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
Filed by the Registrant ☒
Filed by a party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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EVER-GLORY INTERNATIONAL GROUP, INC.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
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No fee required.
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Fee computed on the table below
per Exchange Act Rules 14a-6(i) (1) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or
other underlying value of transaction computed pursuant to Exchange Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee
paid previously with preliminary materials.
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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.
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(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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Date Filed:
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EVER-GLORY INTERNATIONAL GROUP, INC.
Ever-Glory Commercial Center,
509 Chengxin Road, Jiangning Development
Zone,
Nanjing, Jiangsu Province, Peoples
Republic of China
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held at 9:30 a.m. on December
20, 2019 (Beijing Time)
To the Shareholders of Ever-Glory International
Group, Inc.:
Please take notice
that the 2019 Annual Meeting of Shareholders (the “Annual Meeting”) of Ever-Glory International Group, Inc., a Florida
corporation (the “Company” or “Ever-Glory”), will be held on December 20, 2019 at 9:30 a.m. Beijing time,
at the Ever-Glory Commercial Center No. 509 Chengxin Road, Jiangning Development Zone, Nanjing, Jiangsu 211102 China, for the
following purposes:
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To elect
a Board of five (5) directors, to serve until the next annual meeting of shareholders or until their successors are duly elected
and qualified;
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2.
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To ratify the appointment
of BF Borgers CPA PC (“Borgers”) as our independent auditor to audit the financial statements for the fiscal year
ended on December 31, 2018 and to review the three quarterly financial statements ended on September 30, 2019.
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3.
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To approve, by a
non-binding vote, the Company’s executive compensation.
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4.
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To approve, by a
non-binding, vote the frequency of future Stockholder advisory votes relating to the Company’s executive compensation.
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To transact such
other business as may properly come before the Annual Meeting or at any adjournments or postponements thereof.
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A proxy statement
attached to this notice describes these matters in more detail as well as additional information about Ever-Glory and its officers
and directors. The Board of Directors has fixed the close of business on November 12, 2019 EST as the record date and only
holders of the Company’s common stock as of the close of business on November 12, 2019 EST are entitled to receive this
notice and vote at the Annual Meeting and at any adjournments or postponements thereof.
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By Order of the Board of
Directors,
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/s/
Edward Yihua Kang
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Chairman of the Board
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Nanjing, China
Date: November 25, 2019
YOUR VOTE IS VERY
IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN AND WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. PLEASE READ
THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENCLOSED ENVELOPE.
Important Notice Regarding the Availability
of Proxy Materials
for the Annual Shareholder Meeting
to Be Held at 9:30 a.m. on December 20, 2019 (Beijing Time)
The Notice of Annual
Meeting, proxy statement and Annual Report on Form 10-K are available at http://www.edocumentview.com/EVK.
TABLE OF CONTENTS
EVER-GLORY INTERNATIONAL GROUP, INC.
Ever-Glory Commercial Center,
509 Chengxin Road, Jiangning Development
Zone,
Nanjing, Jiangsu Province,
Peoples Republic of China
PROXY STATEMENT
INTRODUCTION
Date, Time and Place of Meeting
The
enclosed proxy is solicited on behalf of the Board of Directors of Ever-Glory International Group, Inc. for the 2019 Annual Meeting
of Shareholders (the “Annual Meeting”) to be held on December 20, 2019 at 9:30 a.m. Beijing time, at the Ever-Glory
China headquarters, Ever-Glory Commercial Center No. 509 Chengxin Road, Jiangning Development Zone, Nanjing, Jiangsu 211102 China
or at any adjournments or postponements of the Annual Meeting, for the purposes set forth in the notice attached to this proxy
statement. This proxy statement and accompanying proxy card are first being mailed to you on or about November 27, 2019. The Company’s Annual Report on Form 10-K for 2018, including financial statements for the year ended
December 31, 2018, but excluding certain exhibits, is being mailed to shareholders at the same time. A copy of the exhibits will
be provided upon request and payment to the Company of reasonable expenses.
GENERAL INFORMATION ABOUT VOTING
Record Date, Outstanding Shares, Quorum and Voting
You can vote your
shares of common stock if our records show that you owned your shares on the record date of November 12, 2019. At the
close of business on the record date, 14,801,770 shares of common stock were outstanding. Holders of shares of common stock
are entitled to vote at the Annual Meeting. Each share of common stock outstanding as of the record date entitles its holder to
one vote.
Business may be transacted
at the Annual Meeting if a quorum is present. A quorum is present at the Annual Meeting if holders of a majority of the shares
of common stock entitled to vote are present in person or by proxy at the Annual Meeting. If you sign and return your proxy card,
your shares will be counted to determine whether we have a quorum even if you abstain or fail to vote on any of the proposals
listed on the proxy card.
If your shares are
held in the name of a nominee, and you do not tell the nominee how to vote your shares (a “broker non-vote”), the
nominee can vote them as it sees fit only on matters that are determined to be “routine”, and not on any other proposal. Broker
non-votes will be counted as present to determine if a quorum exists but will not be counted as present and entitled to vote on
any non-routine proposal.
For Proposal No. 1
(Election of Directors), directors will be elected by a plurality (meaning, the largest number of votes cast) of shares of common
stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. With
respect to Proposal No. 1, broker “non-votes” have no effect and abstentions have the same effect as negative votes.
Proposal No. 2 (Ratification of Appointment of Independent Auditor) will require the affirmative vote of the majority of the shares
entitled to vote. Abstentions and broker non-votes will have no direct effect on the outcome of this proposal. All votes will
be tabulated by the inspector of elections appointed for the Annual Meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker non-votes on each proposal. Proposal No. 3 (Approval on an advisory basis, of the executive compensation)
requires the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of shares of common stock entitled
to vote. Abstentions and broker non-votes will have no direct effect on the outcome of these proposals. With respect to Proposal
No. 4, for purposes of determining the votes cast with respect to the vote to approve a non-binding advisory vote recommending
the frequency of advisory votes on executive compensation, only those votes cast in favor of having the vote occur every one,
two or three years are included. Abstentions and broker non-votes will have no direct effect on the outcome of this proposal.
It is important that
your proxy be returned promptly and that your shares be represented. You are urged to sign, date and promptly return the enclosed
proxy in the enclosed envelope, whether or not you plan to attend the Annual Meeting in person.
Solicitations and Voting of Proxies
When proxies are properly
dated, executed, and returned, the shares they represent will be voted at the Annual Meeting in accordance with the instructions
of the shareholders. If not otherwise instructed, the shares represented by each valid returned proxy in the form accompanying
this proxy will be voted in accordance with the recommendation of the Board of Directors with respect to each matter submitted
to the shareholders for approval, and at the discretion of the proxy holders, upon such other business as may properly come before
the Annual Meeting (including any proposal to adjourn the Annual Meeting) and any adjournment of the meeting. The matters
described in this proxy statement are the only matters we know will be voted on at the Annual Meeting. If other matters
are properly presented at the Annual Meeting, the proxy holders will vote your shares in accordance with the recommendations
of management.
Please follow the
instructions on the enclosed proxy card to vote on each proposal to be considered at the Annual Meeting. If you sign and date
the proxy card and mail it back to us in the enclosed envelope, the proxy holders named on the Proxy card will vote your shares
as you instruct. If you sign and return the proxy card but do not vote on a proposal, the proxy holders will vote your shares
“for” such proposal or, in the case of the election of directors, vote “for” election to the Board of
Directors of all the nominees presented by the Board of Directors.
