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 Incorporated
- --------------------------------------------------------------------------------
(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:
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(5) Total fee paid:
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/ / 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.:
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(3) Filing Party:
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(4) Date Filed:
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TAITRON COMPONENTS INCORPORATED
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1999
----------------------------
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,
June 11, 1999, at 2:00 p.m. Pacific time, to consider and act upon the following
matters:
1. The election of directors;
2. Such other business as may properly come before the Annual
Meeting and any adjournment(s) thereof.
The Board of Directors has fixed May 7, 1999 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
PRESIDENT
25202 Anza Dr.
Santa Clarita, California, 91355
(805) 257-6060
May 11, 1999
TAITRON COMPONENTS INCORPORATED
-----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 1999
-----------------
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, June 11, 1999, 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, 1998, 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 May 11, 1999.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The close of business on May 7, 1999 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 5,376,096 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
105 Shareholders of record. The Company is informed and believes that there are
approximately 1,815 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 May 7, 1999, 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 1999 Annual Meeting, each
director will be elected for a term expiring at the 2000 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
Winston Gu
Felix Sung
If elected, the nominees are expected to serve until the 2000 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, 1999.
NAME AGE POSITION
---- --- --------
Tzu Sheng (Johnson) Ku 50 Chairman of the Board and Director Nominee
Stewart Wang 49 President, Chief Executive Officer, Director and Director Nominee
Richard Chiang 42 Director and Director Nominee
Winston Gu 48 Director and Director Nominee
Felix M. Sung 49 Director and Director Nominee
OTHER OFFICERS:
Michael Adams 44 Vice President of Sales
Steven H. Dong 32 Chief Financial Officer and Secretary
Bob Graziano 62 Senior Vice President of Eastern Regional Sales
Bill Lloyd 44 Senior Vice President of Sales and Marketing
Sally Manley 58 Vice President of Procurement
Alex Miao 49 Vice President of Engineering and Quality Assurance
Eli Yu 47 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".
Additionly, 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 distributor of semiconductor components and computer peripheral
products such as hard disks, floppy disks and CD ROM drives, 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 capitalist firm. In addition, Mr. Chiang serves as Chairman of IDX
International, Inc. and Proware Technology Corportion, which are a voice/fax
service business and RAID subsystem business, respectively. 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 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.
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 specializing in 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.
During 1998, 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.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE - 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
4
Audit Committee met once during the year. Members of the Audit Committee are
Mr. Gu and Mr. Chiang.
COMPENSATION COMMITTEE - 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 no Section 16(a) forms were required to be filed by such
persons, the Company believes that, during the year ended December 31, 1998, all
filing requirements applicable to its officers, directors, and greater than ten
percent beneficial owners were complied with.
MANAGEMENT
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information as to the Company's
Chief Executive Officer (the "Named Executive Officer".) None of the Company's
executive officers total annual salary plus bonus for the year ended December
31, 1998 exceeded $100,000:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM
------------------------------- COMPENSATION STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTION AWARDS (1) COMPENSATION (2)
---------------------------- ----- ---------- -------- ------------------ ----------------
Stewart Wang 1998 $188,941 $ - - $5,619
Chief Executive Officer 1997 $193,211 $ - - $6,044
1996 $172,706 $ 34,725 40,000 $5,774
- -----------------
(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.
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options to the Named Executive
Officer during the 1998 fiscal year.
OPTION EXERCISES AND FISCAL YEAR END VALUE
The Following table provides information with respect to the
Named Executive Officer concerning options held as of December 31, 1998. No
options were exercised during the 1998 fiscal year by the Named Executive
Officer. None of the options have an exercise price below the fair market value
of the Common Stock as of December 31, 1998.
NUMBER OF
OPTIONS AT YEAR END
-------------------------------------
NAME AND PRINCIPAL POSITION EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- -------------
Stewart Wang, Chief Executive Officer 44,334 22,166
5
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, members of the Compensation Committee 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.
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 to do 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, 1998, the Company had sales
of approximately $50,000 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, 1998, the Company purchased printing
and related services of approximately $4,000 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 1998.
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.
6
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 Committees 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
125,300 options to purchase the company's Class A Common Stock during the 1998
fiscal year which the Board approved on March 4, 1999, thereby becoming grants
during the 1999 fiscal year. There were no grants approved by the Board of
Directors in fiscal 1998. 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 $188,941 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.
7
STOCK PERFORMANCE GRAPH
The following performance table compares the cumulative total return
for the period from April 19, 1995 through December 31, 1998, 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 Omitted]
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 $126.66
December 31, 1996 $ 45.24 $159.65 $126.91
December 31, 1997 $ 52.38 $195.95 $126.93
December 31, 1998 $ 29.14 $275.60 $ 90.14
- -------------------------------------------------------------------------
(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. Marshall Industries
Avnet, Inc. Reptron Electronics, Inc.
8
PRINCIPAL SHAREHOLDERS
The following table sets forth as of March 31, 1999, 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 806,946 (2) 15.01% 762,612 100% 58.99% (3)
Tzu Sheng Ku 1,218,407 (4) 22.66% 9.37%
FMR Corporation 577,400 (7) 10.74% 4.44%
82 Devonshire Street
Boston, MA 02109
Richard Chiang 281,361 (5) 5.23% 2.16%
Winston Gu 95,757 (5) 1.78% *
Felix Sung 33,394 (5) * *
All directors and executive officers
as a group (10 persons) 2,836,882 (6) 52.77% 762,612 100% 74.61% (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 and 44,334
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
5,000 shares of underlying options that are, or will within 60 days of the
date hereof, be exercisable.
(5) Includes 6,667 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 1, 1999, claiming beneficial
ownership of 577,400 shares of Class A Common Stock.
AUDITORS
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
9
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.
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. Representatives of Grant
Thornton LLP are expected to be present at the Annual Meeting. They will have an
opportunity to make a statement if they desire to do so and will respond to
appropriate questions from shareholders.
PROPOSALS OF SHAREHOLDERS
A proper proposal submitted by a shareholder for presentation at the
Company's 2000 Annual Meeting and received at the Company's executive offices no
later than December 17, 1999, will be included in the Company's proxy statement
and form of proxy relating to the 2000 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, 1998 is
being mailed to Shareholders along with this Proxy Statement. The Annual Report
is not to be considered part of the soliciting material.
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, 1998,
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.
10
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
TAITRON COMPONENTS INCORPORATED
JUNE 11, 1999
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: Winston Gu
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 May 11, 1999 relating to the
Meeting.
Signature(s) of Shareholders(s): ______________________________________
Signature(s) of Shareholder(s): _______________________ Dated _________, 1999
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.
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 June 11,
1999 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.)