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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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-12
SIGMATRON INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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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:
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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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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
SIGMATRON INTERNATIONAL, INC.
2201 LANDMEIER ROAD
ELK GROVE VILLAGE, IL 60007
August 15, 2007
Notice of Annual Stockholders Meeting:
You are hereby notified that the 2007 Annual Meeting of Stockholders of
SigmaTron International, Inc. (the "Company") will be held at the Holiday Inn
located at 1000 Busse Road, Elk Grove Village, Illinois 60007 at 10:00 a.m.
local time, on Friday, September 21, 2007, for the following purposes:
1. To elect two Class II directors to hold office until the 2010
Annual Meeting.
2. To consider a proposal to ratify the selection of BDO Seidman, LLP
as independent auditors of the Company for the fiscal year ending
April 30, 2008.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 27, 2007 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and/or adjournments thereof.
You are urged to attend the Annual Meeting in person. Whether or not you
expect to be present in person at the Annual Meeting, please mark, date, sign
and return the enclosed proxy in the envelope provided.
By Order of the Board of Directors
/s/ LINDA K. BLAKE
LINDA K. BLAKE
Secretary
SIGMATRON INTERNATIONAL, INC.
2201 LANDMEIER ROAD
ELK GROVE VILLAGE, IL 60007
2007 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 21, 2007
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy are furnished to
stockholders of SigmaTron International, Inc. (the "Company") in connection with
the solicitation of proxies by the Company's Board of Directors for use at the
2007 Annual Meeting of Stockholders (the "Meeting") to be held at the Holiday
Inn located at 1000 Busse Road, Elk Grove Village, Illinois, 60007 at 10:00 a.m.
local time, on Friday, September 21, 2007, for the purposes set forth in the
accompanying Notice of Meeting. This Proxy Statement, the form of proxy included
herewith and the Company's Annual Report to Stockholders for the fiscal year
ended April 30, 2007 are being mailed to stockholders on or about August 15,
2007.
Stockholders of record at the close of business on July 27, 2007 are
entitled to notice of and to vote at the Meeting. On such date there were
outstanding 3,794,956 shares of common stock, par value $.01 per share (the
"Common Stock"). The presence, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding and entitled to vote at the
Meeting is necessary to constitute a quorum. In deciding all questions, each
holder of Common Stock shall be entitled to one vote, in person or by proxy, for
each share held on the record date.
If you are a stockholder of record (that is, if you hold your shares in
certificate form registered in your name on the books of the Company's transfer
agent, American Stock Transfer and Trust Company, as of the close of business on
July 27, 2007), and attend the Meeting, you may deliver your completed proxy
card in person. However, if you hold your shares in "street name" (not
certificate form) (a) you must return your voting instructions to your broker or
nominee so that the holder of record can be instructed how to vote those shares
or (b) if you wish to attend the Meeting and vote in person, you must obtain and
bring to the Meeting a proxy signed by the record holder giving you the right to
vote the shares in order to be able to vote at the Meeting. (You may not use the
voting instruction form provided by your broker or nominee to vote in person at
the Meeting.)
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspector appointed for the Meeting and will determine whether or not a
quorum is present. The election inspector will treat abstentions as shares that
are present and entitled to vote but as not voted for purposes of determining
the approval of any matter submitted to the stockholders for a vote. Abstentions
will have the same effect as negative votes. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter ("Broker Non-Votes"), those shares will not be considered as
present and entitled to vote with respect to that matter.
Properly executed proxies will be voted in the manner directed by the
stockholders. If no direction is indicated, such proxies will be voted FOR the
election of the nominees named under the caption "Election of Directors" as set
forth therein as a director of the Company, and FOR the ratification of the
selection of BDO Seidman, LLP as the Company's independent auditors. If a quorum
is present at the Meeting, directors will be elected by a plurality of the votes
cast. The ratification of the selection of auditors requires an affirmative vote
by holders of a majority of the shares present at the Meeting in person or by
proxy and entitled to vote. Any proxy may be revoked by the stockholder at any
time prior to the voting thereof by notice in writing to the Secretary of the
Company, either prior to the Meeting (at the above address) or at the Meeting if
the stockholder attends in person. A later dated proxy will revoke a prior dated
proxy.
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 Meeting. If
other proper matters are presented at the Meeting, however, it is the intention
of the proxy holders named in the enclosed form of proxy to take such actions as
shall be in accordance with their best judgment.
The information contained in this Proxy Statement relating to the
occupations and security holdings of directors and officers of the Company and
their transactions with the Company is based upon information received from each
individual as of July 13, 2007.
HOLDINGS OF STOCKHOLDERS, DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of July 13, 2007 by (i) each director of the
Company and each nominee, (ii) each executive officer of the Company, (iii) each
person (including any "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act")) who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, and (iv) all
directors and executive officers as a group. The address of directors and
executive officers is c/o SigmaTron International, Inc., 2201 Landmeier Road,
Elk Grove Village, Illinois 60007.
BENEFICIAL OWNERSHIP
NUMBER OF
NAME SHARES(1) PERCENT
---- --------- -------
BENEFICIAL OWNERS OF AT LEAST 5% OF THE OUTSTANDING CAPITAL
STOCK
Cyrus Tang Foundation(2)...................................... 397,063 10.5%
8960 Spanish Ridge Ave.
Las Vegas, NV 89148
Royce & Associates, LLC(9).................................... 383,500 10.1%
1414 Avenue of the Americas
New York, NY 10019
Fidelity Low-Price Stock Fund(3).............................. 371,880 9.8%
82 Devonshire St.
Boston, MA 02109
Tang Foundation for the Research of Traditional Chinese
Medicine(2)................................................. 252,099 6.6%
8960 Spanish Ridge Ave.
Las Vegas, NV 89148
Zeff Holding Company, LLC(10)................................. 210,338 5.5%
50 California St., Ste. 1500
San Francisco, CA 94111
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Gary R. Fairhead(4)........................................... 108,203 2.8%
Gregory A. Fairhead(4)........................................ 68,307 1.8%
John P. Sheehan(4)............................................ 51,566 1.3%
Linda K. Blake(4)............................................. 37,468 1.0%
Daniel P. Camp(4)............................................. 49,500 1.3%
Raj B. Upadhyaya(4)........................................... 22,500 *
John P. Chen(5)............................................... 10,200 *
Thomas W. Rieck(5)(6)(7)...................................... 14,099 *
Franklin D. Sove(5)........................................... 11,000 *
Carl A. Zemenick(5)........................................... 10,000 *
Dilip S. Vyas(5).............................................. 10,000 *
All directors and executive officers as a group(8)............ 392,843 9.6%
--------
* Less than 1 percent.
(1) Unless otherwise indicated in the footnotes to this table, the Company
believes the persons named in this table have sole voting and investment
power with respect to all shares of Common Stock reflected in this
table. As of July 13, 2007, 3,794,956 shares were outstanding, not
including certain options held by various directors and officers as
noted in subsequent footnotes. This table is based on information
supplied by the Company's officers, directors and principal stockholders
and by Schedules 13D and 13G filed with the Securities and Exchange
Commission.
