SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
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))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TAITRON COMPONENTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ 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:
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TAITRON COMPONENTS INCORPORATED
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 2000
----------------------------
TO THE SHAREHOLDERS OF
TAITRON COMPONENTS INCORPORATED
You are cordially invited to attend the Annual Meeting of Shareholders of
Taitron Components Incorporated (the "Company"), which will be held at the Hyatt
Valencia, 24500 Town Center Drive, Valencia, California 91355, on Friday, May
19, 2000, at 2:00 p.m. Pacific time, to consider and act upon the following
matters:
1. To elect five directors to hold office for one year until their
respective successors have been elected. The persons nominated by our
board of directors, Tzu Sheng (Johnson) Ku, Stewart Wang, Richard
Chiang, Craig Miller and Felix Sung are described in the accompanying
Proxy Statement; and
2. To transact such other business as may properly come before the Annual
Meeting or any of its adjournments or postponements.
The Board of Directors has fixed April 21, 2000 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting and any postponements or adjournments thereof, and only stockholders of
record at the close of business on that date are entitled to such notice and to
vote at the Annual Meeting. A list of shareholders entitled to vote at the
Annual Meeting will be available at the Annual Meeting and at the offices of the
Company for ten days prior to the Annual Meeting.
We hope that you will use this opportunity to take an active part in the
affairs of the Company by voting on the business to come before the Annual
Meeting, either by executing and returning the enclosed Proxy Card or by casting
your vote in person at the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE
ANNUAL MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY
AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Stewart Wang
CEO and President
25202 Anza Dr.
Santa Clarita, California, 91355
(661) 257-6060
April 22, 2000
TAITRON COMPONENTS INCORPORATED
-----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 2000
-----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Taitron Components Incorporated, a
California corporation (the "Company"), for use at the Annual Meeting of
Shareholders to be held at the Hyatt Valencia, 24500 Town Center Drive,
Valencia, California 91355, on Friday, May 19, 2000, at 2:00 p.m. Pacific time.
Accompanying this Proxy Statement is the Board of Directors' Proxy for the
Annual Meeting, which you may use to indicate your vote as to the proposals
described in this Proxy Statement.
The expense of this solicitation of proxies will be borne by the Company.
Solicitations will be made only by use of the mail except that, if deemed
desirable, officers and regular employees of the Company may solicit proxies by
telephone, telegraph or personal calls. Brokerage houses, custodians, nominees
and fiduciaries will be requested to forward the proxy soliciting material to
the beneficial owners of the stock held of record by such persons and the
Company will reimburse them for their reasonable expenses incurred in this
connection.
The Company's Annual Report to Shareholders, including financial statements
for the fiscal year ended December 31, 1999, accompanies but does not constitute
part of this Proxy Statement.
The purpose of the meeting and the matters to be acted upon are set forth
in the attached Notice of Annual Meeting. As of the date of this Proxy
Statement, the Board of Directors knows of no other business which will be
presented for consideration at the Annual Meeting. All Proxies which are
properly completed, signed and returned to the Company prior to the Annual
Meeting, and which have not been revoked, will be voted in favor of the
proposals described in this Proxy Statement unless otherwise directed. A
shareholder may revoke his or her Proxy at any time before it is voted either by
filing with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly executed Proxy bearing a later date, or
by attending the Annual Meeting and expressing a desire to vote his or her
shares in person. If any other business shall properly come before the meeting,
votes will be cast pursuant to said proxies in respect of any such other
business in accordance with the judgement of the persons acting under said
proxies.
The Company's principal executive offices is located at 25202 Anza Drive,
Santa Clarita, CA 91355. It is anticipated that the mailing to shareholders of
this Proxy Statement and the enclosed proxy will commence on or about April 22,
2000.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The close of business on April 21, 2000 has been fixed as the record date
for the determination of Shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment(s) of the Annual Meeting. As of the record
date, the Company had outstanding 5,073,610 shares of Class A Common Stock, par
value $.001 per share, (the "Class A Common Stock"), and 762,612 shares of Class
B Common Stock, par value $.001 per share (the "Class B Common Stock" and
collectively with the Class A Common Stock, the "Common Stock"). The Class A
Common Stock and the Class B Common Stock are the only outstanding voting
securities of the Company. As of the record date, the Company had approximately
100 Shareholders of record. The Company is informed and believes that there are
approximately 1,485 beneficial holders of its Class A Common Stock.
