Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
High Income Opportunity Fund Inc.
(Name of Registrant as Specified in its Charter)
Gordon Swartz
Name of Person Filing Proxy Statement
Payment of Filing Fee (Check appropriate box):
[X] No longer applicable
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which the transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] 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:
1. Set forth the amount on which the filing fee is calculated and state how
it was determined.
HIGH INCOME OPPORTUNITY FUND INC.
125 Broad Street
New York, New York 10004
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------
To be Held on February 21, 2002
-----------------
To the Stockholders of High Income Opportunity Fund Inc.:
The Annual Meeting of Stockholders of High Income Opportunity Fund Inc. (the
"Fund") will be held at the Fund's offices at 125 Broad Street, 11/th/ Floor,
New York, New York, on February 21, 2002 at 9:30 A.M. (New York Time) for the
following purposes:
1. To elect three Class I directors, each to hold office for the term
indicated and until his or her successor shall have been elected and
qualified;
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on January 10, 2002
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting and any adjournments thereof.
By Order of the Board of Directors
Christina T. Sydor
Secretary
New York, New York
January 22, 2002
-----------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON OR
BY PROXY; IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE PROVIDED FOR
YOUR CONVENIENCE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
HIGH INCOME OPPORTUNITY FUND INC.
125 Broad Street
New York, New York 10004
-----------------
PROXY STATEMENT
-----------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 21, 2002
INTRODUCTION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of the High Income Opportunity Fund Inc. (the
"Fund") of proxies to be voted at the Annual Meeting of Stockholders (the
"Meeting") of the Fund to be held at the Fund's principal executive offices at
125 Broad Street, 11/th/ Floor, New York, New York 10004, on February 21, 2002
at 9:30 A.M. (New York Time), and at any adjournments thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders (the
"Notice").
The cost of soliciting proxies will be borne by the Fund. Proxy
solicitations will be made mainly by mail. In addition, certain officers,
directors and employees of the Fund; Salomon Smith Barney Inc. ("Salomon Smith
Barney"), which makes a market in the Fund's shares; Smith Barney Fund
Management LLC ("SBFM" or the "Manager"), the Fund's investment manager; and/or
PFPC Global Fund Services (PFPC), the Fund's transfer agent, may solicit
proxies in person or by telephone, telegraph, or mail. Salomon Smith Barney and
SBFM are each located at 125 Broad Street, New York, New York 10004; PFPC is
located at P.O. Box 8030, Boston, Massachusetts 02266.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended September 30, 2001, has previously been furnished to all
stockholders of the Fund. This proxy statement and form of proxy are first
being mailed to stockholders on or about January 22, 2002. The Fund will
provide, without charge, additional copies of the Annual Report to any
stockholder upon request by calling the Fund at 1-800-331-1710.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or otherwise as
provided therein. Unless instructions to the contrary are marked, shares
represented by the proxies will be voted "FOR" all the proposals. For purposes
of determining the presence of a quorum for transacting business at the
Meeting, abstentions and
broker "non-votes" (i.e. proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which
the brokers or nominees do not have discretionary power) will be treated as
shares that are present but which have not been voted. Because the requisite
approval of the proposal is measured by a portion of the votes actually cast,
abstentions and broker "non-votes" will have no impact on the approval of a
proposal. Proposal 1 requires for approval the affirmative vote of a majority
of the votes cast at the Meeting with a quorum present. Any proxy may be
revoked at any time prior to the exercise thereof by submitting another proxy
bearing a later date, by giving written notice to the Secretary of the Fund at
the Fund's address indicated above, or by voting in person at the Meeting.
The Board knows of no business other than that specifically mentioned in the
Notice to be presented for consideration at the Meeting. If any other matters
are properly presented, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment to the extent
permissible under applicable law.
