UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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YONGYE INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Yongye International, Inc.
6th Floor, Suite 608, Xue Yuan International Tower,
No.1 Zhichun Road, Haidian District, Beijing, PRC
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 8, 2012
TO THE STOCKHOLDERS OF YONGYE INTERNATIONAL, INC.:
The Annual Meeting of the stockholders of Yongye International, Inc., a Nevada corporation (“Company”), will be held on June 8, 2012, at 9:00 a.m. (China time), at the offices of the Company, located at High Tech Economic Development Zone, Hohhot City, Inner Mongolia, the People’s Republic of China, for the following purposes:
1. To elect six (6) directors;
2. To ratify appointment of KPMG as Company’s independent accountants for the fiscal year ending December 31, 2012; and
3. To transact any other business as may properly be presented at the Annual Meeting or any adjournment thereof.
A proxy statement, providing information, and a form of proxy to vote, with respect to the foregoing matters accompany this notice.
Important Notice Regarding Availability of Proxy Materials for the Annual Meeting
To be Held on June 8, 2012.
The proxy statement and the Company’s 2011 annual report are available on the Company’s website, www.yongyeintl.com.
By Order of the Board of Directors, | ||
/s/ Zishen Wu | ||
Zishen Wu | ||
Chief Executive Officer |
Dated: April 25, 2012
IMPORTANT
Whether you expect to attend the Annual Meeting, please complete, date, and sign the accompanying proxy, and return it promptly in the enclosed return envelope or follow the instructions contained under “Important Notice Regarding Availability of Proxy Materials”, which also contains instructions on how you may request to receive a paper or email copy of these documents. There is no charge to you for requesting a paper or email copy of these documents. If you grant a proxy, you may revoke it at any time prior to the Annual Meeting or nevertheless vote in person at the Annual Meeting.
PLEASE NOTE: If your shares are held in street name, your broker, bank, custodian, or other nominee holder cannot vote your shares in the election of directors, unless you direct the nominee holder how to vote, by marking your proxy card.
Yongye International, Inc.
6th Floor, Suite 608, Xue Yuan International Tower,
No.1 Zhichun Road, Haidian District, Beijing, PRC
PROXY STATEMENT
for
Annual Meeting of Stockholders
to be held on June 8, 2012
PROXY SOLICITATION
The Company is soliciting proxies on behalf of the Board of Directors in connection with the annual meeting of stockholders on June 8, 2012 and at any adjournment thereof. The Company will bear the entire cost of preparing, assembling, printing and mailing this Proxy Statement, the accompanying proxy, and any additional material that may be furnished to stockholders. Broadridge Financial Solutions, Inc. has been engaged to solicit proxies and distribute materials to brokers, banks, custodians, and other nominee holders for forwarding to beneficial owners of Company stock, and the Company will pay Broadridge Financial Solutions, Inc. approximately $47,000 for these services, including reimbursement of certain of its expenses; in addition, the Company will reimburse nominee holders their forwarding costs. Proxies also may be solicited through the mails or direct communication with certain stockholders or their representatives by Company officers, directors, or employees, who will receive no additional compensation therefor.
May 8, 2012, is the approximate date on which this Proxy Statement and the accompany form of proxy are first being sent to stockholders.
GENERAL INFORMATION ABOUT VOTING
Record Date, Outstanding Shares, and Voting Rights
As of April 25, 2012, the record date for the meeting, the Company had outstanding 50,537,044 shares of common stock and 5,681,818 shares of series A convertible preferred stock (the “Preferred Shares”), being the classes of stock entitled to vote at the meeting. Each share of common stock entitles its holder to one vote. Each Preferred Share entitles its holder to such number of votes as the number of shares of common stock as the Preferred Shares is convertible into, calculated based upon the higher of (i) the applicable conversion price, or (ii) the greater of (x) $3.75 per share and (y) US$4.66 per share.
Procedures for Voting or Revoking Proxies
You may vote your proxy by completing, dating, signing, and mailing the accompanying form of proxy in the return envelope provided. The persons authorized by any of those means to vote your shares will vote them as you specify or, in absence of your specification, as stated on the form of proxy. In addition, you may follow the instructions contained under the heading “Important Notice Regarding Availability of Proxy Materials” regarding how you may access and review all of the important information contained in the proxy materials and how you may submit your proxy on the Internet.
You may revoke any proxy by notifying the Company in writing at the above address, ATTN: Secretary, or by voting a subsequent proxy or in person at the meeting.
Attending the Meeting
You may obtain directions to the meeting at www.yongyeintl.com or by writing to the Company at the above address, ATTN: Secretary. If you attend the meeting, you may vote there in person, regardless whether you have voted by any of the other means mentioned in the preceding paragraph.
Required Votes
Directors are elected by a plurality of votes cast. A majority of votes cast is required to approve each other matter to be considered at the meeting. Abstentions and broker non-votes have no effect on the proposals being voted upon.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of common stock, as of the record date of the meeting, by each of the Company’s directors and executive officers; all executive officers and directors as a group, and each person known to the Company to own beneficially more than 5% of the Company’s common stock. Except as otherwise noted, the persons identified have sole voting and investment powers with respect to their shares.
Name and Address of Beneficial Owner | Amount and nature of Beneficial Ownership(1) | Percentage Outstanding Shares of Common Stock | ||||||
Full Alliance International Limited (2) | 7,657,704 | 15.2 | % | |||||
MSPEA Agriculture Holding Limited (3) | 7,809,861 | 15.5 | % | |||||
Morgan Stanley (4) | 7,932,358 | 15.7 | % | |||||
Zishen Wu (5) | 938,000 | 1.9 | % | |||||
Sam (Yue) Yu (5) | 255,000 | * | ||||||
Nan Xu (5) | 96,000 | * | ||||||
Homer Sun (6) | — | — | ||||||
Rijun Zhang (5) | 10,000 | * | ||||||
Xiaochuan Guo (5) | 10,000 | * | ||||||
Xindan Li (5) | 10,000 | * | ||||||
Sean Shao (5) | 16,667 | * | ||||||
All Directors and Executive Officers, as a group (8 persons) | 1,335,667 | 2.6 | % |
*Represents beneficial ownership of less than one percent of our outstanding shares.
