Washington, D.C. 20549
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes
☐
No
☒
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____.
TARO PHARMACEUTICAL INDUSTRIES LTD.
_____________________
PROXY STATEMENT
_____________________
This Proxy Statement is furnished to the holders of ordinary shares, nominal (par) value New Israeli Shekel (“
NIS
”) 0.0001 each (“
Ordinary Shares
”) and founders' shares, nominal (par) value NIS 0.00001 (“
Founders' Shares
”), of Taro Pharmaceutical Industries Ltd. (the “
Company
” or “
Taro
”) in connection with the solicitation by the Board of Directors of the Company (the “
Board of Directors
” or “
Board
”) of proxies for use at the annual general meeting of shareholders (the “
Annual General Meeting
” or the “
Meeting
”), or any postponement or adjournment thereof, pursuant to the accompanying Notice of Annual General Meeting of Shareholders. The Meeting will be held on December 19, 2018, at 10:00 a.m. (Israeli time) at the offices of Meitar Liquornik Geva Leshem Tal, our Israeli legal counsel, located at 16 Abba Hillel Road, 10th Floor, Ramat Gan, Israel.
It is proposed that, at the Meeting, the following matters be considered:
|
1.
|
Re-appointment of Ziv Haft Certified Public Accountants (Israel), a BDO member firm, as the Company’s independent auditors for the fiscal year ending March 31, 2019, and the additional period until the close of the next annual general meeting of shareholders of the Company, and au
thorization
of their remuneration to be fixed in accordance with the volume and nature
of their services, by the Company’s Audit Committee (the “
Audit Committee
”) and/or the Board of Directors.
|
|
2.
|
Approval of the 2018 compensation policy (“
Compensation Policy for Officer Holders
”) in accordance with the requirements of the Israeli Companies Law 5759-1999 (the “
Companies Law
”).
|
|
3.
|
Re-election to the Board of Directors of each of Dilip Shanghvi, Abhay Gandhi, Sudhir Valia, Uday Baldota, James Kedrowski and Dov Pekelman (each, as an ordinary/non-External Director as defined in the Companies Law) to serve for a one-year term, until the close of the next annual general meeting of shareholders.
|
|
4.
|
Approval that our Chairman of the Board of Directors, Mr. Dilip Shanghvi, beginning April 1, 2018, be eligible for amended annual bonuses in accordance with the Compensation Policy for Office Holders.
|
|
5.
|
Approval that our Director, Mr. Sudhir Valia, beginning April 1, 2018, be eligible for amended annual bonuses in accordance with the Compensation Policy for Office Holders.
|
|
6.
|
Approval of an amended annual salary for Mr. Uday Baldota for his role as Chief Executive Officer (“
CEO
”) of the Company.
|
|
7.
|
Approval that our CEO, Mr. Uday Baldota, beginning April 1, 2018, be eligible for amended annual bonuses in accordance with the Compensation Policy for Office Holders.
|
In addition to the foregoing proposals, members of our management will be available to review and discuss our auditor’s report and consolidated financial statements for our fiscal year ended March 31, 2018.
We are not aware of any other matters that will come before the Meeting. If any other matters are presented properly at the Meeting, the persons designated as proxies intend to vote upon such matters in accordance with their best judgment and the recommendation of the Board.
Our Board unanimously recommends that you vote
“
FOR
”
each of the above proposals.
You are entitled to vote at the Meeting if you are a shareholder of record at the close of business on November 16, 2018. You are also entitled to vote at the Meeting if you held Ordinary Shares through a bank, broker or other nominee that is one of our shareholders of record at the close of business on November 16, 2018, or which appear in the participant listing of a securities depository on that date. In that case, these proxy materials are being forwarded to you by your bank, broker, or other nominee.
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC of Brooklyn, New York, you are considered, with respect to those shares, the shareholder of record. In such case, these proxy materials are being sent directly to you.
As of October 24, 2018, we had 39,019,371 Ordinary Shares issued and outstanding. Each Ordinary Share outstanding as of the close of business on the record date (November 16, 2018) is entitled to one vote upon each of the proposals to be presented at the Meeting. Under our Articles of Association, the Meeting will be properly convened if at least three shareholders attend the Meeting in person or sign and return proxies, provided that they hold shares representing at least one-third (1/3) of our voting power. If a quorum is not present within half an hour from the time scheduled for the Meeting, the Meeting will be adjourned for one week (to the same day, time and place), or to a day, time and place determined by the Chairman of the Meeting (which may be earlier or later than said time). At such adjourned meeting the presence of any two shareholders in person or by proxy (regardless of the voting power represented by their shares) will constitute a quorum.
Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner attends the Meeting but does not vote on a particular proposal because that holder does not have discretionary voting power for that particular proposal and has not received instructions from the beneficial owner. It is important for a shareholder that holds Ordinary Shares through a bank or broker to instruct its bank or broker how to vote its shares if the shareholder wants its shares to count towards the vote on a particular proposal.
Majority Required for Approval of Each of the Proposals
The affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions) is necessary for the approval of each of the proposals. Apart from the purpose of determining a quorum, broker non-votes will not be counted as present and are not entitled to vote. Abstentions are not treated as a vote “FOR” or a vote “AGAINST” a proposal.
In addition to the simple majority required for the approval of all proposals, the approval of each of Proposals 2 (adoption of the Compensation Policy for Officer Holders), 4 (
approval of amended bonuses for Mr. Dilip Shanghvi, our Chairman of the Board of Directors
)
, 5 (
approval of amended bonuses for Mr. Sudhir Valia, our Director
)
, 6 (
approval of an amended annual salary for Mr. Uday Baldota, our CEO)
, and 7 (
approval of amended bonuses for Mr. Uday Baldota, our CEO
) also requires that either of the following conditions be met:
|
·
|
the majority voted in favor of the proposal includes at least a majority of the votes of non-controlling shareholders who also lack a conflict of interest (referred to as a “personal interest” under the Companies Law) in the approval of the proposal and who vote on the proposal (not including abstentions); or
|
|
·
|
the total number of votes of such non-controlling, non-conflicted shareholders voted against the proposal does not exceed two percent (2%) of the aggregate voting rights in the Company.
|
A “controlling shareholder” is any shareholder that has the ability to direct a company’s activities (other than by means of being a director or office holder of the company). A shareholder is presumed to be a controlling shareholder if the shareholder “holds” (within the meaning of the Companies Law) 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager (that is, its chief executive officer). For purposes of Proposals 2, 4, 5, 6, and 7, a shareholder is furthermore deemed to be a controlling shareholder if he, she or it possesses, by itself or together with others who also possess a personal interest in the approval of the same transaction, twenty-five percent (25%) or more of the voting rights in the Company if no other shareholder possesses more than fifty percent (50%) of the voting rights in the Company.