The Board of Directors of the Fund has fixed the close of business on
January 10, 2002 as the record date (the "Record Date") for the determination
of stockholders of the Fund entitled to notice of and to vote at the Meeting or
any adjournment thereof. Stockholders of the Fund on that date will be entitled
to one vote on each matter for each share held, and a fractional vote with
respect to fractional shares, with no cumulative voting rights. At the Record
Date, the Fund had outstanding 71,538,435.846 shares of Common Stock, par value
$.001 per share, the only authorized class of stock, of which 69,921,357.621 or
97.74% were held in accounts, but not beneficially owned, by CEDE & Co., as
nominee for The Depository Trust Company, Box 20, Bowling Green Station, New
York, New York 10004-9998. At the Record Date, no single shareholder or "group"
(as that term is used in Section 13(d) of the Securities Exchange Act of 1934)
to the knowledge of the Board or the Fund, owned beneficially more than 5% of
the outstanding shares of the Fund. As of the Record Date, the officers and
Board members of the Fund in the aggregate beneficially owned less than 1% of
the outstanding shares of the Fund.
In the event that a quorum is not present, or if sufficient votes in favor
of the proposal set forth in the Notice and this Proxy Statement are not
received by the time scheduled for the Meeting, the persons named as proxies
may move for one or more adjournments of the Meeting to permit further
solicitation of proxies with respect to such proposal. In determining whether
to adjourn the Meeting, the following factors may be considered: the nature of
the proposal that is the subject of the Meeting, the percentage of votes
actually cast, the percentage of negative votes actually cast, the nature of
any further solicitation and the information to be
2
provided to stockholders with respect to the reasons for the solicitation. Any
such adjournment will require the affirmative vote of a majority of the shares
present at the Meeting. The persons named as proxies will vote in favor of such
adjournment those shares which they are entitled to vote and which have voted
in favor of such proposal.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Fund is currently classified into three
classes. The directors serving in Class I have terms expiring at the Meeting;
the Class I directors currently serving on the board have been nominated by the
Board of Directors for re-election at the Meeting to serve for a term of three
years (until the 2005 Annual Meeting of Stockholders) or until their successors
have been duly elected and qualified. The affirmative vote of a majority of the
votes cast at the Meeting at which a quorum is present is sufficient to elect
each nominee. It is the intention of the persons named in the enclosed proxy to
vote in favor of the election of the persons listed below as nominees.
The Board knows of no reason why any of the Class I nominees listed below
will be unable to serve, but in the event of any such unavailability, the
proxies received will be voted for such substitute nominees as the Board may
recommend.
Certain information concerning the nominees is set forth below. All of the
nominees for Class I currently serve as Directors of the Fund. Any director
affiliated with the Manager or otherwise considered an "interested person" of
the Fund, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act") is indicated by an asterisk(*). Information as to beneficial
ownership is based upon information furnished to the Fund by Directors.
Persons Nominated for Election as Directors
Number of Shares
Principal Occupations and % Beneficially
During Past Five Years, owned as of
Name Other Directorships, and Age December 31, 2001
---- ---------------------------- ------------------
CLASS I DIRECTORS
Lee Abraham Retired; Director/Trustee of 9 investment None
Director since 1999 companies associated with Citigroup Inc.
("Citigroup"). Director of R.G. Barry Corp., a
footwear manufacturer and Signet Group plc., a
specialty retailer and eNote.com, Inc., a computer
hardware company. Formerly Chairman and
Chief Executive Officer of Associated
Merchandising Corporation, a major retail
merchandising and sourcing organization and
formerly Director of Galey & Lord and Liz
Claiborne; age 74.
3
Number of Shares
Principal Occupations and % Beneficially
During Past Five Years, owned as of
Name Other Directorships, and Age December 31, 2001
---- ---------------------------- ------------------
Allan J. Bloostein President of Allan J. Bloostein Associates, a None
Director since 1999 consulting firm; Director/Trustee of 16
investment companies associated with Citigroup;
Director of CVS Corporation, a drugstore chain,
and Taubman Centers Inc., a real estate
development company. Retired Vice Chairman
and Director of The May Department Stores
Company; age 72.
Richard E. Hanson, Jr. Retired; Formerly Head of The New Atlanta None
Director since 1999 Jewish Community High School, Atlanta,
Georgia; Director/Trustee of 9 investment
companies associated with Citigroup. Formerly
Headmaster, The Peck School, Morristown, New
Jersey; age 60.
The remainder of the Board currently constitutes the Class II and the Class
III directors, none of whom will stand for election at the Meeting, as their terms
are not due to expire until the year 2003 and 2004, respectively.