1
A holder of Class A Common Stock is entitled to cast one vote for each
share held on the record date on all matters to be considered at the Annual
Meeting. A holder of Class B Common Stock is entitled to cast ten votes for each
share held on the record date on all matters to be considered at the Annual
Meeting. The five nominees for election as Directors who receive the highest
number of votes will be elected. All other matters that may properly come before
the meeting require for approval the favorable vote of a majority of shares
voted at the meeting or by proxy. If the Company has fewer than 800 beneficial
owners on April 21, 2000, and a shareholder requests cumulative voting before
commencement of the election (and if the candidates' names have been placed in
nomination prior to that time), then any shareholder may distribute among as
many candidates as desired a number of votes equal to the number of directors to
be elected multiplied by the number of shares held. The Company believes it will
have more than 800 beneficial shareholders as of the record date, however, if
cumulative voting is in effect, the persons named in the accompanying proxy will
vote the shares in their discretion among all or any of the candidates named
herein. Abstentions and broker non-votes will be included in the determination
of shares present at the Annual Meeting for purposes of determining a quorum.
Abstentions will be counted toward the tabulation of votes cast on proposals
submitted to shareholders and will have the same effect as negative votes, while
broker non-votes will not be counted as votes cast for or against such matters.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Articles of Incorporation and Bylaws of the Company,
the Board of Directors consists of not less than three nor more than seven
members, the exact number to be determined by the Board of Directors. At each
annual meeting of the Shareholders of the Company, directors are elected for a
one-year term. The Board of Directors is currently set at five members, and
there currently exist no vacancies. At the 2000 Annual Meeting, each director
will be elected for a term expiring at the 2001 annual meeting. The Board of
Directors proposes the election of the nominees named below.
Unless marked otherwise, Proxies received will be voted FOR the election of
each of the nominees named below. If any such person is unable or unwilling to
serve as a nominee for the office of director at the date of the Annual Meeting
or any postponement or adjournment thereof, the Proxies may be voted for a
substitute nominee, designated by the present Board of Directors to fill such
vacancy. The Board of Directors has no reason to believe that any such nominee
will be unwilling or unable to serve if elected a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF THE DIRECTORS NOMINATED HEREIN.
The Board of Directors proposes the election of the following nominees as
members of the Board of Directors:
Tzu Sheng (Johnson) Ku
Stewart Wang
Richard Chiang
Craig Miller
Felix Sung
If elected, the nominees are expected to serve until the 2001 Annual
Meeting of Shareholders.
2
INFORMATION WITH RESPECT TO EACH NOMINEE AND EXECUTIVE OFFICERS.
The following table sets forth certain information with respect to each
nominee and executive officer of the Company as of March 31, 2000.
NAME AGE POSITION
---- --- --------
Tzu Sheng (Johnson) Ku 51 Chairman of the Board and Director Nominee
Stewart Wang 50 President, Chief Executive Officer, Director and
Director Nominee
Richard Chiang 43 Director and Director Nominee
Winston Gu 49 Director
Craig Miller 46 Director Nominee
Felix M. Sung 50 Director and Director Nominee
OTHER OFFICERS:
Michael Adams 45 Vice President of Sales
Steven H. Dong 33 Chief Financial Officer and Secretary
Bob Graziano 63 Senior Vice President of Eastern Regional Sales
Bill Lloyd 45 Senior Vice President of Sales and Marketing
Sally Manley 59 Vice President of Procurement
Alex Miao 50 Vice President of Engineering and Quality
Assurance
Eli Yu 48 Chief Information Officer
- --------------------------------------------------------------------------------
All officers are appointed by and serve at the discretion of the Board of
Directors. There are no family relationships between any directors or officers
of the Company.
TZU SHENG ("JOHNSON") KU, a co-founder of the Company, has been the
Chairman of the Company since it was founded in 1989. Mr. Ku is the Chairman of
Weekendz Off, Inc., which sells high quality casual sportswear to stores such as
Nordstrom, Bloomingdales, Saks Fifth Avenue and its own label "Weekendz Off".