Sun Pharmaceutical Industries Ltd. (“
Sun Pharma
”) and certain affiliates have indicated to the Company that they believe that they are controlling shareholders and for the purposes of Proposals 2, 4, 5, 6, and 7, the shares owned or controlled by them (or by entities under their control) will not be counted among the votes of the non-controlling, non-conflicted shareholders.
A “personal interest” of a shareholder under the Companies Law (a) includes an interest of any members of the shareholder’s immediate family (or spouses thereof) or an interest of a company with respect to which the shareholder (or such a family member thereof) serves as a director or the chief executive officer, owns at least 5% of the shares or has the right to appoint a director or the chief executive officer; and (b) excludes an interest arising solely from the ownership of ordinary shares of the Company. In determining whether a vote cast by proxy is disinterested, the “personal interest” of the proxy holder is also considered and will cause that vote to be excluded from the disinterested vote, even if the shareholder granting the proxy does not have a personal interest in the matter being voted upon.
Controlling shareholders and shareholders that have a conflict of interest are qualified to participate in the vote on Proposals 2, 4, 5, 6, and 7; however, the vote of such shareholders may not be counted towards the majority requirement described in the first bullet point above and will not count towards the 2% threshold described in the second bullet point above.
A shareholder must inform our Company before the vote (or if voting by proxy or voting instruction form, indicate on the proxy card or voting instruction form) whether or not such shareholder has a conflict of interest in the approval of Proposals 2, 4, 5, 6, or 7, and failure to do so disqualifies the shareholder from participating in the vote on Proposal 2, 4, 5, 6, or 7 (as applicable). In order to confirm that you lack a conflict of interest in the approval of any such proposal and in order to therefore be counted towards or against the special majority required for the approval of that proposal, you must check the box “FOR” Items 2A, 4A, 5A, 6A, and 7A on the accompanying proxy card or voting instruction form when you record your vote or voting instruction form on Proposals 2, 4, 5, 6, and 7, respectively.
If you believe that you, or a related party of yours, is a controlling shareholder or has such a conflict of interest and you wish to participate in the vote for or against Proposals 2, 4, 5, 6, and 7, you should check the box “AGAINST” Items 2A, 4A, 5A, 6A, or 7A (as applicable) on the enclosed proxy card or voting instruction form. In that case, your vote will be counted towards or against the ordinary majority required for the approval of Proposal 2, 4, 5, 6, or 7 (as appropriate), but will not be counted towards or against the special majority required for approval of that proposal.
Shareholders of Record
If you are a shareholder of record, that is, your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, these proxy materials are being sent directly to you by our transfer agent. You can vote your shares by attending the Meeting, or by any of the following alternative means: completing and signing a proxy card; or recording your vote over the Internet
by following the instructions on the enclosed proxy card.
If you vote via the proxy card that has been mailed to you, please be certain to complete, sign and return it in the envelope that was enclosed with it. You may change your mind and cancel your proxy card by sending our Company written notice, by signing and returning a proxy card with a later date, or by voting in person or by proxy at the Meeting. We will not be able to count a proxy card unless we receive it at our registered Israeli offices at 14 Hakitor Street, PO Box 10347, Haifa Bay, 2624761, Israel, by 4 a.m., Israeli time on December 19, 2018, or our registrar and transfer agent receives it in the enclosed envelope, not later than 11:59 p.m. EST on December 18, 2018. Internet voting should be submitted by 11:59 p.m. EST on December 17, 2018.
Shareholders Holding in “Street Name”
If your Ordinary Shares are held in a brokerage account or by a trustee or nominee, you are considered to be the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you together with a voting instruction form by the broker, trustee or nominee or an agent hired by the broker, trustee or nominee.
To vote by internet, please
follow the instructions
on the enclosed voting instruction form
to direct your broker, trustee or nominee how to vote your shares
.
All votes should be submitted by 11:59 p.m. EST on December 17, 2018, (or such earlier deadline as may be indicated on the instructions that you receive) in order to be counted towards the tally of Ordinary Shares voted at the Meeting. Alternatively, if you wish to attend the Meeting and vote in person, you must obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the Meeting, along with an account statement showing that you owned your Ordinary Shares at or about the record date.
Various Voting Scenarios
If you are a shareholder of record and provide specific instructions (by marking a box) with regard to the proposals, your shares will be voted as you instruct. If you sign and return your proxy card without giving specific instructions with respect to a particular proposal, your shares will be voted in favor of the proposal, in accordance with the recommendation of the Board (assuming, in the case of Proposals
2, 4, 5, 6, and 7
, that you have indicated “FOR” Items
2A, 4A, 5A, 6A, and 7A
, thereby confirming that you lack a conflict of interest concerning those proposals and are not a controlling shareholder). However, if you are a beneficial owner of shares and do not specify how you want to vote on your voting instruction form, your broker will not be permitted to instruct the record shareholder of your shares to cast a vote with respect to that proposal (commonly referred to as a “broker non-vote”). Brokers that hold shares in “street name” for clients typically have authority to vote on “routine” proposals even when they have not received instructions from beneficial owners. The only proposal on the Meeting agenda that may be considered routine is Proposal 1 relating to the reappointment of the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2019; however, we cannot be certain whether this will be treated as a routine matter since our Proxy Statement is prepared in compliance with the Companies Law, rather than the rules applicable to domestic U.S. reporting companies. Absent specific instructions from the beneficial owner of the shares, brokers are not allowed to exercise their voting discretion, among other things, with respect to the election of directors. In that circumstance, the shares held by you will be included in determining the presence of a quorum at the Meeting, but are not considered “present” for the purpose of voting on any proposal. Such shares have no impact on the outcome of the voting on such proposal. If your shares of record are held by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how your shares should be voted so that you thereby participate in the voting on these important matters. If you sign and return your proxy card or voting instruction form, the persons named as proxies will vote in their discretion on any other matters that properly come before the Meeting.
Revocation of a Proxy or Voting Instructions
Shares Held by Record Shareholders
If you a record shareholder, any proxy that you give pursuant to this solicitation may be revoked by you at any time before it is voted. Proxies may be revoked in one of three ways:
|
·
|
you can send a written notice stating that you would like to revoke your proxy, which notice must be received in our Israeli offices at least six hours prior to the time set for beginning the Meeting (i.e., by 4:00 a.m., Israeli time, on December 19, 2018);
|
|
·
|
you can complete and submit a new proxy card dated later than the first proxy card, which must be received no later than the deadline applicable to a notice of revocation, as described above; or
|
|
·
|
you can attend the Meeting, and file a written notice of revocation or make an oral notice of revocation of your proxy with the chairman of the Meeting and then vote in person. Your attendance at the Meeting will not revoke your proxy in and of itself.
|
Any written notice of revocation or subsequent proxy submitted to us in advance of the Meeting should be delivered to our Israeli offices, located at
14 Hakitor Street, PO Box 10347, Haifa Bay, 2624761, Israel
, Attention: Myla Kaplan, Senior Counsel - Israeli Operations, Director, or hand-delivered to the chairman of the Meeting at or before the taking of the vote at the Meeting.
