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 Rule 14a-11(c) or Rule 14a-12
ACETO CORPORATION
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(Exact 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:
(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):
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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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(4) Date Filed:
ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215
TEL. (516) 627-6000
October 20, 2005
Dear Fellow Shareholder:
I take pleasure in inviting each of you to attend Aceto Corporation's
annual meeting of shareholders to be held on Thursday, December 1, 2005 at 10:00
a.m., Eastern Standard Time, at the Company's offices, One Hollow Lane, Lake
Success, New York. I am pleased to provide you with your Company's annual report
and the proxy statement attached to this letter.
Please use this opportunity to take part in our affairs by voting on the
business to come before this meeting. You may vote your shares at the annual
meeting by marking your votes on the enclosed proxy card, signing and dating it,
and mailing it in the enclosed envelope.
I look forward to seeing you at the annual meeting and thank you for
your continued support.
Sincerely,
/s/ Leonard S. Schwartz
Leonard S. Schwartz
Chairman of the Board, President and
Chief Executive Officer
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ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215
TEL. (516) 627-6000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Aceto Corporation:
We hereby notify you that the annual meeting of shareholders of Aceto
Corporation, a New York corporation (the "Company"), will be held on Thursday,
December 1, 2005, at 10:00 a.m., Eastern Standard Time, at the Company's offices
indicated above for the following purposes:
o to elect seven directors to the board of directors to hold
office for the following year and until their successors are
elected; and
o to transact any other business that may properly come before the
meeting or any adjournment thereof.
The matters listed in this notice of meeting are described in the accompanying
proxy statement. The Company's board of directors has fixed the close of
business on October 7, 2005 as the record date for this year's annual meeting.
You must be a shareholder of record at that time to be entitled to notice of the
annual meeting and to vote at the annual meeting.
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting, please promptly complete, sign, date and
return the enclosed proxy card in the envelope provided so that your vote will
be counted if you later decide not to attend the meeting. No postage is required
if the proxy card is mailed in the United States.
By order of the board of directors,
/s/ Douglas Roth
Douglas Roth
Chief Financial Officer and
Corporate Secretary
Lake Success, New York
October 20, 2005
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ACETO CORPORATION
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042-1215
TEL. (516) 627-6000
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PROXY STATEMENT
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GENERAL INFORMATION
INFORMATION ABOUT PROXY SOLICITATION
This proxy statement is being furnished to holders of shares as of the record
date of the common stock, $0.01 par value per share, of Aceto Corporation, a New
York corporation (the "Company"), in connection with the Company's annual
meeting to be held on Thursday, December 1, 2005 at 10:00 a.m. Eastern Standard
Time, at the Company's offices. We sent you this proxy statement because our
board of directors is soliciting your proxy to vote your shares at the annual
meeting and at any adjournment. This proxy statement summarizes information that
we are required to provide to you under the rules of the United States
Securities and Exchange Commission and the Nasdaq Stock Market, Inc., which
information is designed to assist you in voting your shares. The purposes of the
meeting and the matters to be acted on are stated in the accompanying notice of
annual meeting of shareholders. At present, the board of directors knows of no
other business that will come before the meeting.
We will begin mailing these proxy materials on or about October 20, 2005. The
Company will bear the cost of its solicitation of proxies. The original
solicitation of proxies by mail may be supplemented by personal interview,
telephone, and facsimile by the directors, officers and employees of the
Company. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of stock held by such persons, and the Company may
reimburse those custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in doing so.
INFORMATION ABOUT VOTING
Q: WHY AM I RECEIVING THESE MATERIALS?
A: The board of directors is providing these proxy materials to you in
connection with the Company's annual meeting of shareholders, which will
take place on December 1, 2005. As a shareholder, you are invited to
attend the annual meeting and to vote on the items of business described
in this proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the
proposals to be voted on at the annual meeting, the voting process, the
compensation of directors and the most highly paid executive officers,
and certain other required information. A copy of our annual report is
also enclosed.
Q: WHAT ITEMS OF BUSINESS WILL BE VOTED ON AT THE ANNUAL MEETING?
A: The one item of business scheduled to be voted on at the annual meeting
is the election of directors. We will also consider any other business
that properly comes before the annual meeting.
Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
A: The board of directors recommends that you vote your shares FOR each of
the nominees to the board on the proxy card included with this proxy
statement.
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Q: WHAT SHARES CAN I VOTE?
A: You may vote all shares owned by you as of the close of business on
October 7, 2005, the record date. These shares include: (1) shares held
directly in your name as a shareholder of record; and (2) shares held
for you, as the beneficial owner, through a broker or other nominee,
such as a bank.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD
AND AS A BENEFICIAL OWNER?
A: Most shareholders of the Company hold their shares through a broker or
other nominee rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record and
those owned beneficially.
If your shares are registered directly in your name with the Company's
transfer agent, The Bank of New York, you are considered, with respect
to those shares, the shareholder of record and these proxy materials are
being sent directly to you by the Company. As the shareholder of record,
you have the right to grant your proxy directly to the board of
directors or to vote in person at the meeting. The board of directors
has enclosed or sent a proxy card for you to use.
If your shares are held in a brokerage account or by another nominee,
you are considered the beneficial owner of shares held in "street name,"
and these proxy materials are being forwarded to you by your broker or
nominee together with a voting instruction card. As the beneficial
owner, you have the right to direct your broker or nominee how to vote
and are also invited to attend the annual meeting. However, since you
are not the shareholder of record, you may not vote these shares in
person at the meeting unless you obtain a "legal proxy" from the broker
or nominee that holds your shares, giving you the right to vote the
shares. Your broker or nominee has enclosed or provided voting
instructions for you to use in directing the broker or nominee how to
vote your shares.
Q: HOW CAN I ATTEND THE ANNUAL MEETING?
A: You are entitled to attend the annual meeting only if you were a
shareholder of the Company or joint holder as of the close of business
on October 7, 2005, or you hold a valid proxy for the annual meeting.
You should be prepared to present photo identification for admittance.
If you are not a record holder but hold shares through a broker or
nominee (that is, in "street name"), you should provide proof of
beneficial ownership on the record date, such as your most recent
account statement prior to October 7, 2005, a copy of the voting
instruction card provided by your broker or nominee, or other similar
evidence of ownership. If you do not provide photo identification or
comply with the other procedures outlined above upon request, you will
not be admitted to the annual meeting. The annual meeting will begin
promptly at 10:00 a.m. Eastern Standard Time. Check-in will begin at
9:00 a.m., and you should allow ample time for the check-in procedures.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE ANNUAL MEETING?