Directors Continuing in Office
Number of Shares
Principal Occupations and % Beneficially
During Past Five Years, owned as of
Name Other Directorships, and Age December 31, 2001
---- ---------------------------- ------------------
CLASS II DIRECTORS
Heath B. McLendon* Managing Director of Salomon Smith Barney; 230.653
Director since 1993 Chairman, Co-Chairman, President and/or (less than 1%)
Trustee/Director of 75 investment companies
associated with Citigroup; Director and President
of SBFM and Travelers Investment Adviser, Inc.
("TIA"); 68.
Roderick C. Rasmussen Investment Counselor; Director/Trustee of 9
Director since 1993 investment companies associated with Citigroup. 166.439
Formerly Vice President of Dresdner and (less than 1%)
Company Inc. (investment counselors); 75.
John P. Toolan Retired; Director/Trustee of 9 investment None
Director since 1993 companies associated with Citigroup; Trustee of
John Hancock Funds. Formerly Director and
Chairman of the Smith Barney Trust Company,
Director of Smith Barney Holdings Inc. and
various subsidiaries, formerly Senior Executive
Vice President, Director and Member of the
Executive Committee of Smith Barney Inc.; 71.
CLASS III DIRECTORS
Jane F. Dasher Controller of PBK Holdings Inc., a family 676.000
Director since 1999 investment company; Director/Trustee of 11 (less than 1%)
investment companies associated with Citigroup.
Prior to 1997, an independent Financial
Consultant; age 52.
4
Number of Shares
Principal Occupations and % Beneficially
During Past Five Years, owned as of
Name Other Directorships, and Age December 31, 2001
---- ---------------------------- ------------------
Donald R. Foley Retired; Director/Trustee of 9 investment 13,131.000**
Director since 1993 companies associated with Citigroup. Formerly (less than 1%)
Vice President of Edwin Bird Wilson,
Incorporated (advertising); 79
Paul Hardin Professor of Law and Chancellor Emeritus at the 4,298.431**
Director since 1994 University of North Carolina at Chapel Hill; (less than 1%)
Director/Trustee of 11 investment companies
associated with Citigroup; Formerly Director of
The Summit Bancorporation and formerly,
Chancellor of the University of North Carolina at
Chapel Hill; 70
- --------
* Designates a Director who is affiliated with the Manager and considered an
"interested person" of the Fund as defined under the 1940 Act.
** Represents shares owned by this Director and members of his family.
Beneficial Ownership Report
Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
officers and directors, and persons who beneficially own more than ten percent
of a registered class of the Fund's equity securities, to file reports of
ownership with the Securities and Exchange Commission, the New York Stock
Exchange (the "NYSE") and the Fund. Based solely upon its review of the copies
of such forms received by it and representations from such persons, the Fund
believes that, during fiscal year 2001, all filing requirements applicable to
such persons were satisfied.
Committees of the Board of Directors
The Fund has no compensation committee of the Board of Directors or any
committee performing similar functions. The Fund has an administrative and
governance committee composed of Lee Abraham, Jane F. Dasher, Donald R. Foley
and Paul Hardin, which acts as a nominating committee of the Board of
Directors. The Fund has an audit and investment performance committee ("Audit
Committee") comprised solely of members who are independent as defined in the
NYSE's Listed Company Manual. The Audit Committee is charged with recommending
a firm of independent auditors to the Board of Directors and considering and
discussing the Fund's accounting matters as set forth in the committee's
charter, which is attached hereto as Appendix A. The Fund has a pricing
committee composed of independent directors which is charged with determining
fair value prices for securities when required. The directors of these
respective committees are not "interested persons" of the Fund as defined under
the 1940 Act (the "independent directors").
Six meetings of the Board were held between October 1, 2000 and September
30, 2001, three of which were regular meetings. Three administrative and
governance committee meetings were held. Three audit committee meetings were
5
also held. Two pricing committee meetings were held. There were no nominating
committee meetings held. No Director attended less than 75% of these meetings
during his or her tenure.