(1) | Beneficial ownership is determined in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC). In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the record date of the meeting, April 25, 2012, are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. The percentage of beneficial ownership is based on 50,537,044 shares of common stock outstanding as of April 25, 2012. |
(2) | The business address of Full Alliance International Limited is OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands. Full Alliance is wholly owned by Ms. Xingmei Zhong and such shares may be deemed to be beneficially owned by Ms. Zhong. Of the 7,657,704 shares of common stock beneficially owned, 5,600,000 shares of the Company’s Common Stock have been pledged to MSPEA and are subject to the terms of a Stockholders’ Agreement (the “Stockholders’ Agreement”) with MSPEA, as described in further detail below. |
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(3) | Represents 5,681,818 shares of Common Stock issuable upon conversion of the Preferred Shares issued to MSPEA at the initial conversion price of $8.80 per share and 2,128,043 shares of Common Stock purchased in open market transactions in August and September 2011. Each Preferred Share entitles the holder to the number of votes as the number of shares of common stock as the Preferred Shares is convertible into, calculated based upon the higher of (i) the applicable conversion price, or (ii) the greater of (x) $3.75 per share, the last closing bid price of the Company’s common stock and (y) US$4.66 per share, the book value per share of the Company’s common stock, in the cases of both (x) and (y) immediately prior to the signing of the Securities Purchase Agreement, dated May 29, 2011 (the “Securities Purchase Agreement”), among the Company, MSPEA and the Company’s largest shareholder, Full Alliance International Limited. Does not include 122,497 additional shares held by the MS Reporting Units which MS Parent (each as defined below) may be deemed to beneficially own. The information was derived from a Schedule 13D filed by the MS Persons on June 10, 2011, as amended by Amendments No. 1, 2 and 3 thereto filed on August 26, 2011, September 7, 2011, and September 9, 2011 (as so amended, the “MS 13D”). Each of Morgan Stanley, a Delaware corporation (“MS Parent”), (ii) MS Holdings Incorporated, a Delaware corporation (“MS Holdings”), (iii) Morgan Stanley Private Equity Asia III, Inc., a Delaware corporation (“MS Inc”), (iv) Morgan Stanley Private Equity Asia III, L.L.C., a Delaware limited liability company (“MS LLC”), (v) Morgan Stanley Private Equity Asia III, L.P., a Cayman Islands limited partnership (“MS LP”), (vi) Morgan Stanley Private Equity Asia Employee Investors III, L.P., a Cayman Islands limited partnership (“MS Employee”), and (vii) Morgan Stanley Private Equity Asia III Holdings (Cayman) Ltd, a Cayman Islands limited liability company (“MSPEA Holdings”) may be deemed, through their ownership of all or a controlling amount of the interests of MSPEA (or intermediate holding companies thereof) to beneficially own such securities. As noted in the MS 13D, in accordance with SEC Release No. 34-39538 (January 12, 1998) (the “Release”), the MS 13D reflects the securities beneficially owned by certain operating units (collectively, the “MS Reporting Units”) of MS Parent and its subsidiaries and affiliates (collectively, “MS”). Neither the table above nor the MS 13D reflects securities, if any, beneficially owned by any affiliates or operating units of MS whose ownership of securities is disaggregated from that of the MS Reporting Units in accordance with the Release. The MS Reporting Units disclaim beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which the MS Reporting Units or their employees have voting or investment discretion, or both, and (ii) certain investment entities of which the MS Reporting Units act as the general partner, managing general partner or other manager, to the extent interests in such entities are held by persons other than the MS Reporting Units. |
MSPEA acquired the securities in the ordinary course of business, and at the time of the acquisition, had no agreement or understanding, directly or indirectly, with any person to distribute the securities. The business address of MSPEA is46th Floor, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong. |
(4) | Consists of shares of Common Stock (a) issuable upon conversion of the Preferred Shares issued to MSPEA at the initial conversion price of $8.80 per share; (b) 2,128,043 shares of Common Stock purchased by MSPEA in open market transactions in August and September 2011; and (c) 122,497 shares of Common Stock held by the MS Reporting Units which MS Parent may be deemed to beneficially own. The information was derived from the MS 13D. Each of MS Parent, MS Holdings, MS Inc, MS LLC, MS LP, MS Employee, and MSPEA Holdings may be deemed, through their ownership of all or a controlling amount of the interests of MSPEA (or intermediate holding companies thereof) to beneficially own such securities. As noted in the MS 13D, in accordance with the Release, the MS 13D reflects the securities beneficially owned by the MS Reporting Units of MS. Neither the table above nor the MS 13D reflects securities, if any, beneficially owned by any affiliates or operating units of MS whose ownership of securities is disaggregated from that of the MS Reporting Units in accordance with the Release. The MS Reporting Units disclaim beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which the MS Reporting Units or their employees have voting or investment discretion, or both, and (ii) certain investment entities of which the MS Reporting Units act as the general partner, managing general partner or other manager, to the extent interests in such entities are held by persons other than the MS Reporting Units. |
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MS Parent acquired the securities in the ordinary course of business, and at the time of the acquisition, had no agreement or understanding, directly or indirectly, with any person to distribute the securities. The business address of MS Parent is 1585 Broadway, New York, New York 10036. |
(5) | Address of referenced person is c/o Yongye International, Inc., 6th Floor, Suite 608, Xue Yuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing, PRC. Except in the case of Mr. Shao and Mr. Wu, each such individual for whom share ownership is reflected has transferred such shares to Prosper Sino Development Limited, which entity is an affiliate of a trustee that has been engaged to administer such shares for the benefit of the relevant transferor or members of his or her family. Of the 938,000 shares beneficially owned by Mr. Wu, 555,000 shares are held directly by Mr. Wu and 383,000 shares have been transferred to Prosper Sino Development Limited. |
(6) | The business address of Mr. Sun is Morgan Stanley, 46th Floor, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong. |
Stockholders’ Agreement
In connection with closing of the transactions contemplated by the Securities Purchase Agreement, on June 9, 2011, Full Alliance and MSPEA entered into a Stockholders’ Agreement. Pursuant to the agreement, Full Alliance agreed not to transfer or dispose of an aggregate of 5,600,000 shares of Common Stock pledged to MSPEA (the “Pledged Shares”) without the prior written consent of MSPEA until the earliest of (i) the conversion of all of the Preferred Shares into shares of Common Stock and the sale of all of the underlying shares of Common Stock, (ii) the redemption of all of the Preferred Shares or (iii) the fifth anniversary of the date of the agreement.