Additionally, Mr. Ku is Chairman of Etron Corporation which is a world wide
distributor of consumer electronic products.
STEWART WANG, a co-founder of the Company, has served as the Chief
Executive Officer and President and a Director of the Company since its
organization in 1989. Prior to founding the Company, Mr. Wang attended
Pepperdine University, where he received his Masters of Business Administration
degree in 1989. From 1985 to 1986, Mr. Wang was employed by Diodes Incorporated,
a manufacturer and reseller of discrete rectifiers located in Southern
California, as Purchasing and MIS Manager and later as Chief Operating Officer
and President from 1986 to 1987. Prior thereto, from 1983 to 1985, Mr. Wang was
Sales Manager for Rectron Limited, a rectifier manufacturer in Taiwan.
RICHARD CHIANG has been a Director of the Company since it was founded in
1989. Mr. Chiang is the Chairman and former President of Princeton Technology
Corporation, a fabless integrated circuit design company in Taipei, Taiwan where
he has been employed since 1986. Mr. Chiang also serves as a Director of
Alliance Venture Capital Corporation, also located in Taipei, Taiwan, which is a
venture capital firm. In addition, Mr. Chiang serves as a Director of eGlobe,
Inc., which is an internet telecom and international networking service
provider. Also, Mr Chiang serves as Chairman of Proware Technology Corporation,
which is a RAID subsystem business company. Mr. Chiang also serves as a Director
of Advanced Communications Devices Corporation which is a networking switch
controller chip business.
3
WINSTON GU has been a director of the Company since it was founded in 1989.
Mr. Gu has elected not to be re-nominated as director and his term will expire
May 18, 2000. Mr. Gu has been the President of Frontier Electronics Corporation,
located in Simi Valley, California, which imports and markets electronic
components in the United States, since he founded it in August 1984. In
addition, Mr. Gu is currently Chief Executive Officer of Autec Power Systems,
Incorporated, based in Simi Valley, California, a manufacturer of switching mode
power supplies, which he founded in June 1989.
CRAIG MILLER is a director nominee of the Company. Since 1998, Mr. Miller
has been a director of Mosaic Capital, LLC, an investment banking firm located
in Sherman Oaks, California. Prior thereto, Mr. Miller served as Regional Vice
President with Comerica Bank since 1994. From 1987 to 1994, Mr. Miller served as
Executive Vice President and Chief Financial Officer of Told Corporation, an
industrial real estate development firm. He started his career with Union Bank
in 1976 as a management trainee and left in 1987 as Senior Vice President.
FELIX M. SUNG became a director of the Company in February 1995. Mr. Sung
is the Managing Director and former Vice President of Tai North Company, a
company engaged in exporting electronics, plastic parts and finished products to
the United States and various European countries.
MICHAEL ADAMS, a co-founder of the Company, has been Vice President of
Western Regional Sales since 1993 and is currently Vice President of Sales. From
1990 to 1993, Mr. Adams served as an Executive Sales Manager for the Company.
Prior thereto, Mr. Adams was employed by Diodes Incorporated, as a Regional
Sales Manager.
STEVEN H. DONG joined the Company in March 1999 as its Chief Financial
Officer. Prior thereto, from 1995 to 1999, Mr. Dong practiced as an independent
financial consultant assisting publicly-held companies with high level
accounting projects and serving as interim Chief Financial Officer. From 1988 to
1995, Mr. Dong was an assurance manager with the international accounting firm
of Coopers & Lybrand, LLP. Mr. Dong is a Certified Public Accountant and a
member in good standing with the American Institute of Certified Public
Accountants and California State Board of Accountancy.
BOB GRAZIANO, joined the Company in April 1999 as its Senior Vice President
of Eastern Regional Sales. From 1975 to 1999, Mr. Graziano served as
International Distribution Manager for General Semiconductor Corporation. From
1972 to 1975, Mr. Graziano served as General Manager of Newark Electronics, a
distributor of a broad line of electronic components. From 1966 to 1972, Mr.
Graziano served as Testing Service Manager for Texas Instruments, Inc. Mr.
