SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
ASIAINFO HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[LOGO]
AsiaINFO(R)
ASIAINFO HOLDINGS, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 19, 2004
-----------------
March 15, 2004
TO THE STOCKHOLDERS OF ASIAINFO HOLDINGS, INC.:
You are cordially invited to attend the Annual Meeting of stockholders (the
"Annual Meeting") of AsiaInfo Holdings, Inc., a Delaware corporation
("AsiaInfo"), to be held on Monday, April 19, 2004 at 4:00 p.m., local time, at
4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian
District, Beijing, PRC, for the following purposes:
1. To elect three directors to serve for three-year terms to expire at the 2007
Annual Meeting of stockholders and until their successors are duly elected
and qualified;
2. To ratify the selection of Deloitte Touche Tohmatsu as the independent
auditors of AsiaInfo for the fiscal year ending December 31, 2004; and
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
This notice of meeting, proxy statement, proxy card and copy of the Annual
Report on AsiaInfo's operations during the year ended December 31, 2003 are
being distributed on or about March 15, 2004. The foregoing items of business
are more fully described in the proxy statement.
Stockholders of record at the close of business on March 1, 2004 are entitled
to notice of and to vote at the Annual Meeting and any adjournment thereof. A
list of these stockholders will be available for inspection during ordinary
business hours at our principal executive offices, at 4th Floor, Zhongdian
Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing, PRC,
from April 9, 2004 to the date of our Annual Meeting. The list will also be
available for inspection at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person.
However, to assure your representation at the Annual Meeting, you are urged to
vote your shares by telephone, the Internet, or by signing and returning the
enclosed proxy card as promptly as possible in the enclosed self-addressed
envelope. Any stockholder attending the Annual Meeting may vote in person even
if he or she returned a proxy. However, if a stockholder's shares are held of
record by a broker, bank or other nominee and the stockholder wishes to vote at
the Annual Meeting, the stockholder must obtain from the record holder a proxy
issued in his or her name.
BY ORDER OF THE BOARD OF DIRECTORS
__________/s/ James Ding__________
Chairman of the Board of Directors
March 15, 2004
Beijing, PRC
ASIAINFO HOLDINGS, INC.
4th Floor, Zhongdian Information Tower
6 Zhongguancun South Street
Haidian District
Beijing 100086, PRC
-----------------
PROXY STATEMENT
2004 ANNUAL MEETING OF STOCKHOLDERS
-----------------
This proxy statement (the "Proxy Statement") and accompanying proxy are being
mailed to stockholders on or about Monday, March 15, 2004, in connection with
the solicitation of proxies by the Board of Directors (the "Board") of AsiaInfo
Holdings, Inc., a Delaware corporation ("AsiaInfo," the "Company," "we" or
"our"), for use at the Annual Meeting of stockholders (the "Annual Meeting") to
be held on Monday, April 19, 2004, at 4:00 p.m., local time, at 4th Floor,
Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District,
Beijing, PRC, or at any adjournment thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders. AsiaInfo's
principal executive offices are located at 4th Floor, Zhongdian Information
Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, PRC.
AsiaInfo's telephone number at that location is +8610 6250 1658.
INFORMATION CONCERNING SOLICITATION AND VOTING
Record Date and Share Ownership
Stockholders of record at the close of business on March 1, 2004 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting. At the
Record Date, 45,406,497 shares of AsiaInfo's common stock ("Common Stock") were
issued and outstanding and held of record by approximately 161 registered
stockholders.
Voting, Solicitation and Revocability of Proxy
Registered stockholders can vote by mail, telephone or the Internet. Telephone
voting can be accessed by calling the toll-free number (in the United States
only) 1-866-593-3363. Internet voting can be accessed by logging on to the
following Internet address: (https://www.proxyvotenow.com/asi). Telephone and
Internet voting information is provided on the proxy card. A control number
located on the proxy card is designed to verify each stockholder's identity and
allow stockholders to vote their shares and confirm that their voting
instructions have been properly recorded. If your shares are held in the name
of a bank or broker, follow the voting instructions on the form you receive
from your bank or broker. The availability of telephone or Internet voting will
depend on your bank or broker's voting process.
If you do not choose to vote by telephone or the Internet, you may still return
your proxy card, properly signed, and the shares represented will be voted in
accordance with your directions. You can specify your choices by marking the
appropriate boxes on the proxy card. If your proxy card is signed and returned
without specifying choices, the shares will be voted in favor of proposals 1
and 2. If you vote by telephone or the Internet, it is not necessary to return
your proxy card.
You may revoke your proxy at any time before it is voted at the Annual Meeting
by casting a different vote by telephone or the Internet, by executing a
later-voted proxy by mail, by voting by ballot at the Annual Meeting, or by
providing written notice of the revocation to Adams Lin, Corporate Secretary
and Legal Counsel of AsiaInfo, at the Company's principal executive offices.