In the event that the Company’s net income falls below the certain income targets and the Company has engaged in certain additional issuances of Company’s equity securities not approved in writing by holders of a majority of the Preferred Shares outstanding, if the Certificate of Designation for the Preferred Shares does not allow for an increase in the applicable Income Target in calculating any adjustments to the conversion price of the Preferred Shares, Full Alliance agreed to transfer to MSPEA or its affiliates, for total consideration of $1, such amount of shares of Common Stock held by Full Alliance that MSPEA would otherwise receive upon conversion of its Preferred Shares, had the applicable Income Target been increased. Notwithstanding the above, the total amount of shares transferable from Full Alliance to MSPEA or its affiliates under the terms of the Stockholders’ Agreement and the shares of Common Stock issuable to MSPEA upon conversion of the Preferred Shares shall not exceed 9,869,205, or 19.99% of the total number of shares of Common Stock outstanding on the date of execution of the Securities Purchase Agreement.
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The net income targets referenced above are: $84 million for fiscal 2011, $210 million for the cumulative period of fiscal 2011 through fiscal 2012, $399 million for the cumulative period of fiscal 2011 through fiscal 2013, and $682.5 million for the cumulative period of fiscal 2011 through fiscal 2014.
Full Alliance also agreed that, so long as MSPEA and its affiliates own at least 10% of the outstanding Preferred Shares, it will not, without the prior written consent of MSPEA, enter into any business that competes with the business of the Company and its subsidiaries or persuade, solicit, or encourage any management or key employee of the Company or its subsidiaries to terminate employment with the Company or its subsidiaries.
Share Pledge
In connection with the Stockholders’ Agreement, on June 9, 2011, Full Alliance pledged the Pledged Shares to guarantee its obligations under the Stockholders’ Agreement described in more detail above. Pursuant to the terms of the pledge agreement, Full Alliance agreed to appoint MSPEA as attorney-in-fact for the Pledged Shares with full power to vote and dispose of the Pledged Shares in the event Full Alliance fails to abide by the transfer restrictions or conversion adjustment transfers set forth in the Stockholders’ Agreement as described above (the “Guaranteed Obligations”).
The Share Pledge is binding upon the parties until the payment and satisfaction of all the Guaranteed Obligations and Full Alliance’s obligations under the pledge agreement.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees of the Board of Directors
Other than Homer Sun, who has been separately elected by the holder of all of the Preferred Shares, each of the remaining six members of the Board of Directors are up for reelection and each has been nominated for election at the annual meeting, to serve until the next annual meeting and their successors have been elected and qualified If any nominee becomes unavailable for election, which is not expected, the persons named in the accompanying proxy intend to vote for any substitute whom the Board nominates.
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Assuming election of all nominees, the following is a list of persons who will constitute the Company's Board of Directors following the meeting.
Name | Age | Other positions with Company; other directorships held in last five years | Has served as Company director since |
Zishen Wu | 44 | Chief Executive Officer, President and Chairman | 2008 |
Nan Xu | 36 | Chief Operating Officer and Director | 2011 |
Homer Sun | 41 | Independent Non-Executive Director; Non-Executive Director of China XD Plastics Company Limited, China Shanshui Cement Group Limited, Sihuan Pharmaceutical Holdings Group Limited, and China Flooring Holding Company Limited | 2011 |
Xiaochuan Guo | 46 | Independent Non-Executive Director | 2008 |
Sean Shao | 55 | Independent Non-Executive Director | 2009 |
Xindan Li | 45 | Independent Non-Executive Director | 2009 |
Rijun Zhang | 49 | Independent Non-Executive Director | 2009 |
The business experience during at least the last five years of each of these individuals is as follows:
Current Nominees
Mr. Zishen Wu, Chief Executive Officer, President and Chairman
Mr. Wu is founder, CEO and Chairman of the Board of Directors of Yongye Nongfeng and Yongye International, Inc. Mr. Wu began his career as an official at the State Planning Department in Inner Mongolia from 1984 to 1988. From 1989 to 2000, Mr. Wu worked at Inner Mongolia Constructional Consulting and Investment Co., Ltd., a business entity managing state-owned assets in Inner Mongolia. He also served as directors on the boards of several state-owned companies in textile, dairy and agriculture industries. In 2001, Mr. Wu founded Yongye Technology Company in Inner Mongolia, an entity that distributed consumer electronics. In 2003, Mr. Wu founded Inner Mongolia Yongye Biotechnology Co., Ltd, an entity that engages in business in agriculture industry. Mr. Wu was General Manager of Inner Mongolia Yongye Biotechnology Co., Ltd. from January 2003 to December 2007. Mr. Wu currently is a member of executive committee for Industry and Commerce Association in Inner Mongolia. Mr. Wu has an EMBA degree from School of Management of Fudan University.We believe that Mr. Wu’s knowledge of the nutrient industry in the PRC brings a unique expertise to the Board of Directors.
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Mr. Nan Xu, Chief Operating Officer and Director
Mr. Xu joined the Company as Chief Operating Officer and Director in 2011 and has been in charge of sales and marketing for the Company’s primary operating subsidiary, Yongye Nongfeng, since 2007. Prior to joining Yongye Nongfeng in 2007, Mr. Xu was responsible for regional sales and channel management in Liaoning province for Hanvon, a leading Chinese technology company. In 2003, Mr. Xu founded Dongfang Xinqidian, a consumer technology company. From 1999 to 2003, Mr. Xu was General Manager for Northern China region of Hi-Tech Wealth. Prior to that, he was responsible for channel management in Hebei province for LG. Mr. Xu is a recipient of the "Jin Ding Award" in 2011, a top recognition in the Chinese sales and marketing profession. We believe that Mr. Xu’s significant sales and marketing experience brings a unique expertise to the Board of Directors.
Dr. Xiaochuan Guo, Independent Director, Chairman of Nominating and Corporate Governance Committee
Professor Xiaochuan Guo joined the Company as an Independent Director in April 2008. Professor Guo received his B.S., M.S. and PhD in management science in Fudan University. He is currently the Dean of the College of Economic & Management and Director of MBA Center of Inner Mongolia University. Professor Guo worked as lecturer for Inner Mongolia University from 1988 to 1992. Professor Guo was the founder of the MBA program at Inner Mongolia University. Professor Guo serves as an Independent Director of Inner Mongolia PingZhuang Energy Resource Co., Ltd. He has previously served as a director and as an independent director in several enterprises, such as Inner Mongolia Shunxin Ningcheng Laojiao Co., Ltd., Inner Mongolia Rising Group, Rising Securities and Baotou Aluminum (Group) Co., Ltd., and Yili Industrial Group Co., Ltd. We believe that Mr. Guo’s academic qualifications and knowledge of finance and accounting brings a unique expertise to the Board of Directors.