Graziano has worked in the electronics industry for nearly 40 years.
BILL LLOYD is a co-founder and Senior Vice President of Sales and Marketing
of the Company. Mr. Lloyd served the Company as Vice President of Sales from
1992 through 1994 and Vice President of Eastern Regional Sales from 1990 through
1991. Prior thereto, Mr. Lloyd was the Director of Marketing for Diodes
Incorporated from 1986 to 1989. Mr. Lloyd had also previously served as a
Director and Secretary of the Company from 1989 to 1995.
SALLY MANLEY, a co-founder of the Company, has been Vice President Central
Regional Sales since 1994 and is currently Vice President of Procurement. From
1990 to 1994, Ms. Manley served as an Executive Sales Manager of the Company.
Prior thereto, Ms. Manley was employed by Diodes Incorporated as a Regional
Sales Manager.
ALEX MIAO, has been Vice President of Engineering and Quality Assurance
since 1997. Prior to 1997, Mr. Miao served as quality assurance manager in the
computer products division at Analog Devices, Inc. Prior thereto, Mr. Miao
served in management positions for quality systems and product/test engineering
with Microchip Technologies, Inc., National Semiconductor Corporation, Micro
Power Systems, the Chung-San Science and Technology institute and RCA Taiwan,
Ltd.
ELI YU, a co-founder of the Company, has been the Chief Information Officer
since 1996. Mr. Yu served the Company as the MIS Manager from 1993 to 1996 and
as the Material Control and EDP Manager from 1990 to 1993. Prior thereto, Mr. Yu
was the EDP manager for Diodes Incorporated.
BOARD MEETINGS AND COMMITTEES
During 1999, the Board of Directors met three times. Each director attended
one hundred percent of the Board of Directors meetings and the meetings of Board
committees on which he served.
4
The Board of Directors has established an Audit Committee that reviews the
audit and control functions of the Company, the Company's accounting principles,
policies and practices and financial reporting, the scope of the audit conducted
by the Company's independent auditors, the fees and all non-audit services of
the independent auditors and the independent auditor's opinion and management
comment letter (if any) and management's response thereto. The Audit Committee
met once during the year. Members of the Audit Committee are Mr. Gu, Mr. Chiang
and Mr Sung, who are all independent from the Company.
The Board of Directors has established a Compensation Committee. The
function of the Compensation Committee is to review and make recommendations
with respect to compensation of executive officers and key employees, including
administration of the Company's Stock Incentive Plan. The Compensation Committee
met once during the year. Members of the Compensation Committee are Mr. Gu, Mr.
Chiang and Mr. Sung.
The Board of Directors does not have a Nominating Committee or a committee
performing similar functions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT.
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons that Section 16(a) forms were required and filed by such
persons. The Company believes that, during the year ended December 31, 1999, all
filing requirements applicable to its officers, directors, and greater than ten
percent beneficial owners were complied with.
MANAGEMENT
SUMMARY COMPENSATION TABLE
The following table sets forth certain information as to the Company's
Chief Executive Officer (the "Named Executive Officer".) None of the Company's
other executive officers total annual salary plus bonus for the year ended
December 31, 1999 exceeded $100,000:
ANNUAL COMPENSATION LONG TERM
------------ COMPENSATION STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTION AWARDS (1) COMPENSATION (2)
---------------------------- ---- ------ ----- ----------------- ----------------
Stewart Wang, CEO 1999 $183,791 $ - 58,000 $8,820
1998 $188,941 $ - - $6,044
1997 $193,211 $ - 40,000 $5,774
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(1) All numbers reflect number of shares of Class A Common Stock subject to
options granted during the year.
(2) The amount consists solely of an automobile allowance.
5
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of
options ("Options") to purchase Class A Common Stock under the Stock Option Plan
to the Named Executive Officer during the fiscal year ended December 31, 1999.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATE OF STOCK
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION -------------------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SH)(1) DATE 5% 10%
---- ---------- -------------- --------- ---------- --------------- ---------------
Stewart Wang, CEO 58,000 6.31% (3) 2009 $90,778 $219,067
- ---------------
(1) The exercise price was market value of the Common Stock on the date of
grant.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on option exercises are dependent upon other factors,
including the future performance of the Common Stock and overall stock
market conditions.