Your vote is important. Accordingly, regardless of whether you plan to attend
the Annual Meeting, you are urged to vote by telephone, by the Internet, or by
signing and returning the accompanying proxy card. If you do attend, you may
vote by ballot at the Annual Meeting, thereby canceling any proxy previously
given.
In the event that any matter not described in this Proxy Statement properly
comes before the Annual Meeting, the proxy holders named in the accompanying
proxy will vote the shares represented by the proxy in accordance with their
best judgment. As of the date of this Proxy Statement, AsiaInfo is not aware of
any other matter that might be presented at the Annual Meeting.
Each share of Common Stock outstanding on the Record Date is entitled to one
vote. The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date, present in person or
represented by proxy. Stockholders may withhold authority to vote for one or
more of the nominees for director and may abstain on one or more of the other
matters that may come before the Annual Meeting. The inspector of election
appointed for the Annual Meeting will determine the existence of a quorum and
will tabulate the votes cast at the Annual Meeting. Broker non-votes will not
be counted in determining the number of votes cast with respect to a proposal.
For purposes of determining the presence of a quorum, abstentions and broker
non-votes will be counted by AsiaInfo as present at the Annual Meeting.
Abstentions will also be counted by AsiaInfo in determining the total number of
votes cast with respect to a proposal (other than the election of directors).
If, however, such quorum shall not be present or represented, the stockholders
present in person or represented by proxy shall have the power to adjourn the
Annual Meeting from time to time, without notice other than announcement at the
Annual Meeting until a quorum shall be present or represented. If a broker
indicates on a proxy that such broker does not have discretionary authority to
vote on a particular matter, under applicable Delaware law those shares will be
counted as present for purposes of determining the presence of a quorum, but
will not be counted as votes cast on the matter and will have no effect on the
outcome of the vote on such matter.
The cost of soliciting proxies will be borne by AsiaInfo. Proxies may be
solicited by certain of AsiaInfo's directors, officers and employees, without
additional compensation, in person or by telephone, email or facsimile. In
addition, AsiaInfo has retained Morrow & Co., Inc. to assist in such
solicitation. The fee to be paid to such firm is not expected to exceed $14,000
plus reasonable out-of-pocket costs and expenses. In addition, AsiaInfo may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners.
2
TABLE OF CONTENTS
Matters to be Considered at The Annual Meeting.................................... 4
Proposal No. 1: Election Of Directors............................................. 4
General.......................................................................... 4
Nominees for Class II Directors.................................................. 4
Board Meetings and Committees.................................................... 5
Director Compensation............................................................ 6
Vote Required.................................................................... 6
Recommendation of the Board...................................................... 6
Proposal No. 2: Ratification of Appointment of Independent Auditors............... 7
General.......................................................................... 7
Audit Fees....................................................................... 7
Audit-Related Fees............................................................... 7
Tax Fees......................................................................... 7
All Other Fees................................................................... 7
Recommendation of the Board...................................................... 8
Management........................................................................ 9
Executive Officers............................................................... 9
Executive Compensation............................................................ 12
Summary Compensation Table....................................................... 12
Option Grants in Last Fiscal Year................................................ 13
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values 13
Employment Agreements and Change of Control Agreements........................... 14
Pension Plans.................................................................... 14
Compensation Committee Report..................................................... 15
Compensation Philosophy and Review............................................... 15
Policy Regarding Section 162(m) of the Internal Revenue Code..................... 15
Base Salaries.................................................................... 15
Long-Term Equity Incentives...................................................... 16
Other Compensation............................................................... 16
Chief Executive Officer Compensation............................................. 16
Compensation Committee Interlocks and Insider Participation....................... 17
Audit Committee Report............................................................ 17
Director Independence............................................................. 19
Nominating and Corporate Governance Committee Procedures and Charter.............. 19
Reliance on Exceptional and Limited Circumstances Exceptions...................... 19
Stockholders Communications with Board of Directors............................... 19
Director Attendance at Stockholders Meeting....................................... 19
Certain Relationships and Related Transactions.................................... 20
Transactions with China Netcom Group and China Netcom............................ 20
Stock Price Performance........................................................... 22
Security Ownership of Certain Beneficial Owners and Management.................... 23
Section 16(a) Beneficial Ownership Reporting Compliance........................... 25
Deadline for Receipt of Stockholder Proposals for 2005............................ 25
Other Matters..................................................................... 25
Exhibit A Audit Committee Charter................................................ A-1
Exhibit B Nominating and Corporate Governance Committee Charter.................. B-1
3
MATTERS TO BE CONSIDERED AT
THE ANNUAL MEETING
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
General
The By-laws of AsiaInfo provide that the authorized number of directors shall
consist of no less than three nor more than nine directors. There are presently
nine directors of AsiaInfo, divided into three classes: Class I, Class II and
Class III. Each class has a three year term. Messrs. James Ding, Alan Bickell
and Weiying Zhang are Class I directors, whose term will expire at the 2006
annual meeting; Messrs. Xingsheng Zhang, Ying Wu and Tao Long are Class II
directors, whose term will expire at the Annual Meeting; and Messrs. Edward
Tian, Chang Sun and Michael Zhao are Class III directors whose term will expire
at the 2005 annual meeting. Unless otherwise instructed, the proxy holders will
vote the proxies received by them for the nominees named below, all of whom are
presently AsiaInfo directors. If any nominee is unable or declines to serve as
a director at the time of the Annual Meeting, the proxies will be voted for any
nominee designated by the present Board to fill the vacancy. If stockholders
properly nominate persons other than AsiaInfo's nominees for election as
directors, the proxy holders will vote all proxies received by them to assure
the election of as many of AsiaInfo's nominees as possible, with the proxy
holder making any required selection of specific nominees to be voted for. The
term of office of each person elected as a director will continue until the
third annual meeting following his or her election or until his or her earlier
resignation or removal. The directors elected this year should continue in
office until the 2007 annual meeting. There is no family relationship between
any director and any other director or executive officer of AsiaInfo.