Mr. Sean Shao, Independent Director, Chairman of Audit Committee
Sean Shao joined the Company as an Independent Director in April 2009. Mr. Sean Shao currently serves as (i) independent director and chairman of the audit committee of: Xueda Education Group, a Chinese personalized tutoring services company listed on NYSE since March 2010; China Biologic Products, Inc., a biopharmaceutical company listed on NASDAQ since July 2008 and Yongye International, Inc.; (ii) independent director and chairman of the compensation committee of AsiaInfo-Linkage, Inc., a Chinese telecom software solutions provider listed on NASDAQ since July 2010 (iii) independent director and chairman of the nominating committee of Agria Corporation, a Chinese agricultural company listed on NYSE since November 2008; and (iv) independent director and chairman of the audit committee and compensation committee of China Nuokang Bio-Pharmaceutical, Inc., a biopharmaceutical company listed on NASDAQ since September 2008. He served as the chief financial officer of Trina Solar Limited from 2006 to 2008. In addition, Mr. Shao served from 2004 to 2006 as the chief financial officer of ChinaEdu Corporation, an educational service provider, and of Watchdata Technologies Ltd., a Chinese security software company. Prior to that, Mr. Shao worked at Deloitte Touche Tohmatsu CPA Ltd. for approximately a decade. Mr. Shao received his master’s degree in health care administration from the University of California at Los Angeles in 1988 and his bachelor’s degree in art from East China Normal University in 1982. Mr. Shao is a member of the American Institute of Certified Public Accountants. We believe that Mr. Shao’s deep knowledge of finance and accounting matters brings a unique expertise to the Board of Directors.
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Dr. Xindan Li, Independent Director, Chairman of Compensation Committee
Professor Xindan Li joined the Company as an Independent Director in April 2009. Mr. Li has served as the Dean of the Graduate School of Management Science and Engineering at Nanjing University since July 2010 and previously served as Deputy Dean from January 2009 to July 2010. He has over 20 years of teaching, research and administrative experiences. He has authored numerous books and papers, received numerous titles and honors, and undertaken research projects which addressed a wide range of business topics including investor behavior. He is a member of the Corporate Governance Index of the Shanghai Stock Exchange, and an independent director for Hiteker Co., Ltd., Union Securities Co. and Nanjing Agriculture Commercial Bank. We believe that Mr. Li’s background in corporate governance and the capital markets brings a unique expertise to the Board of Directors.
Dr. Rijun Zhang, Independent Director
Dr. Rijun Zhang joined the Company as an Independent Director in April 2009. Dr. Zhang is a professor in animal nutrition and feed biotechnology at the Laboratory of Feed Biotechnology, State Key Lab of Animal Nutrition, College of Animal Science and Technology at China Agricultural University Beiing. He is a doctoral supervisor, and currently responsible for a number of research projects which address feed additives and animal nutrition issues. His work has led to numerous patents, 90 papers in Chinese and English, awards and honors. We believe that Dr. Zhang’s knowledge of agricultural issues faced by our customers brings a unique expertise to the Board of Directors.
Director Elected by Holders of Preferred Shares
Mr Homer Sun, Independent Director
Mr. Sun is the Chief Investment Officer of Morgan Stanley Private Equity Asia and leads the China investments for Morgan Stanley Private Equity Asia. Mr. Sun is also a Managing Director of Morgan Stanley Asia Limited and a member of the China Management Committee which is comprised of Morgan Stanley Asia Limited’s most senior business leaders within China. He is currently the Non-Executive Director of China XD Plastics Company Limited (a company listed on the NASDAQ Stock Exchange, ticker: CXDC), China Shanshui Cement Group Limited, a company listed on the Stock Exchange of Hong Kong (stock code: 691), Sihuan Pharmaceutical Holdings Group Limited, a company listed on the Stock Exchange of Hong Kong (stock code: 460) and China Flooring Holding Company Limited, a company listed on the Stock Exchange of Hong Kong (stock code: 2083). Mr. Sun joined Morgan Stanley Asia Limited in 2000 and worked for six years on various mergers and acquisitions in Greater China in the Investment Banking Division prior to joining Morgan Stanley Private Equity Asia Limited. From 1996 to 2000, he was a corporate attorney with Simpson Thacher & Bartlett in New York and Hong Kong, specializing in mergers and acquisitions. Mr. Sun received a B.S.E. in Chemical Engineering, magna cum laude, from the University of Michigan in 1993 and a J.D, cum laude, from the University of Michigan Law School in 1996. Mr. Sun was appointed to the Board of Directors pursuant to the terms of the Securities Purchase Agreement and elected as such by the holders of all outstanding Preferred Shares in accordance with the terms of the Certificate of Designation relating thereto dated June 8, 2011. We believe that Mr. Sun’s capital markets and mergers & acquisitions experience brings unique expertise to the Board of Directors.
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Mr. Sun was appointed to the Board of Directors pursuant to the terms of the Securities Purchase Agreement and elected as such by the holders of all outstanding Preferred Shares in accordance with the terms of the Certificate of Designation relating thereto dated June 8, 2011. We believe that Mr. Sun’s capital markets experience brings a unique expertise to the Board of Directors.
There are no family relationships between the directors and executive officers.
The Board of Directors has determined that Xiaochuan Guo, Sean Shao, Xindan Li, Rijun Zhang and Homer Sun are independent under Rule 5605(a)(2) of the listing rules of The NASDAQ Stock Market LLC.
Board Operations
One person holds the positions of principal executive officer and chairman of the Board of Company. The board has not designated a lead director. Given the limited number of directors comprising the board, the independent directors call and plan their executive sessions collaboratively and, between board meetings, communicate with management and one another directly. In the circumstances, the directors believe that formalizing in a lead director functions in which they all participate might detract from rather than enhance performance of their responsibilities as directors.
The Board of Directors receives regular reports from the Chief Executive Officer and members of senior management on operational, financial, legal and regulatory issues and risks. The Audit Committee of the Board additionally is charged under its Charter with oversight of financial risk, including the Company’s internal controls, and it receives regular reports from management, the Company’s internal auditors and the Company’s independent auditors. When-ever a Committee of the Board receives a report involving risk identification, risk management or risk mitigation, the Chairman of the Committee reports on that discussion, as appropriate, to the full Board during the next Board meeting.
The Board of Directors held 5 meetings during 2011. During 2011, no director attended fewer than 75% of the meetings of the Board of Directors and Board committees of which the director was a member. It is the policy of the Board of Directors that all directors should attend the annual meeting in person or by teleconference. Last year seven directors attended in person.
The Board has adopted a code of ethics applicable to Company’s directors, officers, and employees. The code of ethics is available at Company’s website, www.yongyeintl.com.