Shares Held in Street Name
If your shares are held on the New York Stock Exchange via a stock brokerage account or by a bank or other nominee, in order to change your voting instructions, you must follow the directions from your broker, bank or other nominee to change those instructions.
Proxies are being distributed to shareholders on or about November 20, 2018. Certain officers, directors and employees, of the Company, none of whom will receive additional compensation therefor, may solicit proxies by email or other personal contact. We will bear the cost for the solicitation of the proxies, including postage, printing, and handling, and will reimburse the reasonable expenses of brokerage firms and others for forwarding material to beneficial owners of shares.
We have retained MacKenzie Partners, Inc., a proxy solicitation firm, to perform various solicitation services in connection with the Meeting. We will pay MacKenzie Partners a customary fee, plus phone and other related expenses, in connection with its solicitation services. MacKenzie Partners has engaged certain of its employees to assist us in connection with the solicitation of proxies.
We will tally the final voting results based on the information provided by our transfer agent, and will publish the overall results of the Meeting following the Meeting in a Report of Foreign Private Issuer on Form 6-K that we will furnish to the U.S. Securities and Exchange Commission (the “SEC”).
Availability of Proxy Materials
Copies of the proxy card, the notice of the Meeting and this Proxy Statement are available in the “Investor Relations” portion of our Company’s website, at
http://www.taro.com
. The contents of that website are not a part of this Proxy Statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of our Ordinary Shares as of October 24, 2018 by:
|
|
■
|
each person or entity known by us to own beneficially 5% or more of our outstanding shares;
|
|
|
■
|
each of our directors and executive officers individually; and
|
|
|
■
|
all of our executive officers and directors as a group.
|
The beneficial ownership of Ordinary Shares is determined in accordance with the rules of the SEC and generally includes any Ordinary Shares over which a person exercises sole or shared voting or investment power, or the right to receive the economic benefit of ownership (whether as of October 24, 2018, or whether due to the right to have that power or benefit within 60 days thereafter). The percentage of shares beneficially owned shown below is based on 39,019,371 Ordinary Shares outstanding as of October 24, 2018.
Except where otherwise indicated, we believe, based on information furnished to us by such owners, that the beneficial owners of the Ordinary Shares listed below have sole investment and voting power with respect to such shares.
Unless otherwise noted below, each beneficial holder's address is c/o Taro Pharmaceutical Industries Ltd., 14 Hakitor Street, PO Box 10347, Haifa Bay, 2624761, Israel.
|
|
|
|
|
|
Percentage of
|
|
|
|
|
Number of
Ordinary
|
|
|
Outstanding
Ordinary
|
|
|
Name
|
|
Shares
|
|
|
Shares
|
|
|
Sun Pharmaceuticals Industries Ltd. (1)
|
|
|
29,497,813
|
|
|
|
75.60
|
%
|
|
Dilip Shanghvi (2)
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Abhay Gandhi
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Sudhir Valia (3)
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Uday Baldota
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Linda Benshoshan
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Elli Streit
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Dov Pekelman
|
|
|
—
|
|
|
|
0.00
|
%
|
|
James Kedrowski
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Mariano Balaguer
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Stephen Manzano, Esq.
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Avi Avramoff, Ph.D.
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Itamar Karsenti
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Michele Visosky
|
|
|
*
|
|
|
|
*
|
|
|
Chantal LeBlanc
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Richard Glaze
|
|
|
—
|
|
|
|
0.00
|
%
|
|
Total for all directors and officers (15 persons) listed above, as a group
|
|
|
*
|
|
|
|
*
|
|
*
Less than 0.01%.
____________________________
|
(1)
|
As reported in the Schedule 13D/A filed by Sun Pharma on November 27, 2013.
T
he address of Sun Pharma is Sun House, Plot No. 201/B-1, Western Express Highway, Goregaon (East), Mumbai—400063, India.
|
|
(2)
|
Dilip Shanghvi, as the Managing Director of Sun Pharma’s board of directors and along with entities controlled by him and members of his family, control 54.38% of Sun Pharma. As of October 24, 2018, Sun Pharma and its affiliates owned 75.6% of our outstanding Ordinary Shares
.
|
|
(3)
|
Sudhir Valia is also a director of Sun Pharma. As of October 24, 2018, Sun Pharma and its affiliates owned 75.6% of our outstanding Ordinary Shares.
|
The following table sets forth certain information regarding the ownership of our Founders’ Shares by our directors and officers as of
October 24, 2018
. The percentage of ownership is based on 2,600 Founders’ Shares outstanding as of
October 24, 2018
.
|
Name
|
|
Number of
Founders’ Shares
|
|
Percentage of Outstanding
Founders’ Shares
|
|
|
Alkaloida Chemical Company Exclusive Group Ltd.
(1)
|
|
2,600
|
|
100.00
|
%
|
____________________________
|
(1)
|
Alkaloida Chemical Company Exclusive Group Ltd., or Alkaloida, a subsidiary of Sun Pharma, owns all 2,600 of our outstanding Founders’ Shares and is entitled to exercise one-third of the total voting power in our company regardless of the number of Ordinary Shares then outstanding. As a result of the control that may be deemed to be held by Alkaloida, each of Dilip Shanghvi and Sudhir Valia may be deemed to beneficially own the Founders’ Shares held by Alkaloida. Each of Mr. Shanghvi and Mr. Valia disclaims beneficial ownership of such shares, except to the extent of their pecuniary interest therein.
|
OFFICE HOLDER COMPENSATION IN FISCAL YEAR ENDED MARCH 31, 2018
Under the Companies Law regulations, we are required to disclose the compensation of
our five most highly compensated senior office holders
(as defined in the Companies Law) on an individual basis in the notice of our annual general shareholder meeting or in an accompanying document (such as this Proxy Statement).
The table below outlines the compensation earned by our five most highly compensated senior office holders during or with respect to the fiscal year ended March 31, 2018, in the disclosure format of Regulation 21 of the Israeli Securities Regulations (Periodic and Immediate Reports), 1970. We refer to the five individuals for whom disclosure is provided herein as our “Covered Executives.”
