UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by
the
Registrant þ
Filed by
a Party other than the Registrant o
Check the
appropriate box:
o Preliminary Proxy
Statement
o Confidential, for Use of the
Commission only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material Pursuant to
Rule 240.14a-12
TRIO-TECH
INTERNATIONAL
(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):
| þ |
No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
_____________
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(2)
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Aggregate
number of securities to which transaction applies:
_____________
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_____________
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(4)
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Proposed
maximum aggregate value of transaction:
_____________
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(5)
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Total
fee paid: _____________
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| o |
Fee
paid previously with preliminary
materials:
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| o |
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid: _____________
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(2)
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Form,
Schedule or Registration Statement No.:
_____________
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(3)
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Filing
Party: _____________
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(4)
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Date
Filed: _____________
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NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held December 9, 2008
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Shareholders of Trio-Tech International,
a California corporation (the “Company”), will be held at our principal
executive offices, located at 16139 Wyandotte Street, Van Nuys, California, on
Tuesday, December 9, 2008 at 10:00 A.M., local time, for the following purposes,
as set forth in the attached Proxy Statement:
1.
To elect directors to hold office until the next Annual Meeting of Shareholders;
and
2. To
transact such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the
close of business on October 14, 2008 as the record date for determining the
shareholders entitled to notice of and to vote at the Annual Meeting and any
adjournment and postponements thereof.
After
careful consideration, the Trio-Tech International Board of Directors recommends
a vote IN FAVOR OF the nominees for director named in the accompanying proxy
statement.
Shareholders
are cordially invited to attend the Annual Meeting in person. Whether you plan
to attend the Annual Meeting or not, please complete, sign and date the enclosed
Proxy Card and return it without delay in the enclosed postage-prepaid envelope.
If you do attend the Annual Meeting, you may withdraw your Proxy and vote
personally on each matter brought before the meeting.
By Order of the Board
of Directors
A.
CHARLES WILSON
Chairman
October
23, 2008
Van Nuys,
California
IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO MARK, DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
POSTAGE-PREPAID RETURN ENVELOPE SO THAT IF YOU ARE UNABLE TO ATTEND THE ANNUAL
MEETING, YOUR SHARES MAY BE VOTED.
THANK
YOU FOR ACTING PROMPTLY
-i-
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
OF
TRIO-TECH
INTERNATIONAL, INC.
To
Be Held on December 9, 2008
This
Proxy Statement is furnished in connection with the solicitation of the enclosed
Proxy on behalf of the Board of Directors of Trio-Tech International, a
California corporation (“Trio-Tech” or the “Company”), for use at the annual
meeting of shareholders of the Company (the “Annual Meeting”) to be held at our
principal executive offices, located at 16139 Wyandotte Street, Van Nuys,
California, at 10:00 a.m., local time, on Tuesday, December 9, 2008, and at any
adjournments thereof, for the purposes of electing directors and such other
business as may properly come before the Annual Meeting. This Proxy Statement
and the enclosed Proxy are intended to be mailed to shareholders on or about
November 7, 2008.
Record Date and Voting Securities
The Board of Directors fixed the close of business on October 14, 2008 as the
record date for shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, there were 3,226,430 shares of the Company’s common
stock (the “Common Stock”) outstanding and entitled to vote, the holders of
which are entitled to one vote per share.
Voting Generally
The presence in person or by proxy of holders of a
majority of the shares entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Abstentions will be
counted for purposes of determining the presence of a quorum.
In the
election of directors, a shareholder may cumulate his votes for one or more
candidates, but only if each such candidate’s name has been placed in nomination
prior to the voting and the shareholder has given notice at the meeting, prior
to the voting, of his intention to cumulate his votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
the candidates in nomination. If the voting for directors is
conducted by cumulative voting, each share will be entitled to a number of votes
equal to the number of directors to be elected. These votes may be
cast for a single candidate or may be distributed among two or more candidates
in such proportions as the shareholder thinks fit. The four
candidates receiving the highest number of affirmative votes will be
elected. Abstentions will be counted for purposes of determining the
presence of a quorum, but against a candidate or withheld from voting (whether
by abstention, broker non-votes or otherwise) will not be counted and will
have no legal effect on the vote. Discretionary authority to cumulate votes is
solicited hereby.
Revocability of Proxies
Shareholders
are requested to date, sign and return the enclosed Proxy to make certain their
shares will be voted at the Annual Meeting. Any Proxy given may be revoked by
the shareholder at any time before it is voted by delivering written notice of
revocation to the Secretary of the Company, by filing with the Secretary of the
Company a Proxy bearing a later date, or by attending the Annual Meeting and
voting in person. All Proxies properly executed and returned will be voted in
accordance with the instructions specified thereon. If no instructions are
specified, Proxies will be voted FOR the election of the four nominees for
directors named under “Election of Directors.”
TRIO-TECH
INFORMATION
Our
principal executive offices are located at 16139 Wyandotte Street, Van Nuys,
California 91406. The telephone number of our principal offices is
(818) 787-7000.
ITEM
1
ELECTION OF DIRECTORS
Information
With Respect to Directors
The Board
has nominated the persons listed below for election to the Board at the Annual
Meeting, to hold office until the next Annual Meeting and until their respective
successors are elected and qualified. There are two vacancies on the
Board of Directors. The Board does not intend to fill the vacancies
at this time due to the costs associated therewith. It is intended that the
Proxies received, unless otherwise specified, will be voted FOR the four nominees named
below, all of whom are incumbent directors of the Company and, with the exception of Mr. Yong, are “independent” as
specified in Section 121(A) of the AMEX listing standards and Rule 10A-3 under
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
It is not contemplated that any of the nominees will be unable or
unwilling to serve as a director but, if that should occur, the persons
designated as Proxy holders will vote in accordance with their best judgment. In
no event will Proxies be voted for a greater number of persons than the number
of nominees named in this Proxy Statement. The following sets forth, as of
October 14, 2008, the names of each of the four nominees for election as a
director, his principal occupation, age, the year he became a director of
the Company, and additional biographical data.
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NAME
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AGE
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PRINCIPAL
OCCUPATION
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A.
Charles Wilson
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84
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Chairman
of the Board of Trio-Tech International
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Chairman
of the Board of Ernest Paper Packaging Solutions, Inc.
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Chairman
of the Board of Daico Industries, Inc.
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S.
W. Yong
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55
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Chief
Executive Officer and President of Trio-Tech
International
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Richard
M. Horowitz
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68
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President
of Management Brokers Insurance Agency
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Chairman
of the Board of Dial 800, Inc.
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Jason
T. Adelman
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39
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Managing
Director of Burnham Hill Partners
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A.
Charles Wilson
Mr.
Wilson has served as a Director of Trio-Tech since 1966, and was President and
Chief Executive Officer of the Company from 1981 to 1989. In 1989, he was
elected Chairman of the Board. Mr. Wilson is also Chairman of the
Board of Ernest Packaging Solutions, Inc. and Chairman of Daico Industries,
Inc., as well as an attorney admitted to practice law in
California.