Revocability of Proxies
Any person signing
a proxy in the form accompanying this proxy statement has the power to revoke it prior to the Annual Meeting or at the Annual
Meeting prior to the vote pursuant to the proxy. A proxy may be revoked (i) by a writing delivered to the Secretary
of Ever-Glory stating that the proxy is revoked, (ii) by a subsequent proxy that is signed by the person who signed the earlier
proxy and is presented at the Annual Meeting, or (iii) by attendance at the Annual Meeting and voting in person (although attendance
at the Annual Meeting will not in and of itself constitute a revocation of a proxy). Please note, however, that if
a shareholder’s shares are held of record by a broker, bank or other nominee and that shareholder wishes to vote at the
Annual Meeting, the shareholder must bring to the Annual Meeting a letter from the broker, bank or other nominee confirming
that shareholder’s beneficial ownership of the shares. Any written notice of revocation or subsequent
proxy should be delivered to Ever-Glory International Group, Inc., Ever-Glory Commercial Center No. 509 Chengxin Road, Jiangning
Development Zone, Nanjing, Jiangsu 211102 China, Attention: Secretary, or hand-delivered to the Secretary of Ever-Glory
International Group, Inc. at or before the taking of the vote at the Annual Meeting.
Expenses of Solicitation
We will bear the entire
cost of solicitation, including the preparation and assembly of this proxy statement, printing and mailing the notice of this
proxy statement, the proxy and any additional solicitation materials furnished to you. We will reimburse our transfer agent for
its out-of-pocket expenses. We may also reimburse brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding voting information to the beneficial owners. We estimate that all of the foregoing costs will be
approximately $15,000. In addition to sending you these materials, some of our employees may contact you by telephone, by mail,
or in person. We will not pay our employees additional compensation for contacting you.
VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF
The following table
sets forth information regarding the beneficial ownership of our common stock as of November 12, 2019, for each of the following
persons:
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each of our directors
and each of the Named Executive Officers in the “Director and Executive Officers” on page 8 of this
Proxy Statement;
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all directors and Named Executive Officers as
a group; and
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each person who
is known by us to own beneficially five percent or more of our common stock.
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Beneficial ownership
is determined in accordance with the rules of the SEC. Unless otherwise indicated in the table, the persons and entities named
in the table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s
name. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Ever-Glory International Group, Inc.
The percentage of class beneficially owned set forth below is based on 14,801,770 shares of our common stock outstanding
on November 12, 2019.
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Amount and
Nature
of Beneficial
Ownership of
Common
Stock (1)
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Percent of
Class
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Executive Officers and Directors
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Yi Hua Kang
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4,977,115
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33.63
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%
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Jia Jun Sun
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174,800
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1.18
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%
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Jason Jiansong Wang
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-
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-
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Merry Tang
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10,399
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0.07
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%
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Zhixue Zhang
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22,346
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0.15
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%
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Jianhua Wang
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7,826
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0.05
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%
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All Executive Officers and Directors as a Group (six persons)
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5,192,486
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35.08
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%
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5% Holders
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Ever-Glory Enterprises (H.K.) Ltd. (2)
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5,623,098
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38.00
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%
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Huake Kang (2)
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5,623,098
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38.00
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%
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(1)
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The percentage of
shares beneficially owned is based on 14,801,770 shares of common stock outstanding as of November 12, 2019. Except as otherwise
noted, shares are owned beneficially and of record, and such record shareholder has sole voting, investment and dispositive
power of the shares.
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(2)
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Huake Kang is the
sole director and majority shareholder of Ever-Glory Enterprises (H.K.) Ltd. and, as such, may be deemed to be the beneficial
owner of the 5,623,098 shares held by Ever-Glory Enterprises (H.K.) Ltd. Huake Kang is the son of Yi Hua Kang.
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INFORMATION CONCERNING THE BOARD OF
DIRECTORS
AND THE COMMITTEES THEREOF
The Board of Directors
Our Board of Directors
currently consists of five (5) members and is responsible for the business and affairs of the Company and considers various matters
which require its approval.
During the fiscal
year ended December 31, 2018, the Board held one formal meeting and acted on several matters by unanimous written consents.
Board Committees Generally
In March 2008, the
Board created the Audit Committee and the Compensation Committee and has adopted charters for these committees. In December 2013,
the Board created the Nominating and Governance Committee and adopted charter for this newly created committee. The Board
has determined that in its judgment, Ms. Tang, Mr. Wang, and Mr. Zhang are independent directors within the meaning of Rule 5605(a)(2)
of the NASDAQ Listing Rules. Accordingly, all of the members of our Audit Committee and Compensation Committee are independent
within the meaning of Rule 5605(a)(2) of the NASDAQ Listing Rules.
All of the incumbent
directors attended all the meetings of our Board of Directors and each committee on which they served during the fiscal year ended
December 31, 2018.
Audit Committee
The Board of Directors
adopted and approved a charter for the Audit Committee on March 13, 2008, and the charter was amended on May 26, 2008, June 20,
2008, and December 22, 2015. Currently, three directors comprise the Audit Committee: Ms. Tang, Mr. Wang and Mr. Zhang. Ms.
Tang serves as Chairwoman of the Audit Committee. The members of the Audit Committee are currently “independent directors”
as that term is defined in Rule 5605(a)(2) of the NASDAQ Listing Rules. The Board of Directors has determined that Ms. Tang qualifies
as an “audit committee financial expert” as defined by the rules of the SEC.
Our Audit Committee
is responsible, in accordance with the Audit Committee charter, for recommending our independent auditors, reviewing and approving
in advance any proposed related-party transactions and report to the full Board on any approved transactions, and overseeing our
audit activities and certain financial matters to protect against improper and unsound practices and to furnish adequate protection
to all assets and records.
Our Audit Committee
pre-approves all audit and non-audit services provided by our independent auditors. These services may include audit services,
audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval
is detailed as to particular service or category of services and is generally subject to a specific budget. The Audit Committee
has delegated pre-approval authority to its Chairman when expedition of services is necessary. The independent auditors and management
are required to periodically report to the full Audit Committee regarding the extent of services provided by the independent
auditor in accordance with this pre-approval, and the fees for the services performed to date.
During the fiscal year ended December 31, 2018, the
Audit Committee held three formal meetings.
Compensation Committee
The Board of Directors
adopted and approved a charter for the Compensation Committee on March 13, 2008 which was amended on December 23, 2013 and on December
22, 2015.
The Compensation Committee
currently consists of Ms. Tang, Mr. Wang and Mr. Zhang. Mr. Zhang serves as Chairman of the Compensation Committee. The members
of the Compensation Committee are currently “independent directors” as that term is defined in Rule 5605(a)(2) of the
NASDAQ Listing Rules.
In accordance with
the Compensation Committee’s Charter, the Compensation Committee is responsible for overseeing and, and as appropriate,
making recommendations to the Board regarding the annual salaries and other compensation of the Company’s executive officers
and general employees and other polices, providing assistance and recommendations with respect to the compensation policies and
practices of the Company.
During the fiscal
year ended December 31, 2018, the Compensation Committee did not hold any formal meeting.
Nominating and Governance Committee
The Board of Directors
adopted and approved a charter for the Nominating and Governance Committee on December 23, 2013.
The Nominating and Governance
Committee currently consists of Mr. Wang, Mr. Zhang and Ms. Tang. Mr. Wang serves as chairman of the Nominating and Governance
Committee. The members of the Nominating and Governance Committee are currently “independent directors” as that
term is defined in Rule 5605(a)(2) of the NASDAQ Listing Rules.
In accordance with
the Nominating and Governance Committee’s Charter, the Nominating and Governance Committee is responsible to identity
and propose new potential director nominees to the board of directors for consideration and review our corporate governance policies.
During the fiscal
year ended December 31, 2018, the Nominating and Governance Committee did not hold any formal meeting.
Attendance of Directors at Shareholder
Meetings
Directors are expected
to attend the annual meeting of shareholders. The Board believes that director attendance at shareholder meetings is appropriate
and can assist directors in carrying out their duties. When directors attend shareholder meetings, they are able to directly hear
shareholder concerns regarding the Company. It is understood that special circumstances may occasionally prevent a director from
attending a meeting.
All of the five board
members attended the 2018 Annual Shareholder Meeting held at the Ever-Glory China headquarters, Ever-Glory Commercial Center No.
