CHINA GREEN AGRICULTURE, INC.
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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:
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o
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Preliminary
Proxy Statement
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o
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a- 6(e)(2) )
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þ
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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CHINA
GREEN AGRICULTURE, 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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þ
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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
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Fee
paid previously with preliminary materials.
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o
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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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1
October
28, 2010
Dear
Stockholder:
On behalf
of the Board of Directors of China Green Agriculture, Inc. (the “Company” or
“we”), I invite you to attend our 2010 Annual Meeting of Stockholders (the
“Annual Meeting”). We hope you can join us. The Annual
Meeting will be held:
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At:
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Pryor
Cashman LLP
7
Times Square
New
York, NY 10036
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On:
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December
17, 2010
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Time:
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2
p.m., EST
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The
Notice of Annual Meeting of Stockholders, the Proxy Statement, the proxy card,
and our 2010 Annual Report accompany this letter.
At the
Annual Meeting, we will report on important activities and accomplishments of
the Company and review the Company’s financial performance and business
operations. You will have an opportunity to ask questions and gain an
up-to-date perspective on the Company and its activities, and to meet certain
directors and key executives of the Company.
As
discussed in the enclosed Proxy Statement, the Annual Meeting will also be
devoted to the election of directors and consideration of any other business
matters properly brought before the Annual Meeting.
We know
that many of our stockholders will be unable to attend the Annual
Meeting. We are soliciting proxies so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
stockholders at the Annual Meeting. Whether or not you plan to
attend, please take the time now to read the Proxy Statement and vote via the
Internet or, if you prefer, submit by mail a paper copy of your proxy or voter
instructions card, so that your shares are represented at the
meeting. You may also revoke your proxy or voter instructions before
or at the Annual Meeting. Regardless of the number of Company shares
you own, your presence in person or by proxy is important for quorum purposes
and your vote is important for proper corporate action.
Thank you
for your continuing interest in China Green Agriculture, Inc. We look
forward to seeing you at the Annual Meeting.
If you
have any questions about the Proxy Statement, please contact us at China Green
Agriculture, Inc., 3rd Floor, Borough A, Block A. No. 181, South Taibai Road,
Xian, Shaanxi Province, People’s Republic of China 710065.
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Sincerely,
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/s/
Tao Li
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Tao
Li
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President
and Chief Executive Officer
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2
TABLE OF
CONTENTS
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NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
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4
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PROXY
STATEMENT
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5
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
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7
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PROPOSAL 1 – ELECTION OF
DIRECTORS
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9
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EXECUTIVE
COMPENSATION
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13
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REPORT OF THE COMPENSATION
COMMITTEE
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EXECUTIVE COMPENSATION
TABLES
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PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
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19
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DIRECTOR COMPENSATION
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20
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BOARD
INFORMATION
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22
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REPORT OF THE AUDIT
COMMITTEE
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24
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STOCKHOLDER
PROPOSALS
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25
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ANNUAL REPORT ON FORM 10-K
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25
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OTHER
MATTERS
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25
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3
CHINA GREEN AGRICULTURE, INC.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on
December
17, 2010
To the
Stockholders of CHINA GREEN AGRICULTURE, INC.:
Notice is
hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of
China Green Agriculture, Inc., a Nevada corporation (the “Company”), will be
held on Friday, December 17, 2010, at 2 p.m., EST, at the offices of Pryor
Cashman LLP located at 7 Times Square, New York, NY 10036 for the following
purposes:
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1.
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To
elect five persons to the Board of Directors of the Company, each to serve
until the next annual meeting of stockholders of the Company or until such
person shall resign, be removed or otherwise leave office;
and
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2.
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To
transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
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Only
stockholders of record at the close of business on October 25, 2010 (the “Record
Date”) are entitled to notice and to vote at the Annual Meeting and any
adjournment or postponement thereof. In accordance with the rules of
the Securities and Exchange Commission, we will post our proxy materials on the
Internet beginning on November 5, 2010, the date we will mail Notices of
Internet Availability of Proxy Materials (and, to the extent required or
appropriate, full sets of proxy materials) to the holders of record and
beneficial owners of our common stock as of the close of business on the Record
Date.
A Proxy
Statement describing the matters to be considered at the Annual Meeting is
attached to this Notice. Our 2010 Annual Report accompanies this notice, but it
is not deemed to be part of the Proxy Statement.
It
is important that your shares are represented at the Annual
Meeting. We urge you to review the attached Proxy Statement and,
whether or not you plan to attend the Annual Meeting in person, please vote your
shares promptly by casting your vote via the Internet or, if you receive a full
set of proxy materials by mail or request one be mailed to you, and prefer to
mail your proxy or voter instructions, please complete, sign, date, and return
your proxy or voter instructions card in the pre-addressed envelope provided,
which requires no additional postage if mailed in the United
States. You may revoke your vote by submitting a subsequent vote over
the Internet or by mail before the Annual Meeting, or by voting in person at the
Annual Meeting.
If you
plan to attend the meeting, please notify us of your intentions. This
will assist us with meeting preparations. If your shares are not
registered in your own name and you would like to attend the Annual Meeting,
please follow the instructions contained in the Notice of Internet Availability
of Proxy Materials and any other information forwarded to you by your broker,
trust, bank, or other holder of record to obtain a valid proxy from
it. This will enable you to gain admission to the Annual Meeting and
vote in person.
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By
Order of the Board of Directors,
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/s/
Tao Li
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Tao
Li
Chairman
of the Board
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October
28, 2010
4
CHINA
GREEN AGRICULTURE, INC.
3rd Floor,
Borough A, Black A. No. 181
South
Taibai Road, Xi’an, Shaanxi Province
People’s
Republic of China 710065
PROXY
STATEMENT
INFORMATION
CONCERNING SOLICITATION AND VOTING
This
Proxy Statement and the accompanying proxy are being furnished with respect to
the solicitation of proxies by the Board of Directors of China Green
Agriculture, Inc., a Nevada corporation (the “Company” or “we”), for our 2010
Annual Meeting of Stockholders (the “Annual Meeting”). The Annual
Meeting will be held on Friday, December 17, 2010, at 2 p.m., EST, and at any
adjournment(s) or postponement(s) thereof, at the offices of Pryor Cashman LLP
located at 7 Times Square, New York, NY 10036.
The date
on which the Proxy Statement and form of proxy card are intended to be sent or
made available to stockholders is November 5, 2010.
The
purposes of the Annual Meeting are to seek stockholder approval of one proposal:
electing five (5) directors to our Board of Directors (the
“Board”). We will also transact such other business as may properly
come before the Annual Meeting or any adjournment thereof.
Who
May Vote
Only
stockholders of record of our common stock, par value $.001 per share, as of the
close of business on October 25, 2010 (the “Record Date”) are entitled to notice
and to vote at the Annual Meeting and any adjournment or adjournments
thereof.
A list of
stockholders entitled to vote at the Annual Meeting will be available at the
Annual Meeting and for ten days prior to the Annual Meeting, during office
hours, at our executive offices located at 3rd Floor, Borough A, Block A. No.
181, South Taibai Road, Xian, Shaanxi Province, People’s Republic of China
710065, by contacting our Chief Financial Officer.
The
presence at the Annual Meeting of a majority of the outstanding shares of our
common stock as of the Record Date, in person or by proxy, is required for a
quorum. Should you submit a proxy or voter instructions, even though
you abstain as to one or more proposals, or you are present in person at the
Annual Meeting, your shares shall be counted for the purpose of determining if a
quorum is present.
Broker
“non-votes” are included for the purposes of determining whether a quorum of
shares is present at the Annual Meeting. A broker “non-vote” occurs
when a nominee holder, such as a brokerage firm, bank or trust company, holding
shares of record for a beneficial owner does not vote on a particular proposal
because the nominee holder does not have discretionary voting power with respect
to that item and has not received voting instructions from the beneficial
owner.
As of the
Record Date, we had issued and outstanding 26,848,259 shares of our common
stock. Each holder of our common stock on the Record Date is entitled to one
vote for each share then held on all matters to be voted at the Annual
Meeting. No other class of voting securities was then outstanding.
Voting
Your Proxy
You may
vote by proxy over the Internet by following the instructions provided in the
Notice of Internet Availability of Proxy Materials mailed to you or your
household. If you have received printed copies of the proxy materials
by mail, or if you request printed copies of the proxy materials by mail by
following the instructions on the Notice of Internet Availability of Proxy
Materials, you can also vote by mail by completing, dating, and signing the
proxy or voter instructions card and mailing it in the pre-addressed envelope
provided, which requires no additional postage if mailed in the United
States. You may submit your vote over the Internet until 11:59pm,
EST, on December 16, 2010. If you vote by mail, please be aware that
we can recognize your vote only if we receive it by close of business on the day
before the Annual Meeting.
You may
also vote in person at the Annual Meeting. If your shares are held
through a broker, trust, bank, or other nominee, please refer to the Notice of
Internet Availability of Proxy Materials and any other information forwarded to
you by such holder of record to obtain a valid proxy from it. You
will need to bring this legal proxy with you to the Annual Meeting in order to
vote in person.
5
The
shares represented by any proxy duly given will be voted at the Annual Meeting
in accordance with the instructions of the stockholder. If no
specific instructions are given, the shares will be voted FOR the election of
the nominees for director set forth herein. In addition, if other
matters come before the Annual Meeting, the persons named in the accompanying
form of proxy will vote in accordance with their best judgment with respect to
such matters.
Each
share of our common stock outstanding on the Record Date will be entitled to one
vote on all matters. Under Proposal 1 (Election of Directors), the five
candidates proposed for election as directors at the Annual Meeting are
uncontested. In uncontested elections, directors are elected by majority of the
votes cast at the Annual Meeting. In counting the votes cast, only those cast
“for” and “against” a matter are included. Please note that you
cannot vote “against” a nominee for director, although you may withhold your
vote from a nominee.
Shares
which abstain or which are withheld from voting as to a particular matter, and
shares held in “street name” by brokers or nominees who indicate on their
proxies that they do not have discretionary authority to vote such shares as to
a particular matter, will not be counted as votes in favor of such matter, and
will also not be counted as shares voting on such matter. Accordingly,
abstentions, withheld votes, and “broker non-votes” will have no effect on the
voting on matters that require the affirmative vote of a plurality or a majority
of the votes cast or the shares voting on the matter.
Stockholders
have no cumulative voting rights or dissenter’s or appraisal rights relating to
the matters to be acted upon at the Annual Meeting.
Revoking
Your Proxy
Even if
you submit a proxy or voter instructions, you may revoke your proxy and change
your vote. You may revoke your proxy or voter instructions by submitting a new
proxy or voter instructions over the Internet by using the procedure to vote
your shares online described in the Notice of Internet Availability of Proxy
Materials. You may also revoke your proxy by mail by requesting a
copy be mailed to you, executing a subsequently dated proxy or voter
instructions card, and mailing it in the pre-addressed envelope, which requires
no additional postage if mailed in the United States. You may also
revoke your proxy by your attendance and voting in person at the Annual
Meeting. Mere attendance at the meeting will not revoke a proxy or
voter instructions. We will vote the shares in accordance with the
directions given in the last proxy or voter instructions submitted in a timely
manner before the Annual Meeting. You may revoke your vote over the
Internet until 11:59 pm, EST, on December 16, 2010. If you revoke
your vote by mail, please be aware that we can recognize the revoked vote only
if we receive it by close of business on the day before the Annual Meeting.
If the
Annual Meeting is postponed or adjourned for any reason, at any subsequent
reconvening of the Annual Meeting, all proxies will be voted in the same manner
as the proxies would have been voted at the original convening of the Annual
Meeting (except for any proxies that have at that time effectively been revoked
or withdrawn), even if the proxies had been effectively voted on the same or any
other matter at a previous meeting.
You are
requested, regardless of the number of shares you own or your intention to
attend the Annual Meeting, to vote your shares as described above.
