TRIO-TECH INTERNATIONAL
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material Pursuant to Rule 240.14a-12
TRIO-TECH
INTERNATIONAL
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
No fee required.
☐
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)
Title of each class
of securities to which transaction applies:
_____________
(2)
Aggregate number of
securities to which transaction applies: _____________
(3)
Per unit price or
other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_____________
(4)
Proposed maximum
aggregate value of transaction: _____________
(5)
Total fee paid:
_____________
☐
Fee paid previously with preliminary materials:
☐
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1)
Amount Previously
Paid: _____________
(2)
Form, Schedule or
Registration Statement No.: _____________
(3)
Filing Party:
_____________
(4)
Date Filed:
_____________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held On November 28, 2016
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Trio-Tech International, a California corporation (the
“Company”), will be held at our principal executive
offices, located at 16139 Wyandotte Street, Van Nuys, California
91406, on Monday, November 28, 2016 at 10:00 A.M. local time for
the following purposes, as set forth in the attached Proxy
Statement:
1.
Election of
directors to hold office until the next Annual Meeting of
Shareholders;
2.
To hold a
non-binding, advisory vote on the compensation of our named
executive officers; and
The
Board of Directors of the Company (the “Board of
Directors” or the “Board”) has fixed the close of
business on October 3, 2016 as the record date for determining the
shareholders entitled to notice of and to vote at the Annual
Meeting and any adjournment and postponements thereof (the
“Record Date”).
After
careful consideration, the Trio-Tech International Board of
Directors recommends a vote FOR the nominees for director named in
the accompanying Proxy Statement.
Shareholders are cordially invited to attend the
Annual Meeting in person.
Whether you plan to attend the
Annual Meeting or not, please complete, sign and date the enclosed
Proxy Card and return it without delay in the enclosed
postage-prepaid envelope. If you do attend the Annual Meeting, you
may withdraw your Proxy and vote personally on each matter brought
before the meeting.
|
|
By Order of the Board of Directors
A. CHARLES WILSON
Chairman
|
October
11, 2016
Van
Nuys, California
IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO MARK,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT IF
YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE
VOTED.
THANK YOU FOR ACTING PROMPTLY
Important Notice Regarding the Availability of Proxy Materials for
the Shareholder Meeting to be held on November 28, 2016: The Proxy
Statement and our 2016 Annual Report to
Shareholders
are available at
http://www.triotech.com/ind_rel.htm, which does not have
“cookies” that identify visitors to the
site.
TABLE OF CONTENTS
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PROXY STATEMENT
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1
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PROPOSAL 1: ELECTION OF DIRECTORS
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2
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PROPOSAL 2: ADVISORY RESOLUTION ON EXECUTIVE
COMPENSATION
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4
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CORPORATE GOVERNANCE
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5
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BOARD MEETINGS AND COMMITTEES
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6
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DIRECTORS’ COMPENSATION
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7
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND
MANAGEMENT
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8
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EXECUTIVE OFFICERS
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9
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
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9
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EQUITY COMPENSATION PLAN INFORMATION
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10
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COMPENSATION DISCUSSION AND ANALYSIS
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10
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REPORT OF THE AUDIT COMMITTEE
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13
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EXECUTIVE COMPENSATION
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14
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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17
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ADDITIONAL MEETING INFORMATION
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18
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OTHER MATTERS
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18
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P
ROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHAREHOLDERS
OF
TRIO-TECH INTERNATIONAL, INC.
To
Be Held on
November 28,
2016
This Proxy Statement is furnished in connection
with the solicitation of the enclosed Proxy on behalf of the Board
of Directors (the “Board”) of Trio-Tech International,
a California corporation (“Trio-Tech” or the
“Company”), for use at the annual meeting of
shareholders of the Company (the “Annual Meeting”) to
be held
at our principal executive offices, located at 16139
Wyandotte Street, Van Nuys, California 91406, on Monday, November
28, 2016 at 10:00 A.M. local time, for the purposes of electing
directors and such other business as may properly come before the
Annual Meeting. For directions to our principal executive offices,
please call our executive offices at 818-787-7000. This Proxy
Statement and the enclosed proxy card are intended to be mailed to
shareholders on or about October 17, 2016.
Record Date and Voting Securities
The Board of Directors fixed the close of business
on October 3, 2016 as the record date for shareholders entitled to
notice of and to vote at the Annual Meeting. As of that date, there
were
3,513,055 s
hares of the
Company’s common stock (the “Common Stock”)
outstanding and entitled to vote, the holders of which are entitled
to one vote per share.
Voting Generally
The
presence in person or by proxy of holders of a majority of the
shares entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Abstentions will be
counted for purposes of determining the presence of a
quorum.
Because
a shareholder’s broker may not vote on behalf of the
shareholder on the election of directors unless the shareholder
provides specific instructions by completing and returning the
voting instruction form, for a shareholder’s vote to be
counted, we ask that our shareholders communicate his/her voting
decisions to the broker or other nominee before the date of the
Annual Meeting or give a proxy to vote his/her shares at the
meeting.
In
the election of directors, a shareholder may cumulate his votes for
one or more candidates, but only if each such candidate’s
name has been placed in nomination prior to the voting and the
shareholder has given notice at the meeting, prior to the voting,
of his intention to cumulate his votes. If any shareholder has
given such notice, all shareholders may cumulate their votes for
the candidates in nomination. If the voting for directors is
conducted by cumulative voting, each share will be entitled to a
number of votes equal to the number of directors to be elected.
These votes may be cast for a single candidate or may be
distributed among two or more candidates in such proportions as the
shareholder thinks fit. The five candidates receiving the highest
number of affirmative votes will be elected. Abstentions will be
counted for purposes of determining the presence of a quorum, but
votes against a candidate or withheld from voting (whether by
abstention, broker non-votes or otherwise) will not be counted
and will have no legal effect on the vote. Discretionary authority
to cumulate votes is solicited hereby.
The approval, on an advisory, non-binding basis, of the
compensation of our Named Executive Officers (as defined in this
Proxy Statement) as described under Proposal 2 of this Proxy
Statement requires the affirmative vote of a majority of the shares
present or represented by proxy at the Annual Meeting and entitled
to vote thereon. Abstentions from voting will have the same effect
as voting against the proposal. Broker non-votes are not considered
present or voted for the proposal and thus will have the effect of
reducing the number of affirmative votes required to achieve a
majority for such matter by reducing the total number of shares
from which the majority is calculated.
-1-
Deadline for Voting by Proxy
In
order to be counted, votes cast by proxy must be received prior to
the Annual Meeting.
R
evocability of
Proxies
Shareholders
are requested to date, sign and return the enclosed Proxy to make
certain their shares will be voted at the Annual Meeting. Any Proxy
given may be revoked by the shareholder at any time before it is
voted by delivering written notice of revocation to the Secretary
of the Company, by filing with the Secretary of the Company a Proxy
bearing a later date, or by attending the Annual Meeting and voting
in person. All Proxies properly executed and returned will be voted
in accordance with the instructions specified thereon. If no
instructions are specified, Proxies will be voted FOR the election
of the five nominees for directors named under “Election of
Directors.”
P
ROPOSAL 1
ELECTION
OF DIRECTORS
Information With Respect to Directors
A majority of the independent directors of our
Board has nominated the persons listed below for election to the
Board at the Annual Meeting, to hold office until the next Annual
Meeting and until their respective successors are elected and
qualified. There is one vacancy on the Board of Directors. The
Board does not intend to fill the vacancy at this time due to the
costs associated therewith. It is intended that the Proxies
received, unless otherwise specified, will be voted
FOR
the five nominees named below, all of
whom are incumbent directors of the Company and, with the exception
of Mr. Yong and Mr. Ting, are “independent” as
specified in Section 803 of the NYSE MKT rules and Rule 10A-3 under
the Securities and Exchange Act of 1934, as amended (the
“Exchange Act”). It is not contemplated that any of the
nominees will be unable or unwilling to serve as a director but, if
that should occur, the persons designated as proxies will vote in
accordance with their best judgment. In no event will Proxies be
voted for a greater number of persons than the number of nominees
named in this Proxy Statement. The following chart and accompanying
narrative set forth, as of October 3, 2016, the names of each of
the five nominees for election as a director, his principal
occupation, age, the year he became a director of the Company, and
additional biographical data.