A: You may vote in person at the annual meeting any shares that you hold as
the shareholder of record. You may only vote in person shares held in
street name if you obtain from the broker or nominee that holds your
shares a "legal proxy" giving you the right to vote the shares.
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE ANNUAL MEETING?
A: Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may without attending the meeting
direct how your shares are to be voted. If you are a shareholder of
record, you may vote by granting a proxy. If you hold shares in street
name, you may vote by submitting voting instructions to your broker or
nominee. Each record holder of Company common stock may submit a proxy
by completing, signing, and dating a proxy card and mailing it in the
accompanying pre-addressed envelope. Each shareholder who holds shares
in street name may vote by mail by completing, signing, and dating a
voting instruction card provided by the broker or nominee and mailing it
in the accompanying pre-addressed envelope.
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Q: CAN I CHANGE MY VOTE?
A: You may change your vote at any time prior to the vote at the annual
meeting. For shares held directly in your name, you may accomplish this
by granting a new proxy bearing a later date (which automatically
revokes the earlier proxy) or by attending the annual meeting and voting
in person. Attendance at the meeting will not cause your previously
granted proxy to be revoked unless you specifically so request. For
shares you hold beneficially, you may change your vote by submitting new
voting instructions to your broker or nominee or, if you have obtained a
"legal proxy" from your broker, or nominee giving you the right to vote
your shares, by attending the meeting and voting in person. You may also
change your vote by sending a written notice of revocation to Mr.
Douglas Roth, Chief Financial Officer and Corporate Secretary, Aceto
Corporation, One Hollow Lane, Lake Success, New York 11042.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the annual meeting or how to vote or
revoke your proxy, you should contact Mr. Terry Steinberg, Vice
President, Administration and Assistant Corporate Secretary, by mail to
Aceto Corporation, One Hollow Lane, Lake Success, New York 11042 or by
phone at 516-627-6000. Also, if you need additional copies of this proxy
statement or voting materials, you should contact Mr. Steinberg.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote FOR all of the seven nominees
or you may direct your vote to be WITHHELD with respect to one or more
of the seven nominees. If you provide specific instructions, your shares
will be voted as you instruct. If you sign your proxy card or voting
instruction card with no further instructions, your shares will be voted
in accordance with the recommendations of the board of directors FOR all
of the Company's nominees and, in the discretion of the proxy holders,
on any other matters that properly come before the meeting. If any other
matters properly arise at the meeting, your proxy, together with the
other proxies received, will be voted at the discretion of the proxy
holders.
Q: WHAT IS A QUORUM AND WHY IS IT NECESSARY?
A: Conducting business at the meeting requires a quorum. The presence,
either in person or by proxy, of the holders of a majority of the
Company's shares of common stock outstanding on October 7, 2005 is
necessary to constitute a quorum. Under the New York Business
Corporation Law, and the Company's articles of incorporation and
by-laws, abstentions are treated as present for purposes of determining
whether a quorum exists.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: In the election of directors, the seven persons receiving the highest
number of FOR votes at the annual meeting will be elected. Accordingly,
abstentions and broker non-votes do not have the effect of a vote for or
against the election of any nominee. You do not have the right to
cumulate your votes. Any other matters that might properly arise at the
meeting require the affirmative "FOR" vote of a majority of those shares
present in person or represented by proxy and entitled to vote on that
proposal at the annual meeting. Accordingly, abstentions on other
proposals will have the same effect as a vote against the proposal. In
addition, where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting
instructions (commonly referred to as "broker non-votes"), those shares
will not be included in the vote totals. Broker non-votes will not have
the effect of a vote for or against other proposals. A list of
shareholders entitled to vote at the annual meeting will be available at
the annual meeting for examination by any shareholder.
Q: WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
A: You may receive more than one set of voting materials, including
multiple copies of this proxy statement and multiple proxy cards or
voting instruction cards. For example, if you hold your shares in more
than one brokerage account, you will receive a separate voting
instruction card for each brokerage account in which you hold shares. If
you are a shareholder of record and your shares are registered in more
than one name,
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you will receive more than one proxy card. Please complete, sign, date,
and return each proxy card and voting instruction card that you receive.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
A: We intend to announce preliminary voting results at the annual meeting
and publish final results in our Quarterly Report on Form 10-Q for the
fiscal quarter ending December 31, 2005.
Q: WHAT HAPPENS IF ADDITIONAL MATTERS ARE PRESENTED AT THE ANNUAL MEETING?
A: Other than the one item of business described in this proxy statement,
we are not aware of any other business to be acted upon at the annual
meeting. However, if you grant a proxy, the persons named as proxy
holders, Leonard S. Schwartz, the Company's Chairman, President and
Chief Executive Officer, and Douglas Roth, the Company's Chief Financial
Officer and Secretary, will have the discretion to vote your shares on
any additional matters properly presented for a vote at the meeting. If
for any unforeseen reason any of our nominees is not available as a
candidate for director, the persons named as proxy holders will vote
your proxy for any one or more other candidates nominated by the board
of directors.
Q: WHAT SHARES ARE ENTITLED TO BE VOTED?
A: Each share of the Company's common stock issued and outstanding as of
the close of business on October 7, 2005, the record date, is entitled
to be voted on all items being voted at the annual meeting, with each
share being entitled to one vote. On the record date, 24,299,374 shares
of the Company's common stock were issued and outstanding.
Q: WHO WILL COUNT THE VOTES?
A: One or more inspectors of election will tabulate the votes.
Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots, and voting tabulations that identify
individual shareholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed, either within the
Company or to anyone else, except: (1) as necessary to meet applicable
legal requirements; (2) to allow for the tabulation of votes and
certification of the vote; or (3) to facilitate a successful proxy
solicitation.
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING?
A: The board of directors is making this solicitation and will pay the
entire cost of preparing, assembling, printing, mailing and distributing
these proxy materials. Certain of our directors, officers and employees,
without any additional compensation, may also solicit your vote in
person, by telephone or by electronic communication. On request, we will
also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and solicitation materials to shareholders.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
SHAREHOLDERS?