Board Committees
The Board of Directors has standing audit, compensation, and nominating committees, comprised solely of independent directors. Each committee has a charter, which is available at Company’s website, www.yongyeintl.com.
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Audit Committee
The Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, engages Company’s independent accountants, reviewing their independence and performance; reviews Company’s financial disclosure, financial statements, and accounting principles, policies, and practices, scope and results of the annual audit, and internal audit and risk management processes and effectiveness of Company’s internal control over financial reporting; reviews related party transactions; and maintains procedures for receipt and handling of reports regarding accounting or financial irregularities. The Audit Committee held 4 meetings during 2011.
The members of the Audit Committee are Sean Shao, Chair, Xiaochuan Guo and Xindan Li. The Board has determined that Sean Shao is an audit committee financial expert, as defined by the SEC rules.
Audit Committee Report
With respect to the audit of Company’s financial statements for the year ended December 31, 2011, the Audit Committee
· | has reviewed and discussed the audited financial statements with management; |
· | has discussed with Company’s independent accountants the matters required to be discussed 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; and |
· | has received the written disclosures and the letter from the independent accountant 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 the independent accountant’s independence. |
Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s annual report on Form 10-K for the year ended December 31, 2011.
Sean Shao, Chair
Xiaochuan Guo
Xindan Li
Compensation Committee
The Compensation Committee makes recommendations to the Board of Directors concerning salaries and incentive compensation for the Company’s executive officers and administers the Company’s equity incentive plans. The Compensation Committee held 1meeting during 2011.
The members of the Compensation Committee are Xindan Li, Chair, Xiaochuan Guo, and Sean Shao.
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Compensation Committee Interlocks and Insider Participation
No member of our compensation committee has at any time been an officer or employee of ours, or our subsidiaries. No interlocking relationship exists between our board of directors or Compensation Committee and the board of directors or Compensation Committee of any other company, nor has any interlocking relationship existed in the past.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee assists the Board of Directors in identifying and recommending qualified individuals to the Board as its nominees for election as directors, in determining the composition of the Board, and in assessing the performance of the Board as a whole and its individual members. The Nominating and Corporate Governance Committee held 1 meeting during 2011.
The members of the Nominating and Corporate Governance Committee are Xiaochuan Guo, Chair, Homer Sun, and Xindan Li.
Stockholders wishing to propose a director candidate must send the recommendation to Company by the month and day that is the same month and day that was 120 days before the date of release of proxy materials for the annual meeting immediately preceding the annual meeting at which the candidate is proposed to be elected, c/o Secretary, Yongye International, Inc., accompanied by:
· | Evidence that the writer is a stockholder, sufficient for purposes of SEC Rule 14a-8; |
· | The name and contact information of the candidate; and |
· | A statement signed by the candidate that the candidate is willing to be considered for nomination by the committee and willing to serve as a director, if nominated and elected. |
Company’s Secretary will send its standard director questionnaire to the candidate, and, if returned, fully and accurately completed, by the month and day that is the same month and day that was 100 days before the date of release of proxy materials for the annual meeting immediately preceding the annual meeting at which the candidate is proposed to be elected, the Secretary will forward the recommendation, accompanying documents, and the questionnaire to the Nominating and Corporate Governance Committee for consideration. Company may also require any proposed nominee to furnish such other information as Company or the Nominating Committee and Corporate Governance may reasonably require to determine the eligibility of the nominee to serve as a director.
The Nominating and Corporate Governance Committee also considers, as director nominees, persons recommended by current directors, executive officers, and others, which are evaluated in the same manner as persons proposed by stockholders, except that the Nominating and Corporate Governance Committee may consider, as one of the factors in its evaluation of stockholder recommended candidates, the amount and duration of the stock holding of the recommending stockholder or stockholder group.
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The Committee applies the following criteria in considering director candidates:
· | Independence. Whether non-management candidates may be considered“independent” under applicable stock market rules; under securities and tax laws; or for any other purpose. The Committee also considers whether a candidate might be subject to any conflict of interest. |
· | Corporate Governance. Whether the candidate recognizes the role of directors in representing the interests of stockholders, generally, and not of any particular stockholder or group of stockholders; whether the director demonstrates familiarity and intention to fulfill the fiduciary duties of directors and appears open and candid; whether the director understands the differences in functions of the Board of Directors and management. |
· | Judgment and Knowledge. Whether the candidate demonstrates sound business judgment and ability to assess Company’s strategy and business plans, evaluate management, and decide other board-level issues |
· | Communication Skills. The candidate’s communications skills; willingness to voice his own views; ability to listen to views of others dispassionately; and ability to express and bring to bear his expertise regarding Company matters. |
· | Professional Status. The candidate’s record as a business manager and reputation for integrity; whether the candidate has the respect of his business and community peers; whether the candidate’s Board membership would enhance Company’s reputation. |
· | Diversity. The Board wishes to establish a complement of directors with substantial skill and experience in the following areas: |
· | industry-specific knowledge, experience; |
· | accounting and finance; |
· | capital markets; |
· | corporate governance; |
· | executive compensation; |
· | international business; |
· | operations management; |
· | marketing, advertising, or promotion; and |
· | risk management. |
The Board implements this policy by seeking to fill any Board vacancy with a director having skill or experience in one of the areas that the Board wishes to strengthen and assesses the effectiveness of the policy in light of the results of Company’s operations.
In addition, the Nominating and Corporate Governance Committee considers any other factors it deems appropriate. ”Diversity,” as such, is not a criterion that the Committee considers.
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Pursuant to the Securities Purchase Agreement and the Certificate of Designation for the Company’s Preferred Shares, MSPEA was entitled to designate Mr. Sun to the Board of Directors. Should Mr. Sun cease to be a director of the Company, so long as 1,420,455 or more Preferred Shares are outstanding at such time, the holders of at least a majority of the outstanding Preferred Shares are similarly entitled to elect one director to the Company’s board of directors.
Stockholder Communications
Stockholders can mail communications to the Board of Directors, c/o Secretary, Yongye International, Inc. , 6th Floor, Suite 608, Xue Yuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing, PRC, who will forward the correspondence to each addressee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and any beneficial owner of more than 10% of any class of Company equity security to file reports of ownership and changes in ownership with the Securities and Exchange Commission and furnish copies of the reports to Company. Based solely on the Company’s review of copies of such forms and written representations by Company’s executive officers and directors received by it, the Company believes that during 2011, all such reports were filed timely, except that Nan Xu did not timely file a Form 3 upon his appointment as Chief Operating Officer and a director of the Company.