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NAME
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AGE
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PRINCIPAL
OCCUPATION
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A.
Charles Wilson
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92
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Chairman of the
Board of Trio-Tech International
Chairman of the Board of Ernest Paper
Packaging Solutions, Inc.
Attorney at Law &
Business Consultant,
Chairman of the
Board of Daico Industries, Inc.
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S. W.
Yong
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63
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Chief
Executive Officer and President of Trio-Tech
International
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Richard
M. Horowitz
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75
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President of
Management Brokers Insurance, Inc.
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Jason
T. Adelman
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47
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Chief
Executive Officer of Burnham Hill Capital Group
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Victor
H. M. Ting
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62
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Chief
Financial Officer and Vice President of Trio-Tech
International
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A. Charles Wilson
Mr. Wilson has served as a director of Trio-Tech
since 1966, and was President and Chief Executive Officer of the
Company from 1981 to 1989. In 1989, he was elected Chairman of the
Board. Mr. Wilson is also Chairman of the Board of Ernest
Packaging Solution
s, Inc. and Chairman
of Daico Industries, Inc. as well as an attorney admitted to
practice law in California and a business
consultant.
-2-
In
determining that Mr. Wilson should serve on the Company’s
Board of Directors, the Board has considered, among other
qualifications, his professional background and experience, his
leadership skills as a result of his nine years serving as
President and Chief Executive Officer of the Company, his service
as a Chairman on other corporate boards and his broad range of
knowledge of the Company’s history and business through his
50 years of service as a director of the Company.
Siew Wai Yong
Mr.
Yong has been a director, Chief Executive Officer and President of
Trio-Tech since 1990. He joined Trio-Tech International Pte. Ltd.
in Singapore in 1976 and was appointed as its Managing Director in
August 1980. Mr. Yong holds a Master’s Degree in Business
Administration, a Graduate Diploma in Marketing Management and a
Diploma in Industrial Management.
In
determining that Mr. Yong should serve on the Company’s Board
of Directors, the Board has considered, among other qualifications,
his 40 year history with the Company, his intimate knowledge of the
Company’s business and operations and the markets in which
the Company operates, as well as the Company’s customers and
suppliers, and his detailed in-depth knowledge of the issues,
opportunities, and challenges facing the Company and its principal
industries.
Richard M. Horowitz
Mr. Horowitz has served as a director of Trio-Tech
since 1990. He has been President of Management Brokers
Insurance, Inc. since 1974.
Mr. Horowitz holds a
Master’s
Degree in Business
Administration from Pepperdine University
.
Mr. Horowitz was the subject of an SEC
administrative proceeding arising out of the sale of certain
annuity products in 2007 by Management Brokers Insurance,
Inc. The proceeding was wholly unrelated to the
Company’s business and was settled in March 2014 without
requiring Mr. Horowitz to admit to any of the allegations.
The Board believes that the proceeding and the actions alleged
thereunder do not impair upon Mr. Horowitz’s ability or
integrity as a director of the Company.
In
determining that Mr. Horowitz should serve on the Company’s
Board of Directors, the Board has considered, among other
qualifications, his extensive experience and expertise in
administration and management based on his position as
President of Management Brokers Insurance, Inc.
for
more than 42 years and his broad range of knowledge of
the Company’s history and business through his 26 years of
service as a director of the Company.
Jason T. Adelman
Mr.
Adelman was elected to the Board of Trio-Tech in April 1997.
Mr. Adelman is the Founder and Chief Executive Officer of Burnham
Hill Capital Group, LLC, a privately held financial services
holding company headquartered in New York City. Mr. Adelman
serves as Managing Member of Cipher Capital Partners LLC, a private
investment fund. Prior to founding Burnham Hill Capital Group, LLC
in 2003, Mr. Adelman served as Managing Director of Investment
Banking at H.C. Wainwright and Co., Inc. Mr. Adelman graduated Cum
Laude with a B.A. in Economics from the University of Pennsylvania
and earned a JD from Cornell Law School where he served as Editor
of the Cornell International Law Journal.
In
determining that Mr. Adelman should serve on the Company’s
Board of Directors, the Board has considered, among other
qualifications, his experience and expertise in finance,
accounting, banking and management based on his positions as
Managing Member of Cipher Capital
Partners LLC
for 11 years and Chief Executive Officer of
Burnham Hill Capital Group LLC
for 12 years, as well as his position as
Managing Director of Investment Banking in the New
York offices of H. C. Wainwright & Co.
Victor H.M. Ting
Mr.
Ting was appointed as a director of Trio-Tech on September 16,
2010. Mr. Ting is the Vice-President and Chief Financial Officer of
the Company. Mr. Ting joined Trio-Tech as the Financial Controller
for the Company’s Singapore subsidiary in 1980. He was
promoted to the level of Business Manager during 1985 and in
December 1989 he was promoted to the level of Director of Finance
and Sales & Marketing, and later he was promoted to the level
of General Manager of the Singapore subsidiary. Mr. Ting was
elected Vice-President and Chief Financial Officer of Trio-Tech
International in November 1992. Mr. Ting holds a Bachelor of
Accountancy Degree and Master’s Degree in Business
Administration.
-3-
In
determining that Mr. Ting should serve on the Company’s Board
of Directors, the Board has considered, among other qualifications,
his expertise in finance, accounting and management based on his 24
year history as
Vice-President and
Chief Financial Officer
of the Company and his intimate
knowledge of the Company’s operations.
Vote Required for Election
The
five persons receiving the highest number of affirmative votes will
be elected as directors of the Company. Votes against a nominee or
withheld from voting (whether by abstention, broker non-votes or
otherwise) will have no legal effect on the vote.
P
ROPOSAL 2
ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION
Pursuant
to Section 14A of the Exchange Act, we are required to provide
shareholders with the opportunity to vote to approve, on a
non-binding, advisory basis, the compensation which we paid to our
Named Executive Officers for the fiscal year ended June 30, 2016.
This advisory vote, commonly known as a “Say-on-Pay”
vote, gives our shareholders the opportunity to express their views
on the Company’s executive compensation policies and programs
and the compensation paid to our Named Executive Officers for the
fiscal year ended June 30, 2016.
We
are asking our shareholders to indicate their support for the
fiscal 2016 compensation of our Named Executive Officers as
described in this Proxy Statement by approving the following
resolution at the Annual Meeting:
“RESOLVED,
that the compensation paid to the Company’s named executive
officers, as disclosed in the Company’s Proxy Statement for
the 2016 Annual Meeting of Shareholders pursuant to the
compensation disclosure rules of the Securities and Exchange
Commission, including the compensation tables and accompanying
narrative disclosure, is hereby APPROVED.”
The
Board of Directors believes that the Company’s executive
compensation program effectively reflects the goals and objectives
described in the Compensation Discussion and Analysis and the
Executive Compensation sections of this Proxy Statement and the
overall compensation philosophy of the Company.
The
vote on this Proposal 2 is advisory only and therefore is not
binding on the Company, the Board of Directors or the Compensation
Committee. However, the Board of Directors and the Compensation
Committee will review and consider the voting results in crafting
their approach to future executive compensation
matters.
The Board of Directors recommends a
vote
FOR
approval of the above non-binding advisory
resolution.
-4-
C
ORPORATE
GOVERNANCE
Corporate Governance Program
Our
Board of Directors has established a written Corporate Governance
Program to address significant corporate governance issues that may
arise. It sets forth the responsibilities and qualification
standards of the members of the Board of Directors and is intended
as a governance framework within which the Board of Directors,
assisted by its committees, directs our affairs.
Code of Ethics
The
Company has adopted a written code of business conduct and ethics
applicable to all directors, officers, management and employees and
a separate code of ethics applicable to its principal executive
officer, principal financial officer and principal accounting
officer or controller or persons performing similar
functions. A copy of the Company's code of business conduct
and ethics and code of ethics may be obtained, without charge, upon
written request to the Secretary of the Company at 16139 Wyandotte
Street, Van Nuys, California 91406.