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(2) The Tang Foundation and Tang Foundation for the Research of Traditional
Chinese Medicine are not-for-profit foundations. The entities, whose
combined ownership represents in excess of 17% of the outstanding Common
Stock, is controlled by Cyrus Tang.
(3) Number of shares owned by Fidelity Low-Price Stock Fund at December 31,
2006 as reported by FMR Corp. on Schedule 13G on February 14, 2007.
(4) The number of shares includes 30,000, 56,650, 37,068, 49,500 and 22,500
shares issuable upon the exercise of stock options granted to Gary R.
Fairhead, Gregory A. Fairhead, Linda K. Blake, Daniel P. Camp and Raj B.
Upadhyaya, respectively. Said options are deemed exercised solely for
purposes of showing total shares owned by such employees, respectively.
(5) Includes 10,000 shares issuable upon the exercise of director stock
options granted on September 2004 and September 2005. Said options are
deemed exercised solely for purposes of showing total shares by such
non-employee director.
(6) Includes 4,099 shares issuable upon the exercise of director stock
options granted in December 2001. Said options are deemed exercised
solely for purposes of showing total shares owned by such non-employee
directors.
(7) In addition to the number of shares set forth on the Beneficial
Ownership table, Mr. Rieck is also one of three trustees of Rieck and
Crotty, P.C.'s profit sharing plan, which owns 4,000 shares of the
Company's Common Stock as of July 13, 2007. Mr. Rieck abstains from all
voting and investment decisions with respect to such shares.
(8) For purposes of calculating the total number of shares for all directors
and executive officers as a group, 91,460 of shares and 301,383 options
are deemed exercised.
(9) Number of shares owned by Royce & Associates LLC, at December 31, 2006,
as reported on Schedule 13G on January 25, 2007.
(10) Number of shares owned by Zeff Holding Company LLC, at December 31,
2005, as reported on Schedule 13G on February 3, 2006.
SECTION 16A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to report to stockholders those directors, officers
and beneficial owners of more than 10% of any class of the Company's equity
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), who fail to file timely reports of
beneficial ownership and changes in beneficial ownership, as required by Section
16(a) of the Exchange Act. Based solely upon a review of copies of such reports
furnished to the Company, the Company believes that all persons subject to the
reporting requirements of Section 16(a) of the Exchange Act timely filed all
necessary reports during the fiscal year ended April 30, 2007.
I. ELECTION OF DIRECTORS
Pursuant to the Company's Certificate of Incorporation, the Board of
Directors is divided into three classes of directors, each serving overlapping
three-year terms. The term of Class I director (Mr. Rieck) expires in 2009; the
terms of Class II directors (Messrs. Chen and Zemenick) expire in 2007; and the
terms of Class III directors (Messrs. Fairhead, Sove and Vyas) expire in 2008.
All directors of each class will hold their positions until the annual meeting
of stockholders in the year indicated above, at which time the terms of the
directors in such class expire, or until their respective successors are elected
and qualify, subject in all cases to any such director's earlier death,
resignation or removal.
William L. McClelland did not stand for reelection when his term as a Class
I director expired at the 2006 Annual Meeting of Stockholders. The Board of
Directors did not fill the vacancy left by the departure of Mr. McClelland. The
Board of Directors decided to reduce the number of directors from seven members
to six members and to re-designate as of the 2008 Annual Meeting of Stockholders
one of the Class III directors as a Class I director. Upon redesignation as a
Class I director in 2008, that director will hold office until the expiration of
the term of the current Class I director at the 2009 Annual Meeting of
Stockholders.
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NOMINEES FOR ELECTION AS CLASS II DIRECTOR AT THE MEETING
If a quorum is present at the Meeting, two Class II directors will be
elected by a plurality of the stockholder votes cast at the Meeting, each
director to serve until the 2010 annual meeting of stockholders or until his
successor shall be elected and qualified, subject to his earlier death,
resignation or removal. Abstentions and Broker Non-Votes will have no effect on
the vote. Shares represented by executed proxies will be voted, if the authority
to do so is not withheld, for the election of the nominees named below. The
stockholders do not have cumulative voting rights with respect to the election
of directors. The following persons have been nominated:
DIRECTOR OF
COMPANY
NAME AGE SINCE
---- --- -----------
John P. Chen............. 53 President SKD Automotive Group from 1994
Class II January 2006 to present, a tier one
automotive supplier. Chief Financial
Officer from 1994 to 2005 of National
Material L.P., a steel processing,
stamping and distribution company.
Carl A. Zemenick......... 62 President and CEO from June 1990 until 2001
Class II his retirement in June 2005 of GF
Office Furniture, Ltd. LP, a furniture
manufacturer.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE NOMINEES
NAMED ABOVE.
The Board of Directors knows of no reason why the foregoing nominees will
be unavailable or will decline to serve, but, in the event of any such
unavailability, the proxies received will be voted for such substitute nominees
as the Board of Directors may recommend. THE ENCLOSED PROXY CANNOT BE VOTED FOR
A GREATER NUMBER OF PERSONS THAN TWO, THE NUMBER OF NOMINEES NAMED IN THIS PROXY
STATEMENT.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE
MEETING
PRINCIPAL OCCUPATION(S) DURING PAST DIRECTOR OF
FIVE YEARS COMPANY
NAME AGE AND OTHER PUBLIC DIRECTORSHIPS SINCE
---- --- --------------------------------------- -----------
Thomas W. Rieck.......... 62 Attorney and President of Rieck and 1994
Class I Crotty, P.C.
Gary R. Fairhead......... 55 President and Chief Executive Officer. 1994
Class III Gary R. Fairhead has been President of
the Company since 1990. Gary R.
Fairhead and Gregory A. Fairhead, the
Executive Vice President and Assistant
Secretary of the Company, are brothers.
Mr. Fairhead serves as a director of
Blockshield Corporation plc beginning
in December 2004.
Franklin D. Sove......... 73 Mr. Sove was Vice President of Tang 1994
Class III Industries, Inc., a privately held
company that manufactures and
distributes industrial products, until
his retirement in December 2002.
Dilip S. Vyas............ 59 Mr. Vyas has been self-employed since 1994
Class III December 2004 and from June 2004 to
November 2004 was President of Wave
Zero Manufacturing LLC, a manufacturer
of shielding devices for components
used in the electronic industry.
II. PROPOSAL TO RATIFY SELECTION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors will recommend at the Annual Meeting that the
stockholders ratify the appointment of the firm of BDO Seidman, LLP to audit the
accounts of the Company for the current fiscal year. Representatives of that
firm are expected to be present at the Annual Meeting, have the opportunity to
make a statement if they desire to do so, and be available to respond to
appropriate questions. BDO Seidman, LLP was recommended by the Audit Committee
and the Board of Directors for the fiscal year 2007. In March 2006 the Board of
Directors dismissed
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Grant Thornton LLP and engaged BDO Seidman, LLP as the Company's auditors. The
principal accountant's report on the financial statements was unqualified for
fiscal year 2006 and 2007.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE
SELECTION OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING APRIL 30, 2008.