Nominees for Class II Directors
Certain information regarding the nominees is set forth below:
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- --------
Xingsheng Zhang 48 President and Chief Executive Officer of AsiaInfo 2003
Ying Wu........ 44 Vice Chairman, UTStarcom, Inc. 2003
Tao Long....... 51 Chairman, Beijing Investment Consultants, Inc. 2003
Xingsheng Zhang has served as President and Chief Executive Officer and a
member of the board of directors of AsiaInfo since April 2003. Prior to that,
Mr. Zhang served as Chief Marketing Officer of Ericsson (China) Co., Ltd. Since
joining Ericsson in 1990, Mr. Zhang took on successively greater management
responsibilities in positions of Marketing Manager, Director of Business
Development, Vice President/Head of Mobile Phones and Executive Vice
President/General Manager of National Network Operators. Before joining
Ericsson, Mr. Zhang worked in engineering and management positions with
different organizations of the Beijing Toll Telecom Bureau, the Beijing Telecom
Administration and China International Telecom Construction Corporation of the
Ministry of Posts & Telecom (now the Ministry of Information Industry). Mr.
Zhang graduated from Beijing University of Posts and Telecommunications in
1977, and holds an MBA degree from Norwegian School of Management BI.
Ying Wu has served as a member of the board of directors of AsiaInfo since July
2003. Mr. Wu is the co-founder and Vice-Chairman of UTStarcom Inc. (Nasdaq:
UTSI), a leading global provider of wireless and wireline access and IP
switching solutions, and President of UTStarcom China. Before founding Starcom
in 1991, which later merged with Unitech in 1995 to become today's UTStarcom,
Mr. Wu was a member of the technical staff and
4
senior project manager of AT&T Bell Labs, which he joined in 1987. He holds a
MS in Electrical Engineering from New Jersey Institute of Technology and a BS
in wireless communication from Beijing Industrial University.
Tao Long has served as a member of the board of directors of AsiaInfo since
January 2003. He founded and has served as Chairman of Beijing Investment
Consultants, Inc. since 1991. Mr. Long worked for KPMG LLP as an auditor in the
field of auditing and financial analysis from 1987 to 1989. Mr. Long has been
an Associate Professor at Central University of Finance & Economics since 1992.
Mr. Long received a Master of Science degree in accounting from the Institute
of Public Finance Science Research of the Ministry of Finance in 1985 and a
Bachelor of Economics degree in planning and statistics from Inner Mongolia
University in 1982.
Board Meetings and Committees
The Board held four regular meetings and one special meeting during the fiscal
year ended December 31, 2003, and acted two times by unanimous written consent.
The Board has an audit committee, a compensation committee, a finance committee
and a nominating and corporate governance committee.
Nominating and Corporate
Audit Committee Compensation Committee Finance Committee Governance Committee
--------------- ---------------------- ----------------- ------------------------
Alan D. Bickell Alan D. Bickell Chang Sun Chang Sun
Tao Long Chang Sun Alan D. Bickell Weiying Zhang
Weiying Zhang Tao Long James Ding
The Audit Committee. The audit committee of the Board (the "Audit Committee")
currently consists of Messrs. Bickell (Chair), Long and Zhang. The Board has
determined that each member of the Audit Committee is "independent" as defined
by the Nasdaq National Market. The Board has also determined that each member
of the Audit Committee is an "audit committee financial expert" as defined by
the Securities and Exchange Commission (the "SEC"). The Audit Committee held 4
meetings during the last fiscal year. The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of the
work of our independent auditors. The Audit Committee represents and assists
the Board with the oversight of: the integrity of the Company's financial
statements and internal controls, the Company's compliance with legal and
regulatory requirements, the independent auditors' independence and
qualifications, the performance of the Company's internal audit function and
the independent auditors. In addition, the Audit Committee pre-approves the
audit and non-audit services to be provided by the independent auditors. For
more information on our audit committee, please see the discussion below under
the heading "Audit Committee Report".