Board Leadership Structure
The
Board of Directors believes it is important to select its Chairman
and the Company’s Chief Executive Officer in the manner it
considers in the best interests of the Company at any given point
in time. The Chairman of the Board and CEO of the Company are held
by separate persons as an aid in the Board's oversight of
management. The duties of the non-executive Chairman of the Board
include:
●
presiding
over all meetings of the Board;
●
preparing
the agenda for Board meetings in consultation with the CEO and
other members of the Board;
●
calling
and presiding over meetings of the independent
directors;
●
managing the
Board's process for annual director self-assessment and evaluation
of the Board and of the CEO
;
and
●
presiding
over all meetings of shareholders.
The
Board believes that there may be advantages to having an
independent chairman for matters such as communications and
relations between the Board, the CEO, and other senior management;
assisting the Board in reaching consensus on particular strategies
and policies; and facilitating robust director, Board, and CEO
evaluation processes.
Risk Management
The
Chief Executive Officer and senior management are primarily
responsible for identifying and managing the risks facing the
Company, and the Board of Directors oversees these efforts. The
Chief Executive Officer and senior management report to the Board
of Directors regarding any risks identified and steps it is taking
to manage those risks. In addition, the Audit Committee identifies,
monitors and analyzes the priority of financial risks, and reports
to the Board of Directors regarding its financial risk
assessments.
Certain Relationships and Related Transactions
The Board’s Audit Committee is responsible
for review, approval, or ratification of “related-person
transactions” between the Company or its subsidiaries and
related persons. Under SEC rules, a related person is a director,
officer, nominee for director, or 5% shareholder of the Company and
their immediate family members. The Company's code of business
conduct and ethics provides guidance to the Audit Committee for
addressing actual or potential conflicts of interests that may
arise from transactions and relationships between
the
Company
and
its
executive officers or directors. Potential
conflicts relating to other personnel must be addressed by the
Chief Executive Officer or the Chief Financial
Officer
.
There was no related
party transaction during the fiscal year ended June 30,
2016.
-5-
B
OARD MEETINGS AND
COMMITTEES
The
Board held three regularly scheduled and special meetings during
the fiscal year ended June 30, 2016. All of the directors attended
(in person or by telephone) at least 75% of the meetings of the
Board and any committees of the Board on which they served during
the last full fiscal year. Directors are expected to use their best
efforts to be present at the Annual Meeting of Shareholders. All of
our directors attended the Annual Meeting of Shareholders held on
December 7, 2015.
The
Company does not have a standing nominating committee. The Board
consists of five directors, three of whom are
“independent” (as defined under the rules of the NYSE
MKT upon which the Company’s securities are listed), namely
Jason T. Adelman, Richard M. Horowitz and A. Charles Wilson.
Pursuant to a resolution adopted by the Board, a majority of the
independent directors, following a discussion with the entire
Board, has the sole and ultimate responsibility to determine and
nominate Board candidates for election at the Annual Meeting.
Although nominations are made by a majority of the independent
directors, the three current independent directors value the input
of the entire Board and thus discuss proposed nominees at the Board
level before the ultimate nomination determinations are made by the
independent directors. The Board does not believe that it is
necessary, at this time, given the Board composition and such Board
resolution, to have a separately constituted nominating committee.
At such time as the Board composition changes, the Board may elect
to establish a separate nominating committee.
The Board has also adopted a resolution addressing
the nomination process and related matters and it states, among
other things, that the Board believes that the continuing service
of qualified incumbents promotes stability and continuity in the
boardroom, contributing to the Board's ability to work as a
collective body, while giving the Company the benefit of the
familiarity and insight into the Company's affairs that its
directors have accumulated during their tenure. The resolution
further states that the Board will evaluate the performance of its
Board members on an annual basis in connection with the nomination
process. The Board may solicit recommendations for nominees from
persons that the Board believes are likely to be familiar with
qualified candidates, including without limitation members of the
Board and management of the Company. The Board may also determine
to engage a professional search firm to assist in identifying
qualified candidates if the need arises. In addition, the
Board
has the authority to retain third-party consultants to
provide advice regarding compensation issues.
The Board has not adopted specific minimum
qualifications for a position on the Company’s Board or any
specific skills or qualities that the Board believes are necessary
for one or more of its members to possess. However, the Board will
consider various factors including without limitation the
candidate’s qualifications, the extent to which the
membership of the candidate on the Board will promote diversity
among the directors, and such other factors as the Board may deem
to be relevant at the time and under the then existing facts and
circumstances.
The Company does not have a formal policy
with regard to the consideration of diversity in identifying
nominees for director. The Board of Directors seeks to nominate
directors with a variety of skills and experience so that the Board
will have the necessary expertise to oversee the Company’s
business.
The Company did not receive
any recommendations as to nominees for election of directors for
the Annual Meeting of Shareholders to be held on November 28,
2016.
The
Board will consider candidates proposed by shareholders of the
Company and will evaluate all such candidates upon criteria similar
to the criteria used by the Board to evaluate other candidates.
Shareholders desiring to propose a nominee for election to the
Board must do so in writing sufficiently in advance of an annual
meeting so that the Board has the opportunity to make an
appropriate evaluation of such candidate and his or her
qualifications and skills and to obtain information necessary for
preparing all of the disclosures required to be included in the
Company’s proxy statement for the related meeting should such
proposed candidate be nominated for election by shareholders.
Shareholder candidate proposals should be sent to the attention of
the Secretary of the Company at 16139 Wyandotte Street, Van Nuys,
California 91406.
The Board has a standing Compensation Committee,
which currently consists of the three independent directors, namely
Jason T. Adelman, Richard M. Horowitz and A. Charles Wilson,
Chairman. The Compensation Committee determines salary and bonus
arrangements. The Compensation Committee met three times during the
fiscal year ended June 30, 2016. The Compensation Committee has a
written charter. T
he current Compensation
Committee Charter is included as Appendix A to this Proxy
Statement.
For
the
fiscal year ended June 30, 2016, the Compensation Committee did not
retain a third-party consultant to review the Company’s
current policies and procedures with respect to executive
compensation.
-6-
The
Board has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended. The members thereof
consist of Jason T. Adelman, Richard M. Horowitz and A. Charles
Wilson, Chairman. The Board of Directors has determined that the
Audit Committee has at least one financial expert, namely A.
Charles Wilson. The Board of Directors has affirmatively determined
that Mr. Wilson does not have a material relationship with the
Company that would interfere with the exercise of independent
judgment and is “independent” as independence is
defined in Section 803 of the rules of the NYSE MKT. Pursuant to
its written charter, which charter was adopted by the Board of
Directors, the Audit Committee is charged with, among other
responsibilities, selecting our independent public accountants,
reviewing our annual audit and meeting with our independent public
accountants to review planned audit procedures. The Audit Committee
also reviews with the independent public accountants and management
the results of the audit, including any recommendations of the
independent public accountants for improvements in accounting
procedures and internal controls. The Audit Committee held five
meetings during the fiscal year ended June 30, 2016. Each of the
members of the Audit Committee satisfies the independence standards
specified in Section 803 of the rules of the NYSE MKT and Rule
10A-3 under the Securities Exchange Act of 1934, as amended. The
current Audit Committee Charter was included as Appendix A to the
Proxy Statement relating to the Annual Meeting held in December
2014.
D
IRECTORS’
COMPENSATION
Our
directors play a critical role in guiding our strategic direction
and overseeing our management. In order to compensate them for
their substantial time commitment, we provide a mix of cash and
equity-based compensation. We do not provide pension or retirement
plans for non-employee directors. Our employee directors, S.W. Yong
and Victor Ting, do not receive separate compensation for Board
service.
During the fiscal year ended June 30, 2016,
Richard M. Horowitz and Jason T. Adelman, as non-employee
directors, received quarterly fees in an amount equal to $7,500 for
each quarter and for service on the various committees of which
they are a member. A. Charles Wilson, as a non-employee director,
Chairman of the Board,
Chairman of the Audit Committee and
Chairman of the Compensation Committee, received $16,000 in
quarterly fees for each quarter and for service on the various
committees of which he is a member. The directors were also
reimbursed for out-of-pocket expenses incurred in attending
meetings.
Each of our directors is entitled to participate
in our 2007 Directors Equity Incentive Plan (“2007 Directors
Plan”). Messrs. Yong and Ting, as employees of the Company,
are also entitled to participate in our 2007
Employee Stock
Option Plan (“2007 Employee Plan”).