For purposes of the table and the summary below, and in accordance with the above mentioned securities regulations, “compensation” includes base salary, bonuses, equity-based compensation, retirement or termination payments, benefits and perquisites such as car, phone and social benefits and any undertaking to provide such compensation.
Summary Compensation Table
|
Information Regarding the Covered Executive
(1)
|
|
(U.S. dollars)
|
|
Name and Principal
Position
(2)
|
Base
Compensation
(3)
|
Benefits and
Perquisites
(4)
|
Variable
compensation
(5)
|
Equity-Based
Compensation
|
Total
|
|
Dilip Shanghvi
|
921,243
|
—
|
608,752
|
—
|
1,529,995
|
|
Sudhir Valia
|
611,729
|
—
|
392,096
|
—
|
1,003,825
|
|
Uday Baldota
|
461,538
|
153,122
|
196,154
|
—
|
810,814
|
|
Mariano Balaguer
|
347,274
|
56,755
|
221,192
|
—
|
625,221
|
|
Ara Aprahamian
|
310,756
|
54,734
|
236,797
|
—
|
602,289
|
____________________________
|
(1)
|
All amounts reported in the table represent amounts recorded in the Company’s financial statements, which in some instances is a portion of the Covered Executive’s compensation, as more fully described in the footnotes below. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate during the fiscal year ended March 31, 2018.
|
|
(2)
|
Mr. Dilip Shanghvi and Mr. Sudhir Valia are directors of Taro. Mr. Uday Baldota is a full-time employee of Taro and CEO and Director. Mr. Mariano Balaguer is a full-time employee of Taro and Vice President, Chief Financial Officer and Chief Accounting Officer. Ara Aprahamian is a former full-time employee of Taro.
|
|
(3)
|
As As approved by our shareholders, Mr. Shanghvi’s base compensation consists of USD 869,648 of management fees, USD 42,434 of statutory director fees and USD 9,161 of board meeting fees. Similarly, Mr. Valia’s base compensation consists of USD 560,134 of management fees, USD 42,434 of statutory director fees and USD 9,161 of board meeting fees.
|
|
(4)
|
Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, disability, accident), convalescence pay, payments for social security, tax gross-up payments, rent assistance, and other benefits and perquisites consistent with Taro’s guidelines.
|
|
(5)
|
Amounts reported in this column represent short and long-term performance based bonuses that were earned during the fiscal year ended March 31, 2018, subject to vesting.
|
PROPOSAL 1
RE-APPOINTMENT OF INDEPENDENT AUDITORS
Ziv Haft, Certified Public Accountants (Israel), a member firm of BDO, which we refer to as BDO Israel, has been nominated and approved by the Board of Directors and the Audit Committee for re-appointment as the Company's independent auditors for the fiscal year ending March 31, 2019, and for the additional period until the close of the annual general meeting of the shareholders of the Company that follows the Meeting. The shareholders at the Meeting are requested to approve such auditors’ re-appointment and authorize their remuneration, to be fixed, in accordance with the volume and nature of their services, by the Audit Committee and the Board of Directors.
We paid the following fees for professional services rendered by BDO Israel for the years ended March 31, 2018 and 2017, respectively.
|
|
|
Year ended
March 31, 2018
|
|
|
Year ended
March 31, 2017
|
|
|
|
|
(in millions)
|
|
|
Audit fees
|
|
$
|
0.71
|
|
|
$
|
0.69
|
|
|
Tax fees
|
|
|
0.06
|
|
|
|
0.06
|
|
|
Other fees
|
|
|
0.10
|
|
|
|
—
|
|
|
Total
|
|
$
|
0.87
|
|
|
$
|
0.75
|
|
The audit fees for the years ended March 31, 2018 and 2017, respectively, represent fees for professional services rendered for the audits of our annual consolidated financial statements, statutory or regulatory audits of us and our subsidiaries, consents and assistance with review of documents filed with the SEC. All services provided by the Company’s independent auditors, including those set forth in the table above, were approved by the Audit Committee.
Tax fees represent fees for professional services related to tax compliance, including the preparation of tax returns and claims for refund, and tax planning and tax advice, including assistance with tax audits and appeals, tax services for employee benefit plans and assistance with respect to requests for rulings from tax authorities.
Other fees represent fees for additional professional services performed for certain legal entities.
The Board of Directors will present the following resolution at the Annual General Meeting:
“RESOLVED, that the Company’s independent auditors, Ziv Haft, Certified Public Accountants (Israel), a member firm of BDO, be, and hereby are, re-appointed as the Company’s independent auditors for the fiscal year ending March 31, 2019, and for the additional period until the close of the next annual general meeting of the shareholders of the Company, and that their remuneration is hereby authorized to be fixed, in accordance with the volume and nature of their services, by the Audit Committee and the Board of Directors.”
In order to approve the above resolution pursuant to Proposal 1, the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions) is required.
The Board of Directors unanimously recommends a vote
FOR
the reappointment of BDO Israel as described above.
ADOPTION OF THE COMPENSATION POLICY FOR OFFICE HOLDERS
Background
The Companies Law requires all public Israeli companies, including companies whose shares are only listed outside of Israel, to adopt a written compensation policy, which sets forth their policy regarding the terms of office and employment of office holders, including compensation, equity awards, severance and other benefits, as well as indemnification undertakings and exemption from liability.
The Companies Law defines “office holders” to include
a general manager (i.e., chief executive officer), chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of the foregoing positions without regard to such person’s title, any manager that reports directly to the general manager, and any director.
The compensation policy must be approved by the board of directors, after considering the recommendations of the compensation committee of the board. The compensation policy must also be approved by the shareholders of the Company as prescribed in the Companies Law.
The compensation policy—or an amended version thereof— must be approved once again by the compensation committee, board of directors and shareholders every three years following its last adoption. Our initial compensation policy was approved by our Board, upon the recommendation of our Compensation Committee (the “
Compensation Committee
”), and was approved by our shareholders on September 12, 2013, and ratified and approved again on March 27, 2014. In December 2016, following its approval by our Compensation Committee and Board, our renewed compensation policy was approved by a majority of our shareholders, but not by the requisite special majority of the non-controlling, disinterested shareholders. As permitted under the Companies Law, our Compensation Committee and Board reconsidered the renewed compensation policy, determined that its adoption was beneficial to our Company based on several factors, and adopted it on February 9, 2017. We refer to that renewed, existing compensation policy of our Company as the 2017 compensation policy.