(3) Options to purchase 20,000 shares are exercisable at $1.62 and options to
purchase 38,000 shares are exercisable at $1.37.
OPTION EXERCISES AND FISCAL YEAR END VALUE
The following table sets forth with respect to the Named Executive Officer
information with respect to options exercised, unexercised options and year-end
option values with respect to options to purchase shares of Class A Common
Stock.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN THE MONEY OPTIONS
SHARES VALUE DECEMBER 31, 1999(#) AT DECEMBER 31, 1999 (1)
ACQUIRED ON REALIZED ----------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- -------------- -------------- -------------- --------------
Stewart Wang, CEO -- -- 66,500 58,000 -- $24,000
- ---------------
(1) Represents the difference between the last reported sale price of the
Common Stock on December 31, 1999 and the exercise price of the option
multiplied by the applicable number of shares.
COMPENSATION OF DIRECTORS
Non-employee directors receive $1,500 for attending the Annual Board of
Directors meeting. The Company pays all out-of-pocket fees associated with the
Directors attendance. In addition, non-employee directors receive an annual
grant of 5,000 non-statutory stock options under the Company's 1995 Stock
Incentive Plan (the "1995 Plan"), exercisable at the fair market value of the
Company's Class A Common Stock on the date of grant, and which vest 1/3 upon
each anniversary thereafter.
6
EMPLOYMENT CONTRACT
Mr. Wang's employment agreement expired December 31, 1997. As of the date
of this Report, the Company and Mr. Wang have not entered into a new agreement
and they do not anticipate doing so. Mr. Wang and the other executive officers
are appointed by and serve at the discretion of the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1999, the Company had sales of
approximately $23,000 to a company controlled by Winston Gu, a director of the
Company. All of these sales were of discrete electronic component products
carried by the Company in inventory and the Company considers these sales to be
in the normal course of business and on an arm's length basis. The Company
expects that such sales may continue in the future.
During the year ended December 31, 1999, the Company purchased printing and
related services of approximately $26,000 from a company in which Mr. Ku, Mr.
Wang and Mr. Gu are affiliated. All of these purchases were for printing of
catalogs and other materials that the Company considers to be in the normal
course of business and on an arm's length basis.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee has the responsibility to determine and
administer the Company's executive compensation programs and make appropriate
recommendations concerning matters of executive compensation. Set forth below
are the principal factors underlying the Committee's philosophy used in setting
compensation for fiscal 1999.
COMPENSATION PHILOSOPHY. At the direction of the Board of Directors, the
Committee endeavors to ensure that the compensation programs for executive
officers of the Company are competitive and consistent in order to attract and
retain key executives critical to the Company's long-term success. The Committee
believes that the Company's overall financial performance should be an important
factor in the total compensation of executive officers. At the executive officer
level, the Committee has a policy that a significant portion of potential
compensation should consist of variable, performance-based components, such as
stock options and bonuses, which can increase or decrease to reflect changes in
corporate and individual performance. These incentive compensation programs are
intended to reinforce management's commitment to the enhancement of
profitability and stockholder value.
The Committee takes into account various qualitative and quantitative
indicators of corporate and individual performance in determining the level and
composition of compensation for the Company's executive officers. In
implementing the Company's executive compensation objectives, the Committee has
designed an executive compensation program consisting of base salary, annual
incentive compensation, stock options and other employment benefits.
The Committee seeks to maintain levels of compensation that are competitive
with similar companies in the Company's industry. To that end, the Committee
reviews proxy data and other compensation data relating to companies within the
Company's industry. In addition, from time to time, the Committee also receives
assessments and advice regarding the Company's compensation practices from
independent compensation consultants.
BASE SALARY. The base salary of the executive officers represents the fixed
component of their compensation program. The Company's philosophy regarding base
salaries is to maintain salaries for the aggregate group of executive officers
at levels the Committee believes to be near the industry average. Periodic
increases in base salary relate to individual contributions to the Company's
performance.