Only the independent directors receive remuneration from the Fund for acting
as a director. Aggregate fees and expenses (including reimbursement for travel
and out-of-pocket expenses) of $13,769 were paid to such directors by the Fund
during the calendar year ended December 31, 2000. Fees for the independent
directors, who also serve as board members of certain other funds sponsored by
or affiliated with Salomon Smith Barney, are currently set at $60,000 per annum
plus a per meeting fee of $2,500 with respect to in-person meetings and $100
for each telephone meeting. None of the officers of the Fund received any
compensation from the Fund for such period. Officers and interested directors
of the Fund are compensated by Salomon Smith Barney.
COMPENSATION
The following table shows the compensation paid by the Fund to each person
who was a Director during the Fund's fiscal year ended September 30, 2001 and
calendar year ended December 31, 2000.
Compensation Table
Compensation
from Fund
Aggregate and Fund
Compensation Pension or Complex Total Number of
from Fund Retirement Paid to Directors Funds for
for the Fiscal Benefits Accrued for the Calendar Which Director
Year Ended as part of Year Ended Serves Within
Name of Person 9/30/01 Fund Expenses 12/31/00 Fund Complex
-------------- -------------- ---------------- ----------------- ---------------
Lee Abraham $350 0 $ 72,800 9
Allan J. Bloostein 350 0 109,500 12
Jane F. Dasher 550 0 75,000 9
Donald R. Foley* 336 0 74,900 9
Richard E. Hanson, Jr. 350 0 74,800 9
Paul Hardin 350 0 93,150 11
Heath B. McLendon+ 0 0 0 75
Roderick C. Rasmussen* 450 0 74,900 9
John P. Toolan* 450 0 74,900 9
- --------
+ Designates a Director who is an "interested person" of the Fund as defined
under the 1940 Act.
* Pursuant to the Fund's deferred compensation plan, the indicated Directors
have elected to defer the following amounts of their compensation from the
Fund: Donald R. Foley: $113, Roderick C. Rasmussen: $158 and John P. Toolan:
$450, and the following amounts of their total compensation from the Fund
Complex: Donald R. Foley: $24,000; Roderick C. Rasmussen: $30,000 and John P.
Toolan: $74,900.
Upon attainment of age 72 the Fund's current directors may elect to change to
emeritus status. Any directors elected or appointed to the Board of Directors
in the future will be required to change to emeritus status upon attainment
of age 80. Directors Emeritus are entitled to serve in emeritus status for a
maximum of 10 years during which time they are paid 50% of the annual
retainer fee and meeting fees otherwise applicable to the Fund's directors,
together with reasonable out-of-pocket expenses for each meeting attended.
During the Fund's last fiscal year, total compensation paid by the Fund to
Directors Emeritus totalled $186.
6
Current Officers
The following is a list of the current executive officers of the Fund, all
of whom have been elected by the directors to serve until their respective
successors are elected:
Offices and Positions Period Principal Occupations During
Name Held with Fund Offices Held Past Five Years and Age
---- --------------------- ------------ ----------------------------
Heath B. McLendon Chairman of the 1995 to date (see table of directors above)
Board, President and
Chief Executive
Officer
Lewis E. Daidone Senior Vice 1993 to date Managing Director of Salomon Smith
President and Barney; Senior Vice President or
Treasurer Executive Vice President and
Treasurer of 83 investment companies
associated with Citigroup; Director and
Senior Vice President of the Manager
and TIA; 44.
John C. Bianchi Vice President 1993 to date Managing Director of Salomon Smith
Barney and investment officer of
certain investment companies
associated with Citigroup; 46.
Christina T. Sydor Secretary 1993 to date Managing Director of Salomon Smith
Barney; Secretary of 61 investment
companies associated with Citigroup;
Secretary and General Counsel of the
Manager and TIA; 50.
Paul Brook Controller 1998 to date Director of Salomon Smith Barney;
Controller or Assistant Treasurer of
certain investment companies
associated with Citigroup since 1998;
Prior to 1998, Managing Director of
AMT Capital Services Inc.; Prior to
1997, Partner with Ernst & Young
LLP; 47.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF NOMINEES TO THE BOARD.