509 Chengxin Road, Jiangning Development Zone, Nanjing, Jiangsu 211102 China on December 17, 2018.
CORPORATE GOVERNANCE MATTERS
Corporate Governance Principles
We have adopted
a Code of Ethics, which is posted on and can be accessed at our website
at http://www.everglorygroup.com/userfiles/doc/Code%20of%20Ethics.pdf. All of our financial and senior managers
and directors including our Chief Executive Officer and the Chief Financial Officer, are required to adhere to the Code of
Ethics in discharging their work-related responsibilities. Employees are required to report any conduct that they believe in
good faith to be an actual or apparent violation of the Code of Ethics. In keeping with the Sarbanes-Oxley Act of 2002,
the Audit Committee has established procedures for receipt and handling of complaints received by it regarding accounting or
auditing matters, and to allow for the confidential anonymous submission by our employees of concerns regarding accounting or
auditing matters.
Director Qualifications and Nominations
The Nominating and
Governance Committee identifies, considers and recommends candidates for membership on the Board and will consider suggestions
from shareholders for nominees for election as directors at the 2019 Annual Meeting, provided that the recommendations are received
on a timely basis and meet the criteria set forth below. The Nominating and Governance Committee does not use different standards
to evaluate nominees depending on whether they are proposed by our directors and management or by our shareholders. While the
Nominating and Governance Committee has not determined minimum criteria for director nominees, they seek to achieve a balance
of knowledge, experience and capability on our Board. To this end, the Nominating and Governance Committee seeks nominees
with high professional and personal ethics and values, an understanding of our business lines and industry, diversity of business
experience and expertise, broad-based business acumen, and the ability to think strategically. In addition, the Nominating and Governance
Committee considers the level of the candidate’s commitment to active participation as a director, both at Board and committee
meetings and otherwise.
Communications with the Board of Directors
Any shareholder who
desires to contact the Board or specific members of the Board may do so by writing to: The Board of Directors, Ever-Glory International
Group, Inc., Ever-Glory Commercial Center No. 509 Chengxin Road, Jiangning Development Zone, Nanjing, Jiangsu 211102
China.
AUDIT COMMITTEE REPORT*
In accordance with
our written charter adopted by the Board of Directors, the Audit Committee oversees the quality and integrity of our accounting
and financial reporting practices and the audit of our consolidated financial statements by our independent registered public
accounting firm.
The Audit Committee
has reviewed and discussed our audited consolidated financial statements for the year ended December 31, 2018, with our management
and our independent registered public accounting firm, Borgers, prior to public release. The Audit Committee has discussed
with Borgers, the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit
Committees”, as amended, which includes, among other items, matters related to the conduct of the audit of our consolidated
financial statements.
The Audit Committee
has received the written disclosures and the letter from Borgers, required by Independence Standards Board Standard No. 1, “Independence
Discussions with Audit Committees”, and the Audit Committee discussed with Borgers, their independence from our company.
Based on the review
and discussions referred to above, the Audit Committee recommended to our Board of Directors and the Board of Directors has approved
that the audited consolidated financial statements for the year ended December 31, 2018, be included in our Annual Report on Form
10-K.
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Respectfully submitted by
the Audit Committee,
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Merry Tang Chairwoman
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Jianhua Wang
Zhixue Zhang
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*
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The
foregoing Audit Committee Report does not constitute soliciting material and shall not
be deemed filed or incorporated by reference into any other filing of our company under
the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange
Act, except to the extent we specifically incorporate this Audit Committee Report by
reference therein.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table
identifies our current executive officers and directors, their respective offices and positions, and their respective dates of
election or appointment:
Name
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Age
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Position
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Held Position
Since
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Edward Yihua Kang
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56
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Chief Executive Officer, President, and
Director
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2005
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Jiajun Sun
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46
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Chief Operating Officer and Director
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2005
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Jason Jiansong Wang
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40
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Chief Financial Officer and Secretary
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2010
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Jianhua Wang (1)(2)(3)
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52
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Director
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2014
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Zhixue Zhang (1)(2)(3)
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52
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Director
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2008
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Merry Tang (1)(2)(3)
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59
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Director
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2011
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(1)
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Member
of the Audit Committee
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(2)
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Member
of the Compensation Committee
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(3)
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Member
of the Nominating and Corporate Governance Committee
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Arrangements Involving Directors or
Executive Officers
There is no arrangement
or understanding between any of our directors or executive officers and any other person pursuant to which any director or officer
was or is to be selected as a director or officer, and there is no arrangement, plan, or understanding as to whether non-management
shareholders will exercise their voting rights to continue to elect the current Board of Directors. There are also no arrangements,
agreements, or understandings to our knowledge between non-management shareholders that may directly or indirectly participate
in or influence the management of our affairs.
Family Relationships
There are no family
relationships among the directors and executive officers.
Business Experience
Jiansong Wang has
been the Chief Financial Officer and Secretary of the Company since 2010. From July, 2002 to February, 2004,
Mr. Wang served as the Cost Accountant in Nanjing GongNongBing Textile (Group) CO., Ltd. From March 2004 to June 2006, he served
as the General Manager of Accounting Department in MG Garment Manufacturing Co., Ltd. From July 2006 to August 2009,
he served as the International Settlement Accountant for Goldenway Nanjing Garments Co. Ltd., a subsidiary of the Company. From
September 2009 to September 1, 2011, he was the General Manager of Accounting Department in Ever-Glory International Group Apparel
Inc., a subsidiary of the Company. Mr. Wang earned a Bachelor’s degree in Accounting from Hohai University in the P.R. China.
The business experience
of the Company’s directors is provided under the “Director Nominees” section on page 17.
Legal Proceedings
Our directors, executive
officers and control persons have not been involved in any of the following events during the past five years:
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any bankruptcy petition filed by or against any business
of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior
to that time;
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any conviction in a criminal proceeding or being subject
to a pending criminal proceeding (excluding traffic violations and other minor offenses);
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3.
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being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending
or otherwise limiting his involvement in any type of business, securities or banking activities; or
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4.
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being found by a court of competent jurisdiction (in a
civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the
Exchange Act, as amended, requires our directors and certain of our officers, as well as persons who own more than 10% of a registered
class of our equity securities (“Reporting Persons”), to file reports with the SEC. To our knowledge, based solely
on review of the copies of such reports furnished to us and written representations that no other reports were required, during
the fiscal year ended December 31, 2018, and all Section 16(a) filing requirements applicable to officers, directors and greater
than ten percent shareholders were complied with.
Director Independence
Based upon information
submitted to the Board by Ms. Tang, Mr. Wang and Mr. Zhang, the Board of Directors has determined that they are each “independent”
as defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. None of the three appointees has participated in the preparation
of the Company’s financial statements or any current subsidiary at any time during the past three years, and each of them
are able to read and understand fundamental financial statements.
EXECUTIVE COMPENSATION
Compensation Committee Report*
Our Compensation Committee
has reviewed and discussed with management the Compensation Discussion and Analysis (“CD&A”) included in
this Proxy Statement. Based on that review and discussion, the Compensation Committee has recommended to the Board of Directors
that the CD&A be included in this Proxy Statement.
|
Respectfully submitted by
the Compensation Committee
|
|
Merry Tang
|
|
Jianhua Wang
Zhixue Zhang
|
|
*
|
The
foregoing Compensation Committee Report does not constitute soliciting material and shall
not be deemed filed or incorporated by reference into any other filing of our company
under the Securities Act or the Exchange Act, except to the extent we specifically incorporate
this Audit Committee Report by reference therein.
|
Compensation Discussion and Analysis
This compensation
discussion and analysis describes the material elements of the compensation awarded to our current executive officers. This compensation
discussion focuses on the information contained in the following tables and related footnotes and narrative for the last completed
fiscal year. Our Board of Directors and the Compensation Committee, since its chartering, has overseen and administered our executive
compensation program.