The Compensation Committee. The compensation committee of the Board (the
"Compensation Committee") currently consists of Messrs. Bickell and Sun
(Chair). The Compensation Committee held 3 meetings during the last fiscal
year. The Compensation Committee administers AsiaInfo's stock option plans and
makes decisions concerning salaries and incentive compensation for AsiaInfo's
employees.
The Finance Committee. The finance committee of the Board (the "Finance
Committee") consists of Messrs. Sun (Chair), Long and Bickell. The Finance
Committee held one meeting during the last fiscal year. The Finance Committee
makes recommendations to the Board with respect to AsiaInfo's capital position,
financing requirements and strategic acquisitions and other corporate
transactions.
The Nominating and Corporate Governance Committee. On February 27, 2004, we
established a nominating and corporate governance committee (the "Governance
Committee") consisting of Messrs. James Ding (chair), Chang Sun and Weiying
Zhang. The Governance Committee replaced our existing nominating committee,
which had been established in 2002. The Governance Committee makes
recommendations to the Board regarding the nomination of candidates to stand
for election or re-election as members of the Board. The Governance
5
Committee will consider candidates for Board membership proposed by
stockholders. Any such proposals should be made in writing to AsiaInfo
Holdings, Inc., 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South
Street, Haidian District, Beijing 100086, PRC, Attention: Legal Department. For
more information on our Governance Committee, please see the discussion below
under the heading "Nominating and Corporate Governance Committee Procedures and
Charter".
During the year 2003, each director attended 75% or more of the meetings of the
Board and of the committees of the Board on which the director served during
the period for which he was a director or committee member, respectively,
except for Steve Chang who attended three of five Board meetings and Edward
Tian who attended two of five Board meetings.
Executive sessions, or meetings of outside directors without the Chief
Executive Officer or other members of management present, are generally held on
a quarterly basis in conjunction with regular meetings of the Board. Additional
executive sessions or meetings of outside directors may be held from time to
time as required.
Director Compensation
In 2003, each non-executive director was entitled to receive an annual retainer
of $15,000, a meeting fee of $1,000 for each Board meeting attended, and $1,000
as expense reimbursement for each Board meeting attended (unless such director
filed a reimbursement report for actual expenses incurred). The chairman of the
Audit Committee was entitled to an additional annual fee of $5,000 and each
member of the Audit Committee was entitled to a meeting fee of $1,000 for each
Audit Committee meeting attended.
AsiaInfo also grants stock options to its non-executive directors, beginning
with initial grants of 20,000 options to each non-executive director, vesting
over four years on an annual schedule of 25%, 25%, 25% and 25%. During the last
two years of the vesting schedule, the options vest quarterly. Each year, we
grant new options to our non-executive directors as their options vest, so that
the unvested portion of each non-executive director's options is maintained at
20,000.
Vote Required
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
Recommendation of the Board
The Board recommends that the stockholders vote "FOR" the election of each of
the nominees listed above.
6
PROPOSAL NO. 2:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
General
The Board has selected the firm of Deloitte Touche Tohmatsu as AsiaInfo's
independent auditors to audit the financial statements of AsiaInfo for the
fiscal year ending December 31, 2004, and recommends that stockholders vote for
ratification of this appointment. Deloitte Touche Tohmatsu has audited
AsiaInfo's financial statements since the Company's inception in 1993.
Representatives of Deloitte Touche Tohmatsu are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
Stockholder ratification of the selection of Deloitte Touche Tohmatsu as
AsiaInfo's independent auditors is not required by AsiaInfo's By-Laws or
otherwise. However, the Board is submitting the selection of Deloitte Touche
Tohmatsu to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit Committee
and the Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board in its discretion may direct the appointment
of different independent auditors at any time during the year if it determines
that such change would be in the best interests of AsiaInfo and its
stockholders.
The following discussion describes the fees billed by Deloitte Touch Tohmatsu
for services rendered on behalf of the Company. For additional information on
the types of fees discussed below, please see the discussion under the heading
"Audit Committee Report."
Audit Fees
The aggregate fees billed by Deloitte Touche Tohmatsu for professional services
rendered for the audit of the Company's financial statements for the fiscal
years ended December 31, 2003 and December 31, 2002, and for the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for those fiscal years were approximately $413,000 and $373,000, respectively.
Audit-Related Fees
Deloitte Touche Tohmatsu did not bill any fees for audit-related services for
either of the last two fiscal years.
Tax Fees
The aggregate fees billed by Deloitte Touche Tohmatsu for professional services
for tax compliance, tax advice and tax planning for each of the last two fiscal
years were approximately $1,037,000 and $759,000, respectively.
All Other Fees
Deloitte Touche Tohmatsu did not bill any fees for any other services for
either of the last two fiscal years except for $384,000 for merger and
acquisition consultation during the year ended December 31, 2002.
