ACETO
CORPORATION
One
Hollow Lane
Lake
Success, New York 11042-1215
Tel.
(516) 627-6000
October
23, 2006
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 7, 2006 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, |
|
|
|
Leonard
S. Schwartz
|
|
Chairman
of the Board, President and
|
|
Chief
Executive Officer
|
[This
page left blank intentionally]
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 7, 2006, at
10:00 a.m., Eastern Standard Time, at the Company’s offices indicated above for
the following purposes:
· |
to
elect seven directors to the board of directors to hold office for
the
following year and until their successors are
elected;
|
· |
to
ratify the appointment of BDO Seidman, LLP as the Company’s independent
registered public accounting firm for the fiscal year ending June
30,
2007; and
|
· |
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 13, 2006 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,
|
|
|
|
|
|
Douglas
Roth
|
|
Chief
Financial Officer and
Corporate
Secretary
|
Lake
Success, New York
October
23, 2006
ACETO
CORPORATION
ONE
HOLLOW LANE
LAKE
SUCCESS, NEW YORK 11042-1215
Tel.
(516) 627-6000
PROXY
STATEMENT
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 7, 2006 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 LLC, 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 26, 2006. 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 7, 2006. 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
two items of business scheduled to be voted on at the annual meeting
are
the election of directors and the ratification of the Company’s
independent registered public accounting firm. 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 and FOR the ratification of the Company’s
independent registered public accounting firm on the proxy card
included
with this proxy statement.
|
Q:
|
What
shares can I vote?
|
A:
|
You
may vote all shares owned by you as of the close of business on
October
13, 2006, 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
13,
2006, 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
13, 2006, 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.
|
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. In the ratification of the Company’s independent
registered public accounting firm, you may vote FOR ratification,
AGAINST
ratification or you may ABSTAIN from voting with respect to ratification.
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, FOR ratification of the Company’s independent registered public
accounting firm 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 13, 2006 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,
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, 2006.
|
Q: |
What
happens if additional matters are presented at the annual
meeting?
|
A:
|
Other
than the two items 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 13, 2006, 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, 24,286,521 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 26, 2007. 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.
|
ACTIONS
TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL
ONE
ELECTION
OF DIRECTORS
THE
NOMINEES
The
Company’s board of directors is proposing a slate of directors that consists of
seven incumbent directors. The nominees are set forth in the table
below.
NAME
|
|
AGE
|
|
POSITION
|
|
DIRECTOR
SINCE
|
|
|
|
|
|
|
|
Leonard
S. Schwartz
|
|
60
|
|
Chairman,
President and CEO
|
|
1991
|
Robert
A. Wiesen (1)
|
|
55
|
|
Director
|
|
1994
|
Stanley
H. Fischer
|
|
63
|
|
Director
|
|
2000
|
Albert
L. Eilender (2)(3)
|
|
63
|
|
Director
|
|
2000
|
Ira
S. Kallem (2)
|
|
58
|
|
Director
|
|
2002
|
Hans
C. Noetzli (2)
|
|
65
|
|
Director
|
|
2002
|
William
N. Britton
|
|
61
|
|
Director
|
|
2006
|
(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, except for Mr. Noetzli, who is
a
member of the board of directors of Synthetech, Inc. 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.
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 former 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 his role as Chairman of Schweizerhall, Inc.,
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, Ira S. Kallem (Chairman) and
Hans
C. Noetzli. The audit committee is responsible for recommending the Company’s
independent public accounting firm and reviewing management actions in matters
relating to audit functions. The committee reviews with the Company’s
independent public accountants 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 2006 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 Act of 2002. The audit committee operates under a formal
charter
that governs its duties and conduct. The charter is attached as an appendix
to
this 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:
· |
They
consider and recommend to the board of directors, individuals for
election
as directors.
|
· |
They
make recommendations to the board of directors regarding any changes
to
the size of the board of directors or any
committee.
|
· |
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.