7
ANNUAL INCENTIVE COMPENSATION. The Company's executive officers are
eligible for annual incentive compensation consisting primarily of cash bonuses
based on the attainment of corporate earnings. While performance against
financial objectives is the primary measurement for executive officers' annual
incentive compensation, non-financial performance also affects pay. The
Committee considers such corporate performance measures as net income, basic
earnings per common share, return on average common stockholders' equity, sales
growth and expense management in making compensation decisions. The Committee
also appreciates the importance of achievements that may be difficult to
quantify, and accordingly recognizes qualitative factors, such as successful
supervision of major corporate projects and demonstrated leadership ability.
STOCK OPTIONS. The Committee strongly believes that the Company's
compensation program should provide employees with an opportunity to increase
their equity ownership and potentially gain financially from Class A Common
Stock price increases. By this approach, the best interests of shareholders,
executives and employees will be closely aligned. Therefore, executives and
other employees are eligible to receive stock options, giving them the right to
purchase shares of Class A Common Stock of the Company at a specified price in
the future. The Committee believes that the use of stock options as the basis
for long-term incentive compensation meets the Committee's compensation strategy
and business needs of the Company by achieving increased value for shareholders
and retaining key employees.
The Company recommended to the Board of Directors the granting of 375,400
options to purchase the company's Class A Common Stock during the 1999 fiscal
year. In approving grants and awards under the Plan, the quantitative and
qualitative factors and industry comparisons outlined above are considered. The
number of options previously awarded to and held by executive officers was an
important factor in determining the size of current option grants.
OTHER EMPLOYMENT BENEFITS. The Company provides a cafeteria plan to cover
health and welfare benefits to executives and all employees similar to those
provided by similar companies in the Company's industry. The Company also
provides a 401(k) plan in which all employees are eligible.
CHIEF EXECUTIVE OFFICER COMPENSATION. With respect to Mr. Wang, the
Company's Chief Executive Officer, the Compensation Committee established an
annual base salary of $183,791 for him. In determining the appropriate
compensation figure for Mr. Wang, the Compensation Committee considered a
variety of factors, including a comparison of Mr. Wang's compensation at his
level of experience with the executive compensation paid in similar industry
groups to executives with comparable levels of experience.
COMPENSATION COMMITTEE
Richard Chiang
Winston Gu
Felix Sung
The Report of the Compensation Committee on Executive Compensation shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 as amended, or under the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such acts.
8
STOCK PERFORMANCE GRAPH
The following performance table compares the cumulative total return for
the period from April 19, 1995 through December 31, 1999, from an investment of
$100 in (i) the Company's Class A Common Stock, (ii) the NASDAQ US Companies
index, (iii) the Peer Group of companies. For each group an initial investment
of $100 is assumed on April 19, 1995 (the date of the Company's initial public
offering). The total return calculation assumes reinvestment of all dividends
for the indices. The Company did not pay dividends on its Class A Common Stock
during the time frame set forth below:
[GRAPH]
The data points depicted on the graph are as follows:
- ----------------------------------------------------------------------------------------------------------------------------
DATE THE COMPANY NASDAQ US COMPANIES PEER GROUP (2)
- ----------------------------------------------------------------------------------------------------------------------------
April 19, 1995 (1) $ 100.00 $100.00 $100.00
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1995 $ 150.00 $129.80 $124.03
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1996 $ 45.24 $159.65 $125.24
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1997 $ 52.38 $195.95 $125.69
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1998 $ 29.14 $275.60 $ 93.10
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1999 $ 34.96 $512.34 $149.41
- ----------------------------------------------------------------------------------------------------------------------------
(1) The 1995 data begins April 19, 1995, the date of the Company's initial
public offering.
(2) The Peer Group consists of the following electronic and industrial
distribution companies:
All American Semiconductor, Inc. Jaco Electronics, Inc.
Arrow Electronics, Inc. Reptron Electronics, Inc.
Avnet, Inc.
9
PRINCIPAL SHAREHOLDERS
The following table sets forth as of March 31, 2000, certain information
regarding the ownership of the Company's Common Stock by (i) each person
(including any group) known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock, (ii) each of the Company's
directors and (iii) all of the Company's executive officers and directors as a
group. Except as otherwise indicated below, each person named in the table has
sole voting and investment power with respect to all shares of Common Stock
owned by such person. Unless otherwise indicated, the address of each person
shown is c/o the Company, 25202 Anza Dr., Santa Clarita, California 91355.