Our current executive
compensation program presently includes a base salary. Our compensation program does not include (i) discretionary annual cash
performance-based incentives, (ii) termination/severance and change of control payments, or (iii) perquisites and benefits.
Our Compensation Philosophy and Objectives
Our philosophy regarding
compensation of our executive officers includes the following principles:
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our compensation
program should align the interests of our management team with those of our shareholders;
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our compensation
program should reward the achievement of our strategic initiatives and short- and long-term operating and financial goals;
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compensation should
appropriately reflect differences in position and responsibility; compensation should be reasonable and bear some relationship
with the compensation standards in the market in which our management team operates; and
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the compensation
program should be understandable and transparent.
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In order to implement
such compensation principles, we have developed the following objectives for our executive compensation program:
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overall compensation
levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior
results;
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a portion of total
compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion
should increase as an executive’s position and responsibility increases;
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total compensation
should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating
goals and strategic initiatives;
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the number of elements
of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily
communicated to executives, shareholders, and others; and
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executive compensation
should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship
of corporate resources among shareholders.
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Determination of Compensation Awards
Our Board of Directors
is provided with the primary authority to determine the compensation awards available to our executive officers. To aid the Board
of Directors in making its determination for the last fiscal year, our current senior management provided recommendations to the
Compensation Committee regarding the compensation of Chief Executive Officer and Chief Operating Officer.
Compensation Benchmarking and Peer
Group
Our Board of Directors
did not rely on any consultants or utilize any peer company comparisons or benchmarking in 2018 in setting executive compensation.
However, our management has considered competitive market practices by reviewing publicly available information relating to compensation
of executive officers at other comparable companies in the apparel industry in China in making its recommendations to our Board
of Directors regarding our executives’ compensation for fiscal year 2018. As our company evolves, we expect to take steps,
including the utilization of peer company comparisons and/or hiring of compensation consultants, to ensure that the Board has
a comprehensive picture of the compensation paid to our executives and with a goal toward total direct compensation for our executives
that are on a par with the median total direct compensation paid to executives in peer companies if annually established target
levels of performance at the company and business segment level are achieved.
Elements of Compensation
Presently, we compensate
our executives with a base salary and annual a cash performance-based bonus. We do not pay any compensation to our executive officers
in the form of discretionary long-term incentive plan awards or perquisites and other compensation, although our Board of Directors
may recommend and institute such forms of compensation in the future.
Base Salaries
Base salary is used
to recognize the experience, skills, knowledge and responsibilities required of our employees, including our named executive officers.
All of our named executive officers, including our Chief Executive Officer, are subject to employment agreements, and accordingly
each of their compensation has been determined as set forth in their respective agreement. When establishing base salaries since
2009, subject to the provisions of each person’s employment agreement, our Board and management considered a number of factors,
including the seniority of the individual, the functional role of the position, the level of the individual’s responsibility,
the ability to replace the individual, the base salary of the individual at their prior employment and the number of well qualified
candidates to assume the individual’s role.
Long-Term Incentive Plan Awards
We currently have
a 2014 equity incentive plan pursuant to which 1,500,000 shares were authorized. No stock awards or stock option grants were made
to any of the named executive officers during the fiscal year ended December 31, 2018. No stock options were held by the named
executive officers as of December 31, 2018.
Perquisites and Other Compensation
We do not have any
retirement or pension plans in place for any of our named executives. Our named executive officers are eligible for group medical
benefits that are generally available to and on the same terms as our other employees.
Management’s Role in the Compensation-Setting
Process
Our management plays
a role in our compensation-setting process. We believe this input from management to the Compensation Committee is needed in order
for the committee to evaluate the performance of our officers, recommend business performance targets and objectives, and recommend
compensation levels. Our management may from time to time, make recommendations to our Board of Directors regarding executive
compensation. During this process, management may be asked to provide the board with their evaluation of the executive officers’
performances, the background information regarding our strategic financial and operational objectives, and compensation recommendations
as to the executive officers.
Summary Compensation Table for Fiscal
Years 2018, 2017 and 2016
The following table
sets forth information for the fiscal years ended December 31, 2018, 2017 and 2016 concerning the compensation paid and awarded
to all individuals serving as (a) our Chief Executive Officer and Chief Financial Officer (b) the three most highly compensated
Executive Officers (other than our Chief Executive Officer and Chief Financial Officer) of ours and our subsidiaries at the
end of our fiscal years ended December 31, 2018, 2017, and 2016 whose total compensation exceeded $100,000 for these periods,
and (c) two additional individuals for whom disclosure would have been provided pursuant to (b) except that they were not serving
as executive officers at the end of our fiscal year ended December 31, 2018. These individuals may be collectively referred to
in this report as our “Named Executive Officers.”
Name and
Principal Position
|
|
Fiscal
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
|
|
Non-
qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yihua Kang
|
|
|
2018
|
|
|
|
181,543
|
|
|
|
107,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
289,427
|
|
Chairman of the Board,
|
|
|
2017
|
|
|
|
171,624
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171,624
|
|
Chief Executive Officer and President
|
|
|
2016
|
|
|
|
184,193
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jiansong Wang
|
|
|
2018
|
|
|
|
20,363
|
|
|
|
20,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,241
|
|
Chief Financial
|
|
|
2017
|
|
|
|
18,559
|
|
|
|
7,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,329
|
|
Officer
|
|
|
2016
|
|
|
|
19,866
|
|
|
|
6,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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26,563
|
|
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(1)
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All
compensation is paid in Chinese RMB. For reporting purposes, the amounts in the table
above have been converted to U.S. Dollars at the conversion rate of 6.61, 6.76 and 6.64
for 2018, 2017 and 2016, respectively. The officers listed in this table received no
other form of compensation in the years shown, other than the salary set forth in this
table.
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Other Compensation
Other than as described
above, there were no post-employment compensation, pension or nonqualified deferred compensation benefits earned by the executive
officers during the year ended December 31, 2018. We do not have any retirement, pension, or profit-sharing programs for the benefit
of our directors, officers or other employees. The Board of Directors may recommend adoption of one or more such programs in the
future.
Employment Contracts and Termination
of Employment and Change-In-Control Arrangements
The Company entered
into an employment agreement with Edward Yihua Kang on November 1, 2005 pursuant to which Mr. Kang was appointed as the Chief
Executive Officer and President of the Company. In determining the compensation to be paid to Mr. Kang, the Board of Directors
and the Compensation Committee reviewed the overall performance of the Company and the relative contribution of Mr. Kang in order
to arrive at an appropriate compensation level.
The Company entered
into an employment agreement with Jiajun Sun on November 1, 2005 pursuant to which Mr. Sun was appointed as the Chief Operating
Officer of the Company. In determining the compensation to be paid to Mr. Sun, the Board of Directors and the Compensation Committee
reviewed the overall performance of the Company and the relative contribution of Mr. Sun in order to arrive at an appropriate
compensation level.
Although the Company
does not have a written employment agreement with Jiansong Wang, he will be compensated approximately US$41,000 (RMB 270,000)
per year for his services as the Chief Financial Officer and Secretary, which was based on the Board of Directors and the Compensation
Committee’s review of the overall performance of the Company and the relative contribution of Mr. Wang.
There are no compensatory
plans or arrangements, including payments to be received from us, with respect to any director or executive officer of us which
would in any way result in payments to any such person because of his resignation, retirement, or other termination of employment
with us, any change in control of the Company, or a change in the person’s responsibilities following a change in control
of the Company.
Director Compensation for Fiscal 2018
The following table
reflects all compensation awarded to, earned by or paid to our directors for the fiscal year ended December 31, 2018. Directors
who are also officers do not receive any additional compensation for their services as directors.