Compensation Discussion and Analysis
The Company’s executive compensation program for the named executive officers (as defined below) is administered by the Board of Directors.
Background and Compensation Philosophy
The Compensation Committee of our Board of Directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. No pre-established, objective performance goals or metrics have been used by the Compensation Committee in determining the compensation of our executive officers.
Elements of Compensation
Some of our executive officers receive a base salary to compensate them for services rendered during the year. Our policy of compensating our certain executives with a cash salary has served the Company well. Because of our history of attracting and retaining executive talent, we do not believe it is necessary at this time to provide our executives regular discretionary bonuses, equity incentives, or other benefits for the Company to continue to be successful.
Base Salary and Bonus. The value of base salary and bonus for each our executive reflects his or her skill set and the market value of that skill set in the sole discretion of the Board of Directors.
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Equity Incentives. The Company has adopted an equity incentive plan pursuant to which awards may be granted if the Compensation Committee of our Board of Directors determines that it is in the best interest of the Company and its stockholders to do so.
Retirement Benefits. Other than those benefits included in government-mandated social insurance programs, our executive officers are not presently entitled to company-sponsored retirement benefits.
Perquisites. We have not provided our executive officers with any material perquisites and other personal benefits and, therefore, we do not view perquisites as a significant or necessary element of our executive’s compensation.
Deferred Compensation. We do not provide our executives the opportunity to defer receipt of annual compensation.
This compensation discussion describes the material elements of compensation awarded to, earned by, or paid to each of our executive officers listed in the Summary Compensation Table below (the “named executive officers”) during the last completed fiscal year. This compensation discussion focuses on the information contained in the following tables and related footnotes and narrative for primarily the last completed fiscal year, but we also describe compensation actions taken before or after the last completed fiscal year to the extent it enhances the understanding of our executive compensation disclosure.
Compensation Committee Report on Executive Compensation
OurCompensation Committeehas certain duties and powers as described in its charter. TheCompensation Committeeis currently composed of the three non-employee directors named at the end of this report, each of whom is independent as defined by the NASDAQ listing standards.
TheCompensation Committeehas reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this proxy statement. Based upon this review and discussion, theCompensation Committeerecommended to our Board of Directors that the Compensation Discussion and Analysis section be included in this proxy statement.
Xindan Li, Chair
Xiaochuan Guo
Sean Shao
SEC filings sometimes “incorporate information by reference.” This means that we are referring you to information that has previously been filed with the SEC, and that this information should be considered as part of the filing you are reading. Unless we specifically state otherwise, this proxy statement shall not be deemed to be incorporated by reference and shall not constitute soliciting material or otherwise be considered filed under the Securities Act or the Securities Exchange Act.
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Executive Compensation
Summary Compensation Table
The following table sets forth information regarding compensation of the named executive officers for each of the three fiscal years in the period ended December 31, 2011.
FISCAL 2011 COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||||||
Zishen Wu | 2011 | $ | 550,000 | $ | 567,144 | $ | 1,799,926 (1) | $ | 2,917,070 | |||||||||||||||||||||||||
(Principal Executive Officer) | 2010 | $ | 550,000 | - | $ | 1,397,003 (1) | – | – | – | – | $ | 1,947,003 | ||||||||||||||||||||||
2009 | $ | 211,902 | – | – | – | – | – | – | $ | 211,902 | ||||||||||||||||||||||||
Sam Yu | 2011 | $ | 400,000 | $ | 608,048 | $ | 1,198,879 (1) | $ | 2,206,927 | |||||||||||||||||||||||||
(Principal Financial Officer) | 2010 | $ | 400,000 | $ | 147,520 | $ | 930,120 (1) | – | – | – | – | $ | 1,477,640 | |||||||||||||||||||||
2009 | $ | 124,173 | – | – | – | – | – | – | $ | 124,173 | ||||||||||||||||||||||||
Nan Xu | 2011 | $ | 196,546 | – | $ | 450,785 | – | – | – | – | $ | 647,331 | ||||||||||||||||||||||
(Chief Operating Officer) | 2010 | $ | 86,825 | – | $ | 350,163 | – | – | – | – | $ | 436,988 | ||||||||||||||||||||||
2009 | $ | 60,859 | – | – | – | – | – | – | $ | 60,859 |
(1) Representing compensation cost of stock awards recognized for the year ended December 31, 2011.
Narrative Discussion
We have entered into an employment agreement with each of Zishen Wu, Sam Yu and Nan Xu. We entered into an employment contract on April 17, 2008 with Mr. Wu to employ him as our Chairman and CEO that was subsequently amended to extend the term of employment until May 31, 2016. Since January 1, 2010, Mr. Wu has been entitled to an annual gross salary in an amount of $550,000 including all allowances, social insurance such as pension, unemployment, medical insurance and other social insurance coverage in accordance with relevant PRC laws and regulations, and housing fund. This also includes a stipend of $50,000 annually for board activities. We have the right to adjust the salary and welfare benefits of Mr. Wu appropriately based on his capability, experience, attitude, performance, achievement, working-age and position as well as its salary and position adjustment policies and business conditions experienced. Either party to the agreement has a right to terminate the agreement, subject to the terms and conditions therein.
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We entered into an employment contract on March 20, 2009 with Mr. Sam Yu to employ him as our Chief Financial Officer. The contract was subsequently amended to extend the term of employment until May 31, 2016. Since January 1, 2010, Mr. Yu has been entitled to an annual gross salary in an amount of $400,000 including all allowances, social insurance such as pension, unemployment, medical insurance and other social insurance coverage in accordance with relevant PRC laws and regulations, and housing fund. We have the right to adjust the salary and welfare benefits of Mr. Yu appropriately based on his capability, experience, attitude, performance, achievement, working-age and position as well as its salary and position adjustment policies and business conditions experienced. Either party to the agreement has a right to terminate the agreement, subject to the terms and conditions therein.
We entered into an employment contract, effective September 1, 2011, with Mr. Nan Xu to employ him as our Chief Operating Officer. Mr. Xu is entitled to an annual gross salary in an amount of $400,000 including all allowances, social insurance such as pension, unemployment, medical insurance and other social insurance coverage in accordance with relevant PRC laws and regulations, and housing fund. This also includes a stipend of $50,000 annually for board activities. We have the right to adjust the salary and welfare benefits of Mr. Yu appropriately based on his capability, experience, attitude, performance, achievement, working-age and position as well as its salary and position adjustment policies and business conditions experienced. Either party to the agreement has a right to terminate the agreement, subject to the terms and conditions therein.