Siew
Wai Yong
Mr. Yong
has been a Director, Chief Executive Officer and President of Trio-Tech since
1990. He joined Trio-Tech International Pte. Ltd. in Singapore in 1976 and was
appointed as its Managing Director in August 1980. Mr. Yong holds a Masters
Degree in Business Administration, a Graduate Diploma in Marketing Management
and a Diploma in Industrial Management.
Richard M.
Horowitz
Mr.
Horowitz has served as a Director of Trio-Tech since 1990. He has
been President of Management Brokers Insurance Agency since 1974. He also serves
as Chairman of Dial 800, Inc., a national telecommunications
company. He is the international chairman of Aish HaTorah. Mr.
Horowitz holds a Masters Degree in Business Administration from Pepperdine
University.
Jason T.
Adelman
Mr.
Adelman was elected to the Board of Trio-Tech in April 1997. Mr.
Adelman is the Founder and Managing Member of Burnham Hill Capital Group, LLC, a
privately held financial services holding company headquartered in New York
City. Mr. Adelman serves as Senior Managing Director of its wholly
owned subsidiary, Burnham Hill Partners, providing investment banking and
merchant banking services to small cap private and public
companies. Prior to founding Burnham Hill Capital Group, LLC in 2003,
Mr. Adelman served as Managing Director of Investment Banking at H.C. Wainwright
and Co., Inc. Mr. Adelman graduated Cum Laude with a BA in Economics from the
University of Pennsylvania and earned a JD from Cornell Law School where he
served as Editor of the Cornell International Law Journal.
Vote Required for Election
The four
persons receiving the highest number of affirmative votes will be elected as
directors of the Company. Votes against a nominee or withheld from
voting (whether by abstention, broker non-votes or otherwise) will have no legal
effect on the vote.
CORPORATE GOVERNANCE
Corporate
Governance Program
Our Board of Directors has
established a written Corporate Governance Program to address significant
corporate governance issues that may arise. It sets forth the
responsibilities and qualification standards of the members of the Board of
Directors and is intended as a governance framework within which the Board of
Directors, assisted by its committees, directs our affairs.
Code
of Ethics
The
Company has adopted a written code of business conduct and ethics applicable to
all officers, management and employees and a separate code of ethics applicable
to its principal executive officer, principal financial officer and principal
accounting officer or controller or persons performing similar functions.
A copy of the Company's code of business conduct and ethics and code of ethics
may be obtained, without charge, upon written request to the Secretary of the
Company at 16139 Wyandotte Street, Van Nuys, California 91406.
Certain
Relationships and Related Transactions
The
Board’s Audit Committee is responsible for review, approval, or ratification of
“related-person transactions” between the Company or its subsidiaries and
related persons. Under SEC rules, a related person is a director,
officer, nominee for director, or 5% stockholder of the Company since the
beginning of the last fiscal year and their immediate family
members. The Company's code of business conduct and ethics provides
guidance for addressing actual or potential conflicts of interests, including
those that may arise from transactions and relationships between the Company and
its executive officers or directors. The Company's code of business
conduct and ethics provides guidance to the Audit Committee for addressing
actual or potential conflicts of interests that may arise from transactions and
relationships between the Company and its executive officers or directors.
Potential conflicts relating to other personnel must be addressed by the Chief
Executive Officer or the Chief Financial Officer.
Compensation
Committee Interlocks and Insider Participation
The
President of the Compensation Committee, A. Charles Wilson, previously served as
an employee officer of the Company from 1981 to 1989.
BOARD
MEETINGS AND COMMITTEES
The Board
held seven meetings during the fiscal year ended June 30, 2008. All
of the directors attended (in person or by telephone) at least 75% of the
meetings of the Board and any committees of the Board on which they served
during the fiscal year. Directors are expected to use their best efforts to be
present at the Annual Meeting of Shareholders. All of our directors attended the
Annual Meeting of Shareholders held in December 2007.
The
Company does not have a standing nominating committee. The entire Board
nominates the directors for election at the Annual Meeting. Because
the Company currently has only four Board members, three of whom are
“independent” (as defined under the listing standards of the American Stock
Exchange upon which the Company’s securities are listed), the Board of Directors
does not believe that a separate nominating committee is necessary as any
selection of nominees, by virtue of the composition of the current Board, would
be by a vote that would be the same as the vote of any separate committee
consisting of only the independent directors. Furthermore, the Board
values the input of each of its members and believes that input is important in
determining the Board nominees. At such time, if any, as the Board
composition changes, the Company may establish a separate nominating
committee. As a result, the entire Board participates in the
consideration of Board nominees and nominates the candidates for election named
in this Proxy Statement.
The Board
has adopted a resolution addressing the nomination process and related matters.
That resolution states, among other things, that the Board believes that the
continuing service of qualified incumbents promotes stability and continuity in
the boardroom, contributing to the Board's ability to work as a collective body,
while giving the Company the benefit of the familiarity and insight into the
Company's affairs that its directors have accumulated during their
tenure. The resolution further states that the Board will evaluate
the performance of its Board members on an annual basis in connection with the
nomination process. The Board may solicit recommendations for
nominees from persons that the Board believes are likely to be familiar with
qualified candidates, including without limitation members of the Board and
management of the Company. The Board may also determine to engage a
professional search firm to assist in identifying qualified candidates if the
need arises. The Board has not adopted specific minimum
qualifications for a position on the Company’s Board or any specific skills or
qualities that the Board believes are necessary for one or more of its members
to possess. However, the Board will consider various factors
including without limitation the candidate’s qualifications, the extent to which
the membership of the candidate on the Board will promote diversity among the
directors, and such other factors as the Board may deem to be relevant at the
time and under the then existing facts and circumstances. The Company did not
receive any recommendations as to nominees for election of directors for the
Annual Meeting of Shareholders to be held on December 9,
2008.
The Board
will consider candidates proposed by shareholders of the Company and will
evaluate all such candidates upon criteria similar to the criteria used by the
Board to evaluate other candidates. Shareholders desiring to propose
a nominee for election to the Board must do so in writing sufficiently in
advance of an annual meeting so that the Board has the opportunity to make an
appropriate evaluation of such candidate and his or her qualifications and
skills and to obtain information necessary for preparing all of the disclosure
required to be included in the Company’s proxy statement for the related meeting
should such proposed candidate be nominated for election by
shareholders. Shareholder candidate proposals should be sent to the
attention of the Secretary of the Company at 16139 Wyandotte Street, Van Nuys,
California 91406.
The Board
has a standing Compensation Committee, which currently consists of three
independent directors, namely Messrs. Jason T. Adelman, Richard M. Horowitz and
A. Charles Wilson, Chairman. The Compensation Committee determines salary and
bonus arrangements. The Compensation Committee met four times during
the past fiscal year. The Compensation Charter was amended on March
5, 2007 and was included as an appendix to the Proxy Statement relating to the
Annual Meeting held in December 2007.
The Board
has a separately designed standing Audit Committee established in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The
members thereof consist of Messrs. Jason T. Adelman, Richard M. Horowitz and A.
Charles Wilson, Chairman. The Board of Directors has determined that
the Audit Committee has at least one financial expert, namely A. Charles Wilson.
The Board of Directors has affirmatively determined that Mr. Wilson does not
have a material relationship with the Company that would interfere with the
exercise of independent judgment and is “independent” as independence is defined
in Section 121(A) of the listing standards of the American Stock Exchange.