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, 2006, the board of directors held five
meetings and acted by unanimous written consent three times. Each director
attended 100% of the board meetings and meetings of the board committees
on
which he served.
During
the Company’s fiscal year ended June 30, 2006, 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 2005 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 [email protected], 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 LLC 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.
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,
2006, except for the acquisition of common stock on June 16, 2006 by certain
executive officers, for which such reports were filed on September 15,
2006.
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
|
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Restricted
Stock
Awards
|
|
Options/(1)
SARs
|
|
All
Other
Compensation
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard
S. Schwartz
|
|
2006
|
|
$
|
398,575
|
|
$
|
920,000
|
|
|
-
|
|
|
-
|
|
$
|
88,782
|
|
President,
Chairman
|
|
2005
|
|
|
398,398
|
|
|
605,000
|
|
$
|
100,000
|
|
|
300,000
|
|
|
271,257
|
|
|
|
2004
|
|
|
383,245
|
|
|
715,900
|
|
|
-
|
|
|
18,000
|
|
|
571,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
DeBenedittis
|
|
2006
|
|
|
238,164
|
|
|
228,000
|
|
|
-
|
|
|
-
|
|
|
45,561
|
|
Senior
Vice President
|
|
2005
|
|
|
231,118
|
|
|
206,000
|
|
|
10,000
|
|
|
30,000
|
|
|
46,286
|
|
|
|
2004
|
|
|
222,263
|
|
|
240,000
|
|
|
-
|
|
|
6,000
|
|
|
50,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vincent
Miata
|
|
2006
|
|
|
232,620
|
|
|
235,000
|
|
|
-
|
|
|
-
|
|
|
41,849
|
|
Senior
Vice President
|
|
2005
|
|
|
232,517
|
|
|
220,000
|
|
|
-
|
|
|
30,000
|
|
|
41,029
|
|
|
|
2004
|
|
|
223,673
|
|
|
220,000
|
|
|
-
|
|
|
6,000
|
|
|
40,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Feinman
|
|
2006
|
|
|
190,345
|
|
|
127,000
|
|
|
-
|
|
|
-
|
|
|
38,265
|
|
President,
Aceto
|
|
2005
|
|
|
185,305
|
|
|
135,000
|
|
|
-
|
|
|
30,000
|
|
|
45,926
|
|
Agricultural
Chemicals Corp.
|
|
2004
|
|
|
177,758
|
|
|
132,000
|
|
|
-
|
|
|
6,000
|
|
|
37,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas
Roth
|
|
2006
|
|
|
228,844
|
|
|
80,000
|
|
|
20,000
|
|
|
-
|
|
|
38,679
|
|
Chief
Financial Officer
|
|
2005
|
|
|
203,566
|
|
|
61,980
|
|
|
13,620
|
|
|
30,000
|
|
|
34,925
|
|
|
|
2004
|
|
|
195,766
|
|
|
67,200
|
|
|
16,800
|
|
|
6,000
|
|
|
31,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
All
figures have been adjusted to reflect the 3-for-2 stock splits,
effected
in the form of dividends, paid in January 2005 and 2004, as
appropriate.
|
(2) |
Represents
contributions to retirement plans and compensation recognized from
the
issuance of premium shares on restricted
stock.
|
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, 2006 to the named executives.
|
|
Number
of
Securities
Underlying
Options
Granted
|
|
%
of Total Options
Granted
to Employees
in
Fiscal
|
|
Exercise
or
Base
Price
|
|
Expiration
|
|
Potential
Realizable Value at
Assumed
Annual Rates of
Stock
Price Appreciation for
Option
Term
|
Name
|
|
(#
of Shares)
|
|
Year
|
|
($/Sh)
|
|
Date
|
|
5%
|
|
10%
|
Leonard
S. Schwartz
|
|
None
|
|
|
|
|
|
|
|
|
|
|
Frank
DeBenedittis
|
|
None
|
|
|
|
|
|
|
|
|
|
|
Vincent
Miata
|
|
None
|
|
|
|
|
|
|
|
|
|
|
Michael
Feinman
|
|
None
|
|
|
|
|
|
|
|
|
|
|
Douglas
Roth
|
|
None
|
|
|
|
|
|
|
|
|
|
|
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, 2006 and the value
of
unexercised options held by such persons on June 30, 2006.