7
Recommendation of the Board
The Board recommends that the stockholders vote "FOR" the ratification of the
appointment of Deloitte Touche Tohmatsu as AsiaInfo's independent auditors for
the fiscal year ending December 31, 2004.
8
MANAGEMENT
Executive Officers
The following table sets forth certain information with respect to our current
directors and executive officers:
Board of Directors Age Position
------------------ --- --------
James Ding....... 38 Chairman of the Board and Board Member
Xingsheng Zhang.. 48 President, Chief Executive Officer and Board Member
Michael Zhao..... 38 Board Member
Alan D. Bickell.. 67 Board Member
Weiying Zhang.... 45 Board Member
Tao Long......... 51 Board Member
Chang Sun........ 47 Board Member
Edward S. Tian... 40 Board Member
Ying Wu.......... 44 Board Member
Executive Officers Age Position
------------------ --- --------
Xingsheng Zhang.. 48 President and Chief Executive Officer
Ying Han......... 49 Executive Vice President and Chief Financial Officer
Steve Zhang...... 40 Senior Vice President and General Manager of China
Mobile Account
Chao Wang........ 40 Vice President and General Manager of Strategy and
Marketing Division
James Li......... 41 Vice President and General Manager of Enterprise
Information Solutions Unit
For a biographical summary of Xingsheng Zhang, Ying Wu and Tao Long, please see
the section headed "Election of Directors" beginning on page 4 of this Proxy
Statement.
James Ding has served as our Chairman of the Board since April 1, 2003 and has
served as a member of the Board of AsiaInfo since our inception. He served as
our Chief Executive Officer from May 1999 to April 2003. He was also our Senior
Vice President for Business Development and Chief Technology Officer from 1997
to 1999. Prior to that, Mr. Ding was our Senior Vice President and Chief
Technology Officer from 1993 to 1997. Mr. Ding received a Master of Science
degree in information science from the University of California at Los Angeles
in 1990.
Alan D. Bickell has served as a member of the Board of AsiaInfo since March
1999. Mr. Bickell retired in November 1996 as corporate senior vice president
of Hewlett-Packard Company and managing director of Geographic Operations, a
position he had held since 1992. Mr. Bickell originally joined Hewlett-Packard
in 1964. He is a member of the board of directors of Power Integrations, Inc.
and a member of the board of directors of the Peking University Foundation
(USA). In 1998, he became an advisory Professor at Beijing University. He holds
a degree in marketing and finance from Menlo College and an M.B.A. from Santa
Clara University.
Weiying Zhang has served as a member of the Board of AsiaInfo since October
2003. Professor Zhang is a Professor of Economics and the First Associate Dean
of Guanghua School of Management at Beijing University. He is also a member of
the Advisory Board for the State Informatization Committee of China, and a
member of the Advisory Board for Telecommunication Law Drafting Committee.
Professor Zhang has had a distinguished career in the field of economic reform
and management science since 1984, when he served as a research fellow of the
Economic System Reform Institute of China under the State Commission of
Economic System Restructuring. He has also been a member of the Advisory Board
on Enterprise Reform to the State Commission
9
for Economic Restructuring, a consultant to the Department of Enterprises of
the State Economic and Trade Commission, and a local consultant to the World
Bank Project on Chinese State-Owned Enterprise Reform. Professor Zhang received
a doctorate degree in economics from Oxford University in 1994.
Michael Zhao has served as a member of the Board of AsiaInfo since 1999 and was
a Senior Vice President and General Manager of Communication Solutions
(previously, Network Infrastructure Solutions) for AsiaInfo from 2001 to
September 2003. He served as our Senior Vice President and Chief Strategy
Officer between January 1997 and January 2001, our General Manager from October
1996 to December 1997, and our Deputy Chief Engineer from February 1996 to
January 1997. Mr. Zhao holds a Ph.D. in engineering from the State University
of New York at Buffalo, which he received in 1994, and an M.B.A. from Rutgers,
the State University of New Jersey, which he received in 2000.
Chang Sun has served as a member of the Board of AsiaInfo since December 1997.
Mr. Sun has been a Managing Director of Warburg Pincus, a major shareholder and
affiliate of AsiaInfo, since 1995. Warburg Pincus is in the business of
managing private equity and venture capital funds. Prior to that position, he
was an Executive Director of Goldman Sachs (Asia) LLC. Mr. Sun holds a B.A.
from the Beijing Foreign Language University, a Master of Arts degree from the
Joseph Lauder Institute of International Management at the University of
Pennsylvania and an M.B.A. from the Wharton School of the University of
Pennsylvania.
Edward S. Tian has served as a member of the Board of AsiaInfo since our
inception. Dr. Tian is the President and CEO of China Netcom Corporation
("China Netcom"), a position he has held since June 1999. Since April 2002, Dr.