Name
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Options
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($) (1)
|
|
Yihua Kang
|
|
|
289,427
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
289,427
|
|
Jiajun Sun
|
|
|
216,339
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
216,339
|
|
Jianhua Wang
|
|
|
—
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
Zhixue Zhang
|
|
|
—
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
Merry Tang
|
|
|
34,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,000
|
|
|
(1)
|
All
cash compensation was paid in RMB except the cash compensation paid to Ms. Tang. The
amounts in the foregoing table have been converted into U.S. Dollar at the conversion
rate of 6.61 RMB to the dollar.
|
Service Description
|
|
Amount
(in U.S. dollars)
|
|
|
|
|
|
Base Compensation
|
|
$
|
3,000
|
|
Audit Committee Member
|
|
$
|
1,000
|
|
Compensation Committee Member
|
|
$
|
1,000
|
|
Audit Committee Chairman
|
|
$
|
3,000
|
|
Audit Committee Financial Expert
|
|
$
|
26,000
|
|
Each director may
be appointed to perform multiple functions or serve on multiple committees, and accordingly, may be eligible to receive more than
one category of compensation described above. Annual compensation will be paid in cash or a combination of stock and cash. Compensation
paid in stock will be in the form of a number of shares of our restricted common stock having an aggregate value equal to the
annual compensation, as determined by the average per share closing prices of our common stock as quoted on NASDAQ MKT, for the
five trading days leading up to and including the last trading date of the quarter following which the shares are to be issued
(i.e. when the shares are issued within 30 days following the end of the second quarter, and the fourth quarter when the shares
are issued within 30 days following the end of the fourth quarter) of the year for which compensation is being paid. Compensation,
in the form of shares, shall be issued and paid semi-annually, within 30 days following the end of the second quarter, and within
30 days after the end of the fourth quarter, of each calendar year. In addition, the annual compensation will be prorated
daily (based on a 360 day year) for any portion of the year during which a director serves. Independent directors are
also eligible for reimbursement of all travel and other reasonable expenses relating to the directors’ attendance of board
meetings. In addition, we have agreed to reimburse independent directors for reasonable expenses incurred in connection with the
performance of duties as a director of the Company.
Outstanding Equity Awards at Fiscal Year-End
None of our executive officers
was granted or otherwise received any option, stock or equity incentive plan awards during 2018, and there were no outstanding
unexercised options previously awarded to our officers and directors, during the fiscal year ended December 31, 2018.
Related Party Transactions
Mr. Kang is the Company’s
Chairman and Chief Executive Officer. Ever-Glory Enterprises (HK) Ltd. (Ever-Glory Enterprises) is the Company’s major shareholder.
Mr. Xiaodong Yan was Ever-Glory Enterprises’ sole shareholder and sole director. Mr. Huake Kang, Mr. Kang’s son, acquired
83% interest of Ever-Glory Enterprises and became its sole director in 2014. All transactions associated with the following companies
controlled by Mr. Kang or his son are considered to be related party transactions, and it is possible that the terms of these
transactions may not be the same as those that would result from transactions between unrelated parties. All related party outstanding
balances are short-term in nature and are expected to be settled in cash.
Other income from Related Parties
Jiangsu Wubijia Trading
Company Limited (“Wubijia”) is an entity engaged in high-grade home goods sales and is controlled by Mr. Kang. Wubijia
has sold their home goods on consignment in some of the Company’s retail stores since the third quarter of 2014. During the
year ended December 31, 2018 and 2017, the Company received $96,556 and $54,081 from the customers and paid $79,925 and $42,241
to Wubijia through the consignment, respectively. The net profit of $16,631 and $11,840 was recorded as other income during the
years ended December 31, 2018 and 2017, respectively.
Nanjing
Knitting Company Limited (“Nanjing Knitting”) is an entity engaged in knitted fabric products and knitting underwear
sales and is controlled by Mr. Kang. Nanjing Knitting has sold their knitting underwear on consignment in some Company’s
retail stores since the third quarter of 2015. During the years ended December 31, 2018 and 2017, the Company received $4,452
and $6,443 from the customers and paid $0 and $11,661 to Nanjing Knitting
through the consignment, respectively. The net profit (loss) of $0 and ($5,218) was recorded as other income during the years
ended December 31, 2018 and 2017.
Included in other income for the
years ended December 31, 2018 and 2017 is rental income from EsC’Lav, the entity controlled by Mr. Kang under operating
lease agreement with term though 2018. The rental income is $0 and $14,638 for the years ended December 31, 2018 and 2017, respectively.
Other expenses due to Related Parties
Included in other expenses for the years ended December
31, 2018 and 2017 are rent costs due to entities controlled by Mr. Kang under operating lease agreements as follows (See details
at Note 13):
|
|
2018
|
|
|
2017
|
|
|
|
(In thousands
of
U.S. Dollars)
|
|
Jiangsu Ever-Glory
|
|
$
|
-
|
|
|
$
|
47
|
|
Chuzhou Huarui
|
|
|
217
|
|
|
|
222
|
|
EsC’Lav
|
|
|
25
|
|
|
|
-
|
|
Kunshan Enjin
|
|
|
94
|
|
|
|
44
|
|
Total
|
|
$
|
336
|
|
|
$
|
313
|
|
The Company leases Chuzhou Huarui and Kunshan Enjin’s
warehouse spaces because the locations are convenient for transportation and distribution.
Purchases from, and Sub-contracts with Related Parties
The Company purchased raw materials
of $1.44 million and $1.39 million during the years ended 2018 and 2017, respectively, from Nanjing Knitting.
In addition, the Company sub-contracted
certain manufacturing work to related companies totaling $25.1 million and $23.8 million for the years ended December 31,
2018 and 2017, respectively. The Company provided raw materials to the sub-contractors and was charged a fixed fee for labor provided
by the sub-contractors.
Sub-contracts with related parties
included in cost of sales for the years ended December 31, 2018 and 2017 are as follows:
|
|
2018
|
|
|
2017
|
|
|
|
(In thousands
of
U.S. Dollars)
|
|
Ever-Glory Vietnam
|
|
$
|
14,718
|
|
|
$
|
15,998
|
|
Chuzhou Huarui
|
|
|
6,356
|
|
|
|
4,155
|
|
Ever-Glory Cambodia
|
|
|
-
|
|
|
|
179
|
|
Fengyang Huarui
|
|
|
2,438
|
|
|
|
1,860
|
|
Nanjing Ever-Kyowa
|
|
|
1,566
|
|
|
|
1,577
|
|
EsC’Lav
|
|
|
50
|
|
|
|
20
|
|
Total
|
|
$
|
25,128
|
|
|
$
|
23,789
|
|
Accounts Payable – Related Parties
The accounts payable to related parties at December
31, 2018 and 2017 are as follows:
|
|
2018
|
|
|
2017
|
|
|
|
(In thousands
of
U.S. Dollars)
|
|
Ever-Glory Vietnam
|
|
$
|
1,863
|
|
|
|
1,934
|
|
Fengyang Huarui
|
|
|
622
|
|
|
|
459
|
|
Nanjing Ever-Kyowa
|
|
|
580
|
|
|
|
900
|
|
Chuzhou Huarui
|
|
|
888
|
|
|
|
1,152
|
|
Nanjing Knitting
|
|
|
171
|
|
|
|
114
|
|
Esc’elav
|
|
|
-
|
|
|
|
6
|
|
Jiangsu Ever-Glory
|
|
|
632
|
|
|
|
110
|
|
Total
|
|
$
|
4,756
|
|
|
$
|
4,675
|
|
Amounts Due From Related Parties – Current Assets
The amounts due from related parties at December 31, 2018 and 2017 are
as follows:
|
|
2018
|
|
|
2017
|
|
|
|
(In thousands
of
U.S. Dollars)
|
|
Jiangsu Ever-Glory
|
|
$
|
122
|
|
|
$
|
265
|
|
EsC’eLav
|
|
|
70
|
|
|
|
-
|
|
Total
|
|
$
|
192
|
|
|
$
|
265
|
|
Jiangsu Ever-Glory is an entity engaged in importing/exporting,
apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang. During
2018 and 2017, the Company and Jiangsu Ever-Glory purchased raw materials on behalf of each other in order to obtain cheaper purchase
prices. The Company purchased raw materials on Jiangsu Ever-Glory’s behalf and sold to Jiangsu Ever-Glory at
cost for $1.4 million and $0.3 million during 2018 and 2017, respectively. Jiangsu Ever-Glory purchased raw materials
on the Company’s behalf and sold to the Company at cost for $1.1 million and $49,967 during 2018 and 2017, respectively.