|
|
|
|
|
|
Number
Of Securities
Underlying
Unexercised
Options
At FY-End (1)
|
|
Value
Of Unexercised In-The-
Money
Options At
FY-End
(1)
|
Name
|
|
Shares
Acquired
On
Exercise
(1)
|
|
Value
Realized
|
|
Exercisable/
|
Unexercisable
|
|
Exercisable/
|
Unexercisable
|
Leonard
S. Schwartz
|
|
-
|
|
-
|
|
887,250
|
-
|
|
$
2,177,235
|
-
|
Frank
DeBenedittis
|
|
-
|
|
-
|
|
79,500
|
-
|
|
106,920
|
-
|
Vincent
Miata
|
|
-
|
|
-
|
|
101,438
|
-
|
|
195,145
|
-
|
Michael
Feinman
|
|
-
|
|
-
|
|
79,500
|
-
|
|
106,920
|
-
|
Douglas
Roth
|
|
-
|
|
-
|
|
58,650
|
-
|
|
51,876
|
-
|
(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, 2006 ($6.92). 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 $40,000 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.
On
January 3, 2006, the Company granted each of Messrs. Eilender, Wiesen, Fischer,
Noetzli, Kallem and Britton 13,000 non-qualified stock options pursuant to
the
1998 Stock Option Plan. Each option vests on the first anniversary of the
date
of grant, is exercisable at $6.82 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.
REPORT
OF THE INDEPENDENT DIRECTORS REGARDING COMPENSATION MATTERS
The
Company’s independent directors, consisting of William N. Britton, 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
by the Company’s independent directors.
William
N. Britton
Albert
L.
Eilender
Ira
S.
Kallem
Hans
C.
Noetzli
Robert
A.
Wiesen (lead compensation director)
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 attached
to
this proxy statement and is available on the Company’s corporate website.
The
audit
committee is comprised of Albert L. Eilender, Ira S. Kallem (Chairman) and
Hans
C. Noetzli. Each of these directors meets the independence and expertise
requirements of the SEC and the Nasdaq Stock Market LLC. The
audit
committee recommends the Company’s independent registered public accounting
firm, approves the scope of the audit plan, and reviews and approves the
fees of
the independent accountants. The audit committee met regularly with the
Company’s independent accountants 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 BDO Seidman, LLP for the Company
within and outside the scope of the quarterly review and annual auditing
functions.
We
also:
· |
Met
to discuss the quarterly unaudited and the annual audited financial
statements with management and BDO Seidman, LLP prior to the statements
being filed with the SEC;
|
· |
Reviewed
the Company’s disclosures in the Management’s Discussion and Analysis
sections of such filings;
|
· |
Reviewed
management’s program, schedule, progress and accomplishments for
maintaining financial controls and procedures to assure compliance
with
Section 404 of the Sarbanes-Oxley Act of
2002;
|
· |
Reviewed
quarterly earnings releases prior to their
publication;
|
· |
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
BDO Seidman, LLP;
|
· |
Reviewed
and revised the committee’s charter as necessary in order to comply with
newly enacted rules and regulations;
|
· |
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;
|
· |
Reviewed
the audit, tax and audit-related services the Company had received
from
BDO Seidman, LLP and determined that the providing of such services
by BDO
Seidman, LLP was compatible with the preservation of their independent
status as our independent registered public accounting
firm.
|
We
have
also reviewed and discussed the audited financial statements for the fiscal
year
ended June 30, 2006 with management and discussed with BDO Seidman, 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 BDO Seidman,
LLP
required by Independence Standards Board Standard No. 1 and have discussed
with
BDO Seidman, 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.