A: You may submit proposals for consideration at future shareholder
meetings. However, in order for a shareholder proposal to be considered
for inclusion in the Company's proxy statement for the annual meeting
next year, the written proposal must be received by the corporate
secretary of the Company no later than June 18, 2006. Such proposals
also will need to comply with United States Securities and Exchange
Commission regulations under Proxy Rule 14a-8 regarding the inclusion of
shareholder proposals in company-sponsored proxy materials.
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ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL
ELECTION OF DIRECTORS
THE NOMINEES
The Company's board of directors is proposing a slate of directors that consists
of six incumbent directors and one new director nominee. Mr. Britton is being
nominated to fill the vacancy created by the death of our former director,
Samuel I. Hendler. The nominees are set forth in the table below.
DIRECTOR
NAME AGE POSITION SINCE
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Leonard S. Schwartz 59 Chairman, President and CEO 1991
Robert A. Wiesen (1) 54 Director 1994
Stanley H. Fischer 62 Director 2000
Albert L. Eilender (2)(3) 62 Director 2000
Ira S. Kallem (2) 57 Director 2002
Hans C. Noetzli (2) 64 Director 2002
William N. Britton 60 Director Nominee -
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(1) This director is designated the lead compensation director.
(2) This director is a member of the audit committee.
(3) This director is designated the lead independent director.
It is the intention of the persons named in the accompanying proxy card to vote
all shares of common stock for which they have been granted a proxy for the
election of the nominees, each to serve as a director until the next annual
meeting of shareholders and until his or her successor shall have been duly
elected and qualified. All the nominees have consented to being named in this
proxy statement and to serve as a director if elected.
At the time of the annual meeting, if any of the nominees named above is not
available to serve as director (an event that the board of directors does not
currently have any reason to anticipate), all proxies will be voted for any one
or more other persons that the board of directors designates. The board of
directors believes that it is in the best interests of the Company to elect the
above-described slate of directors.
INFORMATION ABOUT THE NOMINEES
No director or executive officer of the Company is related to any other director
or executive officer. None of the Company's officers or directors hold any
directorships in any other public company. A majority of our board members are
independent.
Set forth below is the principal occupation of the nominees, the business
experience of each for at least the past five years and certain other
information relating to the nominees.
LEONARD S. SCHWARTZ. Mr. Schwartz has served as Chairman and Chief Executive
Officer of the Company since July 1, 1997 and President since July 1, 1996.
After joining the Company in 1969, Mr. Schwartz, a chemist by training,
developed the Company's industrial chemicals business and had a key role in the
management of the Company's subsidiaries.
ROBERT A. WIESEN. Mr. Wiesen is an attorney and partner in the law firm of
Clifton Budd & DeMaria. He joined this law firm in 1979 subsequent to his
employment with the National Labor Relations Board. He has handled matters for
the Company relating to labor and employment law for over ten years and he has
written and lectured on labor law.
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STANLEY H. FISCHER. Mr. Fischer is President of Fischer and Burstein P.C., a law
firm. Mr. Fischer received a J.D. degree from New York University School of Law.
He has been a practicing attorney for more than 30 years and has advised and
represented corporate entities in matters relative to internal matters, mergers,
acquisitions, real estate and litigation. He is a member of the American Bar
Association, the New York Bar Association, the Association of the Bar of the
City of New York, the Association of Trial Lawyers of America, New York State
Trial Lawyers and the Nassau County Bar Association. He is a member of various
professional committees including the International Law Section of the New York
State Bar.
ALBERT L. EILENDER. Mr. Eilender is the sole owner of Waterways Advisory
Services, a firm specializing in advising companies on developing and evaluating
options relative to mergers, acquisitions and strategic partnerships in the
chemical industry. He has more than 30 years of diverse senior level experience
in the specialty chemicals and pharmaceutical industry and has had direct
financial responsibility for managing businesses up to $300 million in revenues,
with significant experience in mergers, acquisitions and joint ventures, both
domestically and internationally. He has also served on the boards of numerous
industry trade associations during his career.
IRA S. KALLEM. Mr. Kallem has been a practicing accountant, part-time, at
Wiener, Frushtick & Straub, Certified Public Accountants, since September 2000.
In June 1994, Mr. Kallem co-founded Mateo Express, Inc., an international money
transfer company and served as Chief Financial Officer and Director until May
2000. Previously, he was a Senior Partner at Shine & Company, Certified Public
Accountants.
HANS C. NOETZLI. Mr. Noetzli is the Chairman of Schweizerhall, Inc., a wholly
owned subsidiary of Schweizerhall Holding AG, Basel, Switzerland. Mr. Noetzli
holds a degree in Business Administration. He has more than 30 years experience
in the fine chemicals industry. Prior to assuming his present position, he
served in many executive functions of the Alusuisse-Lonza Group, among them as
Chief Executive Officer of Lonza Inc. for 16 years and he was a member of the
executive committee of the worldwide Alusuisse-Lonza Group located in Zurich,
Switzerland. Mr. Noetzli also served on the board of directors of the Chemical
Manufacturing Association, the Swiss-American Chamber of Commerce, New York, as
well as other industry associations. Currently, he is a member of the board of
directors of IRIX Pharmaceuticals, Inc., a privately owned developer and
manufacturer of active pharmaceutical ingredients and he is a member of the
board of directors of Synthetech, Inc., a fine chemicals company specializing in
organic synthesis, biocatalysis and chiral technologies.
WILLIAM N. BRITTON. Mr. Britton is the sole owner of TD AIM, LLC through which
he is involved in a variety of activities surrounding financial consulting and
private equity investing. Previously, Mr. Britton was a Senior Vice President
with JP Morgan Chase. He has over 30 years of commercial lending experience
ranging from large syndicated financings with Fortune 500 companies to privately
owned businesses, with significant experience in private equity related
transactions, asset based lending arrangements, leasing and many other forms of
secured lending. He is a former Vice President-Finance for the Boy Scouts of
America (Manhattan Council) and is on the board of the Rutgers Business School.
INFORMATION ABOUT THE COMPANY'S COMMITTEES
AUDIT COMMITTEE
The audit committee is comprised of Albert L. Eilender (Chairman), Ira S. Kallem
and Hans C. Noetzli. The audit committee is responsible for recommending the
Company's independent auditor and reviewing management actions in matters
relating to audit functions. The committee reviews with the Company's
independent auditors the scope and results of its audit engagement and the
Company's system of internal controls and procedures. The committee also reviews
the effectiveness of procedures intended to prevent violations of laws. The
Committee also reviews, prior to publication, our quarterly earnings releases
and reports to the SEC on Form 10-K and Form 10-Q. The report of the audit
committee for fiscal year 2005 can be found below.