Tian has also served as a Vice President of China Netcom's parent company,
China Netcom Communication Group Corporation ("China Netcom Group"). He has
also served as President of CNC International Communications Ltd. of China
Netcom Group since November 2003 and President of CNC Southern Communications
Ltd. of China Netcom Group since January 2004. Prior to joining China Netcom,
he and James Ding co-founded AsiaInfo in Dallas, Texas in 1993 and Dr. Tian
served as AsiaInfo's President through May 1999. Dr. Tian has a Master of
Science degree from the Graduate School of the Chinese Academy of Science in
Beijing and a Ph.D. in Environmental Management from Texas Tech University.
Ying Han has been our Executive Vice President and Chief Financial Officer
since June 1998. Ms. Han was Chief Controller and Business Development Director
from 1996 to June 1998 of Hewlett-Packard (China), and was their Finance
Manager from 1993 to 1996 and their Service Business Administration Manager
from 1990 to 1993. Ms. Han received a college degree in Western Accounting from
Xiamen University in 1985.
Steve Zhang is our Senior Vice President and General Manager of China Mobile
Account, a position he has held since July 2003. Previously, he was our General
Manager for Operation Support System Solutions from January 2001 to June 2003
and our Vice President for Software from December 1999 to January 2001,
responsible for overseeing AsiaInfo's software development efforts and
management of AsiaInfo's software division. From 1989 to 1999, Mr. Zhang held
senior project management and technical positions in several successful Silicon
Valley companies, including Blue Martini Software, Inc., Hyperion Solutions,
Inc., Arbor Software, Versant Object Technology, Inc., and Sun Microsystems.
From September 1997 to June 1999, he was a development manager and senior
development manager at Hyperion Solutions, Inc. and from March 1994 to October
1995, he served as Development Manager at Versant Object Technology, Inc. Mr.
Zhang earned his Master of Science degree in computer science from Rice
University and a doctorate in information science from the University of Pisa,
Italy.
Chao Wang has served as our Vice President and General Manager of Strategy and
Marketing since September 2003. He joined AsiaInfo on December 2002 and
previously served as Deputy General Manager of Marketing and Presales for the
Operation Support System Solutions. He also served as Deputy General Manager of
R&D for application & communication products from July 2003 to September 2003.
Mr. Wang has more than 18 years of experience in the telecommunications and
software industry. Before joining AsiaInfo, he worked at MCI-WorldCom as a
project manager from 1996 to 2001. He also served as Executive Vice President
for sales and marketing at GCTech Company Limited, a systems integrator for
China's telecommunications industry.
10
Mr. Wang earned his Master degree in Electrical Engineering from the University
of Missouri-Columbia in 1991 and a Bachelor degree in Computer Science from
Xidian University, China in 1984.
James Li is our Vice President and General Manager of the Enterprise
Information Solutions Unit. He served as AsiaInfo's Vice President of Human
Resources and Administration from March 2000 to December 2003. Before joining
AsiaInfo, Mr. Li worked at Lucent Technologies (China) as Director of Human
Resources from 1997 to 2000. He also worked for IBM China from 1987 to 1996,
and became the manager of human resource for IBM China in 1993. Mr. Li earned
an MBA degree from Rutgers, the State University of New Jersey in 2000, and a
Bachelor of Science degree in Engineering from Tsinghua University in 1985.
11
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned for services rendered to
AsiaInfo in all capacities for the three fiscal years ended December 31, 2003,
by AsiaInfo's Chief Executive Officer and its four next most highly compensated
executive officers for the fiscal year ended December 31, 2003 (collectively,
the "Named Executive Officers"):
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($)/(1)/
--------------------------- ---- ---------- --------- ---------------- ------------ --------------------
Xingsheng Zhang/(2)/, 2003 150,000 75,000 64,081 800,000 12,178
President and Chief 2002 -- -- -- -- --
Executive Officer....... 2001 -- -- -- -- --
Ying Han, Executive
Vice President and 2003 149,155 19,510 15,230 102,000 16,163
Chief Financial 2002 131,944 -- 20,492 150,000 11,735
Officer................. 2001 148,795 40,769 20,129 100,000 7,857
Steve Zhang, Senior Vice
President and General 2003 145,000 27,100 33,750 102,000 14,249
Manager of China 2002 128,269 -- 27,750 150,000 14,245
Mobile Account.......... 2001 141,250 23,175 31,105 80,000 13,027
Chao Wang/(3)/, Vice
President and General
Manager of Strategy 2003 140,000 15,370 20,691 42,500 8,794
and Marketing 2002 140,000 -- 375 60,000 --
Division................ 2001 -- -- -- -- --
James Li, Vice President
and General Manager
of Enterprise 2003 105,933 19,090 7,520 85,000 12,173
Information Solutions 2002 93,710 -- 4,500 100,000 11,110
Unit.................... 2001 105,933 20,509 -- 60,000 10,725
--------
/(1)/ This compensation consists of contributions by the Company for pension,
life insurance and health insurance benefits.
/(2)/ Mr. Zhang became our President and Chief Executive Officer on April 1,
2003. His salary in 2003 was on an annual basis.
/(3)/ Mr. Wang joined AsiaInfo in December, 2002. His salary in 2002 was based
on an annual basis.