Respectfully
submitted by the members of the audit committee.
Albert
L.
Eilender
Ira
S.
Kallem (Chairman)
Hans
C.
Noetzli
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth, as of October 13, 2006, 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.
Name
and Address of Beneficial
Owner
|
|
Number
of Shares
Beneficially
Owned
(excluding
stock
options) (1)
|
|
Exercisable
Stock
Options
(2)
|
|
Total
Beneficial
Ownership
|
|
Percent
(3)
|
Leonard
S. Schwartz
|
|
180,290
|
|
887,250
|
|
1,067,540
|
|
4.2%
|
Frank
DeBenedittis
|
|
32,357
|
|
79,500
|
|
111,857
|
|
*
|
Vincent
Miata
|
|
30,812
|
|
101,438
|
|
132,250
|
|
*
|
Michael
Feinman
|
|
20,199
|
|
79,500
|
|
99,699
|
|
*
|
Douglas
Roth
|
|
12,172
|
|
58,650
|
|
70,822
|
|
*
|
Robert
A. Wiesen
|
|
4,547
|
|
36,625
|
|
41,172
|
|
*
|
Stanley
H. Fischer
|
|
3,375
|
|
43,375
|
|
46,750
|
|
*
|
Albert
L. Eilender
|
|
15,000
|
|
53,500
|
|
68,500
|
|
*
|
Hans
Noetzli
|
|
6,000
|
|
43,375
|
|
49,375
|
|
*
|
Ira
S. Kallem
|
|
3,500
|
|
43,375
|
|
46,875
|
|
*
|
William
N. Britton
|
|
2,500
|
|
13,000
|
|
15,500
|
|
*
|
T.
Rowe Price Associates, Inc. (4)
100
East Pratt Street
Baltimore,
MD 21202
|
|
2,018,200
|
|
-
|
|
2,018,200
|
|
8.3%
|
Royce
& Associates, LLC
1414
Avenue of the Americas
New
York, NY 10019
|
|
2,099,059
|
|
-
|
|
2,099,059
|
|
8.6%
|
Dimension
Fund Advisors, Inc.
1299
Ocean Avenue
Santa
Monica, CA 90401
|
|
1,728,232
|
|
-
|
|
1,728,232
|
|
7.1%
|
NWQ
Investment Management Co. LLC
2049
Century Park East, 16th Floor
Los
Angeles, CA 90067
|
|
1,437,240
|
|
-
|
|
1,437,240
|
|
5.9%
|
|
|
|
|
|
|
|
|
|
All
named executive officers and directors as a group (11
persons)
|
|
310,752
|
|
1,439,588
|
|
1,750,340
|
|
6.8%
|
*
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.
|
(3) |
Based
on 24,286,521 shares issued and outstanding as of the record
date.
|
(4) |
Based
on information provided by T. Rowe Price Associates, Inc. T. Rowe
Price
Associates, Inc. has sole dispositive power with respect to these
shares
and sole voting power for 70,000 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 1,778,200 shares representing
7.3% 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.
|
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, 2001.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG
ACETO CORPORATION, THE S & P 500 INDEX
AND
THE DOW JONES US CHEMICALS INDEX
ASSUMES
$100 INVESTED ON JUNE 30, 2001
ASSUMES
DIVIDEND REINVESTMENT
FISCAL
YEAR ENDING JUNE 30, 2006
|
Aceto
Corporation
|
|
S&P
500 Index
|
|
Dow
Jones U.S.
Chemicals
|
June
30, 2001
|
100
|
|
100
|
|
100
|
June
30, 2002
|
110
|
|
82
|
|
107
|
June
30, 2003
|
290
|
|
82
|
|
98
|
June
30, 2004
|
417
|
|
98
|
|
123
|
June
30, 2005
|
270
|
|
104
|
|
135
|
June
30, 2006
|
255
|
|
113
|
|
143
|
|
|
|
|
|
|
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 2006, the Company paid $160,000 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 2006, the Company paid $155,000 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.