On October 5, 2015, pursuant to the 2007 Directors
Plan, Mr. Wilson was granted an option to purchase 25,000 shares,
and Messrs. Horowitz and Adelman each were granted an option to
purchase 12,500 shares of Common Stock at an exercise price of
$2.69 per share. On March 21, 2016, pursuant to the 2007 Directors
Plan, Mr. Wilson was granted an option to purchase 50,000 shares,
and Messrs. Horowitz and Adelman each were granted an option to
purchase 25,000 shares of Common Stock at an exercise price of
$3.26 per share. Each such option vested immediately upon grant and
will terminate five years from the date of grant unless terminated
sooner upon termination of the optionee’s status as a
director or otherwise pursuant to the 2007 Directors
Plan.
The exercise price under the options was
set at 100% of fair market value (as defined in the 2007 Directors
Plan) of the Company’s Common Stock on the date of grant of
each such option.
As
of June 30, 2016, there were only 80,000 shares available for grant
under the 2007 Directors Plan.
The
Compensation Committee reviewed the average directors’ fees
for comparable public companies. The Compensation Committee
believes that the director fees paid to its directors were and are
substantially less than the fees paid to directors of comparable
public companies. Directors’ compensation may be increased
based on the profitability of the Company.
-7-
The following table contains information on
compensation for our non-employee members of our Board of Directors
for the
fiscal year ended June 30, 2016.
|
D
IRECTOR COMPENSATION
|
|
|
|
|
Option Awards
($)(
1
)
|
|
|
|
A. Charles Wilson
(2)
|
64,000
|
|
86,500
|
|
150,500
|
|
Richard M. Horowitz
(3)
|
30,000
|
|
43,250
|
|
73,250
|
|
Jason T. Adelman
(4)
|
30,000
|
|
43,250
|
|
73,250
|
(1)
The option awards
are based on the fair value of stock options on the grant date
computed in accordance with FASB ASC Topic 718.
(2)
The
total shares of option awards outstanding as of June 30, 2016 were
170,000.
(3)
The
total shares of option awards outstanding as of June 30, 2016 were
87,500.
(4)
The
total shares of option awards outstanding as of June 30, 2016 were
87,500.
S
ECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGE
MENT
The
following table sets forth, as of September 30, 2016, certain
information regarding the beneficial ownership of the Common Stock
by (i) all persons known by the Company to be the beneficial owners
of more than 5% of its Common Stock, (ii) each of the directors of
the Company, (iii) each of the Named Executive Officers, and (iv)
all executive officers and directors of the Company as a group. To
the knowledge of the Company, unless otherwise indicated, each of
the shareholders has sole voting and investment power with respect
to shares beneficially owned, subject to applicable community
property and similar statutes.
|
Name
|
Amount of Shares Owned Beneficially (1)
|
|
Percent of Class (1)
|
|
|
|
|
|
|
S. W. Yong
(2)
|
510,318
|
|
12.8
%
|
|
A. Charles Wilson
(3)
|
430,500
|
(4)
|
10.8
%
|
|
Richard M. Horowitz
(5)
|
421,864
|
|
10.6
%
|
|
Jason T. Adelman
(6)
|
94,900
|
|
2.4
%
|
|
Victor H. M. Ting
(7)
|
159,552
|
|
4.0
%
|
|
Hwee Poh
Lim
|
80,733
|
|
2.0
%
|
|
All Directors and
Executive
|
|
|
|
|
Officers
as a group (7 persons)
|
1,713,217
|
(8)
|
43.0
%
|
|
FMR
LLC
|
287,500
|
(9)
|
6.7
%
|
|
|
|
|
|
(1)
The
percent of class is based upon 3,513,055 shares outstanding. The
number of shares indicated and the percentage shown for each
individual assumes the exercise of options that are presently
exercisable or may become exercisable within 60 days from September
30, 2016 which are held by that individual or by all executive
officers and directors as a group, as the case may be. The address
for each of the directors and executive officers above is in care
of the Company at 16139 Wyandotte Street, Van Nuys, California
91406.
(2)
Includes
vested options to purchase an aggregate of 66,250 shares from the
Company at exercise prices from $3.10 to $3.62 per
share.
(3)
Includes
vested options to purchase an aggregate of 170,000 shares from the
Company at exercise prices from $2.07 to $3.81 per
share.
-8-
(4)
The
shares are held in a revocable family trust.
(5)
Includes
vested options to purchase an aggregate of 87,500 shares from the
Company at exercise prices from $2.07 to $3.81 per
share.
(6)
Includes
vested options to purchase an aggregate of 87,500 shares from the
Company at exercise prices from $2.07 to $3.81 per
share.
(7)
Includes
vested options to purchase an aggregate of 55,000 shares from the
Company at exercise prices from $3.10 to $3.62.
(8)
Includes
vested options to purchase an aggregate of 466,250 shares from the
Company at exercise prices from $2.07 to $3.81 per
share.
(9)
Based
on Form 13G filed by FMR LLC on February 13, 2015. The address of
FMR LLC is 245 Summer Street, Boston, MA 02210.
The
Company does not know of any arrangements that may at a subsequent
date result in a change of control of the Company.
E
XECUTIVE
OFFICERS
The
following persons were our only executive officers, as of October
3, 2016:
S.W. Yong
- Mr. Yong, age 63, is our President and Chief
Executive Officer.
He is also a member of our Board of
Directors
. Biographical information
regarding Mr. Yong is set forth under the section entitled
“Election of Directors.”
Victor H.M. Ting
- Mr. Ting, age 62, is our
Vice-President and Chief Financial Officer.
He is also a
member of our Board of Directors
.
Biographical information regarding Mr. Ting is set forth under the
section entitled “Election of
Directors.”
Hwee Poh Lim
- Mr. Lim, age 57, is our Corporate
Vice-President-Testing. Mr. Lim joined Trio-Tech in 1982 and became
the Quality Assurance Manager in 1985. He was promoted to the
position of Operations Manager in 1988. In 1990 he was promoted to
Business Manager and was responsible for the Malaysian operations
in Penang and Kuala Lumpur. Mr. Lim became the General Manager of
the Company’s Malaysia subsidiary in 1991. In February 1993,
all test facilities in Southeast Asia came under Mr. Lim’s
responsibility. He holds diplomas in Electronics &
Communications and Industrial Management and a Master’s
Degree in Business Administration. He was elected Corporate
Vice-President-Testing in July 1998.
S. K. Soon –
Ms.
Soon, age 58, joined Trio-Tech Singapore in 1981 and became the
Personnel and Administration Manager in 1985. In 1991, she was
promoted to Group Logistics Manager and was responsible for the
overall logistics and human resources functions for our operations
in Asia. In 1994, Ms. Soon was promoted to Vice-President in 2005.
Effective July 1, 2015, she was appointed as Corporate
Vice-President and currently oversees the Company's Logistics and
Human Resources functions
in Asia
.
S
ECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires that
directors, certain officers of the Company and beneficial owners of
more than 10% of our Common Stock file reports of ownership and
changes in ownership with the SEC as to the Company’s
securities beneficially owned by them. Such persons are also
required by SEC rules to furnish the Company with copies of all
Section 16(a) forms they file.
Based
solely on its review of copies of such forms received by the
Company, or on written representations from certain reporting
persons, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with during the fiscal
year ended June 30, 2016.
-9-
EQUITY COMPENSATION PLAN INFORMATION
The
Company’s 2007 Employee Plan and 2007 Directors Plan were
approved by the Board on September 24, 2007 and by the shareholders
on December 3, 2007 and were subsequently amended, which
amendments were approved by the Company’s shareholders, on
December 14, 2010. The 2007 Directors Plan was further amended to
increase the number of shares of Common Stock, which amendments
were approved by the Company’s shareholders, on December 9,
2013. The purpose of these two plans is to enable the Company to
attract and retain top-quality employees, officers, directors and
consultants and to provide them with an incentive to enhance
shareholder return.