Amounts Due From Related Party under Counter Guarantee
Agreement
In March 2012, in consideration of the guarantees
and collateral provided by Jiangsu Ever-Glory and Nanjing Knitting, the Company agreed to provide Jiangsu Ever-Glory a counter
guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company.
Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon the expiration or termination
of the underlying lines of credit and is to pay an annual interest at the rate of 6.0% of the amounts provided.
As of December 31, 2018 and 2017, Jiangsu Ever-Glory had provided guarantees for approximately $33.4 million (RMB 230.0 million)
and $49.5 million (RMB 322.0 million) of lines of credit obtained by the Company, respectively. Jiangsu Ever-Glory
and Nanjing Knitting have also provided their assets as collateral for certain of these lines of credit. As of December 31,
2018 and 2017, the value of the collateral, as per appraisals obtained by the banks in connection with these lines of credit
is approximately $29.9 million (RMB 205.5 million) and $31.6 million (RMB 205.5 million), respectively. Mr. Kang has also
provided a personal guarantee for $14.5 million (RMB 100.0 million) and $21.5 million (RMB 140.0 million) at the years ended of
December 31, 2018 and 2017, respectively.
As of December 31, 2017, $12.8 million (RMB 83.6 million)
was outstanding due from Jiangsu Ever-Glory under the counter guarantee agreement. During the year ended December 31, 2018, an
additional $8.4 million (RMB 55.7 million) was provided to and repayment of $10.8 million (RMB 71.1 million) was received from
Jiangsu Ever-Glory under the counter-guarantee agreement. As of December 31, 2018, the amount of the counter-guarantee had decreased
to $9.9 million (RMB 68.2 million) (the difference represents currency exchange adjustment of ($0.5) million), which was 29.7%
of the aggregate amount of lines of credit. This amount plus accrued interest of $0.5 million (2018) and $2.6 million (2017) have
been classified as a reduction of equity, consistent with the guidance of SEC Staff Accounting Bulletins 4E and 4G. As of December
31, 2018 and 2017, the amount classified as a reduction of equity was $10.4 million and $15.4 million, respectively. Interest
of 0.5% is charged on net amounts due from Jiangsu Ever-Glory at each month end. From April 1, 2015, interest rate has changed
to 0.41% as the bank benchmark interest rate decreased. Interest income for the years ended December 31, 2018 and 2017 was approximately
$0.7 million and $0.8 million, respectively.
PROPOSAL NO. 1—ELECTION OF DIRECTORS
The Board of Directors
Our business is managed under
the direction of its Board of Directors. The Board of Directors has designated as nominees for re-election all of the five (5)
directors currently serving on the Board. See “Director Nominees” below for profiles of the nominees. After
the election of the directors at the Annual Meeting, our Board will have five (5) directors.
The Board believes that re-electing
these incumbent directors will promote stability and continuity and expects that such directors will continue making substantial
contributions to our company by virtue of their familiarity with, and insight into, our company’s affairs accumulated during
their tenure.
All of the nominees have indicated
a willingness to continue serving as directors if elected, but if any of them should decline or be unable to act as a director,
the proxy holders will vote for the election of another person or persons as the Board of Directors recommends. We have no reason
to believe that any nominee will be unavailable.
Director Nominees
The director nominees, and their
ages as of the date of the Annual Meeting, their positions at Ever-Glory, and the period during which they have served as a director
are set forth in the following table and paragraphs
Name
|
|
Age
|
|
Position
|
|
Held Position
Since
|
|
|
|
|
|
|
|
Edward Yihua Kang
|
|
55
|
|
Chief Executive
Officer, President, and Chairman of the Board
|
|
2005
|
|
|
|
|
|
|
|
Jiajun
Sun
|
|
45
|
|
Chief Operating
Officer and Director
|
|
2005
|
|
|
|
|
|
|
|
Jianhua Wang
(1)(2)(3)
|
|
51
|
|
Director
|
|
2014
|
|
|
|
|
|
|
|
Zhixue Zhang
(1)(2)(3)
|
|
51
|
|
Director
|
|
2008
|
|
|
|
|
|
|
|
Merry Tang (1)(2)(3)
|
|
58
|
|
Director
|
|
2011
|
(1)
|
Member
of the Audit Committee
|
(2)
|
Member
of the Compensation Committee
|
(3)
|
Member
of the Nominating and Governance Committee
|
The Board has nominated the following
individuals as members of our Board of Directors: At the Meeting, five directors, Edward Yihua Kang, Jiajun Sun, Jianhua
Wang, Zhixue Zhang and Merry Tang are to be re-elected. Each director will hold office until the next annual meeting of shareholders
and until his or her successor has been elected and qualified.
Edward Yihua Kang has
served as our President and Chief Executive Officer and as the Chairman of our Board of Directors, since 2005. From December 1993
to January 2008, Mr. Kang served as the President and Chairman of the Board of Directors of Goldenway. Mr. Kang has extensive
worldwide managerial and operational experience focusing upon business development and strategic planning. Mr. Kang formerly was
the Senior lecturer of the Management College, Nanjing Aeronautics and Astronautics University, and the Vice General Manager of
the Import and Export Department of Nanjing Shenda Company. Mr. Kang earned a MS degree from Peking University, a Bachelor’s
degree in Management from Beijing Aeronautics and Astronautics University and a Bachelor’s degree in Engineering from Nanjing
Aeronautics and Astronautics University. Mr. Kang’s extensive experience in the garment industry, his acute vision and outstanding
leadership capability, as well as his commitment to the Company since its inception make him well-qualified in the Board’s
opinion to serve as our Chairman of the Board.
Jiajun
Sun has served as our Chief Operating Officer and a member of our Board of Directors since 2005. Mr. Sun also
has served as a member of the Board of Directors of Goldenway since 2000 and as a member of the Board of Directors of
New-Tailun since 2006. From July 1996 to November 2002, Mr. Sun was the General Manager of International Trade Department at
Goldenway. Mr. Sun has more than 8 years experience in import and export in the textile industry. Mr. Sun earned his
bachelor’s degree from the Wuhan Textile Industry Institute. Mr. Sun has accumulated substantial institutional
knowledge of our business and operations. His managing experiences and analytical skills make him well positioned
for his role as one of our Directors.
Merry Tang was
appointed as a member of the Board of Directors, a member of the Compensation Committee and Nominating & Governance committee
and chairman of the Audit Committee in August 2011. She has been an independent director for China Sunergy Co., Ltd. (Nasdaq:
CSUN), a specialized manufacturer of solar cell and module products in China since June 2008. She is currently a principal
and managing partner of GTZY CPA Group, LLC. Ms. Tang served a managing director at GTA International, LLC and Partner at Tang
& Company, PC — both U.S.-based CPA firms offering services in risk assessment, audit engagements and Sarbanes-Oxley — related
documentation to leading banks, financial service providers and telecommunications firms from 2006 to 2008. Prior to forming GZTY
CPA Group, LLC, she served as a senior auditor in PricewaterhouseCoopers, LLC from 2004 to 2006. Ms. Tang graduated
from the Central University of Finance & Banking, Beijing, China with a bachelor degree in banking in 1983 and a master degree
in Finance in 1986, before going on to receive her master degree in accounting from the State University of New York at Albany
in 1993. Ms. Tang’s extensive accounting and financial background in the U.S. capital market makes her well-qualified to
serve on our Board.