After reviewing the 2017 compensation policy in light of the feedback that we had received from our shareholders and shareholder advocacy organizations prior to our December 2016 shareholder meeting, our Compensation Committee and Board of Directors have implemented various changes to the policy, which are reflected in the Compensation Policy for Office Holders that is appended to this Proxy Statement as
Annex A
.
In particular, the Compensation Policy for Office Holders is responsive to our shareholders’ request that we provide greater detail as to the criteria to be used in awarding incentive-based compensation such as annual bonuses and long-term incentive compensation for our office holders. The additional information that is included in the Compensation Policy for Office Holders, which did not appear in the 2017 compensation policy, covers the following substantial matters:
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·
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It defines specific annual bonus and long-term incentive (“
LTI
”) targets as a percent of base salary, defines performance criteria with relative weights, and contains a calculation methodology with thresholds and maximum payout multipliers cited (Sections 6.5 and 6.8);
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It defines performance objectives for both annual bonus and LTI compensation (Section 6.8);
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It introduces the measure of relative sales growth as compared to market peers, and creates alignment of interests. (Section 6.5);
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It defines a range of target bonus opportunity with performance metrics linked to short-term compensation, including disclosure of three specific financial metrics measured against relative weights (Section 6.5);
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It specifies a bonus calculation methodology, including threshold performance levels required to be met in order to trigger minimal bonus payments, and maximum payout multipliers (Section 6.5).
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The above highlights do not cover every aspect of the Compensation Policy for Office Holders, and are qualified in their entirety by reference to the copy of the proposed Taro Compensation Policy for Office Holders that appears as
Annex A
to this Proxy Statement.
Following its review of the proposed Compensation Policy for Office Holders, each of the Compensation Committee and then the Board has approved the Compensation Policy for Office Holders and recommended that our shareholders adopt it at the Annual General Meeting.
The Board of Directors will present the following resolution at the Annual General Meeting of Shareholders:
“RESOLVED, that the Taro
Compensation Policy for Office Holders
in the form attached as
Annex A
to the Proxy Statement be, and hereby is, approved in all respects pursuant to the Companies Law.”
Required Majority
The required vote to approve the above resolution under Proposal 2 is
the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions)
, provided that either:
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the majority includes the majority of the voting power of non-controlling shareholders (as defined in the Companies Law) who do not have a conflict of interest in the approval of the matter present at the meeting in person or by proxy (abstentions will not be taken into account); or
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•
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the total number of votes against the proposal by the non-controlling shareholders who do not have a conflict of interest in the approval of the matter does not exceed two percent (2%) of the aggregate voting rights in the Company.
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Please see the discussion under “Majority Required for Approval of Each of the Proposals” above for definitions of the terms “controlling shareholder” and “personal interest” under the Companies Law for purposes of this Proposal 2. In addition, please note there the instructions as to how to confirm that you lack a conflict of interest in the approval of the proposal.
In particular, please remember that you must check the box “FOR” Item 2A on the proxy card in order for your vote to be counted towards or against the special majority required under the Companies Law for the approval of the Compensation Policy for Office Holders under Proposal 2. If you do not check that box, even if you vote in favor of Proposal 2, your vote will not be counted towards the special majority required under the Companies Law for approval of this proposal.
If you believe that you, or a related party of yours, is a controlling shareholder or has such a conflict of interest and you wish to participate in the vote for or against Proposal 2, you should check the box “AGAINST” Item 2A.
Sun Pharma and certain affiliates have indicated to the Company that they believe that they are controlling shareholders and, for the purposes of this Meeting, the shares owned or controlled by them (or by entities under their control) will not be counted among the votes of the non-conflicted, non-controlling shareholders for purposes of Proposal 2.
Board Recommendation
The Board of Directors unanimously recommends a vote
FOR
the approval
of the Company’s
Compensation Policy for Office Holders
, in accordance with the requirements of the Companies Law.
PROPOSAL 3
RE-ELECTION OF DIRECTORS
Under the Companies Law and our Articles of Association, the directors of the Company (other than the External Directors, who serve three-year terms pursuant to the requirements of the Companies Law) are elected at each annual general meeting of shareholders. The elected directors commence their terms from the close of the annual general meeting at which they are elected and serve in office until the close of the next annual general meeting, unless such directorship is earlier vacated in accordance with the provisions of any applicable law or regulation or under our Articles of Association.
At the Annual General Meeting, it is intended that proxies (other than those directing the proxy holders to vote against the listed nominees, or to abstain) will be voted for the re-election, as directors of the Company, of the six nominees named below who shall hold office from the close of the Annual General Meeting until the close of the next annual general meeting of shareholders, unless any such director’s office is earlier vacated in accordance with the provisions of any applicable law or under our Articles of Association. The director nominees will be entitled to the remuneration approved for them by the Compensation Committee, the Board of Directors and our shareholders (in the case of Messrs. Shanghvi and Valia, as described in, Proposals 4 and 5 of this Proxy Statement and to the extent approved at the Meeting).
The list of nominees, all of whom are currently directors, is as follows:
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1.
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Dilip Shanghvi
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2.
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Abhay Gandhi
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3.
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Sudhir Valia
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4.
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Uday Baldota
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5.
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James Kedrowski
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6.
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Dov Pekelman
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The Companies Law requires that a person will not be elected and will not serve as a director in a public company if he or she does not have the required qualifications and the ability to dedicate an appropriate amount of time for the performance of his or her position as director of the company, taking into consideration, among other factors, the special needs and size of the company. The election of a director nominee at a general shareholders meeting of a public company may not be proposed unless the nominee has declared to the company,
inter alia,
that he or she complies with the above-mentioned requirements and details of his or her applicable qualifications are provided.
Each of the proposed nominees has declared to the Company that he complies with the required qualifications under the Companies Law for election as a member of the Board of Directors of the Company, detailing his applicable qualifications, and that he is capable of dedicating the appropriate amount of time for the performance of his or her role as a member of the Board of Directors of the Company. Copies of the declarations of the director nominees are available for inspection at the Company’s offices in Haifa Bay, Israel.