Audit Committee Report
The purposes of the Fund's Audit Committee are set forth in the Charter
included as Appendix A. The purposes include assisting the Board of Directors
in its oversight of the Fund's financial reporting process and internal
controls, the Fund's financial statements and the selection of the Fund's
independent
7
accountants. Management, however, is responsible for the preparation,
presentation and integrity of the Fund's financial statements, and the
independent accountants are responsible for planning and carrying out proper
audits and reviews.
In connection with the audited financial statements as of and for the year
ended September 30, 2001 included in the Fund's Annual Report for the year
ended September 30, 2001 (the "Annual Report"), at a meeting held on November
26, 2001, the Audit Committee considered and discussed the audited financial
statements with management and the independent accountants, and discussed the
audit of such financial statements with the independent accountants.
In addition, the Audit Committee discussed with the independent accountants
the quality, and not just the acceptability under generally accepted accounting
principles, of the accounting principles applied by the Fund, and such other
matters brought to the attention of the Audit Committee by the independent
accountants required by Statement of Auditing Standards No. 61, as currently in
effect. The Audit Committee also received from the independent accountants the
written statement required by Independence Standards Board Statement No. 1, as
currently in effect, delineating relationships between the independent
accountants and the Fund and discussed the impact that any such relationships
may have on the objectivity and independence of the independent accountants.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing including auditor independence. Moreover, the Committee
relies on and makes no independent verification of the facts presented to it or
representations made by management or the independent accountants. Accordingly,
the Audit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures, designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations and discussions
referred to above do not provide any assurance that the audit of the Fund's
financial statements has been carried out in accordance with generally accepted
accounting standards, that the financial statements are presented in accordance
with generally accepted accounting principles or that the Fund's auditors are
in fact "independent."
The Audit Committee also met on March 14, 2001 (to consider and discuss the
audit committee charter for the year ended September 30, 2001 with management
and the independent accountants.
8
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants
and subject to the limitations on the responsibilities and role of the Audit
Committee set forth in the Charter and those discussed above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Fund's Annual Report.
Respectfully submitted,
Allan J. Bloostein Roderick C. Rasmussen
Richard E. Hanson, Jr. John P. Toolan
Disclosure of Auditor Fees
Audit Fees. Audit fees paid by Fund to KPMG LLP ("KPMG") in connection with
KPMG's audit of the Fund's annual financial statements for the year ended
September 30, 2001 totaled $27,000.
Financial Information Systems Design and Implementation Fees. Neither the
Fund nor its investment adviser SBFM or other entities under common control
engaged KPMG to provide advice to the Fund regarding financial information
systems design or implementation during the year ended September 30, 2001.
All other Fees. Fees billed to the Fund by KPMG during the year ended
September 30, 2001 for all other non-audit services rendered to the Fund
totaled approximately $2,700 (such fees related to tax services provided to the
Fund). There were no other non-audit fees billed to SBFM or any entity
controlling, controlled by, or under common control with SBFM that provides
services to the Fund during the year ended September 30, 2001. The Fund's Board
of Directors has selected KPMG as auditors for the fiscal year ending September
30, 2002.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2003 Annual Meeting of
the stockholders of the Fund must be received by September 24, 2002 to be
included in the proxy statement and the form of proxy relating to that meeting,
as the Fund expects that the 2003 Annual Meeting will be held in February 2003.
The submission by a stockholder of a proposal for inclusion in the proxy
statement does not guarantee that it will be included. Stockholder proposals
are subject to certain regulations under the federal securities laws.
The persons named as proxies for the 2003 Annual Meeting of stockholders
will have discretionary authority to vote on any matter presented by a
stockholder for action at that meeting unless the Fund receives notice of the
matter by
9
December 6, 2002, in which case these persons will not have discretionary
voting authority except as provided in the Securities and Exchange Commission's
rules governing stockholder proposals.
OTHER MATTERS
The Manager knows of no other matters which are to be brought before the
Meeting. However, if any other matters not now known or determined properly
come before the Meeting, it is the intention of the persons named in the
enclosed form of proxy to vote such proxy in accordance with their judgment on
such matters.
By Order of the Board of Directors,
Christina T. Sydor
Secretary
January 22, 2002
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE AND SIGN, DATE AND
RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
10
APPENDIX A
HIGH INCOME OPPORTUNITY FUND INC.