Solicitation
of Proxies
We will
pay the expenses relating to the solicitation of proxies. We may solicit proxies
by mail, and our officers and employees may solicit proxies personally or by
telephone and will receive no extra compensation from such activities. We will
reimburse brokerage houses and other nominees for their expenses incurred in
sending proxies and proxy materials to the beneficial owners of shares held by
them.
Delivery
of Proxy Materials to Households
Only one
copy of the our 2010 Annual Report, this Proxy Statement, and/or Notice of
Internet Availability of Proxy Materials, as applicable, will be delivered to an
address where two or more stockholders reside with the same last name or whom
otherwise reasonably appear to be members of the same family based on the
stockholders’ prior express or implied consent.
We will
deliver promptly upon written or oral request a separate copy of the 2010 Annual
Report, this Proxy Statement, and/or Notice of Internet Availability of Proxy
Materials, as applicable, upon such request. If you share an address
with at least one other stockholder, currently receive one copy of our annual
report, proxy statement, and/or Notice of Internet Availability of Proxy
Materials at your residence, and would like to receive a separate copy of our
annual report, proxy statement, and Notice of Internet Availability of Proxy
Materials for our future stockholder meetings, please follow the instructions
for requesting materials indicated on the Notice of Internet Availability of
Proxy Materials sent to your residence and specify this preference in your
request.
If you
share an address with at least one other stockholder and currently receive
multiple copies of annual reports, proxy statements, or Notices of Internet
Availability of Proxy Materials, and you would like to receive a single copy of
annual reports, proxy statements, or Notices of Internet Availability of Proxy
Materials, please follow the instructions for requesting materials indicated on
the Notice of Internet Availability of Proxy Materials sent to you and specify
this preference in your request.
6
Interest
of Officers and Directors in Matters to Be Acted Upon
None of
our officers or directors has any interest in any of the matters to be acted
upon at the Annual Meeting.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain
information as of October 25, 2010 with respect to the beneficial ownership of
our common stock, the sole outstanding class of our voting securities, by (i)
any person or group owning more than 5% of each class of voting securities, (ii)
each director, (iii) each executive officer and (iv) all executive officers and
directors as a group.
As of October 25, 2010, an aggregate of
26,848,259 shares of our common stock were outstanding.
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Title of Class
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Name and Address of Beneficial Owners
(1)
(2)
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Amount and
Nature of
Beneficial
Ownership
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Percent of Class
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(3) | |||||
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Greater Than 5% Shareholders
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Common Stock
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Tao
Li
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9,069,622
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(4)
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33.7
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%
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Common Stock
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Qing
Xin Jiang
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1,677,769
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(5)
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6.2
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%
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Directors and Executive Officers
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Common Stock
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Tao
Li
President,
Chief Executive Officer and Chairman of the Board
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Same
as the above
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Same
as the above
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Common Stock
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Ken
Ren
Chief
Financial Officer
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0
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--
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*
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Common
Stock
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Yu
Hao
Director
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35,524
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--
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*
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Common
Stock
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Robert
B. Fields
Director
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3,334
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(6)
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--
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*
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Common Stock
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Yizhao
Zhang
Director
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3,334
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(7)
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--
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*
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Common Stock
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Lianfu
Liu
Director
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3,334
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(8)
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--
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*
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All executive officers and directors as a group
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9,115,148
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33.9
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%
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____________
* Represents
a percentage that is less than 1%.
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(1)
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Pursuant
to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), a person has beneficial ownership of any securities as to
which such person, directly or indirectly, through any contract,
arrangement, undertaking, relationship or otherwise has or shares voting
power and/or investment power or as to which such person has the right to
acquire such voting and/or investment power within 60
days.
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(2)
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Unless
otherwise stated, each beneficial owner has sole power to vote and dispose
of the shares and the address of such person is c/o China Green
Agriculture, Inc., 3rd Floor, Borough A, Block A. No. 181, South Taibai
Road, Xian, Shaanxi Province, People’s Republic of China
710065.
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(3)
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In
determining the percent of common stock owned by the beneficial owners,
(a) the numerator is the number of shares of common stock beneficially
owned by such owner, including shares the beneficial ownership of which
may be acquired, within 60 days upon the exercise of the options, if any,
held by the owner; and (b) the denominator is the sum of (i) the total
26,848,259 shares of common stock outstanding as of October 25, 2010, and
(ii) the number of shares underlying the options, which such owner has the
right to acquire upon the exercise of the options within 60 days (for
those who have options).
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7
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(4)
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Includes
(i) 30,103 shares of common stock issuable upon the exercise of vested
stock options, (ii) 597,387 shares held by Mr. Li’s wife, and (iii)
897,387 shares held by Mr. Li’s son. Mr. Li disclaims
beneficial ownership with respect to the shares held by his wife and
son.
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(5)
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Includes
671,109 shares held in escrow (the “Escrowed Shares”) pursuant to a
certain Supplementary Agreement dated July 1, 2010 we entered into with
Mr. Qing Xin Jiang and Ms. Qiong Jia (the “Supplementary Agreement”) in
connection with our acquisition of Beijing Gufeng Chemical Products Co.,
Ltd., a company organized under the laws of the People’s Republic of China
(“Gufeng”), and its wholly-owned subsidiary, Beijing Tianjuyuan Fertilizer
Co., Ltd., a company organized under the laws of the People’s Republic of
China. Pursuant to the terms of the Supplementary Agreement, Mr. Jiang has
the right to vote the Escrowed Shares and the Escrowed Shares will be
released to him if Gufeng achieves certain financial performance targets
and other business objectives as set forth in the Supplementary
Agreement.
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(6)
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Represents
shares of common stock issuable upon the exercise of vested stock
options.
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(7)
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Represents
shares of common stock issuable upon the exercise of vested stock
options.
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(8)
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Represents
shares of common stock issuable upon the exercise of vested stock
options.
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8
PROPOSAL
1
ELECTION
OF DIRECTORS
General
Our
Bylaws provide that our Board of Directors shall be comprised of not less than
one (1) director nor more than nine (9) directors, and directors are elected
annually at the annual shareholders meeting. The Board of Directors is currently
comprised of five (5) directors and will be comprised of five (5) directors
effective immediately following the election if all the nominees are
elected.
The Board
of Directors has nominated for election five (5) persons as directors. Each
nominee currently serves as one of our directors. All of the nominees have
consented to serve as directors. If a nominee should not be available for
election as contemplated, the proxy holders will vote for a substitute
designated by the current Board of Directors. We are not aware of any nominee
who will be unable or who will decline to serve as a director.
Directors
Nominees
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Directors
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Position/Title
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Age
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Tao
Li
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Chairman
of the Board of Directors
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44
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Yu
Hao
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Director
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45
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Lianfu
Liu
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Director
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72
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Chairman
of the Nominating Committee
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Audit
Committee Member
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Compensation
Committee Member
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Robert
B. Fields
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Director
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72
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Chairman
of the Compensation Committee
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Audit
Committee Member
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Nominating
Committee Member
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Yizhao
Zhang
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Director
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40
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Chairman
of the Audit Committee
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Compensation
Committee Member
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Nominating
Committee Member
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For
information as to the shares of our common stock beneficially owned by each
nominee, see the section “Securities Ownership of Certain Beneficial Owners and
Management”, and as to other Board matters, see the section “Board
Information.”
The following are biographical
summaries for our nominees for election as directors:
Tao Li,
Chairman of the Board of Directors, Chief Executive Officer and President since
December 26, 2007. Mr. Li has served as the President and CEO of Shaanxi
TechTeam Jinong Humic Acid Product Co., Ltd., our wholly-owned subsidiary
(“Jinong”), since 2000. Mr. Li established Xi’an TechTeam Industry (Group) Co.,
Ltd. in 1996 and established Jinong in 2000. Mr. Li is also currently the
Chairman of Kingtone Wirelessinfo Solution Holding Company Ltd, a NASDAQ listed
company. He graduated from Northwest Polytechnic University in Xi’an,
China with a Master’s degree in heat and metal treatment. Mr. Li is the current
Vice Chairman of the China Green Food Association. Previously, he has held
positions at the World Bank Loan Office of China Education Commission, National
Key Laboratory for Low Temperature Technology, and Northwest Polytechnic
University. Mr. Li is active in Shaanxi Province business and trade
organizations including as a member of the CPPCC Shaanxi Committee, the Shaanxi
Provincial Decision-Making Consultation Committee, Vice Chairman of the Shaanxi
Provincial Federation of Industry and Commerce, Vice President of the Shaanxi
Overseas Friendship Association, Vice Chairman of the Shaanxi Provincial Credit
Association, Vice Chairman of the Shaanxi Provincial Youth Entrepreneurs
Association, Vice Chairman of the Xi’an Municipal Federation of Industry and
Commerce and Vice Chairman of the Xi’an Municipal Youth Entrepreneurs
Association. Mr. Li, as the founder of our company, has been critical
to our success and his experience brings to the board of directors an
irreplaceable perspective with respect or our business and the industry in which
we compete. These attributes make Mr. Li an ideal candidate to serve
as our Chairman.
Yu Hao,
Director since December 26, 2007. Mr. Hao had served as our interim Chief
Financial Officer from December 26, 2007 through April 23, 2008. Mr. Hao has
also served as the Director of Finance at Jinong since 2002. Prior to that, he
was a financial manager for Shaanxi Fengxiang Automobile Repair Plant, and
Shaanxi Baoji Xinsanwei Import & Export Trading Co., Ltd. Mr. Hao holds a
degree in Accounting from Northwest Institute of Light Industry. We
believe that Mr. Hao’s knowledge of our company’s history and day-to-day
operations and his experience in accounting and finance in the PRC qualify him
to serve a director of our company.
9
Lianfu
Liu, Director, Chairman of Nominating Committee, Audit Committee Member
and Compensation Committee Member. Mr. Liu has served as a director of our
company since December 26, 2007. Mr. Liu has served as the Chairman
of the China Green Food Association since 1998. From 1992 to 1998, Mr. Liu was a
Director and Senior Engineer for the China Green Food Development Center. Prior
to that, Mr. Liu was a Vice Director of the PRC Ministry of Agriculture. Mr. Li
graduated from Beijing Forestry University and studied soil
conservation. We believe Mr. Liu’s experience in the agricultural
industry in the PRC allows him to bring a unique perspective as an independent
director of our company.
Robert B.
Fields, Director, Chairman of Compensation Committee, Audit Committee
Member and Nominating Committee Member. Mr. Fields has served as a
director of our company since February 7, 2010. Since 2001, Mr.
Fields has served as the Chairman of ActForex, Inc., a New York fully hosted
management service provider of proprietary software for currency trading with
over 20,000 registered traders. Since August 3, 2010, Mr. Fields has served as
an independent director of Sun River Energy, Inc. (OTCBB: SNRV). From April 25,
2008 to June 28, 2010, Mr. Fields served as an independent director, member of
Audit Committee and member of Compensation Committee of SkyPeople Fruit Juice,
Inc.(Amex: SPU). In June 2000, Mr. Fields was appointed to the Board
of Statmon Technologies, Inc. (OTCBB: STCA) and continues to serve on that board
as well as to serve as Chairman of Statmon’s Audit Committee. From June 2005
through May 31, 2006, Mr. Fields served on the Board of Directors and as
Chairman of the Audit Committee of Genoil Inc. (OTCBB: GNOLF.OB). From 1999 to
2002, Mr. Fields was Executive Advisor to Laidlaw Global Corp. (AMEX). From 1997
to 1998, Mr. Fields served as Vice Chairman and, from 1997 to 1999, as a
director of Laidlaw Ship Funding Ltd. Mr. Fields was President of the Friars
National Association Foundation, Inc., a philanthropy of the arts based in New
York for the last three yeas, and since 1998 Mr. Fields has held various officer
positions with the organization and is currently a trustee. From 1995 to 1998 he
was a director of Hospital Staffing Services, Inc. (NYSE), and prior to that Mr.