PROPOSAL
TWO
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The
Audit
Committee appointed BDO Seidman, LLP as the Company’s independent registered
public accounting firm for the year ended June 30, 2006 on November 23, 2005.
BDO Seidman, LLP commenced providing services for the quarterly period ended
December 31, 2005. KPMG LLP served as the independent registered public
accounting firm for the year ended June 30, 2005 and through to the appointment
of BDO Seidman, LLP, which included the quarterly period ended September
30,
2005. The Board of Directors, in accordance with the recommendation of the
Audit
Committee, recommends that BDO Seidman, LLP be ratified as the Company’s
independent registered public accounting firm for the year ending June 30,
2007.
The
Company anticipates that representatives of BDO Seidman, LLP will attend
the
annual meeting for the purpose of responding to appropriate questions. At
the
annual meeting, the representatives of BDO Seidman, LLP will be afforded
an
opportunity to make a statement if they so desire.
The
aggregate fees for professional services rendered by BDO Seidman, LLP for
the
year ended June 30, 2006 and by KPMG LLP for the year ended June 30, 2005
were:
|
|
Fiscal
2006
|
|
Fiscal
2005
|
|
|
|
|
|
|
|
Audit
fees
|
|
$
|
854,000
|
|
$
|
1,294,000
|
|
Audit
related fees
|
|
|
-
|
|
|
-
|
|
Tax
fees
|
|
|
15,000
|
|
|
60,000
|
|
All
other fees
|
|
|
-
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
Total
fees
|
|
$
|
869,000
|
|
$
|
1,361,000
|
|
|
|
|
|
|
|
|
|
Audit
fees are fees for the audit of the Company’s annual financial statements
included on Form 10-K, including the audits of internal control over financial
reporting, reviews of the quarterly financial statements and statutory audits.
In addition to the above, during fiscal 2006, the Company paid $80,000 in
fees
to KPMG LLP relating to the review of the Company’s quarterly financial
statements for the period ended September 30, 2005.
Tax
fees
are fees for tax services, including tax compliance, tax advice and
planning.
All
other
fees during fiscal 2005 represent permissible training services.
SHAREHOLDER
PROPOSALS
All
shareholder proposals which are intended to be presented at the 2007 Annual
Meeting of Shareholders of the Company must be received by the Company no
later
than June 26, 2007, 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, 2006 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 2006 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”.
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
Douglas
Roth
Chief
Financial Officer and
Corporate
Secretary
|
Dated:
October 23, 2006
Appendix
A
ACETO
CORPORATION
AUDIT
COMMITTEE CHARTER
Purpose
of the Committee
The
primary purpose of the Audit Committee (the “Committee”) is to assist the Board
of Directors of Aceto Corporation (the “Company”) in fulfilling its oversight
responsibilities by reviewing the financial information which will be provided
to the Company’s shareholders and others, the quality of the Company’s
accounting policies and reporting practices, the systems of internal disclosure
controls which management and the Board of Directors have established,
compliance with the Company’s Code of Ethics for Financial Management, and the
internal and external audit processes. The Committee is to assist the Board
in
maintaining compliance by the Company with legal and regulatory
requirements.
In
fulfilling its purpose, it is the responsibility of the Committee to provide
an
open avenue of communication between the Board of Directors, management and
the
independent auditors. The Committee is to be the Board’s principal agent in
ensuring the independence and objectivity of the independent auditors, the
integrity of management, and the adequacy of disclosure to shareholders.
The
independent auditors are ultimately accountable to the Board of Directors
and
the Committee, as representative of the Company’s shareholders; however, the
Committee has the sole authority to select, evaluate, and, where appropriate,
replace the independent auditors.