Biographical Information for Director Nominees
The following information is supplied with respect to each nominee for election to the Board of Directors pursuant to this Proposal 3 and is based upon the records of the Company and information provided to it by the nominees:
Dilip Shanghvi
became the Chairman of the Taro Board in August 2013, after previously serving as Director and Chairman from September 2010 to April 2012. He is the founder and Managing Director of Sun Pharma and has extensive industrial experience in the pharmaceutical industry. A first generation entrepreneur, Mr. Shanghvi has won numerous awards and recognitions, including the 2017 Entrepreneur of the Year Award from AIMA (All India Management Association), the 2016 PADMA SHRI (Fourth Highest Civilian Award in the Republic of India) from the Government of India and the 2016 NDTV Business Leadership Award (Pharmaceutical), as well as various other awards including, the Forbes Entrepreneur of the Year award in 2014, Outstanding Business Leader of the Year from CNBC TV18 in 2014, the Economic Times’ Business Leader of the Year Award in 2014, the JRD TATA Corporate Leadership Award AIMA (All India Association) in 2014, CNN IBN’s Indian of the Year (Business) in 2012, Business India’s Businessman of the Year in 2012 and Ernst and Young’s World Entrepreneur of the Year in 2011. He has also been awarded the Entrepreneur of the Year, Ernst and Young in 2010, CNBC TV 18’s First Generation Entrepreneur of the Year in 2007 and Entrepreneur of the Year (Healthcare and Life Sciences), Ernst and Young in 2005. Mr. Shanghvi is a Director of various companies, including Shantilal Shanghvi Foundation and is also the Chairman and Managing Director of Sun Pharma Advanced Research Company Ltd.
Abhay Gandhi
became a Director in December 2016 and Vice Chairman of the Taro Board in February 2017. Mr. Gandhi has served as Chief Executive Officer of Sun Pharmaceutical Industries, Inc. (“Sun Pharmaceuticals”) since November 2016. Mr. Gandhi also served as Interim Chief Executive Officer of Taro from December 2016 until Mr. Uday Baldota’s assumption of these duties in August 2017. Prior to joining Sun Pharmaceuticals, Mr. Gandhi served as a Director starting in November 2014, and as the CEO – India Subcontinent, of Sun Pharmaceutical Laboratories Ltd. (“SPLL”) starting in November 2013, where he was responsible for domestic operations of the business as well as certain international markets, including sales & marketing, integration efforts, business development, portfolio management and other allied functions. Prior to that appointment, Mr. Gandhi was President – India Subcontinent of SPLL from March 2012 to November 2013, Executive Vice President – International Marketing from April 2007 to March 2012 and has served in various other positions within the Sun Pharma organization for over 20 years. Prior to joining Sun Pharma, Mr. Gandhi held positions at Boehringer Mannheim Gmbh, and Nestle India Ltd. From 2013 to 2015, he was a Member of the Executive Committee of the Indian Drug Manufacturers Association (IDMA) and a Member of the Confederation of Indian Industry (CII) National Committee on Drugs and Pharmaceuticals from 2013 to 2014. Mr. Gandhi holds a Bachelor of Science and a Masters in Marketing Management from the University of Mumbai, and a Diploma in Business Management from the Institute of Chartered Financial Analysts of India (ICFAI University).
Sudhir Valia
became a member of the Taro Board in September 2010. Mr. Valia joined Sun Pharma as a director in January 1994 and has been a full-time director since his appointment in April 1994. Mr. Valia is the recipient of the CNBC TV 18’s CFO Awards for best performing CFO in the Pharma/Healthcare sector in 2012, 2009 and 2006. He also received the “Adivasi Sevak Puraskar” award from the Government of Maharashtra in 2008-2009. Prior to joining Sun Pharma, Mr. Valia was a chartered accountant in private practice. Mr. Valia is a Director of various companies, including Shantilal Shanghvi Foundation and Sun Pharma Advanced Research Company Ltd. Mr. Valia is a qualified chartered accountant in India.
Uday Baldota
became a member of the Taro Board in December 2016 and assumed the role of Chief Executive Officer in August 2017. He continues as a member of the global Core Management Team of Sun Pharma. Mr. Baldota was formerly Executive Vice President & Chief Financial Officer of Sun Pharma. He led their global Finance function from June 2012 and was designated as the Chief Financial Officer in August 2014. From June 2005 to May 2012, Mr. Baldota served in various leadership positions as a Vice President and later Senior Vice President reporting to the Chairman and Managing Director of Sun Pharma. Mr. Baldota’s areas of responsibility over his tenure at Sun Pharma have included accounting, M&A, business finance, tax, treasury, insurance, controllership, legal, corporate secretarial, corporate communication and internal audit. Mr. Baldota was the Vice President Purchasing of Lafarge India Limited from March 2003 to June 2005 and served as its Head of Information Technology from November 1999 to March 2003. Prior to that, Mr. Baldota served in various IT and marketing roles with Sun Pharma between May 1995 and November 1999. Mr. Baldota earned a Bachelor of Technology in Chemical Engineering from Indian Institute of Technology, Delhi, and a Masters of Business Administration from the Indian Institute of Management, Ahmedabad.
James Kedrowski
became a member of the Taro Board in May 2011. In addition, Mr. Kedrowski served as the Company’s Interim Chief Executive Officer from October 2010 until August 2013. Mr. Kedrowski was with Chattem Chemicals, Inc., an indirect subsidiary of Sun Pharma since 1997 and served as its President. Mr. Kedrowski’s prior experience includes over 20 years with Alcoa Inc., starting in sales, then purchasing roles culminating as senior purchasing agent for all chemicals, energy, and carbon. Subsequently, Mr. Kedrowski was in progressive P&L business management positions in the United States before heading to Tokyo for four years of international experience running Alcoa’s Industrial Chemicals business in Asia. Mr. Kedrowski then returned to the United States as Operational Vice President for seven North American Industrial Chemicals plants.
Dov Pekelman
became a member of the Taro Board and Audit Committee in August 2011, Chairman of the Special Committee in November 2011 (disbanded in February 2013), the Stock Option Committee in March 2012 (disbanded in January 2015) and the Compensation Committee in February 2013. Professor Pekelman is currently a major shareholder of Atera Networks Ltd. and a board member of Mapi Pharma, Ltd. He serves as Dean of the Business School at the Interdisciplinary Center (IDC), Herzliya, Israel, and is Chairman of the IDC Corporation, the center’s economic arm. Professor Pekelman served as a senior consultant to Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) from 1985 to 2008 and also founded and ran a leading, Israeli-based management-consulting firm, P.O.C. Ltd. Professor Pekelman served on the Board of Directors of several large industrial corporations, including Enzymotec (NASDAQ:ENZY), Koor Industries Ltd. (TASE: KOR) and served for 22 years on the Board of Directors of Makhteshim Agan Industries Ltd. (TASE: MAIN). Professor Pekelman was also a member of the advisory committee of the Bank of Israel. He holds a Ph.D. from the University of Chicago and a B.S. from the Technion, Israeli Institute of Technology. Professor Pekelman is a published author writing on various aspects of business operations.
Proposed Resolutions
The Board of Directors will present the following resolutions at the Annual General Meeting:
“RESOLVED, that Dilip Shanghvi be, and hereby is, elected to serve as director of the Company until the close of the next annual general meeting of shareholders.”