In connection with the audits for the years ended April 30, 2007 and 2006,
the Company has had no disagreements with BDO Seidman, LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
BDO Seidman, LLP would have caused it to make reference thereto in its report on
the consolidated financial statements for 2007 and 2006.
The ratification of the selection of auditors requires an affirmative vote
by holders of a majority of the shares present at the Meeting in person or by
proxy and entitled to vote. Abstentions and Broker Non-Votes will have the same
effect as negative votes.
FISCAL 2007 AND 2006 AUDIT FIRM FEE SUMMARY
During the first three quarters of fiscal 2006, the Company retained its
auditor, Grant Thornton LLP, to provide services. BDO Seidman LLP provided
services during the fourth quarter of fiscal 2006 and completed the audit for
fiscal year 2006 and 2007. The following amounts were charged by Grant Thornton
LLP for services provided in fiscal years 2006 and by BDO Seidman, LLP for
services provided in fiscal years 2006 and 2007.
2007 2006
------------------- -------------------
BDO GRANT BDO GRANT
SEIDMAN, THORNTON SEIDMAN, THORNTON
LLP LLP LLP LLP
-------- -------- -------- --------
Audit Fees (a)........................... $134,000 $ -- $90,000 $162,280
Audit-Related Fees (b)................... 7,500 16,798 -- 73,961
Tax Fees (c)............................. 37,638 39,606 23,255 154,360
All Other Fees (d)....................... 48,380 69,662 -- 48,872
(a) Fees for audit services billed in 2007 and 2006 consisted of:
- Audit of the Company's annual financial statements
- Reviews of the Company's quarterly financial statements
- Statutory and regulatory audits, consents and other services related
to Securities and Exchange Commission matters
(b) Fees for audit-related services consisted primarily of services for
Employee 401(k) Retirement Plan and acquisitions.
(c) Fees for tax services billed in 2007 and 2006 consisted of tax
compliance and tax planning and advice. Fees for tax compliance
services totaled $77,244 and $177,615 in 2007 and 2006, respectively.
Tax compliance services consisted of:
- Federal, state and local income tax return preparation
- Assistance with tax return filings and compliance in certain foreign
jurisdictions
- Assistance with tax audits and amended tax returns
(d) All other fees are general fees, change in accounting firm transition
fees, fees for expatriate compliance and transfer pricing studies.
(e) As described in Audit Committee Charter, it is the Audit Committee's
policy and procedure to review and consider and ultimately pre-approve,
where appropriate, all audit and non-audit engagement services to be
performed by the independent auditors.
CORPORATE GOVERNANCE
Our Board of Directors determined that each of Messrs. Chen, Rieck, Sove,
Vyas and Zemenick are independent under the rules of the Nasdaq Stock Market,
Inc. As a result, our Board currently has a majority
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of independent directors under the rules of the Nasdaq Stock Market, Inc. Our
Board of Directors has determined that our independent directors shall have
regularly scheduled meetings at which only the independent directors are
present. Generally, the independent directors meet quarterly.
DIRECTOR COMMITTEES; BOARD MEETINGS
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Nominating Committee. The Audit Committee Charter, Compensation
Committee Charter and the Nominating Committee Charter are available on the
Company's website at www.sigmatronintl.com. The Company believes that the
composition of these committees meets the criteria for independence under, and
the functioning of these committees complies with, the applicable requirements
of, the Sarbanes-Oxley Act of 2002, the current listing standards of the Nasdaq
Stock Market, Inc. and the Securities and Exchange Commission's rules and
regulations.
The functions of the Audit Committee include: (1) selection, evaluation
and, where appropriate, replacement of the Company's independent accountants;
(2) pre-approval of audit and permitted non-audit services to be performed by
the independent accountants; (3) review of the scope of the audit; (4)
reviewing, with the independent accountants, the corporate accounting practices
and policies and recommending to whom reports should be submitted within the
Company; (5) reviewing the final report of the independent accountants; (6)
reviewing accounting controls; and (7) being available to the independent
accountants and management for consultation purposes. The Audit Committee is
comprised of three members: Messrs. Rieck, Sove (Chairman) and Vyas. The Board
of Directors has determined that each of the members of the Audit Committee is
independent as defined by the Nasdaq Stock Market, Inc. listing standards and
the rules of the Securities and Exchange Commission. Mr. Rieck has been
determined to be an Audit Committee financial expert as defined in Item 401 of
Regulation S-K promulgated under the Exchange Act. The Board of Directors has
adopted a written charter for the Audit Committee. The report of the Audit
Committee to the Stockholders is included in this Proxy Statement under the
heading "Report of the Audit Committee."
The functions of the Compensation Committee are to review and recommend to
the Board of Directors annual salaries and bonuses for all executive officers of
the Company, to review and recommend to the Board of Directors compensation for
the Directors, to review and recommend to the Board of Directors the terms and
conditions of all employee benefit plans or changes thereto and to administer
the Company's stock option plans. Messrs. Chen, Rieck (Chairman), and Zemenick
are members of the Compensation Committee. The Board of Directors has determined
that each of the members of the Compensation Committee is independent under the
listing standards of the Nasdaq Stock Market, Inc.
The functions of the Nominating Committee are to (1) review and recommend
to the Board of Directors the size and composition of the Board and a slate of
nominees for each election of members to the Board of Directors; (2) review and
recommend changes to the number, classification, and term of directors; (3)
identify and recommend to the Board candidates to fill appointments to Board
committees; (4) develop, assess and make recommendations to the Board concerning
appropriate corporate governance policies; (5) to identify and recommend to the
Board candidates to fill a vacancy in the offices of President and Chief
Executive; and (6) to review nominations by stockholders with regard to the
nomination process and to establish the procedures by which stockholder
candidates will be considered. The members of the Nominating Committee are
Messrs. Chen (Chairman), Vyas and Zemenick. The current Board of Directors has
determined that each of the members of the Nominating Committee is independent
under the Nasdaq Stock Market, Inc. listing standards.
In evaluating and determing whether to recommend a person as a candidate
for election as a director, the Nominating Committee's criteria reflects the
requirements of the recently adopted Nasdaq rules with respect to independence
as well as the following factors: the needs of the Company with respect to the
particular talents and experience of its directors; personal and professional
integrity of the candidate; the level of education and/or business experience of
the candidate; broad-based business acumen of the candidate; the candidate's
level of understanding of the Company's business and the electronic
manufacturing services industry; the candidate's abilities for strategic
thinking and willingness to share ideas; and the Board of Directors' need for
diversity of experiences, expertise and background. The Committee will use these
criteria to evaluate all potential nominees.