Assuming the employment of the Company’s named executive officers was to be terminated without cause or for good reason or in the event of change in control, as of December 31, 2011, none of the named executive officers would have been entitled to any cash payments.
Grants of Plan Based Awards
The following table sets forth information regarding each award made to the named executive officers, under Company’s 2010 Omnibus Securities and Incentive Plan during 2011.
2011 GRANTS OF PLAN-BASED AWARDS | |||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | ||||||||||||||||||||||
Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stocks or Units | Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option | ||||||||||||
Zishen Wu | 10/10/11 | — | — | — | — | — | — | 217,000 (1) | — | — | $ 907,060 | ||||||||||||
Sam Yu | 10/10/11 | — | — | — | — | — | — | 145,000 (2) | — | — | $ 606,100 | ||||||||||||
Nan Xu | 10/10/11 | — | — | — | — | — | — | 54,000 (2) | — | — | $ 225,720 |
(1) 217,000 shares granted, which vest on October 10, 2012.
(2) 145,000 shares granted, which vest on October 10, 2012.
(3) 54,000 shares granted, which vest on October 10, 2012.
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth, for each named executive officer, information regarding unexercised stock options, unvested stock awards, and equity incentive plan awards outstanding as of December 31, 2011.
OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR END | |||||||||||||||||||
OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Unexercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: number of Securities Underlying unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That have Not Vested (#) | Market Value of Shares or Units of Stock That Have not vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: market or payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||
Zishen Wu | — | — | — | — | — | 217,000 (1) | $ 763,840 (4) | — | — | ||||||||||
Sam Yu | — | — | — | — | — | 145,000 (2) | $ 510,400 (4) | — | — | ||||||||||
Nan Xu | — | — | — | — | — | 54,000 (3) | $ 190,080 (4) | — | — |
(1) 217,000 shares granted, which vest on October 10, 2012.
(2) 145,000 shares granted, which vest on October 10, 2012.
(3) 54,000 shares granted, which vest on October 10, 2012.
(4)The market value of the shares that have not vested has been calculated by multiplying the number of shares times $3.52, which represents the last reported sale price of our common stock on the Nasdaq Global Select Market on December 31, 2011, which is the last day of the most recent fiscal year.
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Option Exercises and Stock Vested
The following table sets forth aggregate information with respect to each executive officer regarding exercise of stock options and vesting of restricted stock for fiscal 2011.
OPTION EXERCISES AND STOCK VESTED AT 2011 FISCAL YEAR-END
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
Zishen Wu | — | — | 383,000 | $ | 1,869,040 | |||||||||||
Sam Yu | — | — | 255,000 | $ | 1,244,400 | |||||||||||
Nan Xu | — | — | 96,000 | $ | 468,480 |
Compensation of Directors
The following table sets forth information regarding compensation of each director, other than named executive officers, for fiscal 2011.
FISCAL 2011 DIRECTOR COMPENSATION | ||||||||||||||||||||||||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(5) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Rijun Zhang | 40,000 | 83,600 (1) | — | — | — | — | 123,600 | |||||||||||||||||||||
Xiaochuan Guo | 40,000 | 83,600 (2) | — | — | — | — | 123,600 | |||||||||||||||||||||
Sean Shao | 40,000 | 139,332 (3) | — | — | — | — | 179,332 | |||||||||||||||||||||
Xindan Li | 40,000 | 83,600 (4) | — | — | — | — | 123,600 |
(1) 20,000 shares granted, which vest on October 10, 2012.
(2) 20,000 shares granted, which vest on October 10, 2012.
(3) 33,333 shares granted, which vest on October 10, 2012.
(4) 20,000 shares granted, which vest on October 10, 2012.
(5)The market value of the shares that have not vested has been calculated by multiplying the number of shares times $4.18, the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.
Certain Relationships and Related Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Particulars of significant transactions between the Company and related companies are disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed on March 15, 2012.
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It is the Company’s policy to notenter any transaction (other than compensation arrangements in the ordinary course) with any director, executive officer, employee, or principal stockholder or party related to them, unless authorized by a majority of the directors having no interest in the transaction, upon a favorable recommendation by the Audit Committee (or a majority of its disinterested members).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE BOARD OF DIRECTORS’ NOMINEES.
PLEASE NOTE: If your shares are held in street name, your broker, bank, custodian, or other nominee holder cannot vote your shares in the election of directors, unless you direct the holder how to vote, by marking your proxy card.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has appointed KPMG as the Company’s independent accountants for fiscal 2012, subject to the ratification by stockholders. Representatives of KPMG are expected to be present at the Annual Meeting to respond to appropriate questions and will have an opportunity to make a statement, if they so desire.
In the event the stockholders fail to ratify the selection of KPMG, the Audit Committee will reconsider whether or not to retain the firm. Even if the selection is ratified, the Audit Committee and the Board of Directors in their discretion may direct the appointment of a different independent accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
Services and Fees of Independent Accountants
Aggregate fees billed to the Company by KPMG during the last two fiscal years were as follows:
Fees | 2011 | 2010 | ||||||
Audit Fees(1) | $ | 1,045,205 | $ | 625,282 | ||||
Audit Related Fees | $ | – | $ | – | ||||
Tax Fees | $ | – | $ | – | ||||
All Other Fees | $ | – | $ | – | ||||
Total | $ | 1,045,205 | $ | 625,282 |
(1) | Audit Fees consist of fees billed for professional services rendered for the audit of the Company’s consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and audit of the effectiveness of internal control over financial reporting, and services that are normally provided by our auditors in connection with statutory and regulatory filings or engagements. |
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The aggregate amount of Audit Fees for the year 2011 consists of $1,045,205 billed by KPMG, for professional services rendered for the audit of the Company’s financial statements for the fiscal year ended December 31, 2011 and review of the Company’s financial statements included in the three Form 10-Q’s for the quarters ended March, 31, June 30 and September 30, 2011, andaudit of the effectiveness of internal control over financial reporting as of December 31, 2011.
The aggregate amount of Audit Fees for the year 2010 consists of $625,282 billed by KPMG, for professional services rendered for the audit of the Company’s financial statements for the fiscal year ended December 31, 2010 and review of the Company’s financial statements included in the three Form 10-Q’s for the quarters ended March, 31, June 30 and September 30, 2010, and audit of the effectiveness of internal control over financial reporting as of December 31, 2010.
In accordance with the Audit Committee’s pre-approval policies and procedures described below, during fiscal 2011, 100% of all audit, audit-related, tax and other services performed by KPMG were approved in advance by the Audit Committee. KPMG was our principal auditor and no work was performed by persons outside of this firm.