AUDIT COMMITTEE CHARTER
I. Composition of the Audit Committee: The Audit Committee shall be comprised
of at least three directors, each of whom shall have no relationship to the
Company that may interfere with the exercise of their independence from
management and the Company and shall otherwise satisfy the applicable
membership requirements under the rules of the New York Stock Exchange, Inc.
as such requirements are interpreted by the Board of Directors in its
business judgment.
II. Purposes of the Audit Committee: The purposes of the Audit Committee are
to assist the Board of Directors:
1. in its oversight of the Company's accounting and financial reporting
principles, policies and controls, and audit processes;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in selecting, evaluating and, where deemed appropriate, replacing the
outside auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The management of the
Company is responsible for the preparation, presentation and integrity
of the Company's financial statements. Management and the internal
auditing department are responsible for maintaining appropriate
accounting and financial reporting principles and policies and internal
controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The outside auditors are
responsible for planning and carrying out a proper audit of the
Company's annual financial statements in accordance with Generally
Accepted Auditing Standards. In fulfilling their responsibilities
hereunder, it is recognized that members of the Audit Committee are not
full-time employees of the Company and are not, and do not represent
themselves to be, accountants or auditors by profession or experts in
the fields of accounting or auditing including the issue of auditor
independence. As such, it is not the duty or responsibility of the Audit
Committee or its members to conduct "field work" or other types of
auditing or accounting reviews or procedures or to set auditor
independence standards, and each member of the Audit Committee shall
A-1
be entitled to rely on (i) the integrity of those persons and
organizations within and outside the Company from which it receives
information (ii) the accuracy of the financial and other information
provided to the Audit Committee by such persons and organizations absent
actual knowledge to the contrary (which shall be promptly reported to
the Board of Directors) and (iii) representations made by management of
the Company or of Smith Barney Fund Management LLC ("SBFM") as to any
information technology, internal audit and other non-audit services
provided by the outside auditors of the Company to the Company, SBFM and
any entity controlling, controlled by or under common control with SBFM
that provides services to the Company ("SBFM Affiliates").
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The Board of
Directors, with the assistance of the Audit Committee, has the ultimate
authority and responsibility to select, evaluate and, where appropriate,
replace the outside auditors.
The outside auditors shall submit to the Audit Committee annually a
formal written statement delineating all relationships between the
outside auditors and the Company ("Statement as to Independence") which,
in the auditor's professional judgement may be reasonably thought to
bear on independence, addressing each non-audit service provided to the
Company, SBFM and the SBFM Affiliate and at least the matters set forth
in Independence Standards Board No. 1. The Statement as to Independence
shall also identify any audit, tax or consulting services to the
custodian, or other service providers to the Company, and to other
investment companies advised by the Company's investment adviser or
administered by the Company's administrator, as the Audit Committee and
the outside auditors may agree. These professional services may include
those relating to the services provided by such service providers to the
Company or any other services that the outside auditors or the Committee
believe may bear on the outside auditor independence with respect to the
Company. The Audit Committee acknowledges that the disclosure of such
services provided by the outside auditors may be limited by the Code of
Professional Conduct of the American Institute of Certified Public
Accountants.
The outside auditors shall submit to the Company annually a formal
written statement of the fees billed for each of the following
categories of services rendered by the outside auditors: (i) the audit
of the Company's financial statements; (ii) information technology
consulting services provided to the Company, SBFM, and the SBFM
Affiliates for the most recent fiscal year, in the aggregate and, (iii)
all other services provided to the Company, SBFM, and the SBFM
Affiliates by the outside auditors for the most recent fiscal year, in
the aggregate.
A-2
III. Meetings of the Audit Committee: The Audit Committee shall meet at least
annually with the outside auditors to discuss the annual audited
financial statements and results of their audit. The Audit
Committee may request any officer or employee of the Company or
the Company's outside counsel or outside auditors to attend a
meeting of the Audit Committee or to meet with any members of,
or consultants to, the Audit Committee.