The
following table provides information as of June 30, 2016 with
respect to shares of our Common Stock that may be issued pursuant
to our existing equity compensation plans.
|
E
QUITY COMPENSATION PLAN INFORMATION
|
|||
|
Plan
Category
|
Number of securities
to be issued upon exercise of outstanding options
|
Weighted average
exercise price of outstanding options
|
Number of securities
remaining available for future issuance under equity compensation
plans (excluding securities reflected in
|
|
|
(a)
|
(b)
|
column
(a)
|
|
Equity compensation
plans approved by shareholders:
|
|
|
|
|
2007 Employee
Plan
|
90,000
|
$
3.26
|
313,875
|
|
2007 Directors
Plan
|
415,000
|
$
3.14
|
80,000
|
|
Equity compensation
plans not approved by shareholders
|
-
|
-
|
-
|
|
Total
|
505,000
|
$
3.16
|
393,875
|
C
OMPENSATION
DISCUSSION AND ANALYSIS
The Compensation Committee
The
Compensation Committee reviews and approves corporate goals and
objectives relating to the compensation of the Chief Executive
Officer; reviews goals and objectives of other executive officers;
establishes the performance criteria (including both long-term and
short-term goals) to be considered in light of those goals and
objectives; evaluates the performance of the executives; determines
and approves the compensation level for the Chief Executive
Officer; and reviews and approves compensation levels of other key
executive officers.
Compensation Objectives
The
Company operates in a highly competitive and rapidly changing
industry. The key objectives of the Company’s executive
compensation programs are to:
●
attract, motivate
and retain executives who drive Trio-Tech’s success and
industry leadership;
●
provide each
executive, from Vice-President to Chief Executive Officer, with a
base salary based on the market value of that role, and the
individual’s demonstrated ability to perform that
role;
●
motivate executives
to create sustained shareholder value by ensuring all executives
have an “at risk” component of total compensation that
reflects their ability to influence business outcomes and financial
performance.
-10-
What Our Compensation Program is Designed to Reward
Our compensation program is designed to reward
each individual executive officer’s contribution to
the advancement of the Company’s overall performance and
execution of our goals, ideas and objectives. It is designed to
reward and encourage exceptional performance at the individual
level in the areas of organization, creativity and responsibility
while supporting the Company’s core values and ambitions.
This in turn aligns the interest of our executive officers with the
interests of our shareholders, and thus with the interests of the
Company.
Determining Executive Compensation
The
Compensation Committee reviews and approves the compensation
program for executive officers annually after the closing of each
fiscal year. Reviewing the compensation program at such time allows
the Compensation Committee to consider the overall performance of
the past fiscal year and the financial and operating plans for the
upcoming fiscal year in determining the compensation program for
the upcoming fiscal year.
The
Compensation Committee also annually reviews market compensation
levels with comparable jobs in the industry to determine whether
the total compensation for our officers remains in the targeted
median pay range. This assessment includes evaluation of base
salary, annual incentive opportunities, and long-term incentives
for the key executive officers of the Company. The Company did not
hire any compensation consultants in connection with setting
executive compensation for the fiscal year ended June 30,
2016.
The
Compensation Committee’s compensation decisions are based on
the Company’s operation performance, the performance and
contribution of each individual officer, and the compensation
budget and objectives of the Company. The Compensation Committee
also considers other factors, such as the experience and potential
of the officer and the market compensation level for a similar
position.
Role of Executive Officers in Determining Executive
Compensation
The
Compensation Committee determines compensation for the Chief
Executive Officer, which is based on different factors, such as
level of responsibility and contributions to the performance of the
Company. The Chief Executive Officer recommends the compensation
for the Company's executive officers (other than the compensation
of the Chief Executive Officer) to the Compensation Committee. The
Compensation Committee reviews the recommendations made by the
Chief Executive Officer and determines the compensation of the
Chief Executive Officer and the other executive officers. The Chief
Executive Officer is not present during voting on, or deliberations
concerning, his compensation.
Components of Executive Compensation
The
Company’s compensation program has two major components:
(1) base annual salary, and (2) long-term incentive
compensation in the form of stock options.
Base Salary
Base
salaries are provided as compensation for day-to-day
responsibilities and services to the Company and to meet the
objective of attracting and retaining the talent needed to run the
business.
Base
salary for our executive officers was determined utilizing various
factors.
One
factor that was taken into account in determining base salary for
our executive officers was the compensation policies of other
companies comparable in size to and within substantially the same
industry as Trio-Tech. Keeping our executive officers’
salaries in line with the market ensures the Company’s
competitiveness in the marketplace in which the Company competes
for talent.
-11-
Another
factor taken into account in determining base salary for our
executive officers was salaries paid by us to our executive
officers during the immediately preceding year and increases in the
cost of living.
The
Compensation Committee will review the Company’s financial
condition, macroeconomic conditions and adjust base salaries at
least quarterly in order to ascertain the appropriate time to
restore base salaries to pre-reduction levels.
The
salary for each of our Named Executive Officers for the fiscal year
ended June 30, 2016 and the percentage increase in their salary
from the prior fiscal year’s salary were as
follows:
|
Executives
|
Base
Salary
|
Percent
Decreased (1)
|
|
S.
W. Yong, Chief Executive Officer
|
$
230,859
|
--
|
|
Victor Ting,
Vice President and Chief
Financial Officer
|
$
136,763
|
4.0
%
|
|
Hwee Poh Lim, Vice
President-Testing
|
$
88,784
|
4.0
%
|
(1)
Percent
decrease is based on the decrease in base salary in the currency of
Singapore. The depreciation of Singapore dollars against U.S.
dollars is excluded in the calculation. The base cash compensation
for the above named officers of the Company, each of whom resides
in Singapore, in fiscal year ended June 30, 2016, was denominated
in the currency of Singapore. The exchange rate therefore was
established as of June 30, 2016 and was computed to be 1.3916
Singapore dollars to each U.S. dollar.
Singapore executive
officers’ base salaries are credited with a compulsory
contribution ranging from 2.5% to 8.6% of base salary as required
under Singapore’s provident pension fund.
Option Grants
Stock
options are intended to align the interests of key executives and
shareholders by placing a portion of the key executives’
compensation at risk, tied to long-term shareholder value creation.
Stock options are granted at 100% of the “fair market
value” (as defined under the applicable plan) of the
Company’s Common Stock on the date of grant.
The Compensation Committee believes that stock
options are flexible and relatively inexpensive to implement when
compared with cash bonuses. It also has no negative impact on the
Company’s cash flow. The Compensation Committee believes that
long-term incentives in the form of stock options can better
encourage the executive officers to improve operations and increase
profits for the Company through participation in the growth in
value of the Company’s Common Stock.
The
Compensation Committee views any option grant portion of our
executive officer compensation packages as a special form of
long-term incentive compensation to be awarded on a limited and
non-regular basis. The objective of these awards is to ensure that
the interests of our executives are closely aligned with those of
our shareholders. These awards provide rewards to our executive
officers based upon the creation of incremental shareholder value
and the attainment of long-term financial goals. Stock options
produce value to our executive officers only if the price of our
stock appreciates, thereby directly linking the interests of our
executive officers with those of our shareholders.
Awards
of stock options are determined based on the Compensation
Committee’s subjective determination of the amount of awards
necessary, as a supplement to an executive officer’s base
salary, to retain and motivate the executive officer.
In fiscal year 2016, we granted the following
stock options covering the following officers pursuant to
the
2007 Directors Plan
and
2007 Employee Plan as
indicated below.
|
Executives
|
2007 Directors Plan
|
2007 Employee Plan
|
Total
|
|
S. W. Yong, Chief
Executive Officer
|
25,000
|
25,000
|
50,000
|
|
Victor Ting, Vice
President and Chief Financial Officer
|
25,000
|
15,000
|
40,000
|
At the 2013 Annual
Meeting of Shareholders, the Company’s shareholders voted to
conduct future advisory votes on executive compensation on an
“every one year” basis. The Board of Directors had
recommended in the proxy statement for the 2013 Annual Meeting a
vote for the “every three years” option. The Board of
Directors had made such recommendation based on its conclusion that
an advisory vote at such frequency would provide the
Company’s shareholders with sufficient time to evaluate the
effectiveness of its overall compensation philosophy, policies and
practices in the context of the Company’s long-term business
results, while avoiding more emphasis on short term variations in
compensation and business results. Therefore, the Board
decided to conduct future advisory votes on executive compensation
on an “every three years” basis until at least the next
vote by the Company’s shareholders on the frequency of such
votes, which will be no later than the Annual Meeting to be held in
2019.