“RESOLVED, that Abhay Gandhi be, and hereby is, elected to serve as director of the Company until the close of the next annual general meeting of shareholders.”
“RESOLVED, that Sudhir Valia be, and hereby is, elected to serve as director of the Company until the close of the next annual general meeting of shareholders.”
“RESOLVED, that Uday Baldota be, and hereby is, elected to serve as director of the Company until the close of the next annual general meeting of shareholders.”
“RESOLVED, that James Kedrowski be, and hereby is, elected to serve as director of the Company until the close of the next annual general meeting of shareholders.”
“RESOLVED, that Dov Pekelman be, and hereby is, elected to serve as director of the Company until the close of the next annual general meeting of shareholders.”
In order to approve each above resolution pursuant to Proposal 3, the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions) is required.
The Board of Directors unanimously recommends a vote
FOR
the re-election of each of the proposed nominees under Proposal 3.
PROPOSAL 4
AMENDED ANNUAL BONUSES FOR DILIP SHANGHVI
Background
As required by the Companies Law, the initial approval of, or any amendment to, the terms of service or employment of directors in a public company requires approval by the company’s compensation committee, board of directors and shareholders. If a controlling shareholder serves as a director of a public company, such approval is required once every three years, even when the terms of employment have not changed. The bonuses for Mr. Dilip Shanghvi, our Chairman of the Board, who may be deemed to control us indirectly via his (along with entities controlled by him and members of his family) control of Sun Pharma, our controlling shareholder, have been approved by the Compensation Committee and Board of Directors of our Company, and consist of an adjusted target annual bonus in an amount of up to 100% of his management fee.
If approved at the Meeting, the effectiveness of the above-described bonuses for Mr. Shanghvi will be as of April 1, 2018, subject to Mr. Shanghvi’s re-election at the Meeting pursuant to Proposal 3. The Compensation Committee and the Board of Directors believe that such bonuses are in line with our office holder compensation policy (both our existing 2017 compensation policy and the Compensation Policy for Office Holders that is subject to approval at the Meeting pursuant to Proposal 2).
Proposed Resolutions
“RESOLVED, that Mr. Dilip Shanghvi, beginning April 1, 2018, be eligible for annual bonuses targeted in an amount of 100% of his annual
management fee
in accordance with the Compensation Policy for Office Holders.”
Required Majority
The required vote to approve the above resolution under Proposal 4 is
the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions)
, provided that either:
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the majority includes the majority of the voting power of non-controlling shareholders (as defined in the Companies Law) who do not have a conflict of interest (referred to under the Companies Law as a “personal interest”) in the approval of the matter present at the Meeting in person or by proxy (abstentions will not be taken into account); or
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•
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the total number of votes against the policy by the non-controlling shareholders who do not have a conflict of interest in the approval of the matter does not exceed two percent (2%) of the aggregate voting rights in the Company.
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Please see the discussion under “Majority Required for Approval of Each of the Proposals” above for definitions of the terms “controlling shareholder” and “personal interest” under the Companies Law for purposes of this Proposal 4. In addition, please note there the instructions as to how to confirm that you lack a conflict of interest in the approval of the proposal.
In particular, please remember that you must check the box “FOR” Item 4A on the proxy card or voting instruction form in order for your vote to be counted towards or against the special majority required under the Companies Law for the approval of Mr. Shanghvi’s annual bonuses under Proposal 4. If you do not check that box, even if you vote in favor of or against Proposal 4, your vote will not be counted towards or against the special majority required under the Companies Law for approval of this proposal.
Sun Pharma and certain affiliates have indicated to the Company that they believe that they are controlling shareholders and, for the purposes of this Meeting, the shares owned or controlled by them (or by entities under their control) will not be counted as part of the votes of the non-controlling shareholders for purposes of Proposal 4.
The Board of Directors unanimously recommends a vote
FOR
the annual bonuses for Dilip Shanghvi under Proposal 4.
PROPOSAL 5
AMENDED ANNUAL BONUSES FOR SUDHIR VALIA
As required by the Companies Law, the initial approval of, or any amendment to, the terms of service or employment of directors in a public company requires approval by the company’s compensation committee, board of directors and shareholders. If a controlling shareholder serves as a director of a public company, such approval is required once every three years, even when the terms of employment have not changed. The bonuses for Mr.
Sudhir Valia
, our director, who may be deemed to control us indirectly via his (along with entities controlled by him and members of his family) control of Sun Pharma, our controlling shareholder, have been approved by the Compensation Committee and Board of Directors of our Company, and consist of an adjusted target annual bonus in an amount of up to 100% of his annual management fee.
If approved at the Meeting, the effectiveness of the above-described bonuses for Mr.
Valia
will be as of April 1, 2018, subject to Mr. Valia’s re-election at the Meeting pursuant to Proposal 3. The Compensation Committee and the Board of Directors believe that such bonuses are in line with our office holder compensation policy (both our existing 2017 compensation policy and the Compensation Policy for Office Holders that is subject to approval at the Meeting pursuant to Proposal 2).
Proposed Resolutions
“RESOLVED, that Mr. Sudhir Valia, beginning April 1, 2018, be eligible for annual bonuses targeted in an amount of 100% of his annual
management fee
.”
Required Majority
The required vote to approve the above resolution under Proposal 5 is
the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions)
, provided that either:
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the majority includes the majority of the voting power of non-controlling shareholders (as defined in the Companies Law) who do not have a conflict of interest (referred to under the Companies Law as a “personal interest”) in the approval of the matter present at the Meeting in person or by proxy (abstentions will not be taken into account); or
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•
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the total number of votes against the policy by the non-controlling shareholders who do not have a conflict of interest in the approval of the matter does not exceed two percent (2%) of the aggregate voting rights in the Company.
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Please see the discussion under “Majority Required for Approval of Each of the Proposals” above for definitions of the terms “controlling shareholder” and “personal interest” under the Companies Law for purposes of this Proposal 5. In addition, please note there the instructions as to how to confirm that you lack a conflict of interest in the approval of the proposal.
In particular, please remember that you must check the box “FOR” Item 5A on the proxy card or voting instruction form in order for your vote to be counted towards or against the special majority required under the Companies Law for the approval of Mr. Valia’s annual bonuses under Proposal 5. If you do not check that box, even if you vote in favor of or against Proposal 5, your vote will not be counted towards or against the special majority required under the Companies Law for approval of this proposal.
Sun Pharma and certain affiliates have indicated to the Company that they believe that they are controlling shareholders and, for the purposes of this Meeting, the shares owned or controlled by them (or by entities under their control) will not be counted as part of the votes of the non-controlling shareholders for purposes of Proposal 5.