The Nominating Committee will consider proposed nominees whose names are
submitted to it by stockholders. The Nominating Committee has not adopted a
formal process for that purpose because it believes that the
6
Committee's process for considering information has been and remains adequate.
Historically, stockholders have not proposed any nominees. The Nominating
Committee intends to review periodically whether a formal process should be
adopted. To be considered, all stockholder nominations must comply with the
notice provisions of the Company's by-laws, which generally require that such
notice be received by the Secretary of the Company not less than 60 days and not
more than 90 days prior to a regularly scheduled annual meeting of stockholders,
or within 10 days after receipt of notice of an annual meeting of stockholders
if the date of such meeting has not been publicly disclosed within 70 days prior
to the meeting date.
The Board of Directors held eight meetings either in person or by telephone
conference during the fiscal year ended April 30, 2007. The Compensation
Committee held five meetings in person or by telephone conference and the Audit
Committee held eight meetings in person or by telephone conference during fiscal
2007. The Nominating Committee held one meeting during fiscal 2007. All
directors attended at least 75% of the meetings of the board and each of the
committees of which they were members. The Company has a policy of encouraging
all directors to attend the annual meeting of stockholders. All directors
attended the Company's 2006 annual meeting of stockholders.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders can contact the Board of Directors or any of the individual
directors by contacting: Franklin D. Sove, Chairman of the Board, by regular
mail at 2201 Landmeier Road, Elk Grove Village, IL 60007. Inquiries will be
reviewed, sorted and summarized by the Chairman of the Board before they will be
forwarded to the Board or to an individual director.
COMPENSATION OF DIRECTORS
The Company pays non-employee directors $2,000 per month. Directors who
serve on the Audit Committee are paid an additional $1,250 per month. Directors
who serve on the Compensation Committee or the Nominating Committee are paid an
additional $250 per month per committee. In addition, under the 2000 Directors'
Stock Option Plan, non-employee directors received a grant of options to acquire
7,500 shares of Common Stock at each of the September 2000, December 2001 and
September 2002 annual stockholders' meetings. Such options are exercisable for
ten years from the respective date of grant at a price based on the price of the
Common Stock on the respective grant dates. In addition, under the 2004
Directors' Stock Option Plan, non-employee directors received a grant of options
to acquire 5,000 shares of Common Stock at the September 2004 and September 2005
annual stockholders' meeting. Such options are exercisable for ten years from
the respective date of grant at a price based on the price of the Common Stock
on the respective grant dates.
7
SUMMARY COMPENSATION TABLE
The individuals listed in the following table are referred to as our "Named
Executive Officers" throughout this proxy statement. The following table sets
forth a summary of all compensation paid by the Company for its fiscal years
ended April 30, 2007, 2006 and 2005 to the Company's Named Executive Officers:
ANNUAL
COMPENSATION LONG-TERM
----------------- COMPENSATION ALL OTHER
SALARY BONUS AWARDS(4) COMPENSATION TOTAL
NAME AND PRINCIPAL POSITION ($) ($) OPTIONS($) (5)($) COMPENSATION ($)
--------------------------- ------- ------- ------------ ------------ ----------------
Gary R. Fairhead........... 2007 185,813 0 0 2,400 188,213
President and Chief 2006 179,175 0 0 2,400 181,575
Executive Officer 2005 173,000 160,000(3) 0 2,350 335,350
Gregory A. Fairhead........ 2007 177,534 40,000(1) 0 2,400 219,934
Executive Vice President, 2006 171,200 40,000(2) 0 2,400 213,600
Operations and Assistant 2005 163,770 145,000(3) 0 2,350 311,120
Secretary
Linda K. Blake............. 2007 130,310 30,000(1) 0 2,400 162,710
Chief Financial Officer, 2006 125,185 0 0 2,400 127,585
Vice President Finance, 2005 121,330 110,000(3) 0 2,350 233,680
Treasurer and Secretary
Daniel P. Camp............. 2007 151,006 30,000(1) 0 2,400 183,406
Vice President and 2006 145,729 20,000(2) 0 2,400 168,129
General
Manager, China Operations 2005 140,600 110,000(3) 0 2,350 252,950
Raj B. Upadhyaya........... 2007 175,318 81,812(1)(6) 0 2,400 259,530
Executive Vice President, 2006 152,828 163,897(2)(6) 0 2,400 319,125
Hayward and Tijuana 2005 135,913 95,677(3)(6) 0 1,564 233,154
Operations
--------
(1) Represents bonus earned in fiscal 2007 and paid in fiscal 2008.
(2) Represents bonus earned in fiscal 2006 and paid in fiscal 2007.
(3) Represents bonus earned in fiscal 2005 and paid in fiscal 2005 and 2004.
(4) In fiscal 2006 30,000, 27,500, 25,000, 25,000, and 22,500 stock options
were granted to Gary R. Fairhead, Gregory A. Fairhead, Linda K. Blake,
Daniel P. Camp and Raj B. Upadhyaya, respectively. The Company adopted
Financial Accounting Standards Board, Share-Based Payment ("SFAS 123(R)")
on May 1, 2006 in fiscal year 2007 and implemented the new standard
utilizing the modified prospective application transition method.
Accordingly, there was no compensation expense recorded for the fiscal
2006 stock option grants.
(5) Represents the match and contributions to the Company's 401(k) plan made
by the Company.
(6) Represents bonus earned in conjunction with the Company's purchase of SMT
Unlimited L.P. ("SMTU") in the amount of $51,812, $103,897 and $85,677 in
fiscal 2007, 2006 and 2005, respectively.
GRANTS OF PLAN-BASED AWARDS TABLE
There were no options or stock appreciation rights granted to Named
Executive Officers of the Company in fiscal 2007.
8
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
The following table sets forth certain information with respect to each
Named Executive Officer of the Company concerning the exercise of options during
the fiscal year ended April 30, 2007, as well as any unexercised options held as
of the end of such fiscal year. The Company has not granted any stock
appreciation rights.
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------ -----------------------
EQUITY
INCENTIVE
NUMBER OF NUMBER OF PLAN AWARDS: MARKET
SECURITIES SECURITIES NUMBER OF NUMBER OF VALUE OF
UNDERLYING UNDERLYING SECURITIES SHARES OR SHARES OR
UNEXERCISED UNEXERCISED UNDERLYING UNITS OF UNITS OF
OPTIONS OPTIONS UNEXERCISED OPTION STOCK THAT STOCK THAT
(#) (#) UNEARNED EXERCISE OPTION HAVE NOT HAVE NOT
----------- ------------- OPTIONS PRICE EXPIRATION VESTED VESTED
NAME EXERCISABLE UNEXERCISABLE (#) ($) DATE (#) ($)
---- ----------- ------------- ------------ -------- ---------- ---------- ----------
Gary R. Fairhead.... 30,000 -- -- 9.17 9/15/15 -- --
Linda K. Blake...... 12,068 -- -- 2.20 2/12/12 -- --
25,000 -- -- 9.17 9/15/15 -- --
Gregory A.