The audit committee, consistent with the Sarbanes-Oxley Act of 2002 and the
rules adopted thereunder, also meets with management and the auditors prior to
the filing of officers' certifications with the SEC to request information
concerning, among other things, significant deficiencies in the design or
operation of internal controls, if any.
Our board has determined that all audit committee members are independent under
applicable SEC regulations, and as defined by Rule 4200 (a)(14) of the Nasdaq
Marketplace Rules. Our board of directors has determined that Mr. Kallem
qualifies as an "audit committee financial expert" as that term is used in
Section 407 of the Sarbanes-Oxley
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Act of 2002. The audit committee operates under a formal charter that governs
its duties and conduct. The charter was attached as an appendix to the Company's
2003 proxy statement, and is published on the Company's corporate website -
WWW.ACETO.COM.
The audit committee has adopted a Non-Retaliation Policy and a Complaint
Monitoring Procedure to enable confidential and anonymous reporting regarding
financial irregularities, if any.
BOARD NOMINATIONS
The Company's board of directors does not have a nominating committee. Instead,
the Company's independent directors make recommendations to the full board,
which nominates directors on an annual basis. The board believes this process is
preferable because it wishes to involve all of its independent directors in the
nomination process rather than a select number of committee members.
The independent directors perform the following functions with respect to
nomination decisions:
o They consider and recommend to the board of directors,
individuals for election as directors.
o They make recommendations to the board of directors regarding
any changes to the size of the board of directors or any
committee.
o They report to the board of directors on a regular basis, not
less than once a year.
The Company's independent directors and board of directors have determined that
candidates for director should have certain minimum qualifications, including
being able to understand basic financial statements, being over 21 years of age,
having relevant business experience, and having high moral character. The board
of directors retains the right to modify these minimum qualifications from time
to time.
In evaluating an incumbent director whose term of office is set to expire, the
independent directors and the board of directors review that director's overall
service to the Company during that director's term, including the number of
meetings attended, level of participation, quality of performance, and any
transactions with the Company engaged in by that director during his or her
term.
When selecting a new director nominee, the independent directors and the board
of directors first determine whether the nominee must be independent for Nasdaq
purposes or whether the candidate must qualify as an "Audit Committee Financial
Expert," as that term is used in section 407 of the Sarbanes-Oxley Act of 2002.
The board then uses its network of contacts to compile a list of potential
candidates, but may also engage, if it deems appropriate, a professional search
firm. Each director then has an opportunity to privately interview each nominee
if he or she deems it necessary. The board then meets to consider the
candidates' qualifications and chooses candidates by a unanimous vote.
Shareholders wishing to directly recommend candidates for election to the board
of directors at an annual meeting must do so by giving notice in writing to
Leonard S. Schwartz, Chairman, Aceto Corporation, One Hollow Lane, Lake Success,
New York 11042. Any such notice must, for any given annual meeting, be delivered
to the Chairman not less than 120 days prior to the anniversary of the preceding
year's annual meeting. The notice must state (1) the name and address of the
shareholder making the recommendations, (2) the name, age, business address, and
residential address of each person recommended, (3) the principal occupation or
employment of each person recommended, (4) the class and number of shares of
Aceto shares that are beneficially owned by each person recommended and by the
recommending shareholder, (5) any other information concerning the persons
recommended that must be disclosed in nominee and proxy solicitations in
accordance with Regulation 14A of the Securities Exchange Act of 1934, and (6) a
signed consent of each person recommended stating that he or she consents to
serve as a director of the Company if elected.
The board of directors will consider and vote on any recommendations so
submitted. In considering any person recommended by a shareholder, the committee
will look for the same qualifications that it looks for in any other person that
it is considering for a position on the board of directors.
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Any shareholder nominee proposed by the board of directors for election at the
next annual meeting of shareholders will be included in the company's proxy
statement for that annual meeting.
COMPENSATION DECISIONS
Effective December 2004, the board of directors eliminated the executive
compensation committee. Instead of that committee, all of the Company's
independent directors recommend to the full board of directors all elements of
compensation of the Company's executive officers. With respect to compensation
matters, the independent directors make recommendations regarding salary, stock
option plans, stock option grants and other grants under the Company's stock
option plans. The board believes this process is preferable because it wishes to
involve all of its independent directors in compensation decisions rather than a
select number of committee members.
BOARD AND COMMITTEE MEETINGS
During the Company's fiscal year ended June 30, 2005, the board of directors
held six meetings and acted by unanimous written consent twice. Each director
attended more than 75% of the board meetings and meetings of the board
committees on which he served.
During the Company's fiscal year ended June 30, 2005, the executive compensation
committee met once, before this committee was eliminated, and the audit
committee met six times.
At each scheduled meeting of the board of directors, the independent members of
the board of directors meet separately in executive session without management
being present. A lead director elected by the independent directors is
responsible for chairing such executive sessions. Currently the lead director is
Albert L. Eilender.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
Our directors are encouraged, but not required, to attend the annual meeting of
shareholders. All of our directors attended the 2004 annual meeting of
shareholders.
COMMUNICATIONS BY OUR SHAREHOLDERS TO THE BOARD OF DIRECTORS
Our board of directors recommends that shareholders direct to the Company's
corporate secretary any communications intended for the board of directors.
Shareholders can send communications by e-mail to droth@aceto.com, by facsimile
to (516) 627-6093, or by mail to Douglas Roth, Chief Financial Officer and
Secretary, Aceto Corporation, One Hollow Lane, Lake Success, New York 11042.
This centralized process will assist the board in reviewing and responding to
shareholder communications in an appropriate manner. If a shareholder wishes to
direct any communication to a specific board member, the name of that board
member should be noted in the communication. The board of directors has
instructed the corporate secretary to forward shareholder correspondence only to
the intended recipients, but the board has also instructed the corporate
secretary to review all shareholder correspondence and, in his discretion, not
forward any items that he deems to be of a commercial or frivolous nature or
otherwise inappropriate for the board's consideration. Any such items may be
forwarded elsewhere in the Company for review and possible response.