-12-
R
EPORT OF THE AUDIT COMMITTEE
During
the fiscal year ended June 30, 2016, the Audit Committee
fulfilled its duties and responsibilities as outlined in its
charter. The Audit Committee reviewed and discussed the
Company’s audited consolidated financial statements and
related footnotes for the fiscal year ended June 30, 2016, and
the independent auditor’s report on those financial
statements, with the Company’s management and Mazars LLP
(“Mazars”), the Company’s independent auditor.
Management presented to the Audit Committee that the
Company’s financial statements were prepared in accordance
with accounting principles generally accepted in the United States
of America. The Audit Committee has discussed with Mazars the
matters required to be discussed with the Audit Committee by the
statement on Auditing Standards No. 61, as amended (AICPA,
Professional Standards
,
Vol. 1 AU Section 380) as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. The Audit Committee’s review
included a discussion with management and the independent auditor
of the quality (not merely the acceptability) of the
Company’s accounting principles, the reasonableness of
significant estimates and judgments, and the disclosures in the
Company’s financial statements, including the disclosures
relating to critical accounting policies.
The
Audit Committee recognizes the importance of maintaining the
independence of the Company’s independent auditor, both in
fact and appearance. The Audit Committee has evaluated
Mazars’s qualifications, performance, and independence,
including that of the lead audit partner. As part of its auditor
engagement process, the Audit Committee considers whether to rotate
the independent audit firm. The Audit Committee has established a
policy pursuant to which all services, audit and non-audit,
provided by the independent auditor must be pre-approved by the
Audit Committee or its delegate. The Company’s pre-approval
policy is more fully described in this Proxy Statement under the
caption “Policy for pre-approval of audit and non-audit
services.” The Audit Committee has concluded that provision
of the non-audit services described in that section is compatible
with maintaining the independence of Mazars. In addition, the Audit
Committee has received the written disclosure and the letter from
Mazars required by the applicable requirements of the Public
Company Accounting Oversight Board regarding Mazars’
communications with the Audit Committee concerning independence and
has discussed with Mazars its independence.
Based
on the above-described review, written disclosures, letter and
discussions, the Audit Committee recommended to the Board of
Directors of the Company that the audited financial statements for
the fiscal year ended June 30, 2016 be included in the
Company’s Annual Report on Form 10-K.
Dated
October 11, 2016
THE
AUDIT COMMITTEE
A.
Charles Wilson, Chairman
Jason
T. Adelman
Richard
M. Horowitz
-13-
E
XECUTIVE
COMPENSATION
The
following table shows compensation information concerning
compensation awarded to, earned by or paid for services rendered to
the Company in all capacities during the fiscal years ended June
30, 2016 and 2015 by our Chief Executive Officer and our two most
highly compensated executive officers (other than our Chief
Executive Officer) who were serving as executive officers at the
end of the fiscal year ended June 30, 2016 (the “Named
Executive Officers”).
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)
|
Option
Awards
($)
(1)
|
All
Other Compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
S. W. Yong
(2)
|
2016
|
230,859
|
71,750
(4)
|
85,735
(3)
|
388,344
|
|
President and Chief
Executive Officer
|
2015
|
245,972
|
--
|
28,860
(5)
|
274,832
|
|
|
|
|
|
|
|
|
Victor H. M. Ting
(2)
|
2016
|
136,763
|
55,250
(7)
|
44,121
(6)
|
236,134
|
|
Vice President and
Chief Financial Officer
|
2015
|
151,788
|
--
|
23,163
(8)
|
174,951
|
|
|
|
|
|
|
|
|
Hwee Poh
Lim
|
2016
|
88,784
|
--
|
38,889
(9)
|
127,673
|
|
Vice President -
Testing
|
2015
|
98,538
|
--
|
20,281
(10)
|
118,819
|
(1)
The
option awards are based on the fair value of stock options on the
grant date computed in accordance with ASC Topic 718.
(2)
Neither
Mr. Yong nor Mr. Ting received any fees for services rendered as a
director of Trio-Tech International.
(3)
The
amount shown in the other compensation column includes total bonus
payment of $62,180, central provident fund contributions of $5,687,
car benefits of $13,131, and director fees of $4,737 for service as
a director for Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which
are 55% owned by the Company. Singapore officers are credited with
a compulsory contribution to their central provident fund at a
certain percentage of their base salaries in accordance with
Singapore law, except for bonuses in this context. The compulsory
contribution with respect to Mr. Yong was 2.5% for fiscal
2016.
(4)
A
stock option covering 25,000 shares of Common Stock was granted to
Mr. Yong pursuant to the 2007 Director Plan on March 21, 2016. The
option has a five-year term and was immediately exercisable in full
as of the grant date. On March 21, 2016, a stock option covering
25,000 shares of Common Stock was granted to Mr. Yong pursuant to
the 2007 Employee Plan. The option has a five-year term and vests
over the period as follows: 25% vesting on the grant date and the
remaining balance vesting in equal installments on the next three
succeeding anniversaries of the grant date.
(5)
The
amount shown in the other compensation column includes total
central provident fund contributions of $3,560, car benefits of
$19,610, and director fees of $5,690 for service as a director for
Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which are 55% owned
by the Company. Singapore officers are credited with a compulsory
contribution to their central provident fund at a certain
percentage of their base salaries in accordance with Singapore law,
except for bonuses in this context. The compulsory contribution
with respect to Mr. Yong was 1.4% for fiscal 2015.
(6)
The
amount shown in the other compensation column includes total bonus
payment of $24,872, central provident fund contributions of $5,203,
car benefits of $10,645, and director fees of $3,401 for the
service as a director for Trio-Tech Malaysia and Trio-Tech Kuala
Lumpur, which are 55% owned by the Company. Singapore officers are
credited with a compulsory contribution to their central provident
fund at a certain percentage of their base salaries in accordance
with Singapore law, except for bonuses in this context. The
compulsory contribution with respect to Mr. Ting was 3.8% for
fiscal 2016.
(7)
A stock option covering 25,000 shares of Common
Stock was granted to Mr. Ting pursuant to the 2007 Directors Plan
on March 21, 2016. The option has a five-year term and was
immediately exercisable in full as of the grant date. On March 21,
2016, a stock option covering 15,000 shares of Common Stock was
granted to Mr. Ting pursuant to the 2007 Employee Plan. The option
has a five-year term and
vests over the period as follows:
25% vesting on the grant date and the remaining balance vesting in
equal installments on the next three succeeding anniversaries of
the grant date.
-14-
(8)
The amount shown in the other compensation column
includes total central provident fund contributions of
$4,077,
car benefits
of
$15,001, and director fees of $4,085 for the service as a director
for Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which are 55%
owned by the Company. Singapore officers are credited with a
compulsory contribution to their central provident fund at a
certain percentage of their base salaries in accordance with
Singapore law, except for bonuses in this context. The compulsory
contribution with respect to Mr. Ting was 2.7% for fiscal
2015.
(9)
The
amount shown in the other compensation column includes total bonus
payment of $19,548, central provident fund contributions of $7,662,
car benefits of $10,100, and director fees of $1,579 for service as
a director for Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which
are 55% owned by the Company. Singapore officers are credited with
a compulsory contribution to their central provident fund at a
certain percentage of their base salaries in accordance with
Singapore law, except for bonuses in this context. The compulsory
contribution with respect to Mr. Lim was 8.6% for fiscal
2016.
(10)
The
amount shown in the other compensation column includes total
central provident fund contributions of $5,641, car benefits of
$12,743, and director fees of $1,897 for service as a director for
Trio-Tech Malaysia and Trio-Tech Kuala Lumpur, which are 55% owned
by the Company. Singapore officers are credited with a compulsory
contribution to their central provident fund at a certain
percentage of their base salaries in accordance with Singapore law,
except for bonuses in this context. The compulsory contribution
with respect to Mr. Lim was 5.7% for fiscal 2015
Narrative
Disclosure to Summary Compensation Table
Base Salary
.
Base salaries for
the fiscal year ended June 30, 2016 for Messrs. Yong, Ting and Lim
were $230,859, $136,763 and $88,784,
respectively.
Option Awards.