12
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to stock
options granted to each of the Named Executive Officers during the fiscal year
ended December 31, 2003. In accordance with the rules of the SEC, also shown
below is the potential realizable value over the term of the option (the period
from the grant date to the expiration date) based on assumed rates of stock
appreciation of 5% and 10%, compounded annually. These amounts are based on
certain assumed rates of appreciation and do not represent AsiaInfo's estimate
of its future stock price. Actual gains, if any, on stock option exercises will
be dependent on the future performance of our Common Stock.
Individual Grants Potential Realizable
-------------------------------------- Value at Assumed Annual
Number of Rates of Stock Price
Securities Percent of Total Appreciation for Option
Underlying Options Granted Exercise Terms
- Options to Employees in Price Expiration -----------------------
Name Granted (#) Fiscal Year (%) ($/share) Date 5% ($) 10% ($)
---- ----------- ---------------- --------- ---------- --------- ---------
Xingsheng Zhang 800,000 35 4.18 04/01/2013 5,447,024 8,673,475
Ying Han....... 102,000 4.5 7.07 09/29/2013 1,174,661 1,870,451
Steve Zhang.... 102,000 4.5 7.07 09/29/2013 1,174,661 1,870,451
Chao Wang...... 42,500 1.9 7.07 09/29/2013 489,442 779,355
James Li....... 85,000 3.7 7.07 09/29/2013 978,884 1,558,710
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information concerning option exercises and
option holdings for each of the Named Executive Officers during the fiscal year
ended December 31, 2003. The numbers in the columns titled "Value Realized" and
"Value of Unexercised In-the-Money Options at December 31, 2003" are based on
the fair market value of our Common Stock on December 31, 2003, $6.68, less the
option exercise price payable for such shares.
Fiscal Year End Option Values
---------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired December 31, 2003 (#) December 31, 2003 ($)/(2)/
on Value ------------------------- -------------------------
Name Exercise (#) Realized ($)/(1)/ Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ---------------- ----------- ------------- ----------- -------------
Xingsheng Zhang -- -- -- 800,000 -- 2,000,000
Ying Han....... -- -- 346,000 266,000 398,025 298,125
Steve Zhang.... -- -- 294,000 290,000 99,375 298,125
Chao Wang...... -- -- 15,000 87,500 -- --
James Li....... 5,000 14,450 145,000 220,000 53,000 198,750
--------
(1) This value is based on the closing market price of AsiaInfo's Common Stock
on the date of exercise of shares covered by the options exercised, less
the option exercise price.
(2) Options are in-the-money if the market value of the shares covered thereby
is greater than the option exercise price.
13
Employment Agreements and Change of Control Agreements
We have entered into two-year employment agreements with Xingsheng Zhang, our
President and Chief Executive Officer, Ying Han, our Executive Vice President
and Chief Financial Officer, Steve Zhang, our Senior Vice President and General
Manager of China Mobile Account, Chao Wang, our Vice President and General
Manager of Strategy and Marketing Division, and James Li, our Vice President
and General Manager of Enterprise Information Solutions Unit, which provide for
annual base salaries of $150,000, $149,155, $145,000, $140,000 and $105,933,
respectively. The agreements terminate on March 30, 2005, January 1, 2006,
October 18, 2004, December 2, 2004 and February 28, 2005, respectively.
On October 17, 2000, the Compensation Committee of the Board adopted a
resolution on severance policy for departing members of AsiaInfo's senior
management. In the event that AsiaInfo terminates an employee at the level of
62 grade (vice president) or above without cause, the employee will receive
severance pay equal to one month's base salary for each year he or she has been
employed by AsiaInfo, or six month's base salary, whichever is greater.
Each of Xingsheng Zhang, Ying Han, Steve Zhang, Chao Wang and James Li have
entered into a non-compete agreement with AsiaInfo, pursuant to which he or she
is prevented from engaging in any commercial activity in competition with
AsiaInfo for two years (six months in case of Xingsheng Zhang and Chao Wang)
after termination of his or her employment. In addition, each of them is
required to disclose all of his or her patent and copyright applications to
AsiaInfo during and for a period of one year after his or her employment.
On May 30, 2003, we entered into change of control agreements with Xingsheng
Zhang, Ying Han and James Li. These agreements provide, among other things,
that these executive officers would be entitled to various benefits upon the
occurrence of either a covered termination (as defined therein) or a change of
control (as defined therein), including payment of one year of base salary and
bonus, immediate vesting of 50% of any outstanding unvested stock options held
by the executive officers and provision of medical benefits and housing
allowance.
Pension Plans
For the benefit of employees who are citizens or lawful permanent residents of
the United States, AsiaInfo has adopted a Simplified Employee Pension Plan (the
"Pension Plan"). The Pension Plan covers employees who have worked at AsiaInfo
for at least six months. The Company makes monthly contributions under the
Pension Plan in amounts equal to 5% of each covered employee's monthly salary.