CORPORATE GOVERNANCE
The Company operates within a comprehensive plan of corporate governance for the
purpose of defining responsibilities, setting high standards of professional and
personal conduct and assuring compliance with those responsibilities and
standards. In July 2002, Congress passed the Sarbanes-Oxley Act of 2002 which,
among other things, establishes, or provides the basis for, a number of new
corporate governance standards and disclosure requirements. In addition, the
Nasdaq Stock Market, Inc. has recently made changes to its corporate governance
and listing requirements. The board of directors has initiated numerous actions
consistent with these new rules and will continue to regularly monitor
developments in the area of corporate governance.
11
CODE OF ETHICS FOR WORLDWIDE FINANCIAL MANAGEMENT
The Company has adopted a Code of Ethics for Worldwide Financial Management that
sets forth standards of ethics for the Company's principal executive officer and
senior financial officers, violations of which are reported to the audit
committee. This Code of Ethics was attached as an appendix to the Company's 2003
proxy statement, and is published on the Company's corporate website.
CODE OF BUSINESS CONDUCT FOR ALL ACETO EMPLOYEES
The Company has adopted a Code of Business Conduct for all Aceto Employees that
includes provisions ranging from restrictions on gifts to conflicts of interest.
All employees are required to affirm in writing their acceptance of the code.
The Code of Business Conduct was attached as an appendix to the Company's 2003
proxy statement, and is published on the Company's corporate website.
NASDAQ CODE OF BUSINESS CONDUCT AND ETHICS
The Company also adopted a Code of Business Conduct and Ethics for all Aceto
directors and employees in accordance with Nasdaq Qualitative Listing
Requirement 4350(n). This Code of Conduct is published on the Company's
corporate website.
DISCLOSURE COMMITTEE
The Company has formed a disclosure committee, comprised of senior management,
including senior financial personnel, to formalize processes to ensure accurate
and timely disclosure in Aceto's periodic reports filed with the United States
Securities and Exchange Commission and to implement certain disclosure controls
and procedures. The disclosure committee operates under a formal charter that
governs its duties and conduct. The charter was attached as an appendix to the
Company's 2003 proxy statement, and is published on the Company's corporate
website.
PERSONAL LOANS TO EXECUTIVE OFFICERS AND DIRECTORS
The Company's policy has always been to not extend personal loans or other terms
of personal credit to its directors and officers, and is in compliance with the
legislation prohibiting such personal loans and other forms of personal credit.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Exchange Act, the Company's directors and
executive officers and beneficial owners of more than 10% of the Company's
Common Stock are required to file certain reports, within specified time
periods, indicating their holdings of and transactions in the Common Stock and
derivative securities. Based solely on a review of such reports provided to the
Company and written representations from such persons regarding the necessity to
file such reports, the Company is not aware of any failures to file reports or
report transactions in a timely manner during the Company's fiscal year ended
June 30, 2005.
12
EXECUTIVE COMPENSATION
The following table shows, for the last three fiscal years, compensation
information for Leonard S. Schwartz, the Company's Chief Executive Officer, and
the next four most highly compensated executives. Other tables that follow
provide more detail about the specific type of compensation.
SUMMARY COMPENSATION TABLE
--------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------- --------------------------------------------------
RESTRICTED
NAME AND STOCK OPTIONS/(1) ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS SARS COMPENSATION (2)
------------------------- ------ --------- --------- ------------- ------------- -----------------
Leonard S. Schwartz 2005 $398,398 $605,000 $100,000 300,000 $271,257
President, Chairman 2004 383,245 715,900 - 18,000 571,034
and Chief Executive Officer 2003 368,505 703,135 12,765 81,000 321,155
Frank DeBenedittis 2005 231,118 206,000 10,000 30,000 46,286
Senior Vice President 2004 222,263 240,000 - 6,000 50,395
2003 213,844 256,500 13,500 27,000 49,128
Vincent Miata 2005 232,517 220,000 - 30,000 41,029
Senior Vice President 2004 223,673 220,000 - 6,000 40,473
2003 215,070 200,000 - 27,000 39,128
Michael Feinman 2005 185,305 135,000 - 30,000 45,926
President, Aceto 2004 177,758 132,000 - 6,000 37,243
Agricultural Chemicals Corp. 2003 171,429 96,625 13,375 27,000 32,299
Douglas Roth 2005 203,566 61,980 13,620 30,000 34,925
Chief Financial Officer 2004 195,766 67,200 16,800 6,000 31,393
2003 188,352 56,000 14,000 27,000 28,397
(1) All figures have been adjusted to reflect the 3-for-2 stock splits, effected
in the form of dividends, paid in January 2005, 2004 and 2003, as
appropriate.
(2) Represents contributions to retirement plans and compensation recognized
from the issuance of premium shares on restricted stock.
13
STOCK OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------------
The following table contains information regarding the grant of stock options in
the fiscal year ended June 30, 2005 to the named executives.
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM (1)
OPTIONS GRANTED IN FISCAL BASE PRICE EXPIRATION -------------------------------
NAME (# OF SHARES) YEAR ($/SH) DATE 5% 10%
------------ ------------------ ------------ ------------- ------------ -------------- --------------
Leonard S. Schwartz 300,000 (2) 22% $ 10.95 9/9/2014 $ 2,065,290 $ 5,233,850
Frank DeBenedittis 30,000 (2) 2% 10.95 9/9/2014 206,529 523,385
Vincent Miata 30,000 (2) 2% 10.95 9/9/2014 206,529 523,385
Michael Feinman 30,000 (2) 2% 10.95 9/9/2014 206,529 523,385
Douglas Roth 30,000 (2) 2% 10.95 9/9/2014 206,529 523,385
--------------------------------------------------------------------------------
(1) The dollar amounts illustrate value that might be realized upon exercise
of the options immediately prior to the expiration of their term, at the
specific compounded rates of appreciation set by the Securities and
Exchange Commission (5% and 10%) and are not, therefore, intended to be
forecasts by the Company of possible future appreciation of the stock
price of the Company.
(2) On September 9, 2004, the Company granted nonqualified stock options to
Messrs. Schwartz, DeBenedittis, Miata, Feinman and Roth to purchase
common stock of the Company under the Company's 1980 Stock Option Plan.