Fields also served as President and CEO of L’Express Inc., a New Orleans based
interstate regional airline, EVP of American Finance Group in Boston, and as a
director and on the Audit Committee of Flight International Group of Newport
News, Virginia, a public company. Additionally, Robert Fields was managing
director of Equifund, L.P. Since 1979 he has served as the President of
Tradestar Ltd., his wholly owned consulting firm that specializes in asset
appreciation. Additionally, since 2006, Mr. Fields has served as the managing
member of Petrofields LLC, based in New York. Mr. Xia’s capital
market and financial experience qualified him to serve as a director of company
and to provide us necessary guidance as a U.S. public company. We
believe Mr. Fields’ extensive experience as a director of many public companies,
his financial experience and diversified business acumen qualify him to serve as
an independent director of our company and to provide us necessary guidance as a
U.S. public company.
Yizhao
Zhang, Director, Chairman of Audit Committee, Compensation Committee
Member and Nominating Committee Member. He has served as a director of our
company since March 27, 2008. Mr. Zhang has over 14 years of experience in
portfolio investment, corporate finance, and accounting. From August 2009 to
August 2010, he was the Chief Financial Officer of Universal Travel Group (NYSE:
UTA). From August 2008 to January 2009, he was the Chief Financial Officer of
Energroup Holdings Corp. From May 2007 through May 2008, he was Chief
Financial Officer of Shengtai Pharmaceutical Inc. From April 2006 through
December 2006, he was the Deputy Chief Financial Officer of China Natural
Resources, Inc., a NASDAQ-listed company. From April 2005 through April 2006, he
was the vice president and senior manager in Chinawe Asset Management
Consultancy Limited, a US public company which mainly manages non-performing
loan assets in China. Previously, he worked from a foreign exchange and common
stock trader to a portfolio manager in the South Financial Service Corporation
from 1993 to 1999. Mr. Zhang is a certified public accountant in
Delaware, and a member of the American Institute of Certified Public Accountants
(AICPA). Mr. Zhang received a bachelor degree in Economics from Fudan
University, Shanghai in 1992 and obtained an MBA degree with Financial Analysis
and Accounting concentrations from the State University of New York, University
at Buffalo in 2003. Currently Mr. Yizhao Zhang is a director of China Education
Alliance, Inc., a NYSE listed company, and China Carbon Graphite, Inc, an OTCBB
company, respectively. He is also a director of a Hong Kong Stock Exchange
listed company, Kaisa Group Holdings Ltd., which is one of the biggest property
developers in mainland China. We believe Mr. Zhang’s extensive financial and
accounting experience with various publicly traded companies qualifies Mr. Zhang
to serve as an independent director of our company and serve as the Chairman of
our Audit Committee.
Executive
Officers of the Company
|
Executive Officers
|
Position/Title
|
Age
|
||
|
Tao
Li
|
Chief
Executive Officer and President
|
44
|
||
|
Ken
Ren
|
Chief
Financial Officer
|
34
|
The
following is a biographical summary of Mr. Ken Ren, our Chief Financial Officer.
Mr. Li’s biographical summary is set forth above.
Ken
Ren. Mr. Ren has served as the Chief Financial Officer of our
company since April 23, 2010. Prior to joining our company, he served
as a capital market analyst for the Federal Home Loan Bank of Des Moines since
April 2009, where he analyzed, priced, and assisted in trading investments and
issuing debt, conducted hedges and performed relative value analysis in the
bank’s capital market group. From March 2008 to April 2009, Mr. Ren
served as a senior investment associate at an asset management subsidiary of
Wells Fargo, which provides money management services to institutional
clients. Prior to that, Mr. Ren served as a portfolio analyst at
Risk, Valuation and Analytics department, GMAC-ResCap from January 2007 through
December 2007, where he was responsible for risk analytics in managing the
credit residual portfolio. He worked in the ABS task force for Commerzbank from
December 2007 to March 2008. Mr. Ren received a Ph.D. degree in Operations
Research in 2006, and a M.S. degree in Computational Finance in 2004, both from
Purdue University.
10
Independence
of the Board of Directors
Our Board
of Directors is currently composed of five (5) members. Messrs. Yizhao Zhang,
Robert B. Fields and Lianfu Liu qualify as independent directors in accordance
with the published listing requirements of the New York Stock Exchange (“NYSE”).
The NYSE independence definition includes a series of objective tests, such as
that the director is not, and has not been for at least three years, one of our
employees and that neither the director nor any of his or her family members has
engaged in various types of business dealings with us. In addition, as further
required by NYSE rules, our Board of Directors has made an affirmative
determination as to each independent director that no relationships exist which,
in the opinion of our Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. In
making these determinations, our directors reviewed and discussed information
provided by the directors and us with regard to each director’s business and
personal activities as they may relate to us and our management. Our directors
hold office until their successors have been elected and qualified or their
earlier death, resignation or removal.
Certain
Relationships and Related Transactions
On June 19, 2008, we signed an
agreement with Xi’an Kingtone Information Technology Co., Ltd., a PRC company
(“Kingtone Information”), pursuant to which Kingtone Information produced
certain fertilizer processing equipment for Jinong. Mr. Li is a
principal shareholder and the Chairman of Kingtone
Information. Kintone Information is now an indirect
contractually-controlled subsidiary of Kingtone Wirelessinfo Solution Holding,
Ltd. (KONE), a publicly traded company (“Kingtone”). Mr. Li
beneficially owns a controlling interest in Kingtone and serves as Kingtone’s
Chairman. The total contracted value of this agreement, including
value-added taxes and other taxes, was RMB 4 million, or approximately $586,000.
The project was performed from May 2009 to June 2009. Pursuant to the agreement,
Kingtone Information provided certain services including designing,
manufacturing, installing and adjusting the production facilities for Jinong’s
compound fertilizer for drip irrigation. Kingtone Information was also
responsible for debugging the system and training Jinong employees to operate
the production line. The agreement required Kingtone Information to complete the
project within 25 days unless there were causes for delay beyond its control.
The agreement sets forth an eighteen month warranty period during which Jinong
is entitled to receive certain spare parts for the facilities and to receive
maintenance and repair services at no cost.
On October 20, 2008, we entered into an
agreement with Kingtone Information with respect to the construction of the
phase II expansion of an integrated pipeline control project for Jinong. The
total contracted value, including VAT and other taxes, was RMB 5.2 million, or
approximately $760,000. The project was performed from December 2008 to June
2009. The term of the agreement is from the date of its signing until one year
after the operation of the subject project. Pursuant to the agreement, Kingtone
Information provided services in order to develop and install the automation
system solution for Jinong’s phase II production line and to upgrade the
automation system solution for its phase I production line. Work related to the
phase II production line included the development of automation system software,
setup of integrated automation management and control computer network to
realize relevant data collection, and automatic management and control of the
production process. Work related to the phase I production line included
upgrading the existing automation system so that phase I and phase II automation
systems become integrated into the same management and control system. In
addition to the wired automation system, Kingtone Information also developed and
installed a wireless system solution for Jinong. This wireless system solution
integrates into Jinong’s production automation system and the plant video
surveillance system.
On August 10, 2010, we entered into an
agreement with Kingtone Information, pursuant to which Kingtone Information is
responsible for developing certain electronic control systems for Xi’an Hu
County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”), a
wholly-owned subsidiary of Jinong in the PRC. The total contracted
value of this agreement, including value-added taxes and other taxes, is RMB
3.03 million, or approximately $452,000. Work on this project started in August
2010, and is expected to be completed in November 2010. Pursuant to the
agreement, Kingtone Information will design, plan, construct and purchase
materials for the electronic control systems to be used in 28 greenhouses of
Yuxing. The agreement sets forth a warranty period, which is the earlier of (a)
18 months after the construction raw materials are delivered, inspected and
accepted, and (b) 12 months after the inspection and acceptance of the work
completed. During the warranty period Yuxing is entitled to receive maintenance
and repair services at no cost.
Our executive offices located at 3/F,
Area A, Block A, No. 18 South Taibai Road, Xi’an 710065, the People’s Republic
of China are leased from Kingtone Information at no cost.
11
Vote
Required and Board of Directors’ Recommendation
Assuming
a quorum is present, the affirmative vote of a plurality of the votes cast at
the Meeting, either in person or by proxy, is required for the election of a
director. For purposes of the election of directors, abstentions and broker
non-votes will have no effect on the result of the vote.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
THESE
NOMINEES.
12
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
This section contains a discussion of
the material elements of compensation awarded to, earned by or paid to our
principal executive officer, our principal financial officer, and our other
executive officers whose total compensation exceeded $100,000 during the fiscal
year ended June 30, 2010. Accordingly, our “Named Executive Officers” are Mr.
Tao Li, our Chairman, President and Chief Executive Officer, Mr. Ken Ren, our
Chief Financial Officer, and Ms. Ying Yang, our former Chief Financial
Officer.
Our Board of Directors established the
Compensation Committee to assist with the analysis and determination of the
compensation structure for our executive officers. Our Compensation
Committee, consisting of three independent directors, reviews and approves, or
in some cases recommends for the approval of the full Board of Directors, the
annual compensation for our executive officers. Typically, management recommends
to the Compensation Committee compensation package proposals based on prevailing
compensation standards in our industry, which in turn reviews and approves such
proposals. Our Compensation Committee may consult with the executive officers to
form consensus on such packages. Our executive officers may discuss any
disagreements and needed amendment to such proposals with our Compensation
Committee before such proposals are finalized and approved by the Compensation
Committee.
In the fiscal year ended June 30, 2010,
we retained Compensation Resources, Inc. (“Compensation Resources”), a
U.S.-based independent compensation consulting company, to assist us in the
development of a more comprehensive and competitive executive compensation
program. Compensation Resources conducted a study based on a
group of similarly situated companies and made recommendations with respect to
our executive compensation packages. The peer group of companies
consisted of:
|
Agfeed
Industries Inc. (FEED)
|
Griffin
Land & Nurseries Inc. (GRIF)
|
|
Alico
Inc. (ALCO)
|
Harbin
Electric, Inc. (HRBN)
|
|
American
Soil Technologies Inc. (SOYL.OB)
|
HQ
Sustainable Maritime Industries, Inc. (HQS)
|
|
China
Agritech Inc. (CAGC)
|
ML
Macadamia Orchards LP (NNUT.PK)
|
|
China
Fire & Security Group, Inc. (CFSG)
|
New
Oriental Energy & Chemical Corp (NOEC)
|
|
China
Transinfo Technology Corp. (CTFO)
|
RINO
International Corporation (RINO)
|
|
Clean
Diesel Technologies, Inc. (CDTID)
|
Shandong
Zhou Yuan Seed and Nursery Co., Ltd. (SZSN.PK)
|
|
Converted
Organics Inc. (COIN)
|
Tiens
Biotech Group USA Inc. (TBV)
|
|
Diatect
International Corp. (DI8●F)
|
Yongye
International, Inc. (YONG)
|
|
Energroup
Holdings Corp. (ENHD.OB)
|
Based in part on the recommendations of
Compensation Resources, we have adopted the compensation objectives set forth
below and the elements of executive compensation described herein.