Jianhua Wang has
served as a member of the Board of Directors and chairman of the nominating & governance committee since September 2015, and
serves on the Audit Committee and compensation committee. Mr. Wang is the Chief Lawyer of Wang Jianhua Law Offices, a boutique
law firm based in Kunshan city, Jiangsu Province. Mr. Wang had more than 20 years of practicing experience in corporate, securities
and business laws in China. He held numerous honors and distinctions, including being listed as one of Outstanding Young Lawyers
of Jiangsu Province. He was a member of the Standing Committee of People’s Political Consultant Committee of Kunshan City.
He is currently a member of the Advisory Board of Legal Affairs of the People’s Government of Kunshan City, Vice Chairman
of the Entrepreneurs Chamber of Commerce of Peking University Alumni of Suzhou City, Vice Chairman of the Bar of Kunshan City,
a member of the Social Security and Labor Law Committee of the Jiangsu Provincial Bar. He had a master degree in Executive Master
of Business Administration (EMBA) from Guanghua School of Management Peking University.
Zhixue Zhang has
served as a member of the Board of Directors, a member of the Audit Committee and Nominating & Governance committee and chairman
of the Compensation Committee since 2008. Mr. Zhang is a professor of Organizational Management at Peking University,
and has held this position since August 2008. Mr. Zhang has over fifteen years of experience in the fields of organizational psychology,
management and organizational culture as it relates to conducting business within China and with Chinese businesses. From August
2001 to July 2008, he was the Associate professor at Peking University. From August 2006 to June 2007, he was a Freeman Fellow
at the University of Illinois at Urbana-Champaign. From September 2001 to March 2002, he was a visiting scholar at the Kellogg
School of Management at Northwestern University. Mr. Zhang holds a Ph.D. from the University of Hong Kong, and a M.Sc. from Beijing
Normal University, and a B.Sc. from Henan University. Mr. Zhang’s life-long background of management education,
as well as his business aptitude and strong analytical skills, qualify him for his position as one of our Directors.
Vote Required
The holders of our common stock
are entitled to one vote per share equal to the number of shares held by such person at the close of business on the record date. As
there is no cumulative voting, each shareholder shall cast all of his/her votes for each nominee of his/her choice or withhold
votes from any or all nominees. Unless a shareholder requests that voting of the proxy be withheld for any one or more
of the nominees for directors by so directing on the proxy card, the shares represented by the accompanying proxy will be voted
FOR election, as directors, of the above-mentioned five nominees. If any nominee becomes unavailable for any reason
(which event is not anticipated) to serve as a director at the time of the Annual Meeting, then the shares represented by
such proxy may be voted for such other person as may be determined by the holders of such proxy. Directors will be
elected at the Annual Meeting by a plurality (meaning, the largest number) of the votes cast for each director. Directors are
to be elected to hold office until the next annual meeting of shareholders and until their successors are elected and qualified,
or until their earlier resignation or removal.
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE “FOR” AND SOLICITS PROXIES IN FAVOR OF THE NOMINEES LISTED ABOVE (ITEM 1 ON THE ENCLOSED PROXY CARD).
PROPOSAL NO. 2—RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Audit Committee has selected
BF Borgers CPA PC (“Borgers”) to serve as the independent registered public accounting firm of the Company for the
fiscal year ended December 31, 2018 and the three quarters ended September 30, 2019.
We are asking our shareholders
to ratify the selection of Borgers as our independent registered public accounting firm. In the event our shareholders fail to
ratify the appointment, the Audit Committee may reconsider this appointment.
We have been advised by Borgers
that neither the firm nor any of its associates had any relationship with our company other than the usual relationship that exists
between independent registered public accountant firms and their clients during the last fiscal year. Representatives
of Borgers are not expected to attend the Annual Meeting in person and therefore are not expected to be available to respond to
any questions. As a result, representatives of Borgers will not make a statement at the Annual Meeting.
Principal Accountant Fees and Services
On December 2018 the Audit Committee
engaged BF Borgers CPA PC as our independent auditor.
Fees for audit services include
fees associated with the annual audit and the review of documents filed with the SEC including quarterly reports on Form 10-Q
and the Annual Report on Form 10-K.
|
|
2018
|
|
|
2017
|
|
|
|
(In
thousands of
U.S. Dollars)
|
|
Audit
fees
|
|
$
|
335
|
|
|
$
|
332
|
|
Vote Required and Recommendation
Approval of this proposal will
require the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person
or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF BF BORGERS CPA PC OUR INDEPENDENT AUDITORS TO AUDIT THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2018 AND TO REVIEW THE FINANCIAL STATEMENTS FOR THE THREE FISCAL QUARTERS ENDED ON SEPTEMBER
30, 2019 (ITEM 2 ON THE ENCLOSED PROXY CARD).
PROPOSAL NO. 3—ADVISORY
VOTE ON EXECUTIVE COMPENSATION
The SEC
has adopted final rules requiring public companies to provide shareholders with periodic advisory (non-binding votes) on executive
compensation, also referred to as “say-on-pay” proposals. We are presenting the following proposal, which gives you
as a shareholder the opportunity to endorse or not endorse the compensation paid to our Principal Executive Officer and Principal
Financial Officer (collectively, the “Named Executive Officers”), as disclosed in this Proxy Statement pursuant to
Item 402 of Regulation S-K (including the compensation tables and accompanying narrative discussion).
“RESOLVED, that the compensation
paid to the Company’s Named Executive Officers for the year ended December 31, 2018, as disclosed pursuant to Item 402 of
Regulation S-K, compensation tables and narrative discussion is hereby APPROVED.”
Pursuant
to the Exchange Act and the rules promulgated thereunder, this vote will not be binding on the Board or the Compensation Committee
and may not be construed as overruling a decision by the Board or the Compensation Committee, creating or implying any change
to the fiduciary duties of the Board or the Compensation Committee or any additional fiduciary duty by the Board or the Compensation
Committee or restricting or limiting the ability of shareholders to make proposals for inclusion in proxy materials related to
executive compensation. The Board and the Compensation Committee, however, may in their discretion take into account
the outcome of the vote when considering future executive compensation arrangements.
Vote Required and Recommendation
Approval
of this proposal will require the affirmative vote of the holders of a majority of the shares of the Company’s common stock
represented in person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS A
VOTE “FOR” APPROVAL OF THE COMPENSATION OF
THE COMPANY’S NAMED
EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT
PROPOSAL NO. 4—TO CONDUCT
AN ADVISORY VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON
EXECUTIVE COMPENSATION
The SEC
has also adopted final rules requiring public companies to hold an advisory (non-binding) vote on the frequency of holding say-on-pay
votes. Accordingly, as required by the SEC’s rules, we are including this proposal to give our shareholders the opportunity
to inform us as to how often they wish the Company to include a say-on-pay proposal, similar to Proposal No. 3, in our proxy statements.
We are
presenting the following proposal, which gives you, as a shareholder, the opportunity to inform us as to whether you wish us to
hold an advisory (non-binding) vote on executive compensation once every (1) one year, (2) two years, or (3) three years, or you
may abstain from voting on the proposal set forth in the following resolution.
“RESOLVED,
that the shareholders determine, on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation
of the Company’s Named Executive Officers as set forth in the Company’s Proxy Statement for the 2019 Annual Meeting
of Stockholders should be every year, every two years, or every three years.”
The Board
recommends that you vote for every three (3) years as the desired frequency for the Company to hold a non-binding, advisory vote
of the shareholders on executive compensation. We believe this frequency is appropriate for the reasons set forth below:
|
1.
|
Our equity compensation program outlined in the Plan
for the Named Executive Officers is designed to support long-term value creation, and a vote every three years will allow the
shareholders to better judge the equity compensation program in relation to our long-term performance. We strive to ensure management’s
interests are aligned with shareholders’ interests to support long-term value creation through our equity compensation program.