The
Committee members are not acting as professional accountants or auditors,
and
their functions are not intended to duplicate or substitute for the activities
of management and the independent auditors. The Committee serves a Board-level
oversight role in which it provides advice, counsel and direction to management
and the independent auditors on the basis of information it receives, discussion
with the accountants and the experience of the Committee’s members in business,
financial and accounting matters.
Authority
of the Committee
The
Committee has the authority to investigate any activity of the Company within
its scope of responsibilities, and shall have unrestricted access to members
of
management and all information relevant to its responsibilities. All employees
are directed to cooperate as requested by members of the Committee. The
Committee is empowered to retain persons having special competence as necessary
to assist the Committee in fulfilling its responsibility.
Composition
of the Committee
The
Committee shall be comprised of at least three members, all of whom shall
meet
the independence requirements and experience qualifications of the United
States
Securities and Exchange Commission (the "SEC") and The Nasdaq Stock Market,
Inc
("Nasdaq").
Specifically,
each audit committee member shall: (i) be "independent", as defined in NASDAQ
Rule 4200; (ii) meet the criteria for independence set forth in Rule 10A-3
of
the Securities Exchange Act of 1934, as amended; (iii) not have participated
in
the preparation of the financial statements of the Company at any time during
the past three years; and (iv) be able to read and understand fundamental
financial statements, including a company’s balance sheet, income statement, and
cash flow statement.
In
addition, at least one member of the Audit Committee shall be an "Audit
Committee Financial Expert" as defined by the SEC, and otherwise meet the
experience requirements of NASDAQ Rule 4350(d)(2)(A).
Meetings
of the Committee
The
Audit
Committee shall meet, either in person or telephonically, at least quarterly.
Prior to each meeting, the Chairman of the Committee may communicate with
the
independent auditors to review the agenda and solicit input on any additional
topics that should be covered. The Audit Committee shall also meet periodically,
in the discretion of the Chairman of the Committee, with Company’s management,
and the independent auditor in separate executive sessions.
Attendance
at Meetings of the Committee
Members
of the Committee are expected to use all reasonable efforts to attend each
meeting. The Chairman may also request that members of management, the Company’s
outside counsel or the independent auditor attend a meeting of the Committee
or
meet with any members of, or consultants to, the Committee.
Minutes
of Meetings of the Committee
Minutes
of each meeting shall be prepared under the direction of the Chairman of
the
Committee and circulated to Committee members for review and approval. Copies
are then to be made available to the Company directors who are not members
of
the Committee, the independent auditors and the Company’s Chief Financial
Officer.
Specific
Responsibilities of the Committee
General
Matters
The
Committee shall:
1.
Oversee the work and compensation of the independent auditor in connection
with
the preparation by the independent auditor of its audit report.
2.
Review
the scope of the independent auditor’s audit examination, including their
engagement letter, prior to the annual audit. Review and approve the audit
fees
agreed upon by management. Approve any permitted non-audit services to be
provided by the independent auditors. The Chairman has the authority to make
specific pre-approvals in his or her sole good faith discretion, except that
for
services with an estimated cost in excess of $10,000, the specific pre-approval
of such services must be subsequently considered and ratified by the entire
Committee.
3.
Have
the authority to recommend to the Board the retention or replacement of the
independent auditors, and provide a written summary of the basis for any
recommended change (subject, if applicable, to shareholder ratification).
The
independent auditor shall report directly to the Audit Committee.
4.
Have
the authority, to the extent it deems necessary or appropriate, to retain
independent legal, accounting or other advisors. The Company shall provide
for
appropriate funding, as determined by the Audit Committee, for payment of
compensation to the independent auditor for the purpose of rendering or issuing
an audit report and to any advisors employed by the Audit
Committee.
Financial
Statement and Disclosure Matters
The
Committee shall:
1.
Review
and discuss with management and the independent auditor the annual audited
financial statements, including disclosures made in management’s discussion and
analysis, and recommend to the Board whether the audited financial statements
should be included in the Company’s Form 10-K.