Pursuant to its written charter, which charter was adopted by the Board of
Directors, the Audit Committee is charged with, among other responsibilities,
selecting our independent public accountants, reviewing our annual audit and
meeting with our independent public accountants to review planned audit
procedures. The Audit Committee also reviews with the independent
public accountants and management the results of the audit, including any
recommendations of the independent public accountants for improvements in
accounting procedures and internal controls. The Audit Committee held
four meetings during the fiscal year ended June 30, 2008. Each of the
members of the Audit Committee satisfies the independence standards specified in
Section 121(A) of the AMEX listing standards and Rule 10A-3 under the Securities
Exchange Act of 1934, as amended. The Audit Committee Charter was
amended on October 25, 2005 and was included as an appendix to the Proxy
Statement. A copy of the Audit Committee Charter is included with
this Proxy Statement as Appendix A.
DIRECTORS’ COMPENSATION
On
July 16, 2007, in recognition of the contributions from the directors and the
fact that our directors’ fees are substantially less than those paid to
directors of comparable public companies, the Compensation Committee agreed to
increase the Board fees for the non-employee Directors from $12,500 per year, to
$16,000 per year, beginning in fiscal year 2008. The Committee also agreed to
increase the Chairman’s compensation for services rendered to the Company
$12,500 per quarter to $16,000 per quarter.
On
February 27, 2008, in view of anticipated reductions in service revenue for
fiscal 2008, the Board of Directors voluntarily decreased their compensation to
50% of the compensation agreed to in July 2007. The decrease became effective as
of April 1, 2008.
During
the fiscal year ended June 30, 2008, Richard M. Horowitz and Jason Adelman, as
non-employee directors, received quarterly fees in an amount equal to $4,000 for
each of the three quarters in which he attended Board and/or Committee meetings,
and a fee of $2,000 for service on the various committees on which he is a
member. Mr. Wilson, as a non-employee director, Chairman of the Board, Chair of
the Audit Committee and Chairman of the Compensation Committee, received
quarterly fees in an amount equal to $16,000 for each the three quarters in
which he attended a Board meeting and a fee of $8,000 for service on the various
committee meetings of which he is a member. The directors were also reimbursed
for out-of-pocket expenses incurred in attending meetings.
Each of
our directors is entitled to participate in our 2007 Directors Equity Incentive
Plan (the “2007 Directors Plan”), which was approved by the Company’s
shareholders on December 3, 2007. On December 4, 2007, pursuant to
the 2007 Directors Plan, each of Messrs. Horowitz and Adelman were granted
an option to purchase 10,000 shares of Common Stock at an exercise price of
$9.57 per share and each of Messrs. Wilson and Yong were granted an option
to purchase 20,000 shares of Common Stock at an exercise price of $9.57 per
share. All options vested immediately upon grant and will terminate
five years from the date of grant unless terminated sooner upon termination of
the optionee’s status as a director or otherwise pursuant to the 2007 Directors
Plan. The exercise price under the options was set at 100% of fair
market value (as defined in the 2007 Directors Plan) of the Company’s Common
Stock on the date of grant of each such option.
The
Compensation Committee reviewed the average directors’ fees for comparable
public companies. The Committee believes that the director fees paid to its
directors were substantially less than the fees paid to directors of comparable
public companies. Directors’ compensation may be increased based on their total
responsibility taken during the year and the profitability of the
Company.
The
following table contains information on compensation for our non-employee
members of our Board of Directors during fiscal 2008.
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Name
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Fees
Earned or Paid in Cash ($)
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Option
Awards ($)(1)
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Total ($)
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A. Charles Wilson (2)
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56,000 | 111,000 | 167,000 | |||||||||
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Richard
M. Horowitz (3)
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14,000 | 55,500 | 69,500 | |||||||||
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Jason
T. Adelman (3)
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14,000 | 55,500 | 69,500 | |||||||||
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(1)
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The
option awards are based on the fair value of stock options on the grant
date computed in accordance with FAS
123R.
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(2)
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The
total outstanding option awards as of June 30, 2008 were
20,000.
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(3)
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The
total outstanding option awards as of June 30, 2008 were
10,000.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND
MANAGEMENT
The
following table sets forth, as of October 10, 2008, certain information
regarding the beneficial ownership of the Common Stock by (i) all persons known
by the Company to be the beneficial owners of more than 5% of its Common Stock,
(ii) each of the directors of the Company, (iii) each of the Named Executive
Officers, and (iv) all executive officers and directors of the Company as a
group. To the knowledge of the Company, unless otherwise indicated, each of the
shareholders has sole voting and investment power with respect to shares
beneficially owned, subject to applicable community property and similar
statutes.
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Name
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Amount
of Shares Owned Beneficially (1)
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Percent
of Class (1)
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S.
W. Yong (4)
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369,068 | 11.30 | % | |||||||
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A.
Charles Wilson (4)
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250,500 | (2) | 7.67 | % | ||||||
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Richard
M. Horowitz (5)
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312,026 | 9.61 | % | |||||||
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Victor
H. M. Ting (6)
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59,802 | 1.85 | % | |||||||
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Jason
Adelman (5)
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20,000 | 0.62 | % | |||||||
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H.
P. Lim (7)
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3,000 | 0.09 | % | |||||||
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All
Directors and Executive Officers as a group (6 persons)
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1,014,396 | (2) (8) | 30.22 | % | ||||||
| Daniel Zeff | 322,320 | (3) | 9.99 | % | ||||||
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(1)
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The
percentage shown for each individual and for all executive officers and
directors as a group is based upon 3,226,430 shares
outstanding. The number of shares indicated and the percentage
shown for each individual assumes the exercise of options that are
presently exercisable or may become exercisable within 60 days from
October 10, 2008 which are held by that individual or by all executive
officers and directors as a group, as the case may be. The
address for each of the directors and executive officers above is in
care of the Company at 16139 Wyandotte Street, Van Nuys, California 91406.
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(2)
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The
shares are held in a revocable family
trust.
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(3)
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Based
on the information provided by Daniel Zeff on October 10, 2008. Mr. Zeff does not
directly own any shares of Common Stock, but indirectly owns 322,320
shares of Common Stock in his capacity as the sole manager and member of
Zeff Holding Company, LLC, a Delaware liability company, which in turn
serves as the general partner for Zeff Capital Partners I, L.P., a
Delaware limited partnership. Mr. Zeff also provides discretionary
investment management services to Zeff Capital Offshore Fund, a class of
shares of Spectrum Galaxy Fund Ltd., a company incorporated in the British
Virgin Islands, reporting the power to vote or direct the vote of over
322,320 shares and the power to dispose or direct the disposition of
322,320 shares. The address of Daniel Zeff is c/o Zeff Holding Company,
LLC 50 California Street, Suite 1500, San Francisco, CA
94111.
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(4)
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Includes
vested options to purchase an aggregate of 40,000 shares from the Company
at exercise prices from $4.81 to $9.57 per
share.
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(5)
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Includes
vested options to purchase an aggregate of 20,000 shares from the Company
at exercise prices from $4.81 to $9.57 per
share.
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(6)
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Includes
vested options to purchase an aggregate of 7,750 shares from the Company
at exercise prices from $4.40 to $9.57 per
share.