To that end, we may grant equity awards to vest over multi-year periods of service to encourage our Named Executive Officers to
focus on long-term performance, and recommend a vote every three years, which would allow the equity compensation to be evaluated
over a similar time-frame and in relation to long-term performance.
|
|
2.
|
A vote every three (3) years will provide the Board
and the Compensation Committee with the time to thoughtfully consider and thoroughly respond to shareholders’ sentiments
and to implement any necessary changes in light of the timing required therefor. The Board and the compensation committee will
carefully review changes to the executive compensation to maintain the effectiveness and credibility of the program, which is
important for aligning interests and for motivating and retaining our Named Executive Officers.
|
|
3.
|
We are open to input from shareholders regarding board
and governance matters, as well as the equity compensation program. We believe that the shareholders’ ability to contact
us and the Board at any time to express specific views on executive compensation holds us accountable to shareholders and reduces
the need for and value of more frequent advisory votes on executive compensation.
|
Pursuant
to the Exchange Act and the rules promulgated thereunder, this vote on the frequency of future advisory votes on named executive
officer compensation is non-binding on the Board and its committees. This vote may not be construed as overruling a decision by
the Board or its committees, creating or implying any change to the fiduciary duties of the Board or its committees or any additional
fiduciary duty by the Board or its committees or restricting or limiting the ability of shareholders to make proposals for inclusion
in proxy materials related to executive compensation. Notwithstanding the Board’s recommendation and the outcome of the
vote on this matter, the Board may, in the future, decide to conduct advisory votes on a more or less frequent basis and may vary
its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs.
Vote Required and Recommendation
Approval of this proposal
will require the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in
person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS THAT
STOCKHOLDERS VOTE TO HAVE THE NON-BINDING VOTE ON EXECUTIVE COMPENSATION OCCUR EVERY THREE YEARS.
OTHER MATTERS
Our Board of Directors knows of
no other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting,
proxies in the enclosed form will be voted in respect thereof in accordance with the recommendations of management.
PROXY SOLICITATION
We will pay reasonable expenses
incurred in forwarding proxy material to the beneficial owners of shares and in obtaining the written instructions of such beneficial
owners. This proxy statement and the accompanying materials, in addition to being made available to shareholders and to brokers,
custodians, nominees and other like parties, will be available to beneficial owners of shares of common stock pursuant to the
SEC rules concerning Internet Availability of Proxy Materials. We will bear the expenses of calling and holding the Annual Meeting
and the soliciting of proxies there for.
We may consider the engagement
of a proxy solicitation firm. Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact.
They will not receive any additional compensation for these activities.
SHAREHOLDER PROPOSALS
Stockholders are entitled to submit
proposals on matters appropriate for stockholder action and have that proposal included in the Company’s proxy statement
consistent with the Company’s By-laws and the regulations of the SEC. Should a stockholder intend to present
a proposal at the 2019 Annual Meeting and have that proposal included in the Company’s proxy statement, it must be received
the Board of Directors of the Company, Attn: Dandan Song at Ever-Glory Commercial Center No. 509 Chengxin Road, Jiangning Development
Zone, Nanjing, Jiangsu 211102 China, not later than 90 nor earlier than 120 days prior to the anniversary of the previous
year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the
annual meeting is scheduled to be held on a date more than 30 days prior to or delayed by more than 60 days after such anniversary
date, notice by the stockholder in order to be timely must be received not later than the day on which such notice of the date
of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made including through public
filings. For nominations by a stockholder relating to a special meeting of stockholders called for the purpose of electing
directors, the stockholder must have given written notice, either by personal delivery or by mail not later than the close of
business on the 10th day following the day on which public announcement of the date of the meeting is first made by the Company.
Any proposal of a stockholder
intended to be presented at the Company’s next annual meeting of stockholders and included in the proxy statement and form
of proxy for that meeting must be received by the Company no later than September 19, 2020.
SHAREHOLDER COMMUNICATIONS
Shareholders wishing to communicate
with our Board of Directors may direct such communications to the Board of Directors c/o the Company, Attn: Dandan Song at Ever-Glory
Commercial Center No. 509 Chengxin Road, Jiangning Development Zone, Nanjing, Jiangsu 211102 China. Ms. Song will
present a summary of all shareholder communications to the Board of Directors at subsequent Board of Directors meetings. The
directors will have the opportunity to review the actual communications at their discretion.
ANNUAL REPORT
Our Annual Report on Form 10-K,
including our financial statements for the year ended December 31, 2018, and this proxy statement are being made available to
all shareholders entitled to notice of and to vote at the Annual Meeting. Additional copies may be requested in writing.
Such requests should be submitted to Ever-Glory’s China headquarters, Ever-Glory Commercial Center No. 509 Chengxin Road,
Jiangning Development Zone, Nanjing, Jiangsu 211102 China. Exhibits to the Form 10-K will also be provided upon specific
request.
It is important that the proxies
be returned promptly and that your shares be represented. Shareholders are urged to mark, date, execute and promptly return the
accompanying proxy card in the enclosed envelope.
EVER-GLORY INTERNATIONAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
2019 ANNUAL MEETING OF SHAREHOLDERS
December 20, 2019 (Beijing Time)
The shareholders hereby appoint Dandan Song and Jiansong
Wang, or either of them, as proxies, each with the power to appoint them substitute, and hereby authorizes them to represent and
to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Ever-Glory International Group,
Inc. that the shareholders are entitled to vote at the 2019 Annual Meeting of Shareholders to be held on December 20, 2019, 9:30
a.m. Beijing Time, at the Ever-Glory China headquarters, Ever-Glory Commercial Center, No. 509 Chengxin Road, Jiangning Development
Zone, Nanjing, Jiangsu 211102 China, and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED AS DIRECTED BY THE SHAREHOLDERS. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR EACH PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
CONTINUED AND TO BE SIGNED ON
REVERSE SIDE
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
EVER-GLORY INTERNATIONAL GROUP, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ITEMS 1,
2, AND 3 AND A VOTE OF HAVING THE NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION TO OCCUR EVERY THREE YEARS ON ITEM 4.
Proposal No. 1 ELECTION OF DIRECTORS
Nominees:
|
For
|
Withhold
|
|
|
|
Edward Yihua
Kang
|
☐
|
☐
|
Jiajun Sun
|
☐
|
☐
|
Merry Tang
|
☐
|
☐
|
Jianhua Wang
|
☐
|
☐
|
Zhixue Zhang
|
☐
|
☐
|
Proposal
No. 2
|
For
|
Against
|
Abstain
|
|
|
|
|
To
ratify the appointment of BF Borgers CPA PC as our independent auditor to audit the financial statements for the fiscal year
ended on December 31, 2018 and to review the three quarterly financial statements ended on September 30, 2019.
|
☐
|
☐
|
☐
|
|
|
|
|
Proposal
No. 3
|
For
|
Against
|
Abstain
|
|
|
|
|
To
approve, by a non-binding vote, the Company’s executive compensation.
|
☐
|
☐
|
☐
|
Proposal
No. 4
|
1
Year
|
2
Years
|
3
Years
|
Abstain
|
|
|
|
|
|
To
approve, by a non-binding vote, the frequency of future Stockholder advisory votes relating to the Company’s executive
compensation.
|
☐
|
☐
|
☐
|
☐
|
The shares represented by this proxy, when properly
executed, will be voted in the manner directed herein by the undersigned Shareholder(s). If no direction is made, this
proxy will be voted FOR each of the nominees on proposal No. 1, FOR each proposal No. 2, and No. 3 voted to have the non-binding
advisory votes on the executive compensation occur every THREE years with respect to proposal No. 4.
Please sign your name exactly as it appears hereon.
When signing as Attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants,
all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized
officer.
|
|
|
|
|
|
|
Signature (Please
Sign Within Box)
|
|
Date
|
|
Signature (Joint
Owners)
|
|
Date
|
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