Fairhead.......... 29,150 -- -- 2.20 2/12/12 -- --
27,500 -- -- 9.17 9/15/15 -- --
Daniel P. Camp...... 14,500 -- -- 2.20 2/12/12 -- --
10,000 -- -- 3.99 2/26/13 -- --
25,000 -- -- 9.17 9/15/15 -- --
Raj B. Upadhyaya.... 22,500 -- -- 9.17 9/15/15 -- --
STOCK AWARDS
--------------------------------
EQUITY
INCENTIVE
EQUITY INCENTIVE PLAN AWARDS:
PLAN AWARDS: MARKET OR
NUMBER OF PAYOUT VALUE
UNEARNED OF UNEARNED
SHARES, UNITS SHARES, UNITS
OR OTHER OR OTHER
RIGHTS THAT RIGHTS THAT
HAVE NOT HAVE NOT
VESTED VESTED
NAME (#) ($)
---- ---------------- -------------
Gary R. Fairhead.... -- --
Linda K. Blake...... -- --
-- --
Gregory A.
Fairhead.......... -- --
-- --
Daniel P. Camp...... -- --
-- --
-- --
Raj B. Upadhyaya.... -- --
OPTIONS EXERCISES AND STOCK VESTED TABLE
There were no options exercised or vesting of options during fiscal year
ended April 30, 2007.
PENSION BENEFITS TABLE
The table "PENSION BENEFITS" has been omitted because we have no
compensation information to report in that table.
NONQUALIFIED DEFERRED COMPENSATION TABLE
The table "NONQUALIFIED DEFERRED COMPENSATION" has been omitted because we
have no compensation information to report in that table.
DIRECTOR COMPENSATION TABLE
CHANGE
IN PENSION
VALUE AND
NONQUALIFIED
NON-EQUITY DEFERRED
FEES EARNED OR INCENTIVE PLAN COMPENSATION ALL OTHER
PAID IN CASH STOCK AWARDS OPTION AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
NAME ($) ($) ($) ($) ($) ($) ($)
---- -------------- ------------ ------------- -------------- ------------ ------------ ------
Franklin D. Sove.... 36,500 -- -- -- -- -- 36,500
Thomas W. Rieck..... 41,250 -- -- -- -- -- 41,250
John P. Chen........ 28,750 -- -- -- -- -- 28,750
Carl A. Zemenick.... 28,750 -- -- -- -- -- 28,750
Dilip S. Vyas....... 39,000 -- -- -- -- -- 39,000
9
EQUITY COMPENSATION PLAN INFORMATION
The following tables provides information as of the fiscal year ended April
30, 2007 with respect to shares of Common Stock that may be issued under the
Company's existing equity compensation plans, as detailed below:
(a) (b) (c)
--- --- ---
NUMBER OF
SECURITIES
REMAINING AVAILABLE
NUMBER OF FOR FUTURE ISSUANCE
SECURITIES TO BE UNDER EQUITY
ISSUED UPON WEIGHTED-AVERAGE COMPENSATION PLANS
EXERCISE OF EXERCISE PRICE OF (EXCLUDING
OUTSTANDING OUTSTANDING SECURITIES
OPTIONS, WARRANTS OPTIONS,WARRANTS REFLECTED IN
PLAN CATEGORY AND RIGHTS AND RIGHTS COLUMN(a)
------------- ----------------- ----------------- -------------------
Equity compensation plans approved by
security holders
--Employee Stock Option Plan 1993......... 183,149 $ 9.21 1,005
--Employee Stock Option Plan 2000......... 96,518 $ 2.71 0
--Employee Stock Option Plan 2004......... 187,541 $ 8.88 52,459
--Director Stock Option Plan 2000......... 4,099 $ 3.69 0
--Director Stock Option Plan 2004......... 60,000 $10.08 0
------- ------ ------
Equity compensation plans not approved by
Security holders........................ * * *
------- ------ ------
Total................................... 531,307 53,464
--------
* Not applicable.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company adopted an Amended and Restated Change-in-Control Severance
Payment Plan on May 30, 2002 (the "CIC Plan"), which covers Named Executive
Officers and certain other officers of the Company (each a "CIC Participant").
Under the terms of the CIC Plan, each CIC Participant is entitled to the payment
of severance pay in the event such CIC Participant's employment with the Company
is involuntarily terminated within twenty-four months of a change of control of
the Company.
In general, for purposes of the CIC Plan, a change of control will be
deemed to have occurred when (a) any entity, person or group other than Cyrus
Tang or his affiliates, acquires more than thirty percent of the outstanding
stock entitled to vote for directors of the Company, (b) as a result of or in
connection with certain corporate transactions identified in the CIC Plan, the
identity of a majority of the members of the Board of Directors immediately
before such transaction changes immediately after the transaction, (c) the
merger, consolidation, or share exchange of the Company, or (d) a sale of all or
substantially all of the Company's assets. In general, a CIC Participant's
employment will be deemed to have been involuntarily terminated under the CIC
Plan, in the event of such employee's termination by the Company for a reason
other than (w) for cause (as defined in the Plan), (x) death, (y) disability, or
(z) that employee's voluntary retirement or resignation except on account of the
reasons set forth in the agreement (which in general would result in a
constructive discharge).
Disputes concerning the CIC Plan and benefits under the CIC Plan are
subject to arbitration.
The CIC Plan provides for automatic reduction of the amounts to be paid out
under the plan in the event such amounts would constitute "parachute payments"
under the Internal Revenue Code. Payments under the CIC Plan are also subject to
an aggregate cap equal to 15% of the market value of the Company's outstanding
capital stock on such date in the event the employment of one or more of the CIC
Participants is terminated voluntarily or involuntarily within seven days after
the change-in-control.
10
POTENTIAL SEVERANCE PAYMENTS UPON CHANGE-IN-CONTROL
The following table describes approximate potential severance payments
under the CIC Plan to which the Named Executive Officers would be entitled upon
change-in-control of the Company, assuming that the change in control of the
Company occurred on April 30, 2007 and that our common stock is valued at $9.44,
which was the closing market price for our common stock on April 30, 2007. The
actual amount of payments can only be determined at the time of a change-in-
control and will vary from the estimated amounts in the table below.
GARY R. GREGORY A. LINDA K. DANIEL P. RAJ B.
FAIRHEAD FAIRHEAD BLAKE CAMP UPADHYAYA
-------- ---------- -------- --------- ---------
Change In Control Payment............ $868,608 $877,732 $515,310 $477,713 $307,519
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee during the 2007 fiscal year was comprised of
Messrs. Chen, Rieck, and Zemenick. None of the members of the Compensation
Committee has ever been an officer or employee of the Company. No Compensation
Committee interlocking relationships exist as to Messrs. Chen, Rieck and
Zemenick.