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(7)
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Includes
vested options to purchase an aggregate of 3,000 shares from the Company
at exercise prices from $4.81 to $9.57 per
share.
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(8)
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Includes
vested options to purchase an aggregate of 130,750 shares from the Company
at exercise prices from $4.40 to $9.57 per
share.
|
The
Company does not know of any arrangements that may at a subsequent date result
in a change of control of the Company.
EQUITY
COMPENSATION PLAN INFORMATION
The
following table provides information as of June 30, 2008 with respect to shares
of our Common Stock that may be issued under our existing equity compensation
plans.
The
Company’s 1998 Stock Option Plan and Directors’ Stock Option Plan were
terminated by the Board of Directors on December 2, 2005. The Company
did not grant any options under either of these two plans in the 2008 fiscal
year.
The
Company’s 2007 Employee Stock Option Plan (the “2007 Employee Plan”) and 2007
Directors Equity Incentive Plan (the “2007 Directors Plan”) were approved by the
Board on September 24, 2007 and the shareholders on December 3,
2007. The purpose of these two plans is to enable the Company to
attract and retain top-quality employees, officers, directors and consultants
and to provide them with an incentive to enhance shareholder
return.
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EQUITY
COMPENSATION PLAN INFORMATION
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Plan
Category
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Number
of securities to be issued upon exercise of outstanding
options
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Weighted
average exercise price of outstanding options
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Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
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(a)
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(b)
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Equity
compensation plans approved by shareholders
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(1)
Company's 1998 Stock Option Plan
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12,550 | $ | 3.03 | - | ||||||||
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(2)
Directors’ Stock Option Plan
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- | - | - | |||||||||
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(3)
2007 Employee Stock Option Plan
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44,000 | $ | 9.57 | 250,000 | ||||||||
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(4)
2007 Directors Equity Incentive Plan
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60,000 | $ | 9.57 | 140,000 | ||||||||
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Equity
compensation plans not approved by shareholders
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- | - | - | |||||||||
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Total
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116,550 |
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$ | 8.87 | 390,000 | |||||||
COMPENSATION DISCUSSION AND ANALYSIS
The
Compensation Committee
The
Compensation Committee reviews and approves
corporate goals and objectives relating to the compensation of the Chief
Executive Officer, and reviews goals and objectives of other executive
officers; establishes the
performance criteria (including both long-term and short-term goals) to be
considered in light of those goals and objectives; evaluates the
performance of the executives; determines and approves the compensation level
for the Chief Executive Officer; reviews and approves compensation levels of
other key executive officers.
Compensation Objectives
The
Company operates in a highly competitive and rapidly changing industry. The key
objectives of the Company’s executive compensation programs are to:
|
·
|
attract,
motivate and retain executives who drive Trio-Tech’s success and industry
leadership;
|
|
·
|
provide
each executive, from Vice-President to Chief Executive Officer, with a
base salary based on the market value of that role, and the individual’s
demonstrated ability to perform that
role;
|
|
·
|
motivate
executives to create sustained shareholder value by ensuring all
executives have an “at risk” component of total compensation that reflects
their ability to influence business outcomes and financial
performance.
|
What
Our Compensation Program is Designed to Reward
Our compensation program is designed
to reward each individual named executive officer’s contribution to
the
advancement of the Company’s overall performance and execution of our goals,
ideas and objectives. It is designed to reward and encourage
exceptional performance at the individual level in the areas of organization,
creativity and responsibility while supporting the Company’s core values and
ambitions. This in turn aligns the interest of our executive officers
with the interests of our shareholders, and thus with the interests of the
Company.
Determining
Executive Compensation
The
Compensation Committee reviews and approves the compensation program for
executive officers annually after the closing of each fiscal year. Reviewing the
compensation program at such time allows the Compensation Committee to consider
the overall performance of the past fiscal year and the financial and operating
plans for the upcoming fiscal year in determining the compensation program for
the upcoming fiscal year.
The
Compensation Committee also annually reviews market compensation levels with
comparable jobs in the industry to determine whether the total compensation for
our officers remains in the targeted median pay range. This assessment includes
evaluation of base salary, annual incentive opportunities, and long-term
incentives for the key executive officers of the Company. The Company did not
hire any compensation consultants in fiscal year 2008.
The
Committee’s compensation decisions are based on the Company’s operation
performance, the performance and contribution of each individual officer, and
the compensation budget and objectives of the Company. The Compensation
Committee also considers other factors, such as the experience and potential of
the officer and the market compensation level for the similar
position.
Role
of Executive Officers in Determining Executive Compensation
The
Compensation Committee determines compensation for the Chief Executive Officer,
which Is based on different factors, such as level of responsibility and
contributions to the performance of the Company. The Chief Executive Officer
recommends the compensation for the Company's executive officers (other than the
compensation of the Chief Executive Officer) to the Compensation Committee. The
Compensation Committee reviews the recommendations made by the Chief Executive
Officer and determines the compensation of the Chief Executive Officer and the
other executive officers.
Components
of Executive Compensation
Historically,
the Company’s compensation program had two major components: (1) base
annual salary; and (2) potential annual cash incentive awards that were
based primarily on financial performance of the Company or its relevant business
operating units.
On July 16, 2007, the Compensation Committee reviewed the components of the
compensation program. As the Company is growing larger, the Committee decided to
terminate the potential cash incentive awards for the Chief Executive Officer
and the Chief Financial Officer for fiscal 2008 and thereafter, which bonuses in
the past were based primarily on the Company’s overall performance. However,
cash incentive awards for other executives and employees that are based on the
Company’s performance and individual contribution are available. Such bonuses
will be determined and approved by the Chief Executive Officer. The Committee
believes that compared with cash incentive awards, stock options are more
flexible and relatively inexpensive to implement. It also has no negative impact
on the Company’s cash flow. As the base salary for our executives is lower as
compared to similar positions in the industry, the Committee proposed to
increase the base salary for the executive officers and restore long-term
incentives in the form of stock options. The Committee believes that long-term
incentives in the from of stock options can better encourage the executive
officers to improve operations and increase profits for the Company through
participation in the growth in value of the
Company’s Common Stock. On September 24, 2007, the Board
approved the 2007 Employee Stock Option Plan and 2007 Directors Equity Incentive
Plan. On December 3, 2007, these two plans were approved by the
shareholders.
In fiscal
year 2008, the Company’s compensation program for its executives consisted of
base salary and long-term incentive compensation in the form of stock
options.
Base
Salary
Base salary for our executive officers was determined
utilizing the following factors.:
One
factor that was taken into account in determining base salary for our executive
officers was the compensation policies of other companies comparable in size to
and within substantially the same industry as Trio-Tech. Keeping our executive
officers’ salaries in line with the market ensures the Company’s competitiveness
in the marketplace in which the Company competes for talent.
The other
factor that was taken into account in determining base salary for our executive
officers was salaries paid by us to our named executive officers during the
immediately preceding year and increases in the cost of living.
In fiscal
year 2008, the Compensation Committee terminated the potential cash incentive
awards for the Chief Executive Officer and the Chief Financial Officer, which
bonuses in the past were based primarily on the Company’s overall performance,
and increased their base salary to compensate for the increase in the cost of
living, which was based on market data in similarly sized companies or in
similar industries. The Committee believes that compared with cash
incentive awards, stock options are more flexible and relatively inexpensive to
implement. It also has no negative impact on the Company’s cash
flow.