Compensation
Objectives
Our compensation objectives are as
follows:
|
|
●
|
We
strive to provide competitive executive compensation programs that will
help to attract highly qualified individuals necessary for our continued
growth. Once an executive is hired, our goal is to retain and motivate
them to achieve higher levels of performance and be appropriately rewarded
for that effort.
|
|
|
●
|
Compensation
programs emphasize a “pay-for-performance” concept, in which an
individual’s future monetary growth and career advancement are dependent
upon maintaining and exceeding our recognized levels of quality and
performance, while supporting our recognized vision and goals. Future
individual monetary growth is dependent upon our financial performance as
well as individual performance.
|
|
|
●
|
Compensation
and benefits are competitive with the local labor markets in which we
compete, and focus also will be given to companies that operate in the
agriculture, feed, and fertilizer industries. Peer companies will
typically have annual revenues that are one-half to double that of us, for
the purposes of compensation
benchmarking.
|
|
|
●
|
We
provide an executive compensation package consisting of base salary,
incentives (short term & long term), and benefits that are consistent
with similar positions at our recognized competitors. Each component
addresses individual and company performance with a focus on long-term
profitable growth and shareholder return, competitive conditions, and our
overall financial performance.
|
13
|
|
●
|
Cash
compensation is targeted near the 50th percentile of the marketplace in
which we compete. Increases in compensation will be based on an
individual’s evaluated performance against pre-established objectives and
the achievement of goals, with the opportunity for above-market
compensation based on superior performance. We are a fiscally conservative
company and our compensation programs will reflect this as
well.
|
|
|
●
|
Competitive
incentive compensation is based upon the achievement of expected
performance targets, with substantial upside potential tied to exceptional
contribution and goal attainment, resulting in above-market compensation.
We believe that maximizing shareholder value and return, as well as
profitable growth are key to the success of the business, and we create
incentive plans that align this vision with our pay
programs.
|
|
|
●
|
Measurable
performance goals and objectives are developed by management, consistent
with our identified business strategies and financial objectives.
Performance metrics include both quantitative and qualitative elements,
which are established on an annual basis and consistent with our
organizational objectives.
|
|
|
●
|
All
compensation programs are administered without regard to race, religion,
national origin, color, sex, age, or disability, and adhere to all local
laws and regulations.
|
Elements
of Compensation
Base
Salary
Our approach is to pay our executives a
base salary that is competitive with those of other executive officers in
similar positions and with similar responsibilities in our peer group of
competitive companies. We believe that a competitive base salary is a necessary
element of any compensation program that is designed to attract and retain
talented and experienced executives. We also believe that attractive base
salaries can motivate and reward executives for their overall
performance. The base salary of each Named Executive Officer is
reviewed annually by our Compensation Committee with input from
management.
Based on the recommendations of
Compensation Resources, on November 6, 2009, the Compensation Committee adopted
our Cash Based Compensation Plan for Fiscal Year 2010 (the “2010 Cash Plan”),
effective retroactively as of July 1, 2009, the first day of our fiscal year
ended June 30, 2010. Pursuant to the 2010 Cash Plan, Mr. Tao Li, our Chairman,
President and Chief Executive Officer, received an increase in his annual base
salary from $129,000 to $189,000, and Ms. Ying Yang, our Chief Financial Officer
at the time, received an increase in her annual base salary from $130,000 to
$160,000.
Our current Chief Financial Officer,
Mr. Ken Ren, receives a base salary of $120,000 in accordance with his
employment agreement.
Discretionary
Bonus
Consistent with our emphasis on
performance incentive compensation programs, our executives are eligible to
receive quarterly and annual cash incentive bonuses primarily based upon their
performance and the performance of our company as measured against predetermined
goals. For the year ended June 30, 2010, these goals were determined with the
help of Compensation Resources and with input from management and our
Compensation Committee.
The 2010 Cash Plan provides for the
payment of cash incentive bonuses upon achievement of certain quarterly and
annual corporate financial targets, including revenue and operating income
(“Targets”). The total annual cash bonus pool for all participants in the 2010
Cash Plan, which includes our Named Executive Officers as well other senior
management, mid-level management and employees, is the lesser of 2% of our
operating income for year ended June 30, 2010 or $500,000. Pursuant
to the 2010 Cash Plan, Mr. Li’s bonus target was set at 40% of
his base salary and Ms. Yang’s was set at 35% of her base salary.
Under the 2010 Cash Plan, 80% of the
annual base cash bonus is payable evenly based on quarterly performance and 20%
of the annual base cash bonus is payable at year-end based on full-year results.
For a quarterly bonus, both revenue and operating income targets must be met for
the corresponding quarter. For a year-end bonus, if one but not both Targets are
met for the full 2010 fiscal year, then only 50% of the year-end bonus is
payable. If we fail to achieve at least 90% of the full-year Targets, then no
year-end bonus will be paid. If we achieve 110% of the 2010 year-end Targets,
the year-end bonus will be 150% of base year-end bonus, which would be 30% of
the annual base cash bonus, not to exceed the total amount available in the
bonus pool.
14
Stock-Based
Awards under the Equity Incentive Plan
In addition to base salary and cash
bonuses, the other key component of executive compensation we provide to our
Named Executive Officers is equity-based compensation. In October 2009, our
Board of Directors adopted our 2009 Equity Incentive Plan (the “Incentive
Plan”), which was approved by our shareholders at our annual shareholders
meeting in December 2009. The Incentive Plan gives us the ability to grant stock
options, stock appreciation rights (SARs), restricted stock and other
stock-based awards to employees or consultants of our company or of any
subsidiary of our company and to non-employee members of our advisory board or
our Board of Directors or the board of directors of any of our subsidiaries. The
Board of Directors and the Compensation Committee believe the ability to grant
stock options and make other stock-based awards under the Incentive Plan is an
important factor in attracting, stimulating and retaining qualified and
distinguished personnel with proven ability and vision to serve as employees,
officers, consultants or members of the Board of Directors or advisory board of
our company and our subsidiaries, and to chart our course towards continued
growth and financial success.
During the year ended June 30, 2010,
based on the recommendations of Compensation Resources, we made certain
restricted stock and option grants under the Incentive Plan to our Named
Executive Officers. The vesting of our restricted stock and stock
option grants is subject in part on (i) the achievement of certain target levels
of net income and operating income, and (ii) traditional time-based vesting
schedules requiring continued employment with our company. These
grants align the interests of our executives with those of our shareholders,
thereby encouraging the creation of shareholder value, and help establish a
direct link between compensation amounts, total shareholder return and company
operating performance. In the year ended June 30, 2010, we made
certain “one-time” grants of restricted stock and stock options, as well as
certain “annual” grants of restricted stock and stock options. We
expect to make similar annual grants in our fiscal year ending June 30, 2011 as
determined by the Board and Compensation Committee.
On January 3, 2010, our Compensation
Committee authorized the grant of various equity awards to our Named Executive
Officers. Pursuant to a one-time grant under the Incentive Plan, the
Compensation Committee granted (i) 25,000 shares of restricted stock and
non-qualified stock options to purchase 25,000 shares of our common stock to Mr.
Tao Li, and (ii) 15,000 shares of restricted stock and non-qualified stock
options to purchase 15,000 shares of our common stock to Ms. Ying Yang. The
non-qualified stock options are exercisable at a price of $14.70 per share, the
closing price of our common stock on the last trading day preceding the grant
date, and have a five-year term. Both the restricted stock and the
non-qualified stock options granted pursuant to this one-time grant vest on
February 2, 2010. Also pursuant to the same one-time grant under the Incentive
Plan, the Compensation Committee granted (i) 50,000 shares of restricted stock
and non-qualified stock options to purchase 50,000 shares of our common stock to
Mr. Li, and (ii) 30,000 shares of restricted stock and non-qualified options to
purchase 30,000 shares of our common stock to Ms. Yang. The
non-qualified stock options are exercisable at a price of $14.70 per share and
have a five-year term. Both the restricted stock and the
non-qualified stock options granted pursuant to this one-time grant vest in two
equal installments on December 31, 2010 and December 31, 2011, so long as we
achieve certain net sales and operating income targets for the fiscal years
ending June 30, 2010 and June 30, 2011, respectively.
In addition, on January 3, 2010 the
Compensation Committee approved the following annual grants under the Incentive
Plan: (i) 15,307 shares of restricted stock and non-qualified stock options to
purchase 30,194 shares of our common stock to Mr. Li, and (ii) 7,654 shares of
restricted stock and non-qualified options to purchase 15,097 shares of our
common stock to Ms. Yang. The non-qualified stock options are exercisable at a
price of $14.70 per share and have a five-year term. Both the
restricted stock and the non-qualified stock options granted pursuant to this
annual equity award vest in three equal installments on September 30, 2010,
September 30, 2011 and September 30, 2012, so long as we achieve certain net
sales and operating income targets in the year ended June 30, 2010.
Retirement
or Pension Benefits
Currently,
we do not provide any company sponsored retirement benefits to any employee,
including the Named Executive Officers.
Deferred
Compensation
We do not
have any qualified or nonqualified deferred compensation plans.
Perquisites
Historically,
we have provided our Named Executive Officers with minimal perquisites and other
personal benefits that we believe are reasonable. We do not view perquisites as
a significant component of compensation, but do believe they can be useful in
attracting, motivating and retaining the executive talent for which we compete.
We believe that these additional benefits assist our Named Executive Officers in
performing their duties and provide time efficiencies for them. It is expected
that our historical practices regarding perquisites will continue and will be
subject to periodic review by our board of directors.
Compensation
Committee Report on Executive Compensation
The following report has been submitted
by the Compensation Committee of our Board of Directors:
The Compensation Committee of our Board
of Directors has reviewed and discussed our Compensation Discussion and Analysis
with management. Based on this review and discussion, the Compensation Committee
recommended to our Board of Directors that the Compensation Discussion and
Analysis be included in our definitive proxy statement on Schedule 14A for our
2010 annual meeting, which is incorporated by reference in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2010, each as filed with the
Commission.
15
Compensation
Committee of the Board of Directors
Respectfully
submitted,
Robert B.
Fields, Chairman
Lianfu
Liu
Yizhao
Zhang
The foregoing Compensation Committee
Report does not constitute soliciting material and shall not be deemed filed or
incorporated by reference into any other filing of our company under the
Securities Act or the Exchange Act, except to the extent we specifically
incorporate this Compensation Committee report by reference
therein.
Summary
of Executive Compensation
The following table sets forth
information concerning cash and non-cash compensation we and/or Jinong paid to
our Named Executive Officers during each of the three fiscal years ended June
30, 2010, 2009 and 2008.
|
SUMMARY
COMPENSATION TABLE
|
|||||||||
|
Name
and
Principal
Position
|
Year
Ended
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(2)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Tao Li
Chief
Executive Officer, President and Chairman of the Board
|
June
30, 2010
June
30, 2009
June
30, 2008
|
$189,000
$129,000
$128,508
|
$43,200
—
—
|
$643,125 —
—
|
$124,432
—
—
|
—
—
—
|
—
—
—
|
—
—
—
|
$999,757
$129,000
$128,508
|
|
Ken
Ren
Chief
Financial Officer
|
June
30, 2010
|
20,000(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
$20,000
|
|
—
|
—
|
—
|
|||||||
|
Ying
Yang
Former
Chief Financial Officer
|
June
30, 2010
June
30, 2009
|
$130,359(4)
$105,000(5)
|
$33,600
—
|
$385,875
—
|
$74,659
$92,116
|
—
—
|
—
—
|
—
—
|
$624,493
$197,116
|
|
(1)
|
The
amounts reported in this column reflect the fair value on the grant date
of the restricted stock awards granted to our Named Executive
Officers. These values are determined by multiplying the number
of shares granted by the closing price of our common stock on the trading
day immediately preceding the grant date. The dollar amounts do
not necessarily reflect the dollar amounts of compensation actually
realized or that may be realized by our Named Executive
Officers.
|
|
(2)
|
The
amounts reported in this column reflect the fair value on the grant date
of the option awards granted to our Named Executive Officers. These values
are determined under the principles used to calculate the grant date fair
value of equity awards for purposes of our financial statements. The
dollar amounts do not necessarily reflect the dollar amounts of
compensation actually realized or that may be realized by our Named
Executive Officers. For a discussion of the assumptions and methodologies
used to value the awards reported in this column, please see Note 14 in
Notes to Consolidated Financial Statements included in our Annual Report
on Form 10-K for the fiscal year ended June 30,
2010.