Stock options are
granted at 100% of the fair market value of the Company’s
Common Stock on the date of grant. Awards of stock options are
determined based on the Compensation Committee’s subjective
determination of amount of awards necessary, as a supplement to an
executive officer’s base salary, to retain and motivate the
executive officer. 50,000 options granted on March 21, 2016
according to 2007 Directors Plan in the Summary Compensation Table
above were immediately exercisable in full, 40,000 options granted
on March 21, 2016 according to 2007 Employee Plan in the Summary
Compensation Table above vest over the period as followings:
25% vesting on the grant date and the
remaining balance vesting in equal installments on the next three
succeeding anniversaries of the grant date
in.
All Other Compensation
. All other
compensation includes central provident fund contributions at a
certain percentage of the base salaries in accordance with
Singapore law, car benefits and director fees for service as a
director for certain subsidiaries of the Company.
The
Company does not generally provide its executive officers with
payments or other benefits at, following, or in connection with
retirement. The Company does not have a nonqualified deferred
compensation plan that provides for deferral of compensation on a
basis that is not tax-qualified for its executive
officers.
-15-
Outstanding Equity Awards at Fiscal Year-End
The
following table provides information concerning shares of our
Common Stock covered by exercisable and un-exercisable options held
by the Named Executive Officers as of June 30, 2016, our last
completed fiscal year end:
|
OUTSTANDING EQUITY AWARDS AT JUNE 30, 2016
|
||||
|
|
Option Awards
|
|||
|
|
Number of
|
Number of
|
|
|
|
|
Securities
|
Securities
|
|
|
|
|
Underlying
|
Underlying
|
|
|
|
|
Unexercised
|
Unexercised
|
Option
|
|
|
|
Options
(#)
|
Options
(#)
|
Exercise
Price
|
Option
|
|
Name
|
Exercisable
|
Un-exercisable
|
($)
|
Expiration Date
|
|
S. W. Yong
|
25,000
(1)
|
-
|
$
3.26
|
03/21/2021
|
|
|
6,250
(2)
|
18,750
|
$
3.26
|
03/21/2021
|
|
|
15,000
(3)
|
5,000
|
$
3.10
|
12/09/2018
|
|
|
20,000
(4)
|
-
|
$
3.62
|
09/17/2018
|
|
|
|
|
|
|
|
Victor H.M. Ting
|
25,000
(1)
|
-
|
$
3.26
|
03/21/2021
|
|
|
3,750
(2)
|
11,250
|
$
3.26
|
03/21/2021
|
|
|
11,250
(3)
|
3,750
|
$
3.10
|
12/09/2018
|
|
|
15,000
(5)
|
-
|
$
3.62
|
09/17/2018
|
(1)
Stock option
granted on March 21, 2016 pursuant to the 2007 Directors Plan,
which option was immediately exercisable in full.
(2)
Stock option
granted on March 21, 2016 pursuant to the 2007 Employee Plan, that
will fully vest on March 21, 2019 (one-fourth of the grant vested
or will vest every year beginning on March 21, 2016).
(3)
Stock option
granted on December 9, 2013 pursuant to the 2007 Employee Plan,
that will fully vest on December 9, 2016 (one-fourth of the grant
vested or will vest every year beginning on December 9,
2013).
(4)
Stock option
granted on September 17, 2013 pursuant to the 2007 Directors Plan,
which option was immediately exercisable in full.
(5)
Stock option
granted on September 17, 2013 pursuant to the 2007 Employee Plan,
which option was immediately exercisable in full.
Employment
Agreements
None of our
executive officers has employment agreements with the Company other
than standard offer letters signed by all employees upon
employment.
-16-
I
NDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The
Audit Committee has selected Mazars as the independent registered
public accounting firm for the fiscal year ended June 30, 2016. A
representative of Mazars is expected to be present at the Annual
Meeting and will have an opportunity to make statements and respond
to appropriate questions.
The following table shows the fees that we paid or
accrued for audit and other services provided by
Mazars in
2016 and in 2015. All of the services
described in the following fee table were approved in conformity
with the Audit Committee’s pre-approval
process.
|
|
2016
|
2015
|
|
Audit
Fees
|
$
214,590
|
$
223,470
|
|
Tax
Fees
|
6,470
|
6,740
|
|
Total:
|
$
221,060
|
$
230,210
|
Audit Fees
The
amounts set forth opposite “Audit Fees” above reflect
the aggregate fees billed by Mazars or to be billed for
professional services rendered for the audit of the Company’s
fiscal 2016 and fiscal 2015 annual financial statements and for the
review of the financial statements included in the Company’s
quarterly reports during such periods.
Tax
Fees
The
amounts set forth opposite “Tax Fees” above reflect the
aggregate fees billed for fiscal 2016 and 2015 for professional
services rendered for tax compliance and return preparation. The
compliance and return preparation services consisted of the
preparation of original and amended tax returns and support during
the income tax audit or inquiries.
The
Audit Committee’s policy is to pre-approve all audit services
and all non-audit services that our independent accountants are
permitted to perform for us under applicable federal securities
regulations. The Audit Committee’s policy utilizes an annual
review and general pre-approval of certain categories of specified
services that may be provided by the independent accountant, up to
pre-determined fee levels. Any proposed services not qualifying as
a pre-approved specified service, and pre-approved services
exceeding the pre-determined fee levels, require further specific
pre-approval by the Audit Committee. The Audit Committee has
delegated to the Chairman of the Audit Committee the authority to
pre-approve audit and non-audit services proposed to be performed
by the independent accountants. Since June 30, 2004, all services
provided by our auditors require pre-approval by the Audit
Committee. The policy has not been waived in any
instance.
-17-
Shareholder
Proposals
Shareholders who
wish to present proposals at the Annual Meeting to be held
following the end of the fiscal year ended June 30, 2017 should
submit their proposals in writing to the Secretary of the Company
at the address set forth on the first page of this Proxy Statement.
Proposals must be received no later than June 10, 2017 for
inclusion in next year’s Proxy Statement and Proxy Card. If a
shareholder intends to present a proposal at the next Annual
Meeting but does not seek inclusion of that proposal in the proxy
statement for that meeting, the holders of Proxies for that meeting
will be entitled to exercise their discretionary authority on that
proposal if the Company does not have notice of the proposal by
September 2, 2017.
Proxy
Solicitation
The
cost of soliciting the enclosed form of Proxy will be borne by the
Company. In addition, the Company will reimburse brokerage firms
and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation material to such
beneficial owners. Directors, officers and regular employees of the
Company may, for no additional compensation, also solicit proxies
personally or by telephone, electronic transmission, telegram or
special letter.
Annual
Report
The
Company’s Annual Report to Shareholders for the year ended
June 30, 2016 is being mailed with this Proxy Statement to
shareholders entitled to notice of the meeting. The Annual Report
includes the consolidated financial statements, unaudited selected
consolidated financial data and management’s discussion and
analysis of financial condition and results of
operations.
Upon
the written request of any shareholder, the Company will provide,
without charge, a copy of the Company’s Annual Report on Form
10-K filed with the Commission for the year ended June 30,
2016. This request should be directed to the Corporate Secretary,
Trio-Tech International, 16139 Wyandotte St., Van Nuys, CA
91406.
O
THER MATTERS
The
shareholders and any other persons who would like to communicate
with the Board can access the website www.triotech.com and fill in
the contact form for any enquiries or information. The form will be
sent directly to the Secretary and the communications for specified
individual directors of the Board will be given to them personally
by the Secretary. In addition, the contact number is listed on the
website and the messages will be passed to the Board
accordingly.
At this
time, the Board knows of no other business that will come before
the Annual Meeting. However, if any other matters properly come
before the Annual Meeting, the persons named as Proxy holders will
vote on them in accordance with their best judgment.
|
|
By
Order of the Board of Directors
A. CHARLES WILSON
Chairman
|
-18-
Appendix A
COMPENSATION COMMITTEE CHARTER
of the Compensation Committee
of TRIO-TECH INTERNATIONAL
This Compensation Committee Charter (the
“
Charter
”) was adopted by the Board of Directors
(the “
Board
”) of Trio-Tech International (the
“
Company
”) on June 29, 2004, and amended on March 5,
2007.