On
February 27, 2008, in view of anticipated reductions in service revenue for
fiscal 2008, the Chief Executive Officer and Chief Financial Officer voluntarily
decreased their base salary to 50% of the base salary agreed to in July 2007.
The decrease became effective as of April 1, 2008.
The
salary increase in fiscal year 2008 was as follows:
|
Executives
|
Base
Salary
|
Percent
Increase (1)
|
||||||
|
S.
W. Yong
|
$ | 451,268 | 78 | % | ||||
|
Victor
Ting, Vice President and Chief Financial Officer
|
$ | 224,763 | 61 | % | ||||
|
H.
P. Lim, Vice President-Testing
|
$ | 104,845 | 5 | % | ||||
(1)
Percent increase is based on the increase in base salary in the currency of
Singapore. The appreciation of Singapore dollars against U.S. dollars is
excluded in the calculation. The fiscal year 2008 base cash
compensation for the above named officers of the Company, each of whom who
resides in Singapore, was denominated in the currency of
Singapore. The exchange rate therefor was established as of
June 30, 2008 and was computed to be 1.44 Singapore dollars to each U.S.
dollar.
Singapore
executive officers’ base salaries are credited with a compulsory contribution
ranging from 0.8% to 5.2% of base salary as required under Singapore’s provident
pension fund.
Option
Grants
The
Compensation Committee views any option grant portion of our executive officer
compensation packages as a special form of long-term incentive compensation to
be awarded on a limited and non-regular basis. The objective of these awards is
to ensure that the interests of our executives are closely aligned with those
of our shareholders. These awards provide rewards to our
executive officers based upon the creation of incremental shareholder value and
the attainment of long-term financial goals. Stock options produce value to our
executive officers only if the price of our stock appreciates, thereby directly
linking the interests of our executive officers with those of our
shareholders.
When
granted, stock options are priced at the “fair market value” of the Company’s
Common Stock on the grant date. Awards of stock options are determined based on
the Compensation Committee’s subjective determination of the amount of awards
necessary, as a supplement to an executive officer’s base salary, to retain and
motivate the executive officer. In fiscal 2008, we granted stock options
covering 17,000 shares of Common Stock to the following officers pursuant to the
2007 Employee Plan:
|
Executives
|
Stock
Options Granted
|
||
|
S.
W. Yong (1)
|
20,000 | ||
|
Victor
Ting, Vice President and Chief Financial Officer
|
10,000 | ||
|
H.
P. Lim, Vice President-Testing
|
7,000 | ||
|
(1)
|
Options
were granted pursuant to the 2007 Directors
Plan.
|
The
exercise price of these stock options equals the fair market value of the
Company’s Common Stock (as
defined
under the 2007 Employee Plan in conformity with Regulation 409A of the Internal
Revenue Code of 1986, as amended) at the date of grant. These options
vest over the period as follows: 25% vesting on the grant date, and the balance
vesting in equal installments on the next three succeeding anniversaries of the
grant date. The fair market value of 17,000 shares of the Company’s
Common Stock issuable upon exercise of stock options granted was approximately
$94,350 based on the fair value of $5.55 per share determined by using the Black
Scholes option pricing model. The options granted to S. W. Yong pursuant to
the 2007 Directors Plan have five-year contractual terms and are exercisable
immediately as of the grant date. The fair market value of 200,000 shares of the
Company’s Common Stock issuable upon exercise of stock options granted was
approximately $111,000 based on the fair value of $5.55 per share determined by
using the Black Scholes option pricing model.
Our
current compensation method, which has the element of a base salary and stock
options, reflects our objective, which is to motivate executives to create
sustained shareholder value by ensuring all executives have an “at risk”
component of total compensation that reflects their ability to influence
business outcome and financial performance.
COMPENSATION COMMITTEE REPORT
The
Compensation Committee of the Board of Directors has reviewed and discussed with
management the Compensation Discussion and Analysis included in this proxy
statement. Based on this review and discussion, the Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis be included in
the Company’s Proxy Statement for this Annual Meeting of shareholders.
|
|
COMPENSATION
COMMITTEE
|
| A. Charles Wilson | |
| Jason T. Adelman | |
| Richard M. Horowitz |
EXECUTIVE COMPENSATION
Executive
Officers
Mr. S. W. Yong serves as the Chief Executive Officer and
as a director of the Company. Biographical information regarding Mr. Yong is set forth
under the section entitled “Election of
Directors.”
Mr.
Victor H. M. Ting, age 55, first joined Trio-Tech as the Financial Controller
for the Company’s Singapore subsidiary in 1980. He was promoted to
the level of Business Manager from 1985-1989. In December 1989 he
became the Director of Finance and Sales & Marketing and later, the General
Manager of the Singapore subsidiary. Mr. Ting was elected
Vice-President and Chief Financial Officer of Trio-Tech International in
November 1992. Mr. Ting holds a Bachelor of Accountancy Degree and
Masters Degree in Business Administration.
Mr. Hwee
Poh Lim, age 49, joined Trio-Tech in 1982 and became the Quality Assurance
Manager in 1985. He was promoted to the position of Operations
Manager in 1988. In 1990 he was promoted to Business Manager and was
responsible for the Malaysian operations in Penang and Kuala
Lumpur. Mr. Lim became the General Manager of the Company’s Malaysia
subsidiary in 1991. In February 1993, all test facilities in
Southeast Asia came under Mr. Lim’s responsibility. He holds diplomas
in Electronics & Communications and Industrial Management and a Masters
Degree in Business Administration. He was elected Corporate
Vice-President-Testing in July 1998.
Summary
Compensation Table
The
following table shows compensation information concerning compensation awarded
to, earned by or paid for services to the Company in all capacities during the
fiscal years ended June 30, 2007 and 2008 by our Chief Executive Officer, our
Chief Financial Officer, and our one other executive officer who had annual
compensation in excess of $100,000 for the fiscal year ended June 30, 2008 and
2007 (the “Named Executive Officers”). The Company has no other
executive officers.
SUMMARY COMPENSATION TABLE
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)
(6)
|
All
Other Compensation
($)
|
Total
($)
|
||||||||||||||
|
S.
W. Yong (2)
|
2008
|
451,268 | - | 111,000 | (7) | 29,737 | (3) | 592,005 | ||||||||||||
|
President
and Chief Executive Officer
|
2007
|
235,758 | 225,278 | - | 27,185 | (10) | 488,221 | |||||||||||||
|
Victor
H. M. Ting,
|
2008
|
224,763 | - | 55,500 | (8) | 15,659 | (4) | 295,922 | ||||||||||||
|
Vice
President and Chief Financial Officer
|
2007
|
129,505 | 45,056 | - | 14,034 | (11) | 188,595 | |||||||||||||
|
H.