All of these options vested on their grant date. All share and per share
amounts have been adjusted to reflect the 3-for-2 stock split, effected
in the form of a dividend paid in January 2005.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
---------------------------------
The following table contains information regarding the exercise of stock options
by the named executives in the fiscal year ended June 30, 2005 and the value of
unexercised options held by such persons on June 30, 2005.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED OPTIONS MONEY OPTIONS AT
SHARES AT FY-END (1) FY-END (1)
ACQUIRED ON VALUE -------------------------------- --------------------------------
NAME EXERCISE (1) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------ -------------- ---------- -------------------------------- --------------------------------
Leonard S. Schwartz - - 887,250 - $2,490,975 -
Frank DeBenedittis - - 79,500 - 129,600 -
Vincent Miata - - 101,438 - 230,110 -
Michael Feinman - - 79,500 - 129,600 -
Douglas Roth - - 58,650 - 62,880 -
--------------------------------------------------------------------------------
(1) The dollar value of each exercisable option was calculated by multiplying
the number of shares of common stock underlying the option by the
difference between the exercise price of the option and the closing price
of the Company's common stock on June 30, 2005 ($7.48). All share amounts
have been adjusted to reflect the 3-for-2 stock splits, effected in the
form of dividends, as appropriate.
COMPENSATION OF DIRECTORS
Directors of the Company who are not also employees currently receive $35,000
per year for serving on the board of directors, plus fees ranging from $2,000 to
$3,500 for each committee or special board meeting attended. The lead
independent director and the lead compensation director each receive $5,000 per
year for serving in such capacity. In addition, each independent director
receives $2,500 per year for compensation related service. Directors of the
Company who are also employees are not compensated for their services as
Directors.
14
On September 9, 2004, the Company granted each of Messrs. Eilender, Hendler,
Wiesen, Fischer, Noetzli and Kallem 10,125 non-qualified stock options, adjusted
to reflect the effect of the 3-for-2 stock split, effected in the form of a
dividend, paid January 10, 2005, pursuant to the 1998 Stock Option Plan. Each
option vested on the grant date, is exercisable at $10.95 (adjusted) and expires
10 years from the date of grant.
EMPLOYMENT AGREEMENTS
The Company has no employment agreements with its senior executives.
LIMITS ON LIABILITY AND INDEMNIFICATION
The Company's Articles of Incorporation eliminate the personal liability of its
directors to the Company and its shareholders for monetary damages for breach of
the directors' fiduciary duties in certain circumstances. The articles of
incorporation further provide that the Company will indemnify its officers and
directors to the fullest extent permitted by law. The Company believes that such
indemnification covers at least negligence and gross negligence on the part of
the indemnified parties. Insofar as indemnification for liabilities under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Company pursuant to the foregoing provisions or otherwise, the Company
has been advised that in the opinion of the United States Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the independent directors (who are responsible for compensation matters)
have ever served as officers or employees of the Company or any of our
subsidiaries. During the last fiscal year, none of our senior executives served
on the board of directors or committee of any other entity whose officers served
either on our board of directors or executive compensation committee.
15
REPORT OF THE INDEPENDENT DIRECTORS REGARDING COMPENSATION MATTERS
The Company's independent directors, consisting of Albert L. Eilender, Ira S.
Kallem, Hans C. Noetzli and Robert A. Wiesen (lead compensation director) make
recommendations to the Board with respect to the remuneration of the Company's
executive officers.
The Company's compensation policy has been designed to enable the Company to
attract, retain and motivate executives whose enthusiasm and abilities will
contribute to the growth of its business and result in maximum profitability to
the Company and its shareholders, by providing salaries and benefits competitive
with those offered by other companies in the chemical industry. The executive
compensation program includes base salary, annual incentive compensation (cash
bonuses), and long term incentive compensation (awards under the Company's stock
option plans).
Base salaries are set at levels competitive within the chemical industry.
Because of the way the Company operates its business, the contributions of its
executives significantly affect corporate profitability. Bonuses (which can
exceed base salary) are paid to reflect the extent of such contributions. The
Company's Chief Executive Officer also is the Chairman of the Board, and
President of the Company. The bonuses paid to the Chief Executive Officer and to
the Secretary/Treasurer, who is the Chief Financial Officer, are intended to
reflect the Company's overall performance.
The three highest paid executives, other than the Chief Executive Officer, are
each responsible for the performance of one of the Company's principal profit
centers. Internally generated performance records are kept on a monthly and
yearly basis for these profit centers, and each center's profitability is
compared in the current year to the previous year.
Other factors considered in determining the bonuses of individual executives are
the individual's own performance and the overall performance of the Company. The
compensation committee determines each bonus primarily based on this data, also
taking into account the long term contributions of each individual.
The Chief Executive Officer's compensation was determined on the basis of the
same factors utilized to compensate other executives, taking into consideration
total compensation comparisons of top executives of corporations in the chemical
industry. The Chief Executive Officer is not present at the time that his
compensation is evaluated and determined.
Submitted October 7, 2005 by the Company's independent directors.
Albert L. Eilender
Ira S. Kallem
Hans C. Noetzli
Robert A. Wiesen (lead compensation director)
16
REPORT OF THE AUDIT COMMITTEE
The audit committee acts under a written charter adopted by the audit committee
and approved by the board of directors. The audit committee charter is available
on the Company's corporate website.
The audit committee is comprised of Albert L. Eilender (Chairman), Ira S. Kallem
and Hans C. Noetzli. Each of these directors meets the independence and
expertise requirements of the SEC and the Nasdaq Stock Market, Inc. The audit
committee recommends the Company's independent auditors, approves the scope of
the audit plan, and reviews and approves the fees of the independent auditors.
The audit committee met regularly with the Company's independent auditors during
the past fiscal year, both with and without management present, to review the
scope and results of the audit engagement, the Company's system of internal
controls and procedures, the effectiveness of procedures intended to prevent
violations of laws and regulations, and the implementation of internal financial
controls required by the Sarbanes-Oxley Act of 2002. In compliance with the SEC
rules regarding auditor independence, and in accordance with the Company's Audit
Committee Charter, we reviewed all services performed by KPMG LLP for the
Company within and outside the scope of the quarterly review and annual auditing
functions.
We also:
o Met to discuss the quarterly unaudited and the annual audited
financial statements with management and KPMG LLP prior to the
statements being filed with the SEC;
o Reviewed the Company's disclosures in the Management's
Discussion and Analysis sections of such filings;
o Reviewed management's program, schedule, progress and
accomplishments for implementing financial controls and
procedures to assure compliance with Section 404 of the
Sarbanes-Oxley Act of 2002;
o Reviewed quarterly earnings releases prior to their publication;
o Reviewed and approved in advance in accordance with the
Company's Audit Committee Pre-Approval Policy all proposals and
fees for any work to be performed by KPMG LLP;
o Reviewed and revised the committee's charter as necessary in
order to comply with newly enacted rules and regulations;
o Monitored the Company's "whistleblower" program under which any
complaints are forwarded directly to the Committee, to be
reviewed in accordance with an established procedure for all
such matters;
o Reviewed the audit, tax and audit-related services the Company
had received from KPMG LLP and determined that the providing of
such services by KPMG LLP was compatible with the preservation
of their independent status as our independent auditor.
