class III Directors to serve
until the 2011 Annual Meeting of Stockholders or until each such Directors successor is elected
and qualified, each of the following nominees: Nominees: 01) M. Craig Haase 02) S. Oden Howell, Jr.
03) Donald Worth For Against Abstain Vote on Proposals 2. PROPOSAL to approve amendments to the
Companys 2004 Omnibus Long-Term Incentive Plan to increase the number of 0 0 0 shares of common
stock reserved for issuance thereunder from 900,000 to 1,300,000 shares and to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended. 3. PROPOSAL to
ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accountants
of the Company for the fiscal year ending June 30, 2009. 0 0 0 4. To transact any other business
that may properly come before the meeting and any postponements or adjournments thereof. 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. The undersigned acknowledges receipt of
this Proxy and a copy of the Notice of Annual Meeting and Proxy Statement, dated September 23,
2008. Please sign, date and return this Proxy promptly. 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. Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date |
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting: The
Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. PROXY PROXY ROYAL
GOLD, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby
appoints Stanley Dempsey and Tony Jensen, or either of them, as attorneys, agents and 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 16, 2008, at the Annual Meeting of
Stockholders of Royal Gold, Inc. (the Meeting) which will be held on November 5, 2008, at the
Oxford Hotel, Sage Room, 1600 Seventeenth Street, Denver, Colorado, at 9:30 A.M., Mountain Standard
Time, or at any postponement or adjournment thereof. 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, 2 AND 3. |