P. Lim (1)
|
2008
|
104,845 | 19,625 | 38,850 | (9) | 17,703 | (5) | 181,023 | ||||||||||||
|
Vice
President - Testing
|
2007
|
93,270 | 52,621 | - | 15,029 | (12) | 160,920 | |||||||||||||
|
(1)
|
The
bonuses for H.P. Lim in fiscal year 2008 were based on a certain
percentage of net profit before tax for all operations under
his responsibility and approved by the Chief Executive
Officer.
|
|
(2)
|
The
Chief Executive Officer did not receive any fees for services rendered as
a director of Trio-Tech International.
|
|
(3)
|
The
amount shown in the other compensation column includes total central
provident fund contributions of $3,568, life insurance premiums of $9,944, car benefits of $11,850, and
director fees of $4,375 for the service as a director for Trio-Tech
Malaysia and Trio-Tech Kuala Lumpur, which are 55% owned by the Company.
Singapore officers are credited with a compulsory contribution to their
central provident fund at a certain percentage of their base salaries in
accordance with Singapore law, except for bonuses in this context. The
compulsory contribution with respect to Mr. Yong was 0.8% for fiscal 2008.
The Company is not the beneficiary of the life insurance for the Chief
Executive Officer. The remaining premiums thereunder are approximately
$9,944 ($14,312 Singapore dollars, based on the spot exchange rates
published by the Federal Reserve on June 30, 2008).
|
|
(4)
|
The
amount shown in the other compensation
column includes total central provident fund contributions of $3,944, car
benefits of $8,396 and director fees of $3,319 for the service as a
director for Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which are 55%
owned by the Company. Singapore officers are
credited with a compulsory contribution to their central provident fund at
a certain percentage of their base salaries in accordance with Singapore law, except for
bonuses in this context. The compulsory contribution for Mr. Ting was 1.8%
for fiscal 2008.
|
|
(5)
|
The amount shown in the other compensation column
includes total central provident fund contributions of $5,444, car benefits of $10,599 and director
fees of $1,660 for the service as a director for Trio-Tech Malaysia, which
is 55% owned by the Company. Singapore
officers are credited with a compulsory contribution to their central
provident fund at a certain percentage of their base salaries in accordance with
Singapore law, except for bonuses in this context. The compulsory
contribution with respect to Mr. Lim was 5.2% for fiscal 2008.
|
|
(6)
|
The option awards are based on the fair
value of stock options on the grant date computed in accordance with FAS
123R.
|
|
(7)
|
Stock
options covering 20,000 shares of Common Stock were granted pursuant to
the 2007 Directors Plan.
|
|
(8)
|
Stock
options covering 10,000 shares of Common Stock were granted pursuant to
the 2007 Employee Plan.
|
|
(9)
|
Stock
options covering 7,000 shares of Common Stock were granted pursuant to the
2007 Employee Plan.
|
|
(10)
|
The
amount shown in the other compensation column includes the total of
central provident fund contributions of $3,139, life insurance premiums of
$9,373, car benefits of $10,519, and
director fees of $4,154 for the service as a director for Trio-Tech
Malaysia and Trio-Tech Kuala Lumpur, which are 55% owned by the Company.
Singapore officers are credited with a compulsory contribution to their
central provident fund at a certain percentage of their base salaries in
accordance with Singapore law, except for bonuses in this context. The
compulsory contribution with respect to Mr. Yong was 1.3% for fiscal 2007.
The Company is not the beneficiary of the life insurance for the Chief
Executive Officer. The remaining premiums thereunder are approximately
$9,485 ($14,512 Singapore dollars, based on the spot exchange rates
published by the Federal Reserve on June 30, 2007).
|
|
(11)
|
The
amount shown in the other compensation column includes the
total of central provident fund contributions of $3,139, car benefits of
$7,744 and director fees of $3,151 for the service as a director
for Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which are 55% owned by
the Company. Singapore officers are credited
with a compulsory contribution to their central provident fund at a
certain percentage of their base salaries in accordance with Singapore
law, except for bonuses in this context. The compulsory
contribution for Mr. Ting was 2.4%
for fiscal 2007.
|
|
(12)
|
The amount shown in the other compensation column
includes the total of central provident fund contributions of $4,534, car
benefits of $8,919 and director fees of $1,576 for the service as a
director for Trio-Tech Malaysia, which is 55% owned by the Company. Singapore officers are credited with a
compulsory contribution to their central provident fund at a certain
percentage of their base salaries in accordance with Singapore law, except
for bonuses in this context. The
compulsory contribution with respect to Mr. Lim was 4.9% for fiscal
2007.
|
Options
Grants in Fiscal Year 2008
The
following tables contain certain information regarding certain options granted
to the Named Executive Officers pursuant to, in the case of Mr. Yong, the 2007
Directors Plan, and the other Named Executive Officers, the 2007
Employee Plan, during the fiscal year ended June 30, 2008.
|
GRANTS
OF PLAN-BASED AWARDS
|
|||||||||||||
|
|
|
|
|||||||||||
|
Name
|
Grant
Date
|
Number
of Securities Underlying Options Granted
|
Exercise
Price($/sh)
|
Expiration
Date
|
Grant
Date Fair Value of Stock Option Awards (1)
|
||||||||
|
S.
W. Yong
|
12/4/2007
|
20,000 | $ | 9.57 |
12/04/12
|
$ | 111,000 | ||||||
|
Victor
H. M. Ting
|
12/4/2007
|
10,000 | $ | 9.57 |
12/04/12
|
$ | 55,500 | ||||||
|
H.
P. Lim
|
12/4/2007
|
7,000 | $ | 9.57 |
12/04/12
|
$ | 38,850 | ||||||
|
(1)
|
The
fair value of stock option awards are computed in accordance with FAS
123R.
|
Outstanding
Equity Awards at Fiscal Year-End
The following table provides
information concerning shares of our Common Stock covered by exercisable and
unexercisable options held by the Named Executive Officers on June 30,
2008.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|||||||||||||
|
Number
of Securities Underlying Unexercised Options
(#)
|
Number
of Securities Underlying Unexercised Options
(#)
|
Option
Exercise Price
|
|
||||||||||
|
Name
|
Exercisable
|
Unexercisable
|
($)
|
Option
Expiration Date
|
|||||||||
|
S.
W. Yong
|
20,000 | (1) | - | $ | 9.57 |
12/4/2012
|
|||||||
|
Victor
H. M. Ting
|
2,750 | (2) | - | $ | 4.40 |
7/1/2009
|
|||||||
|
|
2,500 | (3) | 7,500 | $ | 9.57 |
12/4/2012
|
|||||||
|
H.
P. Lim
|
1,750 | (3) | 5,250 | $ | 9.57 |
12/4/2012
|
|||||||
|
(1)
|
Stock
Options granted on December 4, 2007 pursuant to the 2007 Directors Plan
that were fully vested immediately.
|
|
(2)
|
|
Stock
Options granted on July 1, 2004 that were fully vested on July 1,
2007 (one-fourth of the grant vested every year beginning on July 1,
2004).
|
|
(3)
|
|
Stock
Options granted on December 4, 2007 that will be fully vested on
July 1, 2010 (one-fourth of the grant vested every year beginning on
December 4, 2007).
|
Option
Exercises and Stock Vested
There
were no exercises of stock options by the Named Executive Officers during fiscal
year 2008. The following table reflects for each of the Named
Executive Officers the number of shares of Common Stock subject to outstanding
stock options that have vested.
|
OPTION
AWARD
|
|||||||
|
Name
and Principal Position
|
Number
of Shares Acquired on Vesting (#)
|
|
Value
Realized on Vesting
|
||||
|
S.