We have also reviewed and discussed the audited financial statements for the
fiscal year ended June 30, 2005 with management and discussed with KPMG LLP the
matters required to be discussed by Statement on Auditing Standards No. 61, as
amended by Statement on Auditing Standards No. 90. We also received during the
past fiscal year the written disclosures and the letter from KPMG LLP required
by Independence Standards Board Standard No. 1 and have discussed with KPMG LLP
their independence. Based on the discussions referred to above, we recommended
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for filing with the SEC.
AUDIT FEES AND ALL OTHER FEES
AUDIT FEES
Fees for audit services totaled $1,294,000 in fiscal year 2005 and $521,000 in
fiscal year 2004, including fees associated with the annual audit (including the
audit of management's assessment of the effectiveness of its internal controls
over financial reporting as required by Section 404 of the Sarbanes-Oxley Act)
and the reviews of the Company's quarterly reports on Form 10-Q.
17
AUDIT RELATED FEES
There were no audit-related fees in fiscal year 2005 or 2004.
TAX FEES
Fees for tax services, including tax compliance, tax advice and tax planning,
totaled $60,000 in fiscal year 2005 and $203,000 in fiscal year 2004.
OTHER FEES
Fees for other services totaled $7,000 in fiscal year 2005 and represent
permissible training services. There were no Other fees in fiscal year 2004.
Respectfully submitted October 7, 2005 by the members of the audit committee.
Albert L. Eilender (Chairman)
Ira S. Kallem
Hans C. Noetzli
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 7, 2005, the number and percentage
of shares of the Company's outstanding common stock owned by each named
executive officer, each director and each person that, to the best of the
Company's knowledge, owns more than 5% of the Company's issued and outstanding
common stock, and all named executive officers and directors as a group. Unless
indicated otherwise the business address of each person is c/o Aceto
Corporation, One Hollow Lane, Lake Success, New York 11042.
NUMBER OF SHARES
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNED (EXCLUDING EXERCISABLE STOCK TOTAL BENEFICIAL
OWNER STOCK OPTIONS) (1) OPTIONS (2) OWNERSHIP PERCENT (3)
--------------------------- -------------------- ------------------- ------------------ ------------
Leonard S. Schwartz 179,701 887,250 1,066,951 4.2%
Frank DeBenedittis 31,837 79,500 111,337 *
Vincent Miata 30,812 101,438 132,250 *
Michael Feinman 19,666 79,500 99,166 *
Douglas Roth 8,938 58,650 67,588 *
Robert A. Wiesen 1,172 50,625 51,797 *
Stanley H. Fischer - 33,750 33,750 *
Albert L. Eilender 15,000 40,500 55,500 *
Hans Noetzli (4) 1,559,996 30,375 1,590,370 6.5%
Ira S. Kallem 1,500 30,375 31,875 *
T. Rowe Price Associates, Inc. (5) 2,252,625 - 2,252,625 9.3%
100 East Pratt Street
Baltimore, MD 21202
Royce & Associates, LLC 2,219,867 - 2,219,867 9.1%
1414 Avenue of the Americas
New York, NY 10019
Schweizerhall, Inc. (6) 1,559,996 - 1,559,996 6.4%
c/o Leonard M. Freidman, CPA 380
Foothill Road
Bridgewater, NJ 08807
All named executive officers and 1,848,622 1,391,963 3,240,585 12.6%
directors as a group (11 persons)
--------------------------------------------------------------------------------
* Less than 1%.
(1) Unless otherwise indicated, each person has, or shares with his spouse,
sole voting and dispositive power over the shares shown as owned by him.
(2) For purposes of the table, a person is deemed to have "beneficial
ownership" of any shares which such person has the right to acquire
within 60 days after the record date. Any share which such person has
the right to acquire within those 60 days is deemed to be outstanding
for the purpose of computing the percentage ownership of such person,
but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
19
(3) Based on 24,299,374 shares issued and outstanding as of the record date.
(4) These shares are registered in the name of Schweizerhall, Inc., of which
Mr. Noetzli is Chairman. These are the same shares listed as owned by
Schweizerhall Inc. in the table above. Mr. Noetzli disclaims beneficial
ownership of these shares in accordance with Rule 13d-4 of the Exchange
Act Rules promulgated pursuant to the Securities Exchange Act of 1934,
as amended.
(5) Based on information provided by T. Rowe Price Associates, Inc. T. Rowe
Price Associates, Inc. has sole dispositive and voting power with
respect to these shares. These shares are held of record by various
individual and institutional investors, including the T. Rowe Price
Small-Cap Value Fund, Inc. (which owns 1,900,000 shares representing
7.8% of the Company's outstanding shares), which T. Rowe Price
Associates, Inc. serves as investment advisor with power to direct
investments and/or power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, T. Rowe
Price Associates, Inc. is deemed to be the beneficial owner of such
securities; however, T. Rowe Price Associates, Inc. disclaims beneficial
ownership of these shares in accordance with Rule 13d-4 of the Exchange
Act of 1934, as amended.
(6) Represents shares issued in connection with the Company's fiscal 2001
acquisition of the Schweizerhall Pharma distribution division of
Schweizerhall Holding AG, and certain assets relating to the
pharmaceutical ingredients business of Schweizerhall, Inc., a wholly
owned subsidiary of Schweizerhall Holding AG.
20
PERFORMANCE GRAPH
-----------------
The following graph compares on a cumulative basis the yearly percentage change,
assuming dividend reinvestment, over the last five fiscal years in (a) the total
shareholder return on our common stock with (b) the total return on the Standard
& Poor's 500 Index and (c) the total return on a published line-of-business
index - the Dow Jones U.S. Chemicals Index (the "Peer Group").
The following graph assumes that $100 had been invested in each of the Company,
the Standard & Poor's 500 Index and the Peer Group on June 30, 2000.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ACETO CORPORATION, THE S & P 500 INDEX
AND THE DOW JONES US CHEMICALS INDEX
DOW JONES U.S.