|
|
(3)
|
Represents
the portion of Mr. Ren’s annual salary of $120,000 paid during the period
from April 23, 2010, the date he became our Chief Financial Officer, and
the end of the fiscal year.
|
|
(4)
|
Represents
the portion of Ms. Yang’s annual salary of $160,000 for serving as Chief
Financial Officer paid during the period from July 1, 2009 to April 23,
2010, the date she resigned as Chief Financial
Officer.
|
|
(5)
|
Represents
Ms. Yang’s pro-rated annual salary of $130,000 for the period from
September 2008, the date she became our Chief Financial Officer, to the
end of the fiscal year.
|
16
Grants
of Plan-Based Awards
The following table sets forth
information regarding grants of awards to Named Executive Officers during the
year ended June 30, 2010:
|
GRANTS
OF PLAN-BASED AWARDS
|
|||||||||||||||||||||||||||||||||||||||||
|
Estimated
Future Payouts
Under
|
Estimated
Future Payouts
|
All
Other
Stock
Awards:
Number
of
Shares
|
All
Other
Option
Awards:
Number
of
|
Exercise
or
Base
Price
of
|
Grant
Date
Fair
Value
of
Stock
|
||||||||||||||||||||||||||||||||||||
|
Non-Equity
Incentive Plan
Awards
|
Under
Equity
Incentive Plan Awards
|
of
Stock
or
|
Securities Underlying |
Option
Awards
|
and Option |
||||||||||||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
($)
|
Units
(#)
|
Options
(#)
|
($
/Sh)
(1)
|
Awards
($)(2)
|
||||||||||||||||||||||||||||||
|
Tao
Li
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
75,000
|
$
|
14.70
|
$
|
452,867.00
|
||||||||||||||||||||||||||||
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
30,194
|
$
|
14.70
|
$
|
182,318.00
|
|||||||||||||||||||||||||||||
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
75,000
|
—
|
—
|
$
|
1,102,500.00
|
||||||||||||||||||||||||||||||
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
15,307
|
—
|
—
|
$
|
225,012.90
|
||||||||||||||||||||||||||||||
|
Ying
Yang
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
45,000
|
$
|
14.70
|
$
|
271,720.00
|
||||||||||||||||||||||||||||
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
15,097
|
$
|
14.70
|
$
|
91,159.00
|
|||||||||||||||||||||||||||||
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
45,000
|
—
|
—
|
$
|
661,500.00
|
||||||||||||||||||||||||||||||
|
1/3/2010
|
—
|
—
|
—
|
—
|
—
|
—
|
7,654
|
—
|
—
|
$
|
112,513.80
|
||||||||||||||||||||||||||||||
________________
|
(1)
|
The
exercise price for all options is equal to the closing market price of our
common stock on the trading day immediately preceding the grant
date.
|
||
|
(2)
|
With
respect to the stock option awards, these values are determined under the
principles used to calculate the grant date fair value of equity awards
for purposes of our financial statements. For a discussion of the
assumptions and methodologies used to value the option awards reported in
this column, please see Note 14 in Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K for the fiscal year
ended June 30, 2010. With respect to the restricted stock
awards, the grant date fair value is calculated by multiplying the number
of shares granted by the closing price on the trading day immediately
preceding the grant date.
|
||
Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards
Table
Employment
Agreements
We have entered into employment
agreements with each of our Named Executive Officers. The material terms of
those employment agreements are summarized below.
Tao Li. Pursuant
to an employment agreement between Jinong and Mr. Tao Li dated January 16, 2008,
Mr. Li is employed by Jinong as its Chairman of the Board and Chief Executive
Officer for a term of five years. The agreement will be automatically
renewed on the same terms and conditions for successive additional five-year
periods unless either party provides written notice of termination at least 60
days prior to the end of any five-year term. The agreement is terminable
immediately, or upon 30-days prior written notice, upon the occurrence of
certain events. The agreement provides for an annual salary of RMB60,000
(approximately $8,508).
In addition, Mr. Li was previously paid
an additional $120,000 in base salary, which was not set forth in an employment
agreement. In November 2009, our Compensation Committee approved an
increase in Mr. Li’s base salary to an aggregate total of $189,000 (inclusive of
the RMB60,000 payable by Jinong).
Ken Ren. Pursuant
to our employment agreement with Mr. Ken Ren, Mr. Ren will serve as our Chief
Financial Officer for a term of one year and is entitled to annual compensation
consisting of base salary of $120,000 per year. The agreement will
automatically renew for an additional year unless either party provides notice
of termination 60 days prior to the end of the current term. Either
party may terminate the agreement upon prior written notice, and we may
terminate the agreement at any time for cause without prior written
notice.
Ying Yang. Before Ms. Yang
resigned as our Chief Financial Officer on April 23, 2010, the terms of her
employment with our company were set forth in an employment agreement, pursuant
to which she agreed to serve as our Chief Financial Officer for a term of one
year and was entitled to annual compensation consisting of base salary of
$130,000 per year and a one-time grant of options to purchase 28,000 shares of
common stock at an exercise price of $4.00 per share. In November
2009, our Compensation Committee approved a raise in Ms. Ying’s base salary to
$160,000.
17
Description
of Plan Based Awards
The equity incentive awards reported in
the above table entitled “Grants of Plan Based Awards” were granted under, and
are subject to, the terms of our 2009 Equity Incentive Plan (the “Incentive
Plan”). The Incentive Plan is administered by the Compensation Committee. The
Compensation Committee has authority to interpret the plan provisions and make
all required determinations under the Incentive Plan.
With respect to all restricted stock
grants disclosed herein, if we terminate the grantee’s employment or affiliation
with us for any reason, all unvested portions of such restricted stock grants
are forfeited. Any shares of restricted stock that do not vest for
failure to meet the requisite performance targets will also be forfeited.
With respect to all non-qualified stock
option grants disclosed herein, if we terminate the grantee’s employment or
affiliation with us for any reason, all unvested options are
forfeited. If the grantee’s employment or affiliation with us is
terminated voluntarily by the grantee or by us for cause, all vested options are
also terminated. In the event we terminate the grantee’s employment
or affiliation with us without cause, the grantee has the lesser of ninety (90)
days or the remaining term of the option to exercise any vested
options. If we terminate the grantee’s employment or affiliation with
us due to death or disability, the grantee has the lesser of twelve (12) months
or the remaining term of the option to exercise any vested
options. In the case of non-qualified options subject to performance
based vesting, any options which do not vest for failure to meet the requisite
performance targets will be forfeited.
Outstanding Equity Awards at Fiscal
Year-End
The following table provides
information on all restricted stock and stock option awards held by our Named
Executive Officers as of June 30, 2010.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|||||||||||||||||||||||||||||||||||||||
|
Option
Awards (1)
|
Stock
Awards
|
||||||||||||||||||||||||||||||||||||||
|
Equity
|
|||||||||||||||||||||||||||||||||||||||
|
Equity
|
Incentive
|
||||||||||||||||||||||||||||||||||||||
|
Incentive
|
Plan
|
||||||||||||||||||||||||||||||||||||||
|
Plan
|
Awards:
|
||||||||||||||||||||||||||||||||||||||
|
Awards:
|
Market
or
|
||||||||||||||||||||||||||||||||||||||
|
Equity
|
Number
|
Payout
|
|||||||||||||||||||||||||||||||||||||
|
Incentive
|
Number
|
Market
|
of
|
Value
of
|
|||||||||||||||||||||||||||||||||||
|
Plan
|
of
|
Value
of
|
Unearned
|
Unearned
|
|||||||||||||||||||||||||||||||||||
|
Awards:
|
Shares
|
Shares
|
Shares,
|
Shares,
|
|||||||||||||||||||||||||||||||||||
|
Number
of
|
Number
of
|
Number
of
|
or
Units
|
or
Units
|
Units
or
|
Units
or
|
|||||||||||||||||||||||||||||||||
|
Securities
|
Securities
|
Securities
|
of
Stock
|
of
Stock
|
Other
|
Other
|
|||||||||||||||||||||||||||||||||
|
Underlying
|
Underlying
|
Underlying
|
That
|
That
|
Rights
|
Rights
|
|||||||||||||||||||||||||||||||||
|
Unexercised
|
Unexercised
|
Unexercised
|
Option
|
Have
|
Have
|
That
|
That
|
||||||||||||||||||||||||||||||||
|
Options
|
Options
|
Unearned
|
Exercise
|
Option
|
Not
|
Not
|
Have
Not
|
Have
Not
|
|||||||||||||||||||||||||||||||
|
(#)
|
(#)
|
Options
|
Price
|
Expiration
|
Vested
|
Vested
|
Vested
|
Vested
|
|||||||||||||||||||||||||||||||
|
Name
|
Exercisable
|
Unexercisable
|
(#)(2)
|
($)
|
Date
|
(#)
|
($)
|
(#)
|
($)(2)
|
||||||||||||||||||||||||||||||
|
Tao
Li
|
(3)
|
25,000
|
—
|
50,000
|
$
|
14.70
|
1/3/2015
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||
|
(4)
|
—
|
—
|
30,194
|
$
|
14.70
|
1/3/2015
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||
|
(5)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
50,000
|
$
|
449,000
|
|||||||||||||||||||||||||||||
|
(6)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
15,307
|
$
|
137,457
|
|||||||||||||||||||||||||||||
|
Ying
Yang
|
(7)
|
15,000
|
—
|
30,000
|
$
|
14.70
|
1/3/2015
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||||||
|
(8)
|
—
|
—
|
15,097
|
$
|
14.70
|
1/3/2015
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||||
|
(9)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
30,000
|
$
|
269,400
|
|||||||||||||||||||||||||||||
|
(10)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
7,654
|
$
|
68,733
|
|||||||||||||||||||||||||||||
________________
|
(1)
|
The
exercise price for all options is equal to the closing market price of our
common stock on the trading day immediately preceding the grant
date.
|
|
|
(2)
|
Assumes
that any performance based awards contingent on the achievement of
financial targets for the fiscal year ended June 30, 2010 had not vested
yet because financial results for the fiscal year ended June 30, 2010 were
not yet available at June 30, 2010.
|
|
|
(3)
|
Mr.
Li was granted performance-based options to purchase 75,000 shares of
common stock on January 3, 2010, of which (i) 25,000 shares vested on
February 2, 2010, (ii) 25,000 will automatically vest on December 31, 2010
since we achieved certain net sales and operating income targets for our
fiscal year ended June 30, 2010, and (iii) 25,000 will vest on December
31, 2011, subject to our achievement of certain net sales and operating
income targets for our fiscal year ending June 30,
2011.
|
|
|
(4)
|
Mr.
Li was granted performance-based options to purchase 30,194 shares of
common stock on January 3, 2010. Because we achieved certain
net sales and operating income targets for our fiscal year ended June 30,
2010, (i) 10,065 shares vested on September 30, 2010, (ii) 10,065 shares
will automatically vest on September 30, 2011, and (iii) 10,064 shares
will automatically vest on September 30, 2012.
|
|
18
|
(5)
|
Mr.
Li was granted 75,000 shares of performance-based restricted stock on
January 3, 2010, of which (i) 25,000 shares vested on February 2, 2010,
(ii) 25,000 shares will automatically vest on December 31, 2010 because we
achieved certain net sales and operating income targets for our fiscal
year ending June 30, 2010, and (iii) 25,000 shares will automatically vest
on December 31, 2011, subject to our achievement of certain net sales and
operating income targets for our fiscal year ending June 30,
2011.
|
|
|
(6)
|
Mr.
Li was granted 15,307 shares of performance-based restricted stock on
January 3, 2010. Because we achieved certain net sales and
operating income targets for our fiscal year ended June 30, 2010, (i)
5,103 shares vested on September 30, 2010, (ii) 5,102 shares will
automatically vest on September 30, 2011, and (iii) 5,102 shares will
automatically vest on September 30, 2012.
|
|
|
(7)
|
Ms.