CLASS A COMMON STOCK (1) CLASS B COMMON STOCK (1) % OF VOTE
----------------------------- ------------------------------ OF ALL CLASSES
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES % OF CLASS NUMBER OF SHARES % OF CLASS OF COMMON STOCK (1)
- ------------------------------------ ---------------- ---------- ---------------- ---------- -------------------
Stewart Wang 849,145(2) 16.76% 762,612 100% 60.78%(3)
Tzu Sheng Ku 1,227,574(4) 24.24% 9.67%
FMR Corporation 544,900(7) 10.76% 4.29%
82 Devonshire Street
Boston, MA 02109
Richard Chiang 288,861(5) 5.70% 2.28%
Winston Gu 103,257(5) 2.04% *
Felix Sung 40,894(5) * *
All directors and executive officers
as a group (12 persons) 3,012,836(6) 59.48% 762,612 100% 77.82%(3)
* Less than 1.0%
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission that deem shares to be beneficially
owned by any person who has or shares voting or investment power with
respect to such shares. Unless otherwise indicated, the persons named in
this table have sole voting and sole investment power with respect to all
shares shown as beneficially owned, subject to community property laws
where applicable.
(2) Includes 762,612 shares of Class A Common Stock issuable upon conversion of
the 762,612 shares of Class B Common Stock owned by Mr. Wang, 700 shares of
Class A Common Stock owned by Mr. Wang's wife and 85,833 shares of Class A
Common Stock underlying options that are or will within 60 days of the date
hereof, be exercisable.
(3) Excludes 762,612 shares of Class A Common Stock issuable upon conversion of
the 762,612 shares of Class B Common Stock owned by Mr. Wang.
(4) Includes 81,962 shares of Class A Common Stock owned by Mr. Ku's wife and
178,180 shares of Class A Common Stock owned by Mr. Ku's four minor
children as to which Mr. Ku exercises sole voting control and includes
14,167 shares of underlying options that are, or will within 60 days of the
date hereof, be exercisable.
(5) Includes 14,167 shares of underlying options that are, or will within 60
days of the date hereof, be exercisable.
(6) Includes the shares of Class A Common Stock referred to in footnotes (2),
(4) and (5) above.
(7) FMR Corporation filed a Form 13G/A on February 14, 2000, claiming
beneficial ownership of 544,900 shares of Class A Common Stock.
AUDITORS
Grant Thornton LLP, independent certified public accountants, were selected
by the Board of Directors to serve as independent auditors of the Company for
the fiscal year ended December 31, 1998 and 1999. Representatives of Grant
Thornton LLP are expected to be present at the Annual Meeting. They will have an
opportunity to make a statement if
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they desire to do so and will respond to appropriate questions from
shareholders.
The Company filed on Form 8-K, dated December 2, 1998, reporting a change
of the Company's accountants. KPMG, LLP (formerly known as KPMG Peat Marwick
LLP) ("KPMG") was previously the principal accountants for the Company. On
December 2, 1998, KPMG was dismissed by the Company as principal accountants and
Grant Thornton LLP was engaged as principal accountants to audit the accounts of
the company for the year ending December 31, 1998. The decision to change
accountants was approved by the Company's Audit Committee and the Board of
Directors.
During the fiscal years ended December 31, 1997 and 1996 through the date
of this Report, there were no disagreements with KPMG on any matter of
accounting principles or practices, financial statement disclosure or audit
scope or procedure which disagreement, if not resolved to the satisfaction of
KPMG, would have caused them to make reference to the matter of such
disagreement in connection with the Form 8-K, dated December 2, 1998. The
accountant's report for the fiscal years ended December 31, 1997 and 1996 did
not contain an adverse opinion or a disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit scope, or accounting principles.
KPMG furnished the Company with a letter addressed to the Securities and
Exchange Commission stating that it agreed with the above statements. A copy of
that letter was filed as Exhibit 16 to the Form 8-K, dated December 2, 1998.