Section 1: Purpose
The purpose of the Compensation Committee (the
“
Committee
”) of the Board of the Company is (1) to
discharge the Board’s responsibilities relating to
compensation of the Company’s executives, including by
designing (in consultation with management and the Board, as
appropriate), and evaluating the compensation plans, policies and
programs of the Company as they relate to executives and (2) to
produce an annual report on executive compensation for inclusion in
the Company’s proxy materials in accordance with applicable
rules and regulations of the Securities and Exchange
Commission.
Section 2: Membership
The Committee shall be comprised of two or more
directors, as determined by the Board, each of whom (1) satisfies
the independence requirements of the American Stock Exchange, (2)
is a “non-employee director” within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the
“
1934
Act
”), and (3) is an
“outside director” under the regulations promulgated
under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “
Code
”).
The
members of the Committee, including the Chair of the Committee,
shall be appointed by the Board. Committee members may be removed
from the Committee, with or without cause, by the
Board.
Section 3: Meetings and Procedures
The
Chair (or in his or her absence, a member designated by the Chair)
shall preside at each meeting of the Committee and set the agendas
for Committee meetings. The Committee shall have the authority to
establish its own rules and procedures for notice and conduct of
its meetings so long as they are not inconsistent with any
provisions of the Company’s Articles of Incorporation or
bylaws that are applicable to the Committee.
The
Committee shall meet on a regularly scheduled basis at least two
times per year and more frequently as the Committee deems necessary
or desirable.
All
non-management directors that are not members of the Committee may
attend and observe meetings of the Committee, but shall not
participate in any discussion or deliberation unless invited to do
so by the Committee, and in any event shall not be entitled to
vote. The Committee may, at its discretion, include in its meetings
members of the Company’s management; representatives of the
independent auditor and any other financial personnel employed or
retained by the Company or any other persons whose presence the
Committee believes to be necessary or appropriate; provided,
however that the Chief Executive Officer may not be present during
voting or deliberation as and to the extent set forth in the rules
of the American Stock Exchange. The Committee may also exclude from
its meetings any persons it deems appropriate, including but not
limited to, any non-management director that is not a member of the
Committee.
The Committee shall have the sole authority, to
retain and/or replace, as it deems appropriate, any independent
counsel, compensation and benefits consultants and other outside
experts or advisors as the Committee believes to be necessary,
desirable or appropriate. The Committee may also utilize the
services of the Company’s regular legal counsel or other
advisors to the Company. The Company shall provide for appropriate
funding, as determined by the Committee, for payment of
compensation to any such persons retained by the Committee and for
ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its
duties.
The
Chair shall report to the Board following meetings of the Committee
and as otherwise requested by the Chairman of the
Board.
A-1
Section 4: Duties and Responsibilities
|
1.
|
The
Committee shall, at least once each calendar year, review the
compensation philosophy of the Company.
|
|
2.
|
The
Committee shall have sole authority to determine the Chief
Executive Officer’s compensation. The Committee shall, at
least once each calendar year, review and approve corporate goals
and objectives relating to the compensation of the Chief Executive
Officer and shall, with input from the Chief Executive Officer,
annually establish the performance criteria (including both
long-term and short-term goals) to be considered in light of those
goals and objectives in connection with the Chief Executive
Officer’s next annual performance evaluation. At the end of
each year, the Chief Executive Officer shall make a presentation or
furnish a written report to the Committee indicating his or her
progress against such established performance criteria. Thereafter,
with the Chief Executive Officer absent, the Committee shall meet
to review the Chief Executive Officer’s performance,
determine and approve the compensation of the Chief Executive
Officer based on such evaluation and report thereon to the Board.
The results of the review and evaluation shall be communicated to
the Chief Executive Officer by the Chairman of the Board of
Directors and the Chair of the Committee.
|
|
3.
|
The
Committee shall, at least once each calendar year, review and
approve all compensation for all officers (as such term is defined
in Rule 16a-1 promulgated under the 1934 Act), directors and other
employees of the Company or its subsidiaries with a base salary
greater than or equal to $250,000. In addition, the Committee shall
review and approve all officers’ employment agreements and
severance arrangements.
|
|
4.
|
With
the input of the Chief Executive Officer, the Committee shall, at
least once each calendar year, review the performance of principal
senior executives.
|
|
5.
|
The
Committee shall manage and periodically review, the Company’s
executive officers annual bonuses; long-term incentive
compensation, stock options, employee pension and welfare benefit
plans e.g., 401(k), employee stock purchase plan, etc.) and with
respect to each plan shall have responsibility for:
|
|
a.
|
general
administration as provided in each such plan;
|
|
b.
|
setting
performance targets under all annual bonus and long-term incentive
compensation plans as appropriate and committing to writing any and
all performance targets for all executive officers who may be
“covered employees” under Section 162(m) of the Code
within the first 90 days of the performance period to which such
target relates or, if shorter, within the period provided by
Section 162(m) of the Code in order for such target to be
“pre-established” within the meaning of Section
162(m);
|
|
c.
|
certifying that any
and all performance targets used for any performance based equity
compensation plans have been met before payment of any executive
bonus or compensation or exercise of any executive award granted
under any such plan(s);
|
|
d.
|
approving all
amendments to, and terminations of, all compensation plans and any
awards under such plans;
|
|
e.
|
granting any awards
under any performance-based annual bonus, long-term incentive
compensation and equity compensation plans to executive officers or
current employees with the potential to become the CEO or a
“covered employee” under Section 162(m) of the Code,
including stock options and other equity rights (e.g
.,
restricted stock, stock
purchase rights);
|
|
f.
|
approving which
executive officers are entitled to awards under the Company’s
stock option plan(s); and
|
|
g.
|
repurchasing
securities from terminated employees.
|
All
plan reviews should include reviewing the plan’s
administrative costs, reviewing current plan features relative to
any proposed new features, and assessing the performance of the
plan’s internal and external administrators if any duties
have been delegated.
A-2
|
6.
|
The
Committee shall determine the Company’s policy with respect
to change of control or “parachute”
payments.
|
|
7.
|
The
Committee shall review and approve executive officer and director
indemnification and insurance matters.
|
|
8.
|
The
Committee shall prepare and approve the Compensation Committee
report to be included as part of the Company’s annual proxy
statement.
|
|
9.
|
The
Committee shall review and reassess this Charter at least once each
fiscal Year and submit any recommended changes to the Board for its
consideration.
|
Section 5: Delegation of Duties
In
fulfilling its responsibilities, the Committee shall be entitled to
delegate any or all of its responsibilities to a subcommittee of
the Committee, to the extent consistent with the Company’s
Articles of incorporation, bylaws and applicable law and rules of
markets in which the Company’s securities then trade, except
that it shall not delegate its responsibilities for any matters
that involve executive compensation or any matters where it has
determined such compensation is intended to comply with Section
162(m) of the Code or is intended to be exempt from Section 16(b)
under the 1934 Act pursuant to Rule 16b-3 by virtue of being
approved by a committee of “outside
directors.”
Section 6: Disclosure of Charter
This
Charter shall be made available to any stockholder who otherwise
requests a copy. The Company’s Annual Report to Stockholders
shall state the foregoing.
EXECUTIVE COMPENSATION
Trio-Tech’s
Compensation Committee of the Board of Directors, is responsible
for, among other duties, giving suggestions to the Board on
administration of policies and procedures regarding executive
compensation and criteria for the amounts of such
compensation.
Compensation Objectives:
|
●
|
Attract, motivate
and retain executives who drive Trio-Tech’s success and
industry leadership.
|
|
●
|
Provide
each executive, from Vice-President to Chief Executive Officer,
with a base salary based on the market value of the role, and the
individual’s demonstrated ability to perform the
role.
|
|
●
|
Motivate executives
to create sustained shareholder value by ensuring all executives
have an “at risk” component of total compensation that
reflects their ability to influence business outcomes and financial
performance.
|
|
Components of Executive Compensation:
The
compensation program has two elements:
|
1.
|
Base
annual salary; and
|
|
2.
|
Potential annual
cash incentive awards that are based primarily on financial
performance of the Company or its relevant business operating
units.
|
Directors’ Compensation:
Non-employee
directors’ base compensation consists of a reasonable fee and
also of potential annual cash incentive awards. In addition,
directors will be reimbursed for out of pocket expenses incurred in
connection with attendance at such meetings.
A-3
TABLE OF CONTENTS