IV. Duties and Powers of the Audit Committee: To carry out its purposes, the
Audit Committee shall have the following duties and powers:
1. to provide advice to the Board of Directors in selecting, evaluating or
replacing outside auditors;
2. to review the fees charged by the outside auditors for audit and
non-audit services;
3. to ensure that the outside auditors prepare and deliver annually a
Statement as to Independence (it being understood that the outside
auditors are responsible for the accuracy and completeness of this
Statement), to discuss with the outside auditors any relationships or
services disclosed in this Statement that may impact the objectivity and
independence of the Company's outside auditors and to recommend that the
Board of Directors take appropriate action in response to this Statement
to satisfy itself of the outside auditors' independence;
4. If applicable, to consider whether the outside auditors' provision to
the Company, SBFM and the SBFM Affiliates of (a) information technology
consulting services relating to financial information systems design and
implementation and (b) other non-audit services is compatible with
maintaining the independence of the outside auditors; and
5. to instruct the auditors that the outside auditors are ultimately
accountable to the Board of Directors and Audit Committee;
6. to advise management and the outside auditors that they are expected to
provide to the Audit Committee a timely analysis of significant
financial reporting issues and practices;
7. to consider any reports or communications (and management's responses
thereto) submitted to the Audit Committee by the outside auditors
required by or referred to in SAS 61 (as codified by AU Section 380), as
may be modified or supplemented, including reports and communications
related to:
. deficiencies noted in the audit in the design or operation of
internal controls;
. consideration of fraud in a financial statement audit;
A-3
. detection of illegal acts;
. the outside auditors' responsibility under generally accepted
auditing standards;
. significant accounting policies;
. management judgments and accounting estimates;
. adjustments arising from the audit;
. the responsibility of the outside auditors for other information in
documents containing audited financial statements;
. disagreements with management;
. consultation by management with other accountants;
. major issues discussed with management prior to retention of the
outside auditors;
. difficulties encountered with management in performing the audit;
. the outside auditors' judgments about the quality of the entity's
accounting principles; and
. reviews of interim financial information conducted by the outside
auditors; (not applicable) and
8. with respect to reporting and recommendations, to discuss with the
Company's General Counsel any significant legal matters may have a
material effect on the financial statements, the Company's compliance
policies, including material notices to or inquiries received from
governmental agencies;
9. to prepare any report or other disclosures, including any recommendation
of the Audit Committee, required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy
statement;
10. to review this Charter at least annually and recommend any changes to
the full Board of Directors; and
11. to report its activities to the full Board of Directors on a regular
basis and to make such recommendations with respect to the above and
other matters as the Audit Committee may deem necessary or appropriate.
V. Resources and Authority of the Audit Committee: The Audit Committee shall
have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors for
special audits, reviews and other procedures and to retain special counsel
and other experts or consultants.
A-4
FORM OF PROXY
HIGH INCOME OPPORTUNITY FUND INC.
125 Broad Street
New York, New York 10004
This Proxy is Solicited on Behalf of the Board of Directors of the Fund
The undersigned hereby appoints HEATH B. McLENDON, CHRISTINA T. SYDOR, and
GORDON E. SWARTZ, and each of them acting in the absence of the other, as
Proxies, each with the power to appoint a substitute, and hereby authorizes them
to represent and to vote, as designated herein, all the shares of common stock
of High Income Opportunity Fund Inc. held of record by the undersigned on
January 10, 2002 at a Meeting of Stockholders to be held on February 21, 2002 or
any adjournment thereof.
[SEE REVERSE SIDE] CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE
SIDE]
[ X ] Please mark votes as in this example.
The Board of Directors recommends a vote "FOR" the following proposal. This
proxy, when properly executed, will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR each nominee for director.
1. ELECTION OF DIRECTORS
Class I Nominees: (01) Lee Abraham, (02) Allan J. Bloostein,
(03) Richard E. Hanson, Jr.
FOR WITHHELD
[ ] [ ]
[ ]
For all nominees except as noted above
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
[ ]
PLEASE MARK, SIGN DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears to the left. When shares are held by joint
tenants, both should sign, or if one signs, that stockholder's vote binds both
stockholders. When signing as attorney, executor, administrator, agent, trustee
or guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Signature: ____________________________ Date: ______________
Signature: ____________________________ Date: ______________