The Board of Directors unanimously recommends a vote
FOR
the annual bonuses for Sudhir Valia under Proposal 5.
PROPOSAL 6
ADOPTION OF AMENDED COMPENSATION FOR UDAY BALDOTA
As required by the Companies Law, the initial approval of, or any amendment to, the terms of service and employment of the chief executive officer in a public company require approval by the company’s compensation committee, board of directors and shareholders. The amended annual salary of our CEO, Mr. Uday Baldota, has been approved by the Compensation Committee and Board of Directors of our Company and consists of
an amended annual salary (for the fiscal year ending March 31, 2019) in an amount of USD 819,200, increased from an amount of USD 800,000.
If approved at the Meeting, the effectiveness of the above-described annual salary for Mr.
Baldota
will be as of April 1, 2018. The Compensation Committee and the Board of Directors believe that the amended annual salary is in line with our office holder compensation policy (both our existing 2017 compensation policy and the Amended Compensation Policy that is subject to approval at the Meeting pursuant to Proposal 2).
Proposed Resolutions
“RESOLVED, that the annual salary of Mr. Uday Baldota for his role as Chief Executive Officer of the Company, effective as of April 1, 2018, be in the amount of USD 819,200, subject to adjustment from time to time in accordance with the Company’s performance review and merit increase process and subject to the terms of and receipt of all required approvals.”
Required Majority
The required vote to approve the above resolution under Proposal 6 is
the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions)
, provided that either:
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the majority includes the majority of the voting power of non-controlling shareholders (as defined in the Companies Law) who do not have a conflict of interest (referred to under the Companies Law as a “personal interest”) in the approval of the matter present at the Meeting in person or by proxy (abstentions will not be taken into account); or
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•
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the total number of votes against the policy by the non-controlling shareholders who do not have a conflict of interest in the approval of the matter does not exceed two percent (2%) of the aggregate voting rights in the Company.
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Please see the discussion under “Majority Required for Approval of Each of the Proposals” above for definitions of the terms “controlling shareholder” and “personal interest” under the Companies Law for purposes of this Proposal 6. In addition, please note there the instructions as to how to confirm that you lack a conflict of interest in the approval of the proposal.
In particular, please remember that you must check the box for Item 6A on the proxy card or voting instruction form in order for your vote to be counted towards or against the special majority required under the Companies Law for the approval of Mr. Baldota’s amended annual salary under Proposal 6. If you do not check that box, even if you vote in favor of or against Proposal 6, your vote will not be counted towards or against the special majority required under the Companies Law for approval of this proposal.
Sun Pharma and certain affiliates have indicated to the Company that they believe that they are controlling shareholders and, for the purposes of this Meeting, the shares owned or controlled by them (or by entities under their control) will not be counted as part of the votes of the non-controlling shareholders for purposes of Proposal 6.
The Board of Directors unanimously recommends a vote
FOR
the annual salary of Uday Baldota under Proposal 6.
PROPOSAL 7
AMENDED ANNUAL BONUSES FOR UDAY BALDOTA
Background
As required by the Companies Law, the initial approval of, or any amendment to, the terms of service and employment of the chief executive officer in a public company require approval by the company’s compensation committee, board of directors and shareholders. The amended annual bonuses for Mr. Baldota have been approved by the Compensation Committee and Board of Directors of our Company and consist of, beginning April 1, 2018, eligibility for annual bonuses targeted in an amount of 50% of his annual salary in accordance with the Compensation Policy for Office Holders (the version thereof that is subject to approval at the Meeting pursuant to Proposal 2).
Proposed Resolutions
“RESOLVED, that the annual bonuses for Mr. Uday Baldota for his role as Chief Executive Officer of the Company, effective as of April 1, 2018, be an amount targeted at 50% of his annual salary in accordance with the Compensation Policy for Office Holders.”
Required Majority
The required vote to approve the above resolution under Proposal 7 is
the affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (which excludes abstentions)
, provided that either:
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the majority includes the majority of the voting power of non-controlling shareholders (as defined in the Companies Law) who do not have a conflict of interest (referred to under the Companies Law as a “personal interest”) in the approval of the matter present at the Meeting in person or by proxy (abstentions will not be taken into account); or
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•
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the total number of votes against the policy by the non-controlling shareholders who do not have a conflict of interest in the approval of the matter does not exceed two percent (2%) of the aggregate voting rights in the Company.
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Please see the discussion under “Majority Required for Approval of Each of the Proposals” above for definitions of the terms “controlling shareholder” and “personal interest” under the Companies Law for purposes of this Proposal 7. In addition, please note there the instructions as to how to confirm that you lack a conflict of interest in the approval of the proposal.
In particular, please remember that you must check the box for Item 7A on the proxy card or voting instruction form in order for your vote to be counted towards or against the special majority required under the Companies Law for the approval of Mr. Baldota’s annual bonuses under Proposal 7. If you do not check that box, even if you vote in favor of or against Proposal 7, your vote will not be counted towards or against the special majority required under the Companies Law for approval of this proposal.
Sun Pharma and certain affiliates have indicated to the Company that they believe that they are controlling shareholders and, for the purposes of this Meeting, the shares owned or controlled by them (or by entities under their control) will not be counted as part of the votes of the non-controlling shareholders for purposes of Proposal 7.
The Board of Directors unanimously recommends a vote
FOR
the annual bonuses for Uday Baldota under Proposal 7.
REVIEW AND DISCUSSION OF AUDITOR’S REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors has approved, and is presenting to the shareholders for receipt and discussion at the Meeting, the Company’s annual consolidated balance sheet as of March 31, 2018, the consolidated statements of income for the fiscal year then ended, and the auditor’s report thereon, all of which are included in our Annual Report on Form 20-F for the twelve month period ended March 31, 2018, which we filed with the SEC on June 21, 2018, and can be accessed at http://www.taro.com and through the EDGAR website of the SEC at www.sec.gov. None of the auditor’s report, consolidated financial statements, the Form 20-F or the contents of our website form part of the proxy solicitation material.
ADDITIONAL INFORMATION
The Company is subject to the information reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), applicable to foreign private issuers. The Company fulfills these requirements by filing reports with the SEC. The Company’s filings with the SEC may be inspected without charge at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580 Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The Company’s SEC filings are also available to the public on the SEC’s website at
www.sec.gov
. As a foreign private issuer, the Company is exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements. The circulation of this Proxy Statement should not be taken as an admission that the Company is subject to those proxy rules.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Dilip Shanghvi
Dilip Shanghvi
Chairman of the Board of Directors
Dated: November 7, 2018
ANNEX A
COMPENSATION POLICY FOR OFFICE HOLDERS