Pre-Approval of Services
In accordance with the SEC’s auditor independence rules, the Audit Committee has established the following policies and procedures by which it approves in advance any audit or permissible non-audit services to be provided to the Company by its independent auditor.
Prior to the engagement of the independent auditor for any fiscal year’s audit, management submits to the Audit Committee for approval lists of recurring audit, audit-related, tax and other services expected to be provided by the auditor during that fiscal year. The Audit Committee adopts pre-approval schedules describing the recurring services that it has pre-approved, and is informed on a timely basis, and in any event by the next scheduled meeting, of any such services rendered by the independent auditor and the related fees.
The fees for any services listed in a pre-approval schedule are budgeted, and the Audit Committee requires the independent auditor and management to report actual fees versus the budget periodically throughout the year. The Audit Committee will require additional pre-approval if circumstances arise where it becomes necessary to engage the independent auditor for additional services above the amount of fees originally pre-approved. Any audit or non-audit service not listed in a pre-approval schedule must be separately pre-approved by the Audit Committee on a case-by-case basis. Every request to adopt or amend a pre-approval schedule or to provide services that are not listed in a pre-approval schedule must include a statement by the independent auditors as to whether, in their view, the request is consistent with the SEC’s rules on auditor independence.
The Audit Committee will not grant approval for:
· | any services prohibited by applicable law or by any rule or regulation of the SEC or other regulatory body applicable to the Company; |
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· | provision by the independent auditor to the Company of strategic consulting services of the type typically provided by management consulting firms; or |
· | the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the tax treatment of which may not be clear under the Internal Revenue Code and related regulations and which it is reasonable to conclude will be subject to audit procedures during an audit of the Company’s financial statements. |
Subject to certain exceptions, tax services proposed to be provided by the auditor to any director, officer or employee of the Company who is in an accounting role or financial reporting oversight role must be approved by the Audit Committee on a case-by-case basis where such services are to be paid for by the Company, and the Audit Committee will be informed of any services to be provided to such individuals that are not to be paid for by the Company.
In determining whether to grant pre-approval of any non-audit services in the “all other” category, the Audit Committee will consider all relevant facts and circumstances, including the following four basic guidelines:
· | whether the service creates a mutual or conflicting interest between the auditor and the Company; |
· | whether the service places the auditor in the position of auditing his or her own work; |
· | whether the service results in the auditor acting as management or an employee of the Company; and |
· | whether the service places the auditor in a position of being an advocate for the Company. |
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT ACCOUNTANTS.
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OTHER INFORMATION
The Company’s 2011 annual report on Form 10-K, excluding exhibits, will be mailed without charge to any stockholder entitled to vote at the meeting, upon written request to Sam Yu, Chief Executive Officer, 6th Floor, Suite 608, Xue Yuan International Tower, No.1 Zhichun Road, Haidian District, Beijing, PRC.
Important Notice Regarding Availability of Proxy Materials
This proxy statement and the Company’s 2011 annual report are available at Company’s website, www.yongyeintl.com. If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:
By Email: ir@yongyeintl.com
By Telephone: +86.10.8231.8626
By Letter: to Mr. Zishen Wu, Chief Executive Officer, as noted above
Please make the request as instructed on or before May 25, 2012 to facilitate timely delivery.
As indicated on the form of proxy accompanying this proxy statement, you may use the Internet to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 6, 2012. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form and, when prompted, you may indicate that you agree to receive or access proxy materials electronically in future years.
Other Matters to Be Presented at the Annual Meeting
The Company did not have notice, as of March 26, 2012, of any matter to be presented for action at the Annual Meeting, except as discussed in this proxy statement. The persons authorized by the accompanying form of proxy will vote in their discretion as to any other matter that comes before the Annual Meeting.
Stockholder Proposals for Next Annual Meeting
Stockholder proposals intended to be included in the proxy statement for the next annual meeting must be received by the Company by December 27, 2012. The persons authorized by the form of proxy to be sent in connection with the solicitation of proxies on behalf of Company’s board of directors for next year’s annual meeting will vote in their discretion as to any matter of which the Company has not received notice by March 24, 2013.
By Order of the Board of Directors, | ||
/s/ Zishen Wu | ||
Name: Zishen Wu | ||
Title: Chief Executive Officer | ||
April 25, 2012 |
25 |
YONGYE INTERNATIONAL, INC.
XUE YUAN INTL. TOWER
NO. 1 ZHICHUN RD. SUITE 608
HAIDIAN DISTRICT, BEIJING, CHINA
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 6, 2012. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 6, 2012. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report on Form 10-K is/are available at www.proxyvote.com.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
Yongye International, Inc.
To be held on June 8, 2012
The shareholder(s) hereby appoints Zishen Wu and Sam Yu, or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this proxy card and as they shall determine regarding such other business or may properly come before the meeting, all of the shares of common stock of YONGYE INTERNATIONAL, INC. that the shareholder is entitled to vote at the 2011 annual meeting of stockholders to be held at 9:00 am, PRC Time on June 8, 2012, at the offices of the company at High Tech Economic Development Zone, Hohhot City, Inner Mongolia, the People’s Republic of China, and any adjournment or postponement thereof with like effect as if the shareholder were personally present and voting and hereby revokes any proxy or proxies heretofore given.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.
1. | ELECTION OF DIRECTORS |
¨ FOR all nominees listed below (except as marked to the contrary below) | ¨ WITHHOLD AUTHORITY to vote for all nominees listed below |
1. Zishen Wu | 2. Nan Xu |
3. Xiaochuan Guo | 4. Sean Shao |
5. Xindan Li | 6. Rijun Zhang |
INSTRUCTION: To withhold authority to vote for any nominee, write the nominee’s name in the space provided below.
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS, FOR THE FISCAL YEAR ENDING DECEMBER 31, 2012
o | FOR | o | AGAINST | o | ABSTAIN |
PLEASE MARK, DATE AND SIGN YOUR PROXY CARD AND MAIL IT IN THE ACCOMPANYING POSTAGE PAID ENVELOPE AS SOON AS POSSIBLE.
o | I plan on attending the Annual Meeting. |
Name as it appears on certificate___________________________________________________
(print please)
Certificate No(s).____________________________Share Quantity_______________________
Signature________________________________________ Date__________________
Signature________________________________________ Date__________________
NOTE: Please mark, date and sign this proxy card and return it in the accompanying envelope. Please sign as your name appears hereon. If shares are registered in more than one name, all owners should sign. If signing in a fiduciary or representative capacity, please give full title and attach evidence of authority. Corporations please sign with full corporate name by a duly authorized officer and affix corporate seal.
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