PROPOSALS OF SHAREHOLDERS
A proper proposal submitted by a shareholder for presentation at the
Company's 2001 Annual Meeting and received at the Company's executive offices no
later than December 15, 2000, will be included in the Company's proxy statement
and form of proxy relating to the 2001 Annual Meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be acted upon at the
Annual Meeting other than described in this Proxy Statement. Unless otherwise
directed, all shares represented by the persons named in the accompanying proxy
will be voted in favor of the proposals described in this Proxy Statement. If
any other matter properly comes before the meeting, however, the proxy holders
will vote thereon in accordance with their best judgment.
EXPENSES
The entire cost of soliciting proxies will be borne by the Company.
Solicitation may be made by mail. The Company will request brokerage houses,
nominees, custodians, fiduciaries and other like parties to forward soliciting
material to the beneficial owners of the Company's Common Stock held of record
by them and will reimburse such persons for their reasonable charges and
expenses in connection therewith.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report for the year ended December 31, 1999 is being
mailed to Shareholders along with this Proxy Statement. The Annual Report is not
to be considered part of the soliciting material.
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REPORT ON FORM 10-K
THE COMPANY UNDERTAKES, UPON WRITTEN REQUEST, TO PROVIDE, WITHOUT CHARGE,
EACH PERSON FROM WHOM THE ACCOMPANYING PROXY IS SOLICITED WITH A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, BUT EXCLUDING EXHIBITS THERETO. REQUESTS
SHOULD BE ADDRESSED TO TAITRON COMPONENTS INCORPORATED, 25202 ANZA DR., SANTA
CLARITA CALIFORNIA, 91355, ATTENTION: CHIEF FINANCIAL OFFICER.
ON BEHALF OF THE BOARD OF DIRECTORS
STEWART WANG
CEO AND PRESIDENT
25202 Anza Dr.
Santa Clarita, California, 91355
(661) 257-6060
April 22, 2000
12
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
TAITRON COMPONENTS INCORPORATED
May 19, 2000
Please Detach and Mail in the Envelope Provided
Please mark your
A / X / votes as in this
example.
WITHHOLD The Board of Directors
AUTHORITY TO VOTE FOR recommends a WITH vote on
THE NOMINEES Proposal 1.
LISTED AT RIGHT
WITH
1. ELECTION OF Nominees: Tzu Sheng (Johnson) Ku
DIRECTORS, as / / / / Stewart Wang
provided in the Richard Chiang
Company's Proxy Statement: Craig Miller
Felix M. Sung
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR THE
NOMINEES, LINE THROUGH OR OTHERWISE STRIKE OUT
SAME AT RIGHT.)
Please indicate by checking this box if you anticipate / /
attending the Annual Meeting
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF TAITRON COMPONENTS INCORPORATED
The undersigned revokes any other proxy to vote at such Meeting and hereby
ratifies and confirms all that said attorneys and proxies, and each of them, may
lawfully do by virtue hereof. With respect to matters not known at the time of
the solicitation hereof, said proxies are authorized to vote in accordance with
their best judgment.
This Proxy will be voted in accordance with the instructions set forth
above. This Proxy will be treated as a GRANT OF AUTHORITY TO VOTE FOR the
election of the Directors named and as said proxy shall deem advisable on such
other business as may come before the Meeting, unless otherwise directed.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 22, 2000 relating to the
Meeting.
Signature(s) of Shareholders(s):
--------------------------------------
Signature(s) of Shareholder(s): Dated , 2000
----------------------- ---------
NOTE: The signature(s) hereon should correspond exactly with the names(s) of the
Shareholder(s) appearing on the Share Certificate. If stock is jointly held, all
joint owners should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If signer is a corporation,
please sign the full corporate name and give title of signing officer.
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TAITRON COMPONENTS INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned, a Shareholder of TAITRON COMPONENTS INCORPORATED, a
California corporation (the "Company"), hereby appoints STEWART WANG and STEVEN
H. DONG, and each of them, the proxies of the undersigned, each with full power
of substitution, to attend, vote and act for the undersigned at the Annual
Meeting of Shareholders of the Company, to be held on May 19, 2000 and any
postponements or adjournments thereof, and in connection herewith to vote and
represent all of the shares of the Company which the undersigned would be
entitled to vote as follows:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
14