2.
Review
and discuss with management and the independent auditor the Company’s quarterly
financial statements prior to the filing of its Form 10-Q, including the
results
of the independent auditor’s review of the quarterly financial
statements.
3.
Discuss with the independent auditor the matters required to be discussed
by
Statement on Auditing Standards No. 61 relating to the conduct of the audit,
including any difficulties encountered in the course of the audit work, any
restrictions on the scope of activities or access to requested information,
and
any significant disagreements with management.
4.
Discuss with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation
of the
Company’s financial statements, including any significant changes in the
Company’s selection or application of accounting principles, any major issues as
to the adequacy of the Company’s internal controls and any special steps adopted
in light of material control deficiencies, if any.
5.
Review
and discuss quarterly reports from the independent auditors on: (a) all critical
accounting policies and practices to be used; (b) all alternative treatments
of
financial information within generally accepted accounting principles that
have
been discussed with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the independent
auditor; and (c) other material written communications between the independent
auditor and management, such as any management letter or schedule of unadjusted
differences.
6.
Discuss with management the Company’s earnings press releases, including the use
of "pro forma" or "adjusted" non-GAAP information, as well as financial
information and earnings guidance provided to analysts and rating
agencies.
7.
Discuss with management and the independent auditor the effect of regulatory
and
accounting initiatives as well as off-balance sheet structures on the Company’s
financial statements, if any.
8.
Discuss with management the Company’s major risk exposures and the steps
management has taken to monitor and control such exposures, including the
Company’s risk assessment and risk management policies.
9.
Review
disclosures made to the Audit Committee by the Company’s CEO and CFO during
their certification process for the Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal controls
or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company’s internal
controls.
Oversight
of the Company's Relationship with the Independent
Auditor
The
Committee shall:
1.
Review
and evaluate the lead partner of the independent auditor team.
2.
Obtain
and review a report from the independent auditor at least annually regarding
(a)
the independent auditor’s internal quality-control procedures, (b) any material
issues raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting one or
more
independent audits carried out by the firm, (c) any steps taken to deal with
any
such issues, and (d) all relationships between the independent auditor and
the
Company. Evaluate the qualifications, performance and independence of the
independent auditor, including considering whether the auditor’s quality
controls are adequate and the provisions of the permitted non-audit services
is
compatible with maintaining the auditor’s independence, taking into account the
opinions of management. The Audit Committee shall present its conclusions
with
respect to the independent auditor to the Board.
3.
Oversee the rotation of the audit partners as required by law.
4.
Meet
with the independent auditor to discuss the planning and staffing of the
audit.
Compliance
Oversight Responsibilities
The
Committee shall:
1.
Obtain
from the independent auditor assurance that to its knowledge Section 10A(b)
of
the Exchange Act has not been implicated.
2.
Review
management’s monitoring of the Company’s compliance with its Code of Ethics.
Review reports and disclosures of insider and affiliate party
transactions.
3.
Review
on an on-going basis for potential conflicts of interest, and approve if
appropriate, all "Related Party Transactions" of the Company as required
by
NASDAQ Rule 4350(h). For purposes of this Charter, "Related Party Transactions"
shall mean those transactions required to be disclosed pursuant to SEC
Regulation S-K, Item 404.
4.
Establish procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or
auditing matters, and the confidential, anonymous submission by the employees
of
concerns regarding the questionable accounting or auditing matters.
5.
Discuss with management and the independent auditor any correspondence with
regulators or governmental agencies and any published reports which raise
material issues regarding the Company’s financial statements or accounting
policies.
6.
Discuss with the Company’s outside counsel legal matters that may have a
material impact on the financial statements or the Company’s compliance
policies.
Limitation
of the Audit Committee's Role
While
the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Company’s financial statements and disclosures are complete
and accurate and are in accordance with the generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the independent auditor.
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