11
REPORT OF THE AUDIT COMMITTEE
The functions of the Audit Committee include: (1) selection, evaluation,
and where appropriate, replacement of the independent accountants; (2) pre-
approval of audit and permitted non-audit services to be performed by the
independent accountants; (3) review of the scope of the audit; (4) reviewing,
with the independent accountants, the corporate accounting practices and
policies and recommending to whom reports should be submitted within the
Company, (5) reviewing the final report of the independent accountants (6)
reviewing accounting controls, and (7) being available to the independent
accountants and management for consultation purposes. The Audit Committee is
comprised of three members Messrs. Rieck, Sove (Chairman) and Vyas. The Board of
Directors has determined that each of the members is independent as defined by
the rules of the Securities and Exchange Commission and under the Nasdaq Stock
Market Inc. listing standards. Mr. Rieck has been determined to be an Audit
Committee financial expert as defined in Item 401 of Regulation S-K. The Board
of Directors has adopted a written charter for the Audit Committee, a copy of
which is accessible at the Company's web site, www.sigmatronintl.com.
The Audit Committee has reviewed, and discussed the audited financial
statements with management, and discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards (SAS) No 61
(Codification of Statements on Auditing Standards, AU sec. 380) as the same has
been modified or supplemented. The Audit Committee has received the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No 1 as the same has been modified or
supplemented, and has discussed with the independent accountants the independent
accountants' independence. Based on the review and discussions referred to
herein, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the last fiscal year for filing with the Securities and Exchange
Commission.
THIS REPORT IS SUBMITTED BY THE MEMBERS OF THE COMMITTEE.
Franklin D. Sove (Chairman)
Thomas W. Rieck
Dilip S. Vyas
12
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
period from May 2003 through April 2007 with the cumulative total return on (i)
a group consisting of the Company's peer corporations on a line-of-business (the
"Peer Group") and (ii) the Nasdaq Composite Index (Total Return). The comparison
assumes $100 was invested on May 1, 2002 in the Company's Common Stock, the Peer
Group (allocated equally among each of the Peer Group members), and the Nasdaq
Composite Index and assumes reinvestment of dividends, if any. The Peer Group
consists of IEC Electronics Corp., Nortech Systems Inc., SMTEK International,
Inc. (included through 2004; acquired by CTS Corp in 2005), and Simclar Inc.
(formerly known as Techdyne, Inc.)
Comparison of five year cumulative total among SigmaTron International,
Inc., the Peer Group, and the Nasdaq Composite Index (Total Return).
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
(PERFORMANCE GRAPH)
TOTAL RETURN TO SHAREHOLDERS
(INCLUDES REINVESTMENT OF DIVIDENDS)
----------------------------------------------------------------------------
ANNUAL RETURN PERCENTAGE
YEARS ENDING
------------------------------------------------------
COMPANY
NAME/INDEX APR 03 APR 04 APR 05 APR 06 APR 07
----------------------------------------------------------------------------
SIGMATRON
INTERNATIONAL INC 68.62 75.83 6.13 (11.46) (0.65)
--------------------------------------------------------------------------
NASDAQ INDEX (12.68) 30.82 0.33 21.41 9.08
--------------------------------------------------------------------------
PEER GROUP (35.62) 118.60 (10.70) 22.61 41.92
--------------------------------------------------------------------------
---------------------------------------------------------------------------------------
INDEXED RETURNS
YEARS ENDING
-----------------------------------------------------------------
BASE
PERIOD
COMPANY NAME/INDEX APR 02 APR 03 APR 04 APR 05 APR 06 APR 07
---------------------------------------------------------------------------------------
SIGMATRON
INTERNATIONAL INC 100 168.62 296.48 314.66 278.59 276.77
---------------------------------------------------------------------------------------
NASDAQ INDEX 100 87.32 114.24 114.61 139.16 151.79
---------------------------------------------------------------------------------------
PEER GROUP 100 64.38 140.73 125.67 154.08 218.67
---------------------------------------------------------------------------------------
PEER GROUP COMPANIES
--------------------
IEC ELECTRONICS CORP
NORTECH SYSTEMS INC
SIMCLAR INC (Formerly known as Techdyne, Inc.)
SMTEK INTERNATIONAL INC (Included through 2004 Acquired by CTS Corp
in 2005)
13
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Following is the 2007 Compensation Discussion and Analysis, which is a
discussion of the Company's executive compensation programs and policies written
from the perspective of how the Compensation Committee and management view and
use such policies and programs. Given the Compensation Committee's role in
providing oversight to the design of those programs and policies, and in making
specific compensation decisions for Named Executive Officers (those individuals
identified in the Summary Compensation Table on page 8) and other key employees
using those policies and programs, the Compensation Committee initiated
preparation of the Compensation Discussion and Analysis, reviewing successive
drafts of the document, and then participated with management in finalizing the
document. After the Committee discussed the Compensation Discussion and Analysis
with management, the Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy statement.
Thomas W. Rieck (Chairman)
John Chen
Carl Zemenick
2007 COMPENSATION DISCUSSION AND ANALYSIS
General Philosophy. We compensate our Named Executive Officers primarily
through a combination of base salary and bonus and, secondarily, depending upon
availability, equity compensation, in an effort to be competitive with
comparable employers and, at the same time, to align management's incentives
with the long-term interests of our stockholders. At the senior-most levels,
incentive compensation is heavily-weighted on Company-wide performance based
primarily upon a return on invested assets. At lower levels, incentive
compensation is to reward the achievement of specific operational goals within
areas under the control of the relevant employees, although Company-wide
performance is also a factor.
Base Salaries. We attempt to set salaries competitive with salaries paid
to executives with similar responsibilities at comparable electronic
manufacturing service companies. We make some industry-related comparisons
including companies referenced on the Stock Price Performance Graph on page 13;
we do not presently use any other market data, nor do we presently engage any
compensation specialists. We are mindful of the differing levels of competition
for employees in our various geographic locations. Company-wide cost-of-living
increases are generally made annually.
Bonuses. We award performance bonuses based primarily upon overall Company
performance, on specific location performance, and on individual performance.
The performance bonus is entirely discretionary. There are no specific
performance objectives other than to continuously increase Company
profitability. Our wide geographic footprint, the relatively new start-up
operations in China, Tijuana and Hayward, and fluctuating profitability (for
various reasons) make it difficult to establish Company-wide specific
performance objectives at this time. The Company informally refers to a return
on invested assets benchmark when considering performance bonuses, the general
concept being that performance bonuses should only be awarded after stockholder
value has been enhanced. When in our opinion performance bonuses haven't been
earned we sometimes award a retention payment to retain and incentivize key
employees who we believe are integral to the Company's success. We usually
require that such a retention payment be repaid in the event the key employee
voluntary terminates employment within a period of time after receipt of the
award.
Equity Compensation. Historically, we have awarded qualified stock options
across-the-board to Company employees after fiscal year end. As of April 30,
2007, there are only 53,464 options available to grant. At the present time the
Company is not planning to increase the number of options available to grant.