--------------
ACETO CORPORATION S&P 500 INDEX CHEMICALS
----------------- ------------- ---------
June 30, 2000 100 100 100
June 30, 2001 94 85 113
June 30, 2002 103 70 121
June 30, 2003 273 70 111
June 30, 2004 393 83 139
June 30, 2005 254 89 153
ASSUMES $100 INVESTED ON JUNE 30, 2000
ASSUMES DIVIDEND REINVESTMENT
FISCAL YEAR ENDING JUNE 30, 2005
The preceding sections entitled "Executive Compensation" and "Performance Graph"
do not constitute soliciting material for purposes of SEC Rule 14a-9, will not
be deemed to have been filed with the SEC for purposes of Section 18 of the
Securities Exchange Act of 1934, and are not to be incorporated by reference
into any other filing that we make with the SEC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stanley H. Fischer, a director of the Company, is President of Fischer and
Burstein, P.C., a law firm which serves as counsel to the Company on various
corporate matters. During fiscal 2005, the Company paid $114,000 to Fischer and
Burstein, P.C. for legal services rendered to the Company.
Robert A. Wiesen, a director of the Company, is a partner in Clifton, Budd &
DeMaria, a law firm which serves as labor and employment counsel to the Company.
During fiscal 2005, the Company paid $101,000 to Clifton, Budd & DeMaria for
legal services rendered to the Company.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE SEVEN
NOMINEES FOR DIRECTOR.
21
APPOINTMENT OF INDEPENDENT AUDITORS
Pursuant to its charter, the Audit Committee has the sole, discretionary
authority to appoint, retain and terminate the Company's independent auditors.
KPMG LLP has been the Company's independent auditors since 1971. However, in
September 2005, the Audit Committee determined, in accordance with sound
corporate governance practices, that it would issue a request for proposal with
regard to the Company's audit engagement.
The Audit Committee decided to issue the request for proposal because it wanted
the opportunity to review other auditing firms as prospective independent
auditors for the Company and to consider the benefits and detriments of changing
independent auditors. This decision was not related to the quality of services
provided by KPMG LLP.
The request for proposal was issued to several public accounting firms,
including KPMG LLP, in October 2005, and the Audit Committee currently plans to
complete the proposal process by the end of 2005. In the interim, the Audit
Committee has appointed KPMG LLP to serve as the Company's independent auditors
for the first quarter of fiscal 2006 and anticipates appointing KPMG LLP for
subsequent quarters until the request for proposal process is completed and the
decision becomes effective. The Company will make a public announcement in the
event that it decides to engage a firm other than KPMG LLP.
As a result of the Committee's decision to issue the request for proposal, and
the temporary uncertainty as to which firm will be selected as the Company's
independent auditors for fiscal 2006, the Company determined that it was not
appropriate to request shareholder ratification of an independent auditor at its
Annual Meeting. Typically in previous years, the Company has requested that our
shareholders vote to ratify the appointment of KPMG LLP as the independent
auditors for the year. At next year's annual meeting, we fully expect to return
to the practice of seeking shareholder ratification of the Company's independent
auditors.
In following with KPMG LLP's service as the Company's independent auditors for
fiscal 2005, representatives of KPMG LLP will be available to answer questions
at the Annual Meeting and are free to make statements during the meeting.
SHAREHOLDER PROPOSALS
All shareholder proposals which are intended to be presented at the 2006 Annual
Meeting of Shareholders of the Company must be received by the Company no later
than June 18, 2006, for inclusion in the board of directors' proxy statement and
form of proxy relating to the meeting.
OUR ANNUAL REPORT ON FORM 10-K AND CORPORATE GOVERNANCE COMPLIANCE DOCUMENTS
If you own our common stock, you can obtain copies of our annual report on Form
10-K for the fiscal year ended June 30, 2005 as filed with the SEC, including
the financial statements, our committee charters, and our codes of conduct, all
without charge, by writing to Mr. Douglas Roth, Chief Financial Officer and
Corporate Secretary, Aceto Corporation, One Hollow Lane, Lake Success, New York
11042. You can also access our 2005 Form 10-K on our website at WWW.ACETO.COM by
clicking on "Corporate Governance" and then on "SEC Filings". You can also
access our committee charters at our website by clicking on "Corporate
Governance".
22
OTHER BUSINESS
The board of directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it is
the intention of the persons named in the enclosed proxy to vote on such matters
in accordance with their best judgment.
The prompt return of the proxy will be appreciated and helpful in obtaining the
necessary vote. Therefore, whether or not you expect to attend the meeting,
please sign the proxy and return it in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Douglas Roth
Douglas Roth
Chief Financial Officer and
Corporate Secretary
Dated: October 20, 2005
23
ACETO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby constitutes and appoints
Leonard S. Schwartz and Douglas Roth, and each of them, proxies with full power
of substitution to vote for the undersigned all shares of Common Stock of Aceto
Corporation which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders to be held on December 1, 2005 at
the Company's offices, One Hollow Lane, Suite 201, Lake Success, New York 11042,
at 10:00 a.m., Eastern Standard Time, and at any adjournment thereof, upon the
matters described in the accompanying Proxy Statement and upon any other
business that may properly come before the meeting or any adjournment thereof.
Said proxies are directed to vote or refrain from voting as checked on the
reverse side upon the matters listed on the reverse side, and otherwise in their
discretion.
PLEASE INDICATE HOW YOUR SHARES ARE TO BE VOTED. IF NO SPECIFIC VOTING
INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
RECOMMENDED BY THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR ALL NOMINEES."
ACETO CORPORATION
P.O. BOX 11199
NEW YORK, N.Y. 10203-0199
(1) Election of Directors
FOR all: ___________________
WITHHOLD for all: ___________________
*EXCEPTIONS: ___________________
WITHHOLD AUTHORITY to vote for Nominees: Leonard S. Schwartz, Robert A. Wiesen,
Stanley H. Fischer, Albert L. Eilender, Ira S. Kallem, Hans C. Noetzli and
William N. Britton.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX ABOVE AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW.)
*Exceptions
________________________________________________________________________________
(2) In their discretion with respect to such other business as may properly come
before the meeting or any adjournment thereof.
Change of Address Mark Here
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE.)
NOTE: Please sign exactly as your name appears on this proxy. If shares are held
jointly, each joint owner should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. Proxies
executed by a corporation should be signed with the full corporate name by a
duly authorized officer.
Dated:_____________________________, 2005
___________________________________
(Signature of Shareholder)