W. Yong
|
20,000 | $ | 191,400 | ||||
|
Victor
H. M. Ting
|
2,500 | $ | 23,925 | ||||
|
H.
P. Lim
|
1,750 | $ | 16,748 | ||||
The
“value realized” is determined by multiplying the per share market value as of
the date of vesting by the number of those shares that had become vested on that
date.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Exchange Act requires that directors, certain officers of the Company and
ten percent shareholders file reports of ownership and changes in ownership with
the SEC as to the Company’s securities beneficially owned by them. Such persons
are also required by SEC rules to furnish the Company with copies of all Section
16(a) forms they file.
Based
solely on its review of copies of such forms received by the Company, or on
written representations from certain reporting persons, the Company believes
that all Section 16(a) filing requirements applicable to its officers, directors
and greater than ten percent beneficial owners were complied with during the
fiscal year ended June 30, 2008, except for two Form 4s filed late for a
director of the Company, Richard M. Horowitz, each of which late filing reported
one transaction.
REPORT OF THE AUDIT COMMITTEE
During
the fiscal year ended June 30, 2008, the Audit Committee fulfilled its
duties and responsibilities as outlined in its charter. The Audit Committee has
reviewed and discussed the Company’s audited consolidated financial statements
and related footnotes for the fiscal year ended June 30, 2008, and the
independent auditor’s report on those financial statements, with the Company’s
management and independent auditor. Management represented to the Audit
Committee that the Company’s financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America.
The Audit Committee has discussed with BDO Raffles (BDO) the matters required to
be discussed with the Audit Committee by AICPA Statement on Auditing Standards
No. 61, as amended, “Communication with Audit Committees.” The Audit
Committee’s review included a discussion with management and the independent
auditor of the quality (not merely the acceptability) of the Company’s
accounting principles, the reasonableness of significant estimates and
judgments, and the disclosures in the Company’s financial statements, including
the disclosures relating to critical accounting policies.
The Audit
Committee recognizes the importance of maintaining the independence of the
Company’s independent auditor, both in fact and appearance. The Audit Committee
has evaluated BDO’s qualifications, performance, and independence, including
that of the lead audit partner. As part of its auditor engagement process, the
Audit Committee considers whether to rotate the independent audit firm. The
Audit Committee has established a policy pursuant to which all services, audit
and non-audit, provided by the independent auditor must be pre-approved by the
Audit Committee or its delegate. The Company’s pre-approval policy is more fully
described in this proxy statement under the caption “Policy for pre-approval of
audit and non-audit services.” The Audit Committee has concluded that provision
of the non-audit services described in that section is compatible with
maintaining the independence of BDO. In addition, BDO has provided the Audit
Committee with the letter required by the Independence Standards Board Standard
No. 1, “Independence Discussions with Audit Committees,” and the Audit
Committee has engaged in dialogue with BDO regarding their
independence.
Based on
the above-described review, written disclosures, letter and discussions, the
Audit Committee recommended to the Board of Directors of the Company that the
audited financial statements for the fiscal year ended June 30, 2008 be
included in the Company’s Annual Report on Form 10-K.
Dated
October 23, 2008
THE AUDIT
COMMITTEE
A.
Charles Wilson, Chairman
Jason T.
Adelman
Richard
M. Horowitz
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
On July
11, 2008, BDO Seidman, LLP (“BDO”) was reappointed as the principal accountant
to audit the Company’s financial statements, and has audited such statements for
each of the fiscal years ended June 30, 2008 and June 30,
2007. A representative of BDO is expected to be present at the Annual
Meeting and will have an opportunity to make statements and respond to
appropriate questions.
The Audit
Committee has selected BDO as the independent registered public accounting firm
for the fiscal year ending June 30, 2009.
The
following table shows the fees that we paid or accrued for audit and other
services provided by BDO Seidman and LLP and Ernst & Young LLP for
fiscal years 2008 and 2007. All of the services described in the following fee
table were approved in conformity with the Audit Committee’s pre-approval
process.
|
2008
|
2007
|
||||||
|
Audit
Fees
|
$ | 274,248 | $ | 204,000 | |||
|
Audit-Related
Fees
|
3,868 | - | |||||
|
Tax
Fees
|
49,227 | 37,591 | |||||
|
All
Other Fees
|
- | - | |||||
| $ | 327,343 | $ | 241,591 | ||||
Audit
Fees
The
amounts set forth opposite “Audit Fees” above reflect the aggregate fees billed
by BDO or to be billed for professional services rendered for the audit of the
Company’s fiscal 2008 and fiscal 2007 annual financial statements and for the
review of the financial statements included in the Company’s quarterly reports
during such periods. The audit fees for fiscal year 2008 include $5,000 paid to
BDO for the consent to the incorporation by reference of their audit report
dated September 17, 2007, which is included in the Annual Report on Form 10-K of
Trio-Tech International in the Company’s Registration Statement on Form S-8
pertaining to the “2007 Employee Stock Option Plan and 2007 Directors Equity
Incentive Plan.”
Audit- Related
Fees
The
amounts set forth opposite “Audit-Related Fees” above reflect the aggregate fee
billed by certain Chinese Certified Public Accountants for the local statutory
audit of the financial statements of our China operations in fiscal year
2008.
Tax Fees
The
amounts set forth opposite “Tax Fees” above reflect the aggregate fees billed
for fiscal 2008 and fiscal 2007 for professional services rendered for tax
compliance and return preparation. The compliance and return preparation
services consisted of the preparation of original and amended tax returns and
support during the income tax audit or inquiries.
All Other
Fees
No fees
were paid to BDO in either of the last two fiscal years for products or services
rendered in such years, other than those described above.
The
Audit Committee’s policy is to pre-approve all audit services and all non-audit
services that our independent accountants are permitted to perform for us under
applicable federal securities regulations. The Audit Committee’s policy utilizes
an annual review and general pre-approval of certain categories of specified
services that may be provided by the independent accountant, up to
pre-determined fee levels. Any proposed services not qualifying as a
pre-approved specified service, and pre-approved services exceeding the
pre-determined fee levels, require further specific pre-approval by the Audit
Committee. The Audit Committee has delegated to the Chairman of the Audit
Committee the authority to pre-approve audit and non-audit services proposed to
be performed by the independent accountants. Since June 30, 2004, all services
provided by BDO required pre-approval by the Audit Committee. The policy has not
been waived in any instance.
ADDITIONAL MEETING INFORMATION
Shareholder
Proposals
Shareholders
who wish to present proposals at the Annual Meeting to be held following the end
of the fiscal year ended June 30, 2009 should submit their proposals in writing
to the Secretary of the Company at the address set forth on the first page of
this Proxy Statement. Proposals must be received no later than
July 9, 2009 for inclusion in next year’s Proxy Statement and Proxy
Card. If a shareholder intends to present a proposal at the next
Annual Meeting but does not seek inclusion of that proposal in the proxy
statement for that meeting, the holders of proxies for that meeting will be
entitled to exercise their discretionary authority on that proposal if the
Company does not have notice of the proposal by September 22, 2009.