These options are generally used for two purposes: first, they are informally
reserved for award to new higher-level employees in an effort to induce them to
join the Company and to immediately align their interests with those of the
stockholders; and second, when available, options are granted to key employees
as incentive compensation based upon their salary level, performance, potential
and impact on Company performance. The exercise price of all options granted by
the Company in the 2007 fiscal year has been the closing price of the Company's
stock on the date of grant, and fair market value is based upon that price. The
timing of the grants is not coordinated with the release of material non-public
information. Those option grants customarily vest incrementally over a three to
five year period. The
14
Company adopted SFAS 123(R) on May 1, 2006 and implemented the new accounting
standard for stock options utilizing the modified prospective application
transition method. As of April 30, 2007, there was approximately $68,500 of
unrecognized compensation cost related to the Company's stock option plans. This
compensation cost is being amortized over a three year period on a straight line
basis.
Other Benefits. Named Executive Officers participates in the Company's
other benefit plans on the same terms as other employees. These plans include
group medical and dental insurance, voluntary life and disability insurance, and
a 401(k) plan, to which the Company annually matches employee contributions to
$300 per employee. Relocation and other benefits are individually negotiated
when they occur.
Change in Control Severance Payment Plan. The Company adopted an Amended
and Restated Change-in-Control Severance Payment Plan on May 30, 2002 (the "CIC
Plan"), which covers Named Executive Officers and certain other offices of the
Company. The CIC Plan is described in detail elsewhere in this Proxy Statement.
Relative to the overall value of the Company, these potential change in control
benefits are relatively minor and are capped as a group. We believe that the
benefits under the CIC Plan are consistent with the general practice among
comparable employers, although we have not conducted a study to confirm this.
Board Process. The President and Chief Executive Officer meets
periodically with the Compensation Committee throughout the year on various
compensation issues. The President and Chief Executive Officer, keeping in mind
the Company's compensation philosophy and practice, makes the initial bonus and
stock option, if any, and other benefit change recommendations to the
Compensation Committee. Thereafter the Compensation Committee meets to review
the recommendations, separately and with the President and Chief Executive
Officer. The Compensation Committee makes the recommendation for the President
and Chief Executive Officer based upon the philosophy described above. After
further deliberation, the Compensation Committee thereafter submits its
recommendations of the proposed compensation and other awards to officers and
other key employees to the entire Board of Directors which makes the final
decision on all compensation issues except for stock options, which, until May
1, 2007, was the exclusive decision of the Committee. On May 1, 2007, the Board
adopted the Compensation Committee Charter (accessible on the Company's website
www.sigmatronintl.com) which provides that the Compensation Committee will
recommend stock option awards to the entire Board, which will make the final
decision on all compensation issues.
COMPENSATION OF NAMED EXECUTIVES.
President and Chief Executive Officer -- Mr. Fairhead has been President
and Chief Executive Officer of the Company since its inception in 1990. His
total 2007 fiscal year compensation of $188,213 increased by 3.7% from the 2006
fiscal year solely for a cost-of-living increase similar to the increase granted
to most Company employees. The Committee has recommended that Mr. Fairhead not
be awarded a performance or retention bonus for fiscal years 2006 and 2007,
based on the performance of the Company consistent with Mr. Fairhead's and the
Company's pay for performance policy. Notwithstanding the non-payment of a
bonus, Mr. Fairhead remains committed to the Company's long-term prospects and
success.
Chief Financial Officer -- Ms. Blake has been Chief Financial Officer of
the Company since 1994. Her total 2007 fiscal year compensation of $162,710
increased by 27.5% from the 2006 fiscal year. Her base salary in fiscal 2007
increased 4.1% solely for a cost-of-living increase similar to the increase
granted to most Company employees. The Committee has recommended that Ms. Blake
be awarded a discretionary retention payment of $30,000 in fiscal 2007,
primarily as a result of additional responsibilities as a result of Sarbanes-
Oxley compliance and the acquisition of Able Electronics Corp. ("Able").
Executive Vice President -- Operations -- Mr. Gregory A. Fairhead joined
the Company in 1991 in charge of manufacturing, and is now Executive Vice
President -- Operations, with primary responsibility for operations in Acuna,
Mexico and Elk Grove Village, Illinois. His total 2007 fiscal year compensation
of $219,934 increased by 3% from the 2006 fiscal year. His base salary in fiscal
2007 increased approximately 3.7% solely for a cost-of-living increase similar
to the increase granted to most Company employees. The Committee has recommended
that Mr. Fairhead be awarded a discretionary retention payment of $40,000 in
fiscal 2007 because of the success of the operating units for which Mr. Gregory
Fairhead is primarily responsible.
Executive Vice President -- Hayward Operations -- Mr. Upadhyaya was an
officer of the Company's former affiliate, SMTU, located in Fremont, California.
After the remaining minority interest in SMTU was acquired by the
15
Company and SMTU was liquidated in late 2004, Mr. Upadhyaya became Executive
Vice President of Fremont Operations. After the Able acquisition and
consolidation of the Fremont and Hayward operations into a single location in
Hayward, California, Mr. Upadhyaya became Executive Vice President of Hayward
and Tijuana Operations. His total 2007 fiscal year compensation of $259,530
decreased by 18.7% from the 2006 fiscal year. Mr. Upadhyaya's total compensation
in fiscal years 2005, 2006 and 2007 included a bonus in conjunction with SMTU.
The SMTU bonus was greater in 2006 compared to 2007, resulting in a decrease in
total compensation for 2007. Mr. Upadhyaya's base salary in fiscal 2007
increased 14.7% in an effort to bring his salary consistent with salary levels
for executives with similar responsibilities in the Silicon Valley and for cost-
of-living increase similar to the increase granted to most Company employees.
The Committee has recommended that Mr. Upadhyaya be awarded a discretionary
retention payment of $30,000 in fiscal 2007 because of the increased
responsibilities for both the Hayward and Tijuana locations.
Vice President -- China Operations -- Daniel P. Camp. Mr. Camp joined the
Company as Director of Operations, Mexico, in 1994, and is now Vice President -
China Operations. His total 2007 fiscal year compensation of $183,406 increased
by 9.1% from the 2006 fiscal year. His base salary in fiscal 2007 increased 3.6%
for a cost-of-living increase similar to the increase granted to most Company
employees. The Committee has recommended Mr. Camp be awarded a discretionary
retention payment of $30,000 in fiscal 2007 because of the success of the
operating unit for which he is responsible.
CERTAIN TRANSACTIONS
There are no reportable related party transactions.
RELATED PERSON TRANSACTION POLICY
The Board has adopted a written policy addressing the Company's procedures
with respect to the review, approval and ratification of "Related Person
Transactions" that are required to be disclosed pursuant to Item 404(a) of
Regulation S-K. Related Person includes any of an Executive Officer (as defined
in Item 404(a)), director, a nominee for director, a beneficial owner of more
than 5% of any class of voting securities of the Company, and with respect to
each of them, their immediate family members. Related Person Transaction means
any transaction involving an amount in excess of $120,000 in which the Company
is a participant and in which a Related Person has or will have a direct or
indirect material interest.