Yang was granted performance-based options to purchase 45,000 shares of
common stock on January 3, 2010, of which (i) 15,000 shares vested on
February 2, 2010, (ii) 15,000 will automatically vest on December 31, 2010
since we achieved certain net sales and operating income targets for our
fiscal year ended June 30, 2010, and (iii) 15,000 will vest on December
31, 2011, subject to our achievement of certain net sales and operating
income targets for our fiscal year ending June 30,
2011.
|
|
|
(8)
|
Ms.
Yang was granted performance-based options to purchase 15,097 shares of
common stock on January 3, 2010. Because we achieved certain
net sales and operating income targets for our fiscal year ended June 30,
2010, (i) 5,103 shares vested on September 30, 2010, (ii) 5,102 shares
will automatically vest on September 30, 2011, and (iii) 5,102 shares will
automatically vest on September 30, 2012.
|
|
|
(9)
|
Ms.
Yang was granted 45,000 shares of performance-based restricted stock on
January 3, 2010, of which (i) 15,000 shares vested on February 2, 2010,
(ii) 15,000 will automatically vest on December 31, 2010 since we achieved
certain net sales and operating income targets for our fiscal year ended
June 30, 2010, and (iii) 15,000 will vest on December 31, 2011, subject to
our achievement of certain net sales and operating income targets for our
fiscal year ending June 30, 2011.
|
|
|
(10)
|
Ms.
Yang was granted 7,654 shares of performance-based restricted stock on
January 3, 2010. Because we achieved certain net sales and
operating income targets for our fiscal year ended June 30, 2010, (i)
2,552 shares vested on September 30, 2010, (ii) 2,551
shares will automatically vest on September 30, 2011, and (iii)
2,551 shares will automatically vest on September 30,
2012.
|
|
Option
Exercises and Stock Vested During the Fiscal Year
|
OPTION
EXERCISES AND STOCK VESTED DURING THE FISCAL YEAR
|
||||||||||||||||
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
|
Number
of Shares
Acquired
on Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
Value
Realized
on
Vesting
($)
|
||||||||||||
|
Tao
Li
|
25,000 | $ | 224,500 | (1) | ||||||||||||
|
Ying
Yang
|
19,938 | $ | 250,820 | (2) | 15,000 | $ | 134,700 | (1) | ||||||||
_______________
|
(1)
|
Based
on a closing price of $14.78 per share on February 2, 2010, the date of
vesting.
|
|
|
(2)
|
Ms.
Yang received 19,938 shares of our common stock upon the cashless exercise
of an option to purchase 28,000 shares of our common stock at an exercise
price of $4.00 per share based on the cashless exercise formula set forth
in the option grant agreement. For purposes of this
table, the value realized is based on 19,938 shares at a value of $12.58
per share, the closing price of our common stock on the day of
exercise.
|
Payments
upon Termination or Change-in-Control
The following table reflects amounts
payable to our Named Executive Officers (1) assuming their employment was
terminated without cause on June 30, 2010 and (2) assuming a change in control
on June 30, 2010.
19
|
Name
|
Termination
Without
Cause(1)
|
Change
in
Control(2)
|
||||||
|
Tao
Li
|
$15,750
|
$586,457(3)
|
||||||
|
Ken
Ren
|
$10,000
|
—
|
||||||
_______________
|
(1)
|
Represents
the payments made pursuant to contractual agreements with each Named
Executive Officer as described below in this
subsection.
|
|
|
(2)
|
Amounts
in this column reflect the value of unvested options and restricted stock
that would be accelerated upon a change of control. For
options, the amounts are calculated based on (i) the difference between
(a) the closing market price of a share of our common stock on June 30,
2010 and (b) the exercise price per share for an option grant, (ii)
multiplied by the number of unvested shares subject to the option grant.
For restricted stock, the amounts are calculated based on the closing
market price of a share of our common stock on June 30, 2010, multiplied
by the number of unvested shares.
|
|
|
(3)
|
Represents
the vesting of (i) 65,307 shares of restricted stock and (ii) 80,194
shares of our common stock issuable upon the exercise of vested options
which had no value as of June 30, 2010 as the exercise price exceeded the
closing price on that date.
|
Employment
Agreements
Tao Li. Pursuant
to the terms of Mr. Li’s employment agreement with Jinong, we may terminate Mr.
Li’s employment for any reason upon 30 days prior written notice, in which case
no termination payment is due. Alternatively, we may terminate his
employment immediately upon the payment of one month’s salary. In the
case of termination for cause as defined therein, we may terminate Mr. Li’s
employment immediately without pay.
Ken Ren. Pursuant to the
terms of our employment agreement with Mr. Ren, we may terminate Mr. Ren’s
employment for any reason upon 30 days prior written notice, in which case no
termination payment is due. Alternatively, we may terminate his
employment immediately upon the payment of one month’s salary. In the
case of termination for cause as defined therein, we may terminate Mr. Ren’s
employment immediately without pay.
2009
Equity Incentive Plan Change in Control Provisions
In the event of a change in control of
our company, and except as otherwise set forth in the applicable award
agreement, all unvested portions of awards shall vest
immediately. Awards, whether or not then vested, shall be continued,
assumed, or have new rights as determined by our Compensation Committee or a
committee of the board of directors designated to administer the Incentive Plan,
and restrictions to which any shares of restricted stock or any other award
granted prior to the change in control are subject shall not
lapse. Awards shall, where appropriate at the discretion of the
Committee, receive the same distribution of our common stock on such terms as
determined by the Compensation Committee. Upon a change in control,
the Committee may also provide for the purchase of any awards for an amount of
cash per share of common stock issuable under the award equal to the excess of
the highest price per share of our common stock paid in any transaction related
to a change in control of our company over the exercise price of such
award.
Director
Compensation
The following table sets forth
information concerning cash and non-cash compensation we paid to our directors
during the fiscal year ended June 30, 2010.
|
DIRECTOR
COMPENSATION
|
|||||||
|
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(2)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Yu
Hao
|
—
|
$287,410
|
—
|
—
|
—
|
—
|
$287,410
|
|
Lianfu
Liu
|
$12,000
|
—
|
$16,590
|
—
|
—
|
—
|
$28,590
|
|
Robert
B. Fields
|
$4,000(3)
|
—
|
$16,435
|
—
|
—
|
—
|
$20,435
|
|
Yizhao
Zhang
|
$18,750
|
—
|
$16,590
|
—
|
—
|
—
|
$35,340
|
|
Barry
Raeburn
|
$16,133(4)
|
—
|
$16,590(5)
|
—
|
—
|
—
|
$32,723
|
____________
|
(1)
|
The
amounts reported in this column reflect the fair value on the grant date
of the restricted stock awards granted to our directors. These
values are determined by multiplying the number of shares granted by the
closing price of our common stock on the trading day immediately preceding
the grant date. The dollar amounts do not necessarily reflect
the dollar amounts of compensation actually realized or that may be
realized by our directors.
|
20
|
(2)
|
The
amounts reported in this column reflect the fair value on the grant date
of the option awards granted to our directors. These values are determined
under the principles used to calculate the grant date fair value of equity
awards for purposes of our financial statements. The dollar amounts do not
necessarily reflect the dollar amounts of compensation actually realized
or that may be realized by our directors. For a discussion of the
assumptions and methodologies used to value the awards reported in this
column, please see Note 14 in Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended June
30, 2010.
|
|
(3)
|
Represents
the portion of Mr. Fields’ annual salary of $20,000 paid during the period
from February 7, 2010, the date he was appointed as director of our
company, until the end of our fiscal
year.
|
|
(4)
|
Represents
the portion of Mr. Raeburn’s annual salary of $20,000 paid during the
period from July 1, 2009 until February 3, 2010, the date he resigned as a
director of our company.
|
| (5) | Mr. Raeburn forfeited the unvested portion of this option grant upon his resignation as a director on February 3, 2010. Mr. Raeburn subsequently forfeited the vested portion of this option grant by not exercising the vested options within 90 days of his resignation. |
The directors will also be reimbursed
for all of their out-of-pocket expenses in traveling to and attending meetings
of the Board of Directors and committees on which they serve.
Compensation
Committee Interlocks and Insider Participation
The members of the Compensation
Committee during the fiscal year ended June 30, 2010 were Messrs. Yizhao Zhang,
Lianfu Liu, Barry Raeburn (prior to February 3, 2010) and Robert B. Fields
(beginning February 7, 2010). During the fiscal year ended June 30,
2010:
|
|
·
|
none
of the members of the Compensation Committee was an officer (or former
officer) or employee of our company or any of its
subsidiaries;
|
|
|
·
|
none
of the members of the Compensation Committee had a direct or indirect
material interest in any transaction in which we were a participant and
the amount involved exceeded $120,000;
|
|
|
·
|
none
of our executive officers served on the compensation committee (or another
board committee with similar functions or, if none, the entire Board of
Directors) of another entity where one of that entity’s executive officers
served on our Compensation Committee;
|
|
|
·
|
none
of our executive officers was a director of another entity where one of
that entity’s executive officers served on our Compensation Committee;
and
|
|
|
·
|
none
of our executive officers served on the compensation committee (or another
board committee with similar functions or, if none, the entire Board of
Directors) of another entity where one of that entity’s executive officers
served as a director on our Board of
Directors.
|
21
Board
Meetings
The Board
of Directors held seven meetings, either in person or by telephone, in the
fiscal year ended June 30, 2010. In addition, the Board of Directors unanimously
approved six written consents on matters between meetings. During the fiscal
year ended June 30, 2010, each incumbent director attended at least 75% of the
aggregate number of meetings of the Board of Directors and applicable committee
meetings (held during the period for which he or she was a director) on which he
or she served. We do not have a formal policy regarding attendance by members of
the Board of Directors at the annual meeting of stockholders, but we strongly
encourage all members of the Board of Directors to attend the Meeting and expect
such attendance except in the event of extraordinary circumstances.
Board
Committees
Our Board
of Directors has established the following three standing committees which,
pursuant to delegated authority, perform various duties on behalf of and report
to the Board of Directors: (i) Audit Committee, (ii) Compensation
Committee and (iii) Nominating Committee. From time to time, the Board of
Directors may establish other committees.
Audit
Committee
The Audit
Committee is responsible for: (i) overseeing the corporate accounting and
financial reporting practices; (ii) recommending the selection of our
registered public accounting firm; (iii) reviewing the extent of non-audit
services to be performed by the auditors; and (iv) reviewing the disclosures
made in our periodic financial reports. The members of the Audit Committee are
Messrs. Yizhao Zhang, Robert B. Fields and Lianfu Liu, each of whom is an
independent director within the meaning of the rules of the NYSE and
Rule 10A-3 promulgated by the SEC under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). In addition, the Board of Directors has
determined that Mr. Zhang qualifies as an Audit Committee Financial Expert under
applicable SEC Rules. The Chairman of the Audit Committee is Mr. Zhang. The
Audit Committee held six meetings during the fiscal year ended June 30, 2010.
The Audit Committee carries out its responsibilities in accordance with the
terms of its Audit Committee Charter, a copy of which attached hereto as Annex A
and is also available on our website at www.cgagri.com.
Compensation
Committee
The
Compensation Committee determines matters pertaining to the compensation of
executive officers and other significant employees, and administers our stock
and incentive plans. The members of the Compensation Committee are Messrs.
Yizhao Zhang, Robert B. Fields and Lianfu Liu. The Chairman of the Compensation
Committee is Mr. Fields. The Compensation Committee held six meeting during
the fiscal year ended June 30, 2010. Each of the members of the Compensation
Committee is a “non-employee director” within the meaning of Rule 16b-3
under the Exchange Act, and an “outside director” within the meaning of Section
162(m) under the Internal Revenue Code. The Compensation Committee carries out
its responsibilities pursuant to a written charter, a copy of which was attached
as Annex B to the Proxy Statement, dated October 28, 2009, for our 2009 Annual
Meeting. A copy of our Compensation Committee Charter is also
available on our website at www.cgagri.com.