Proxy
Solicitation
The cost
of soliciting the enclosed form of Proxy will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Directors, officers and regular
employees of the Company may, for no additional compensation, also solicit
proxies personally or by telephone, electronic transmission, telegram or special
letter.
Annual
Report
The
Company’s Annual Report to Shareholders for the year ended June 30, 2008 is
being mailed with this proxy statement to shareholders entitled to notice of the
meeting. The Annual Report includes the consolidated financial statements,
unaudited selected consolidated financial data and management’s discussion and
analysis of financial condition and results of operations.
Upon the
written request of any shareholder, the Company will provide, without charge, a
copy of the Company’s Annual Report on Form 10-K filed with the Commission for
the year ended June 30, 2008. This request should be directed to
the Corporate Secretary, Trio-Tech International, 16139 Wyandotte St., Van Nuys,
CA 91406.
OTHER MATTERS
The
shareholders and any other persons who would like to communicate with the Board,
can access the website www.triotech.com and fill in the contact form for any
enquiries or information. The form will be sent directly to the Secretary and
the communications for specified individual directors of the Board will be given
to them personally by the Secretary. In addition, the contact number is listed
on the website and the messages will be passed to the Board
accordingly.
At this
time, the Board knows of no other business that will come before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
the persons named as Proxy holders will vote on them in accordance with their
best judgment.
By Order
of the Board of Directors
A.
CHARLES WILSON
Chairman
Appendix
A
TRIO-TECH INTERNATIONAL
AUDIT COMMITTEE CHARTER
One
committee of the board of directors will be known as the audit
committee. Only independent directors will serve on the audit
committee. An independent director is free of any relationship that
could influence his or her judgment as a committee member. An
independent director may not be associated with a major vendor to, or customer
of, the company. When there is some doubt about independence, as when
a member of the committee has short-term consulting contract with a major
customer, the director should excuse himself from any decisions that might be
influenced by that relationship.
The
primary function of the audit committee is to assist the board in fulfilling its
oversight responsibilities by reviewing the financial information that will be
provided to the shareholders and others, the systems of internal controls
management and the board of directors have established and all audit
processes.
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General
responsibilities
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1.
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The
audit committee provides open avenues of communication among the internal
auditors, the independent accountant and the board of
directors.
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2.
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The
audit committee must report committee actions to the full board of
directors and may make appropriate
recommendations.
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3.
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The
audit committee has the power to conduct or authorize investigations into
matters within the committee’s scope of responsibilities. The
committee is authorized to retain independent counsel, accountants or
others it needs to assist in an
investigation.
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4.
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The
committee will meet at least four times each year, more frequently if
circumstances make that preferable.
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5.
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The
audit committee chairman has the power to call a committee meeting
whenever he or she thinks there is a need. An audit
committee member should not vote on any matter in which he or she is not
independent. The committee may ask members of management or
others to attend the meeting and is authorized to receive all pertinent
information from management.
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6.
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The
committee will do whatever else the law, the company’s charter or bylaws
or the board of directors require.
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Responsibilities
for engaging independent accountants and appointing the internal
auditor
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1.
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The
audit committee will select the independent accountants for company
audits. The committee’s selection is subject to approval by the
full board of directors. The audit committee also will review
and set any fees paid to the independent accountants and review and
approve dismissal of the independent
accountants.
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2.
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The
audit committee will review and have veto power over the appointment,
replacement, reassignment or dismissal of the director of internal
audit.
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3.
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The
audit committee will confirm and assure the independence of the internal
auditor and the independent accountant, including a review of management
consulting services provided by the independent accountant and the fees
paid for them.
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4.
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The
audit committee will consider, in consultation with the
independent accountant and the director of internal auditing,
the audit scope and procedural plans made by the internal
auditors and the independent
accountant.
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5.
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The
audit committee will listen to management and the
primary independent auditor if either thinks there might
be a need to engage additional auditors. The audit committee
will decide whether to engage an additional firm and, if so, which
one.
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6.
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The
audit committee will make sure that the director of internal auditing and
the independent accountant coordinate the internal and external
audits. The purpose of coordinating these efforts is to assure
completeness of coverage, reduce redundancy and use audit resources
effectively.
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Responsibilities
for reviewing internal audits, the annual external audit and the review of
quarterly and annual financial
statements
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1.
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The
audit committee will ascertain that the independent accountantviews the
board of directors as its client, that it will be available tothe full
board of directors at least annually and that it will provide the
committee the committee with a timely analysis of significant financial
reporting issues.
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2.
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The
audit committee will ask management, the director of internal auditing and
the independent accountant about significant risks and exposures and will
assess management’s steps to minimize
them.
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3.
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The
audit committee will review the following with the independent accountant
and the director of internal
auditing:
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a.
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The
adequacy of the company’s internal controls, including computerized
information system controls and
security.
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b.
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Any
significant findings and recommendations made by the independent
accountant or internal auditing, together with management’s responses to
them.
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4.
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Shortly
after the annual examination is completed, the audit committee will review
the following with management and the independent
accountant.
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a.
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The
company’s annual financial statements and related
footnotes.
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b.
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The
independent accountant’s audit of and report on the financial
statements.
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c.
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The
auditor’s qualitative judgments about the appropriateness, not just the
acceptability, of accounting principles and financial disclosures and how
aggressive (or conservative) the accounting principles and underlying
estimates are.
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d.
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Any
serious difficulties or disputes with management encountered during the
course of the audit.
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e.
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Anything
else about the audit procedures or findings that GAAS requires the
auditors to discuss with the
committee.
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5.
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The
audit committee will consider and review with management and the director
of Internal auditing.
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a.
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Any
significant findings during the year and management’s responses to
them.
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b.
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Any
difficulties the internal auditor encountered while conducting audits,
including any restrictions on the scope of their work or access to
required information.
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c.
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Any
changes to the planned scope of management’s internal audit plan that the
committee thinks advisable.
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d.
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The
internal auditing department’s
charter.
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e.
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Whether
the internal auditing department has complied with the Institute of
Internal Auditing’s Standards for the Professional Practice of Internal
Auditing.
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6.
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The
audit committee will review annual filings with the SEC and other
published documents containing the company’s financial
statements.
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7.
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The
audit committee will review the interim financial reports with management,
the independent accountant and the director of internal auditing before
those interim reports are released to the public or filed with the SEC or
other regulators.
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8.
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The
audit committee will prepare a letter for inclusion in the annual report
that describes the committee’s composition and responsibilities and how
the responsibilities were
fulfilled.
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Periodic
responsibilities
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1.
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Review
and update the committee’s charter
annually.
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2.
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Review
policies and procedures covering officers’ expense accounts and
perquisites including their use of corporate assets, and consider the
results of any review of those areas by the internal auditor or the
independent accountant.
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3.
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Review,
with the director of internal auditing and the independent accountant, the
results of their examination of compliance with the company’s code of
conduct.
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4.
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Review
legal and regulatory matters that may have a material effect on the
organization’s financial statements, compliance policies and programs and
reports from regulators.
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5.
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Meet
with the director of internal auditing, the independent accountant and
management in separate executive sessions to discuss any matters the
committee or these groups believe should be discussed privately with the
audit committee.
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