To identify Related Person Transactions, each year the Company requires its
Executive Officers, directors and nominees to complete an annual questionnaire
which seeks information relating to any potential Related Person Transaction
involving themselves and their immediate family members that are known to them.
The Audit Committee will evaluate identified Related Person Transactions, which
will be approved or ratified (i) by the Audit Committee or (ii) if the Audit
Committee determines that the approval or ratification should be considered by
all of the disinterested directors, by a majority vote of the disinterested
directors. In its review of Related Person Transactions, the Audit Committee or
the disinterested directors will consider all factors that they believe are
relevant to the Related Person Transaction, including the following: (i) the
nature and extent of the Company's participation in the transaction; (ii) the
size of the transaction and the amount payable to the Related Person; (iii) the
nature of the interest of the Related Person in the transaction; (iv) whether
the transaction involves a conflict of interest or the appearance of a conflict
of interest; and (v) whether the transaction involves the provision of goods or
services to the Company that are available from unaffiliated third parties and,
if so, whether the transaction is on terms and made under circumstances that are
at least as favorable to the Company as would be available in comparable
transactions with or involving unaffiliated third parties.
MISCELLANEOUS
The Company's 2007 Annual Report to Stockholders is being mailed to
stockholders contemporaneously with this Proxy Statement.
COST OF SOLICITATION
All expenses incurred in the solicitation of proxies will be borne by the
Company. In addition to the use of the mail, proxies may be solicited on behalf
of the Company by directors, officers and employees of the Company by telephone
or telecopy. The Company will reimburse brokers and others holding Common Stock
as nominees for
16
their expenses in sending proxy material to the beneficial owners of such Common
Stock and obtaining their proxies.
PROPOSALS OF STOCKHOLDERS
In accordance with the rules of the Securities and Exchange Commission, any
proposal of a stockholder intended to be presented at the Company's 2008 Annual
Meeting of Stockholders must be received by the Secretary of the Company before
April 17, 2008 in order for the proposal to be considered for inclusion in the
Company's notice of meeting, proxy statement and proxy relating to the 2008
Annual Meeting.
Stockholders may present proposals that are proper subjects for
consideration at an annual meeting, even if the proposal is not submitted by the
deadline for inclusion in the proxy statement. The stockholder must comply with
the procedures specified by the Company's by-laws which require all stockholders
who intend to make proposals at an annual stockholders meeting to send a proper
notice which is received by the Secretary not less than 120 or more than 150
days prior to the first anniversary of the date of the Company's consent
solicitation or proxy statement released to stockholders in connection with the
previous year's election of directors or meeting of stockholders; provided, that
if no annual meeting of stockholders or election by consent was held in the
previous year, or if the date of the annual meeting has been changed from the
previous year's meeting, a proposal must be received by the Secretary within 10
days after the Company has publicly disclosed the date of such meeting.
The Company currently anticipates the 2008 Annual Meeting of stockholders
will be held September 19, 2008.
The by-laws also provide that nominations for director may only be made by
or at the direction of the Board of Directors or by a stockholder entitled to
vote who sends a proper notice which is received by the Secretary no less than
60 or more than 90 days prior to the meeting; provided, however, that if the
Company has not publicly disclosed the date of the meeting at least 70 days
prior to the meeting date, notice may be timely made by a stockholder if
received by the Secretary no later than the close of business on the 10th day
following the day on which the Company publicly disclosed the meeting date.
Some brokers and other nominee record holders may be participating in the
practice of "householding" corporate communications to stockholders, such as
proxy statements and annual reports. This means that only one copy of this proxy
statement may have been sent to multiple stockholders in your household. The
Company will promptly deliver a separate copy of this proxy statement to you if
you call or write us at the following address or phone number: SigmaTron
International, Inc., 2201 Landmeier Road, Elk Grove Village, Illinois 60007,
Telephone: (800) 700-9095. If you want to receive separate copies of our
corporate communications to stockholders such as proxy statements and annual
reports in the future, or if you are receiving multiple copies and would like to
receive only one copy for your household, you should contact your broker or
other nominee record holders, or you may contact the Company at the above
address and phone number.
By order of the Board of Directors
LINDA K. BLAKE
Secretary
Dated: August 15, 2007
17
SIGMATRON INTERNATIONAL, INC.
2201 LANDMEIER ROAD
ELK GROVE VILLAGE, IL 60007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary R. Fairhead, Linda K. Blake and Henry
J. Underwood, and each of them, with full power of substitution, as attorneys
and proxies to represent the undersigned at the 2007 Annual Meeting of
Stockholders of SIGMATRON INTERNATIONAL, INC. (the "Company") to be held at the
Holiday Inn located at 1000 Busse Road, Elk Grove Village, Illinois at 10:00
a.m. local time, on Friday, September 21, 2007 or at any adjournment thereof,
with all power which the undersigned would possess if personally present, and to
vote all shares of stock of the Company which the undersigned may be entitled to
vote at said Meeting as follows.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
SIGMATRON INTERNATIONAL, INC.
SEPTEMBER 21, 2007
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. Election of FOR AGAIN- ABSTA-
Directors: ST IN
[ ] FOR ALL NOMINEES: 2. PROPOSAL TO RATIFY THE [ ] [ ] [ ]
NOMINEES John P. Chen SELECTION OF BDO
[ ] WITHHOLD Carl A. Zemenick SEIDMAN, LLP AS
AUTHORITY INDEPENDENT AUDITORS
FOR ALL
NOMINEES 3. IN THEIR DISCRETION, [ ] [ ] [ ]
[ ] FOR ALL ON SUCH OTHER MATTERS
EXCEPT AS MAY PROPERLY COME
(See BEFORE THE MEETING
instruc- (which the Board of
tions Directors does not
below) know of prior to
August 15, 2007)
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 THE ELECTION OF THE NOMINEES
FOR DIRECTORS AND FOR THE RATIFICATION OF THE
SELECTION OF BDO SEIDMAN, LLP AS INDEPENDENT
AUDITORS, AND WILL CONFER THE AUTHORITY IN
PARAGRAPH 3.
INSTRUCTION: To withhold authority to vote for any RECEIPT IS HEREBY ACKNOWLEDGED OF THE NOTICE OF
individual nominee(s), mark "FOR ALL THE MEETING AND PROXY STATEMENT DATED AUGUST 15,
EXCEPT" and fill in the circle next to 2007 AS WELL AS A COPY OF THE 2007 ANNUAL REPORT
each nominee you wish to withhold, as TO STOCKHOLDERS.
shown here:
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PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
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To change the address on your account, [ ]
please check the box at right and indicate
your new address in the address space
above. Please note that changes to the
registered name(s) on the account may not
be submitted via this method.
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Signature of Stockholder Date: Signature of Stockholder Date:
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NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.