Nominating
Committee
The
Nominating Committee identifies and nominates candidates to serve on our Board
of Directors. The members of the Nominating Committee are Messrs. Yizhao Zhang,
Robert B. Fields and Lianfu Liu. The Chairman of the Nominating Committee is Mr.
Liu. The Nominating Committee held two meetings during the fiscal year ended
June 30, 2010. A copy of our Nominating Committee Charter is attached hereto as
Annex B and is also available on our website at www.cgagri.com. See
“Director Nominations” below for the procedures for the
nomination of directors.
Board
Leadership Structure and Board’s Role in the Oversight of Risk
Management
Our Board of Directors believes it is
important to select our Chairman and our Chief Executive Officer in the manner
it considers in the best interests of our company at any given point in time.
Due to Mr. Li’s substantial experience in the industry, our Board of Directors
has determined that the most effective leadership structure for our company at
this time is for Mr. Li to serve as both our Chairman and Chief Executive
Officer. Our Board benefits from the Chairman having direct knowledge of the
operations of, and opportunities and challenges facing, our business on a
regular and company-wide basis. Mr. Li’s combined role as Chairman
and Chief Executive Officer fosters greater communication between the Board and
management and provides unified leadership for carrying out our company’s
strategic initiatives and business plans. Further, the significant leadership
roles undertaken by the various independent directors who chair all of the
committees of the Board of Directors strike an appropriate balance between
effective Board leadership and independent oversight of management. However, the
Board of Directors recognizes that circumstances may change over time and as
they do, changes to the leadership structure may be warranted.
22
Our Board does not currently have a
designated lead independent director. Our board of directors consists of five
members, three of which are independent, and each of the independent directors
demonstrates leadership qualities. Under these circumstances, our
Board believes that the appointment of a designated lead independent director is
not necessary at this time.
The Board has an active role, directly
and through its committees, in the oversight of our risk management efforts. The
Board carries out this oversight role through several levels of review. The
Board regularly reviews and discusses with members of management information
regarding the management of risks inherent in the operations of our businesses
and the implementation of our strategic plan, including our risk mitigation
efforts.
In accordance with corporate governance
standards of the NYSE, the Audit Committee charter assigns to that committee the
responsibility to review our policies and practices with respect to risk
assessment and risk management, including major financial risk exposures, and
the steps management has taken to monitor and control such exposures.
Additionally, each of the Board’s committees also oversees the management of our
risks that are under each committee’s areas of responsibility. For example, the
Audit Committee oversees management of accounting, auditing, external reporting,
internal controls, and cash investment risks. The Nominating Committee oversees
our compliance policies, Code of Conduct, conflicts of interests, director
independence and corporate governance policies. The Compensation Committee
oversees risks arising from compensation practices and policies. In this manner
the Board is able to coordinate its risk oversight.
Director
Nominations
The
Nominating Committee recommends director candidates and will consider for such
recommendation director candidates proposed by management, other directors and
stockholders. All director candidates will be evaluated based on the criteria
identified below, regardless of the identity of the individual or the entity or
person who proposed the director candidate.
The
selection of director nominees includes consideration of factors deemed
appropriate by the Corporate Governance and Nominating Committee and the Board
of Directors. We may engage a firm to assist in identifying, evaluating, and
conducting due diligence on potential board nominees. Factors will include
integrity, achievements, judgment, intelligence, personal character, any prior
contact or relationship between a candidate and a current or former director or
officer of our company, the interplay of the candidate’s relevant experience
with the experience of other Board members, the willingness of the candidate to
devote adequate time to Board duties and the likelihood that he or she will be
willing and able to serve on the Board of Directors for a sustained period. The
Corporate Governance and Nominating Committee will consider the candidate’s
independence, as defined by the rules of the SEC and the NYSE. In connection
with the selection, due consideration will be given to the Board’s overall
balance of diversity of perspectives, backgrounds, and experiences. Experience,
knowledge, and skills to be represented on the Board of Directors include, among
other considerations, financial expertise (including an “audit committee
financial expert” within the meaning of the SEC’s rules), financing experience,
related industry experience, strategic planning, business development, and
community leadership.
Code
of Ethics
We have adopted a Code of Conduct and
Ethics that applies to all of our employees and officers, and the members of our
Board of Directors. The Code of Conduct and Ethics is available on our website
at www.cgagri.com.
Printed copies are available upon request without charge. Any amendment to or
waiver of the Code of Conduct and Ethics will be disclosed on our website
promptly following the date of such amendment or waiver.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our executive officers and directors, and persons
who own more than 10% of a registered class of our equity securities (“Reporting
Persons”), to file reports of ownership and changes in ownership with the SEC
and with the NYSE. The Reporting Persons are also required to
furnish us with copies of all such reports. Based solely on our review of the
reports received by us, and written representations from certain Reporting
Persons that no other reports were required for those persons, we believe that,
during the year ended June 30, 2010, the Reporting Persons met all applicable
Section 16(a) filing requirements, other than the following:
|
Name
|
Reporting Event
|
|
Yu
Hao
|
On
August 17, 2009, Yu Hao received 7,661 shares of common stock upon the
cashless exercise of vested options to purchase 10,000 shares of common
stock. A Form 4 reporting such transaction was filed by Mr. Hao
on February 16, 2010.
|
23
Stockholder
Communications with the Board
Stockholders
wishing to communicate with the Board of Directors may send correspondence
directed to the Board, care of Mr. Tao Li, Chairman, China Green Agriculture,
Inc., 3rd Floor, Borough A, Block A. No. 181, South Taibai Road, Xian, Shaanxi
Province, People’s Republic of China 710065. Mr. Li will review all
correspondence addressed to the Board of Directors, or any individual Board
member, for any inappropriate correspondence and correspondence more suitably
directed to management. He will summarize all correspondence not forwarded to
the Board and make the correspondence available to the Board of Directors for
its review at the Board’s request. Mr. Li will forward stockholder
communications to the Board of Directors prior to the next regularly scheduled
meeting of the Board following the receipt of the communication as appropriate.
Correspondence intended for our independent directors as a group should be
addressed to us at the address above, Attention: Independent
Directors.
Audit
Fees
Audit
Fees
The aggregate fees billed by Kabani
& Company, Inc. for professional services rendered for the audit of our
annual financial statements included in our Annual Reports on Form 10-K, for the
reviews of the financial statements included in our Quarterly Reports on Form
10-Q, for our Sarbanes-Oxley Act of 2002 compliance audit, and for services in
connection with statutory and regulatory filings or engagements were $210,000
and $120,000 for the fiscal years ended June 30, 2010 and 2009,
respectively.
Audit-Related
Fees
The aggregate fees billed by our
principal accountants for audit-related services were $10,000 and $42,000 for
the fiscal years ended June 30, 2010 and 2009, respectively.
Tax
Fees
We did not engage our principal
accountants to provide tax or related services during the last two fiscal
years.
All
Other Fees
We did not engage our principal
accountants to render services to us during the last two fiscal years, other
than as reported above.
REPORT
OF THE AUDIT COMMITTEE
The Audit
Committee of the Board is comprised of three non-employee directors, each of
whom has been determined by the Board to be “independent” under the meaning of
Rule 10A-3(b)(1) under the Exchange Act. Messrs. Yizhao Zhang qualifies as
a financial expert within the meaning of Item 401(h) of SEC Regulation S-K.
The Audit Committee assists the Board’s oversight of the integrity of our
financial reports, compliance with legal and regulatory requirements, the
qualifications and independence of our independent registered public accounting
firm, the audit process, and internal controls. The Audit Committee operates
pursuant to a written charter adopted by the Board. The current Audit Committee
charter is attached as Annex B to this proxy statement. The Audit Committee is
responsible for overseeing our corporate accounting and financial reporting
practices, recommending the selection of our registered public accounting firm,
reviewing the extent of non-audit services to be performed by the auditors, and
reviewing the disclosures made in our periodic financial reports. The Audit
Committee also reviews and recommends to the Board that the audited financial
statements be included in our Annual Report on Form 10-K.
The Audit
Committee: (1) reviewed and discussed the audited financial statements for
the year ended June 30, 2010 with management; (2) discussed with the
independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards), as may be modified or
supplemented; and (3) received the written disclosures and the letter from
the independent accountants required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent accountant’s
communications with the Audit Committee concerning independence, and has
discussed with the independent accountant its independence.
Based on
the review and discussions referred to above, the Audit Committee had
recommended to the Board of Directors that the audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended June 30,
2010 for filing with the SEC.
The
foregoing report has been furnished in October 2010 by the members of the Audit
Committee, being:
Yizhao Zhang
Robert B. Fields
Lianfu Liu
The foregoing Audit Committee Report
does not constitute soliciting material and shall not be deemed filed or
incorporated by reference into any other of our filings under the Securities Act
or the Exchange Act, except to the extent that we specifically incorporate this
Audit Committee Report by reference therein.
24
STOCKHOLDER
PROPOSALS
Proposals of stockholders intended for
presentation at next year’s annual meeting of stockholders and intended to be
included in our proxy statement and form of proxy relating to that meeting must
be received at our executive office by June 30, 2011 and comply with the
requirements of Rule 14a-8(e) promulgated under the Exchange Act. If
a stockholder intends to submit a proposal at next year’s annual meeting of
stockholders, which proposal is not intended to be included in the our proxy
statement and form of proxy relating to that meeting, the stockholder must
provide appropriate notice to us not later than September 13, 2011 in order to
be considered timely submitted within the meaning of Rule 14a-4(c) of the
Exchange Act. As to all such matters which we do not have
notice on or prior to September 13, 2011, discretionary authority shall be
granted to the persons designated in our proxy related to the 2011 annual
meeting of stockholders to vote on such proposal.
ANNUAL
REPORT ON FORM 10-K
We will
furnish without charge to each person whose proxy is being solicited, upon the
request of such person, a copy of our Annual Report on Form 10-K for the
fiscal year ended June 30, 2010, including the financial statements and
schedules thereto. Requests for copies of such report should be directed to Mr.
Ken Ren, Chief Financial Officer, China Green Agriculture, Inc., 3rd Floor,
Borough A, Block A. No. 181, South Taibai Road, Xian, Shaanxi Province, People’s
Republic of China 710065, +86-29-88266368.
OTHER
MATTERS
As of the
date of this Proxy Statement, the Board of Directors has no knowledge of any
business which will be presented for consideration at the Meeting other than the
election of directors. Should any other matters be properly presented, it is
intended that the enclosed proxy will be voted in accordance with the best
judgment of the persons voting the proxies.
It is
important that the proxies be returned promptly and that your shares be
represented at the Meeting. Stockholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope.
|
October
28, 2010
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By
Order of the Board of Directors
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||
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/s/ Tao
Li
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|||
|
Tao
Li
Chairman
of the Board
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25
Annex A
Audit
Committee Charter
CHINA
GREEN AGRICULTURE, INC.
CHARTER
FOR THE AUDIT COMMITTEE
OF
THE
BOARD OF DIRECTORS
PURPOSE
The purpose of the audit committee (the
“Audit Committee” or the
“Committee”) established
by this charter will be to oversee the corporate accounting and financial
reporting process and the internal and external audits of the financial
statements of China Green Agriculture, Inc. (the "Company”). The Audit Committee
will undertake those specific duties, responsibilities and processes listed
below, and such other duties as the Board of Directors (the "Board") may from time to time
prescribe. In fulfilling this role, the Audit Committee will ensure that there
is effective communication among the Board, management and outside auditors. In
this way, it will help the Board to fulfill its oversight responsibilities to
the stockholders and the investment community relating to the Company's
financial statements and financial reporting process.
CHARTER
REVIEW
The Audit Committee will review and
reassess the adequacy of this charter at least once a year. This review is
initially intended to be conducted at the first Audit Committee meeting
following the Company's annual meeting of stockholders, but may be conducted at
any time the Audit Committee desires to do so. In addition, to the extent and in
the manner legally required by the rules of the Securities and Exchange
Commission (the "SEC"),
the Audit Committee will cause the Company to publicly file this charter (as
then constituted).
MEMBERSHIP
The Audit Committee will be comprised
of at least three members of the Board, all of whom shall meet the independence
requirements established by the Board and applicable laws, regulations, and
listing requirements. The members will be appointed by and serve at the pleasure
of the Board.
Each member of the Audit Committee also
must be able to read and understand fundamental financial statements, including
the Company's balance sheet, income statement, and cash flow statement, or must
become able to do so within a reasonable period of time after his or her
appointment to the Audit Committee. In addition, at least one member of the
Audit Committee must have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. At least one member of the Committee shall in the judgment of
the Board be an "audit committee financial expert" as defined by the rules and
regulations of the Securities and Exchange Commission. The Board may remove any
member from the Committee at any time with or without cause.
COMMITTEE
STRUCTURE AND OPERATIONS
The Chair
of the Committee can be designated by the Board or elected by the
Committee. The Committee shall fix its own rules of procedure and shall
meet where and as provided by such rules or by resolution of the
Committee. In addition to the regular meeting schedule established by the
Committee, the Chair of the Committee may call a special meeting at any
time.
The
Secretary of the Corporation shall be the Secretary of the Audit Committee,
unless the Committee designates otherwise.
In the
absence of the Chair during any Committee meeting, the Committee may designate a
Chair pro tempore.
The
Committee shall act only on the affirmative vote of a majority of the members at
a meeting or by unanimous written consent.
The
Committee may establish sub-committees to carry out such duties as the Committee
may assign.
RESPONSIBILITIES
The responsibilities of the Audit
Committee include:
A-1
|
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1.
|
The
appointment, compensation, retention and oversight of the work of any
registered public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest
services for the Company, and each such registered public accounting firm
must report directly to the audit
committee;
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2.
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Reviewing
the plan for the audit and related services at least
annually;
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3.
|
Reviewing
audit results and annual and interim financial statements and discussing
the audited financial statements with both the Company's outside auditors
and the Company's management prior to any public filing of those
reports;
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4.
|
Reviewing
and resolving any disagreements between management and the outside
auditors that arise in connection with financial
reporting;
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5.
|
Reviewing
major issues regarding accounting principles and practices that could
significantly impact the Company's financial
statements;
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6.
|
Discussing
with the Company's outside auditors the quality of accounting principles
applied in the Company's financial statements and the other matters
required by SAS 61 (including amendments or supplements}, such as
management judgments and accounting estimates that affect financial
statements, significant new accounting policies and disagreements with
management;
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|
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7.
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Ensuring
the receipt of, and reviewing, a formal written statement from the
Company's outside auditors delineating all relationships between the
outside auditors and the Company, consistent with Independence Standards
Board Standard 1;
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8.
|
Reviewing
and actively discussing with the Company's outside auditors the auditors’
independence, including any disclosed relationship or service that may
impact the objectivity and independence of the outside
auditors;
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9.
|
Taking
appropriate action to oversee the independence of the outside
auditors;
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10.
|
Overseeing
the adequacy of the Company's system of internal accounting controls,
including at least annually obtaining and reviewing a report by the
independent auditor describing: the firm's internal quality-control
procedures; any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such issues; and (to
assess the auditor's independence) all relationships between the
independent auditor and the listed
company;
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11.
|
Overseeing
the Company's procedures for preparing published annual statements and
management commentaries;
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12.
|
Overseeing
the effectiveness of the internal audit
function;
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13.
|
Overseeing
the Company's compliance with SEC requirements for disclosure of auditor's
services and Audit Committee members and
activities;
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14.
|
Ensuring
that the Company and its management make any appropriate certifications
required by the Rules of the SEC and the
NASD;
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15.
|
Discussing
the Company's earnings press releases, as well as financial information
and earnings guidance provided to analysts and rating
agencies.
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16.
|
Discussing
the Company’s policies with respect to risk assessment and risk
management.
|
|
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17.
|
Establishing
procedures for the receipt, retention and treatment of complaints received
by the Company regarding accounting, internal accounting controls or
auditing matters; and
|
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18.
|
Establishing
procedures for the confidential, anonymous submission by the Company’s
employees of concerns regarding questionable accounting or auditing
matters.
|
In addition to the above
responsibilities, the Audit Committee will undertake such other duties as the
Board delegates to it.
The Audit Committee will ensure that
the outside auditors understand both (i) their ultimate accountability to the
Audit Committee, as representatives of the Company's stockholders, and (ii) the
Audit Committee's ultimate authority and responsibility to select, evaluate and,
where appropriate in the exercise of its business judgment, replace the
Company's outside auditors (or to nominate the outside auditors to be proposed
for stockholder approval in any proxy statement).
A-2
POWERS
AND AUTHORITY
The Audit Committee shall have
authority to engage independent counsel and other advisers, as it determines
necessary to carry out its duties.
The Company must provide for
appropriate funding, as determined by the Audit Committee, in its capacity as a
committee of the board of directors, for payment of:
|
(i)
|
Compensation
to any registered public accounting firm engaged for the purpose of
preparing or issuing an audit report orperforming other audit, review or
attest services for the Company;
|
|
(ii)
|
Compensation
to any advisers employed by the Audit Company under the first paragraph of
this section of this charter;
|
|
(iii)
|
Ordinary
administrative expenses of the audit committee that are necessary or
appropriate in carrying out its
duties.
|
MEETINGS
The Audit Committee will meet
separately with the President and Chief Executive Officer and the Chief
Financial Officer of the Company at least quarterly to review the financial
affairs of the Company. The Audit Committee will meet with the Company's outside
auditors upon the completion of the annual audit (which meeting may be held
without the presence of management), and at such other times as it deems
appropriate, to review the outside auditors' examination and management
report.
REPORTS
The Audit Committee will, to the extent
required by applicable laws and Regulations of the SEC or applicable exchange
rules, or to the extent deemed appropriate, record its summaries of
recommendations to the Board in written form that will be incorporated as a part
of the minutes of the Board. To the extent required, the Audit Committee also
will prepare and sign a report for inclusion in the Company's proxy statement
for its annual meeting of stockholders.
A-3
Annex
B
Nominating
Committee Charter
CHINA
GREEN AGRICULTURE, INC.
NOMINATING
COMMITTEE CHARTER
The Board
of Directors of China Green Agriculture, Inc. (the “Company”) has authorized the
formation of a Nominating Committee (the “Committee”) and approved the following
Charter in order to set forth the purposes, structure, authority and duties and
responsibilities of the Committee and the members thereof.
Purpose
As
set forth herein, the Committee shall, among other things, discharge the
responsibilities of the Board of Directors of the Company (the “Board”) relating
to the determination of the appropriate size, functioning and needs of the
Board, including, but not limited to, recruitment and retention of high quality
Board members, Committee composition and structure, Board assessment of director
performance and related party and conflicts oversight.
Membership
The Committee shall consist of at least
two members of the Board as determined from time to time by the Board. Each
member shall (a) be an "independent director" in accordance with the listing
standards or quotation qualifications of any national securities exchange or
quotation system on which the securities of the Company are traded or quoted and
(b) meet any independence standards required for membership in a nominating
committee that may from time to time be set forth in rules promulgated by the
Securities and Exchange Commission.
The Board shall elect the members of
the Committee at the first Board meeting practicable following the annual
meeting of stockholders of the Company and may make changes from time to time
pursuant to the provisions below. Unless a chairperson is elected by the Board,
the members of the Committee shall designate a chairperson by majority vote of
the full Committee membership.
A Committee member may resign by
delivering his or her written resignation to the chairperson of the Board, or
may be removed by majority vote of the Board by delivery to such member of
written notice of removal, to take effect at a date specified therein, or upon
delivery of such written notice to such member if no date is
specified.
Meetings
and Committee Action
The Committee
shall meet at such times as it deems necessary to fulfill its responsibilities.
Meetings of the Committee shall be called by the chairperson of the Committee
upon such notice as is provided for in the by-laws of the Company with respect
to meetings of the Board. A majority of the members shall constitute a quorum.
Actions of the Committee may be taken in person at a meeting or in writing
without a meeting. Actions taken at a meeting, to be valid, shall require the
approval of a majority of the members present and voting. Actions taken in
writing, to be valid, shall be signed by all members of the Committee. The
Committee shall report its minutes from each meeting to the Board.
The chairperson of the Committee shall
establish such rules as may from time to time be necessary or appropriate for
the conduct of the business of the Committee. At each meeting, the chairperson
shall appoint as secretary a person who may, but need not, be a member of the
Committee. A certificate of the secretary of the Committee setting forth the
names of the members of the Committee or actions taken by the Committee shall be
sufficient evidence at all times as to the persons constituting the Committee,
or such actions taken.
Duties and
Responsibilities
The Committee's duties and
responsibilities include:
|
|
·
|
Monitoring
and making recommendations regarding Committee functions, contributions
and composition;
|
|
|
·
|
Developing
the criteria and qualifications for membership on the
Board;
|
|
|
·
|
Developing
programs for the continuing education of all directors and for the
orientation of new directors;
|
|
|
·
|
Establishing
and periodically reviewing director retirement policies and making
recommendations to the Board regarding these
policies;
|
|
|
·
|
Reviewing
and making recommendations to the Board regarding the appropriate level of
director and officer liability insurance and evaluating the
appropriateness of providing indemnity to the Company's officers,
directors or agents on a case-by-case basis, including the appropriateness
of advancing fees and expenses;
|
|
|
·
|
Considering
all questions regarding a conflict of interest involving any Board
members, the Company, its subsidiaries or their respective
officers;
|
B-1
|
|
·
|
Creating
a format to review the performance of each of the directors and executive
officers of the Company; conducting the reviews annually in accordance
with the format; and distributing the reviews results to all Board members
for their review and consideration;
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Evaluating,
on an annual basis, the Committee's
performance;
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·
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Making
recommendations to the Board on methods for enhancing services to, and
improving communications and relations with, the Company's
stockholders;
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Carrying
out all other duties and responsibilities related to the purpose of the
Committee delegated to the Committee from time to time by the
Board;
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Developing
and recommending to the Board a set of corporate governance guidelines
applicable to the Company.
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Powers
and Authority
Subject to such specific constraints as
may be imposed by the Board, the Board delegates to the Committee all powers and
authority that are necessary or appropriate to fulfill its duties and
responsibilities hereunder, including but not limited to:
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Recruiting,
reviewing and nominating candidates for election to the Board or to fill
vacancies on the Board;
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·
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Reviewing
candidates proposed by stockholders for nomination to the Board, and
conducting appropriate inquiries into the background and qualifications of
any such candidates;
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Retaining
and terminating any professionals (such as search firms, attorneys and
compensation professionals) to assist in evaluating, designing and
documenting of director compensation, including sole authority to approve
the professional's fees and other retention
terms;
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Establishing
subcommittees for the purpose of evaluating special or unique matters;
and
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In identifying candidates for
membership on the Board, the Committee shall take into account all factors it
deems appropriate, which may include: (a) ensuring that the Board, as a whole,
is diverse, and consists of individuals with various and relevant career
experience, relevant technical skills, industry knowledge and experience,
financial expertise (including expertise that could qualify the candidate as a
“financial expert,” as such term is defined in rules promulgated by the
Securities and Exchange Commission) and local or community ties and (b) minimum
individual qualifications, including strength of character, judgment,
familiarity with the Company’s business and industry, independence of thought
and the ability to work collegially. The Committee may also consider the extent
to which the candidate will fill a present need on the Board.
Reporting
The Committee shall prepare a statement
each year concerning its compliance with this Charter. The statement may be
included in the Company's proxy statement or any of the periodic reports the
Company may be required to file under applicable securities laws.
B-2
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