The contributions are deductible by the Company and are not taxable to the
employees. Withdrawals are taxable as ordinary income, and withdrawals before
age 59-l/2 may be subject to tax penalties.
In 2003, the Company contributed approximately $23,334.25 to all the employees
covered by the Pension Plan. With respect to the Named Executive Officers,
AsiaInfo contributed approximately $5,644 and $6,124.99 on behalf of Steve
Zhang and Chao Wang.
14
COMPENSATION COMMITTEE REPORT
The Compensation Committee currently consists of Messrs. Bickell and Sun
(chair), both of whom are independent directors of AsiaInfo. The Compensation
Committee reviews and recommends to the Board the compensation and benefits of
all officers of AsiaInfo and establishes and reviews general policies relating
to compensation and benefits of employees of AsiaInfo. The following is the
report of the Compensation Committee describing the compensation policies and
rationale applicable to AsiaInfo's executive officers with respect to the
compensation paid to such executive officers for the fiscal year ended December
31, 2003. The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933, as amended, (the "Securities Act") or the Exchange Act, except to the
extent that AsiaInfo specifically incorporates such information by reference in
such filing.
Compensation Philosophy and Review
Our executive compensation program is generally designed to align the interests
of our executives with the interests of our stockholders and to reward our
executives for achieving corporate and individual objectives. The executive
compensation program is also designed to attract and retain the services of
qualified executives in the highly competitive telecommunications software and
services marketplaces. Executive compensation currently consists of a base
salary, long-term equity incentives, and other compensation and benefit
programs generally available to other employees.
Policy Regarding Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation in excess of $1 million paid to the company's Chief
Executive Officer or any of the four most highly compensated executive
officers. Certain performance-based compensation, however, is exempt from the
deduction limit.
It is the Compensation Committee's intention that, so long as it is consistent
with its overall compensation objectives and philosophy, executive compensation
will be deductible for federal income tax purposes. AsiaInfo's stock option
plans have been structured so that any taxable compensation derived pursuant to
the exercise of options granted under such plans should not be subject to these
deductibility limitations.
The Compensation Committee has considered the potential impact of Section
162(m) of the Code on the compensation paid to AsiaInfo's executive officers.
Base Salaries
Base salary levels for the President and Chief Executive Officer and other
executive officers are intended to compensate executives competitively within
the information technology marketplace. Base salaries are determined on an
individual basis by evaluating each executive's scope of responsibility, past
performance, prior experience and data on prevailing compensation levels in
relevant markets for executive talent. The Compensation Committee also takes
into account AsiaInfo's financial performance during the previous fiscal year,
including revenue growth, net income growth, operational cash flow and Common
Stock performance. Base salaries for executives are reviewed annually by the
Compensation Committee.
15
Long-Term Equity Incentives
AsiaInfo provides long-term equity incentives to its executive officers and to
all other employees through the grant of stock options under its stock option
plans. The purpose of granting stock options is to create a direct link between
compensation and the long-term performance of AsiaInfo. Stock options are
generally granted at an exercise price equal to 100% of the fair market of
AsiaInfo's Common Stock on the date of grant, have a ten year term and
generally vest over a four year period. The primary stock options granted to
executive officers are generally in conjunction with the executive officer's
acceptance of employment with AsiaInfo. When determining the number of stock
options to be awarded to an executive officer, the Compensation Committee
considers the executive's current contribution to AsiaInfo's performance, the
executive officer's anticipated contribution in meeting AsiaInfo's long-term
strategic performance goals, and comparisons to formal and informal surveys of
executive stock option grants made by other information technology companies.
The Compensation Committee also reviews stock option levels for executive
officers at the beginning of each fiscal year in light of long term strategic
and performance objectives and each executive's current and anticipated
contributions to AsiaInfo's future performance. In 2003, the Compensation
Committee recommended (and the full Board granted) stock option grants for the
Named Executive Officers representing the right to acquire an aggregate of
1,131,500 shares of Common Stock. These options vest according to the schedules
described in the table detailing the stock options granted to the Named
Executive Officers on page 15 of this proxy statement.
Other Compensation
AsiaInfo's executive officers are also eligible to participate in benefit
programs generally available to other employees. In addition, from time to
time, executive officers have received sign-on bonuses or other bonuses based
on extraordinary effort.
Chief Executive Officer Compensation
Xingsheng Zhang is AsiaInfo's President and Chief Executive Officer. The
Compensation Committee reviews Mr. Zhang's compensation annually using the same
criteria and policies as are employed for other executive officers.
Submitted by the Compensation Committee of the Board of Directors
Alan D. Bickell
Chang Sun
16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Sun and Bickell served as members of the Compensation Committee during
2003. None of these individuals was an officer or employee of AsiaInfo during
2003. No member of the Compensation Committee serves as a member of a board of
directors or compensation committee of any entity that has one or more
executive officers serving as a member of our Board or Compensation Committee.
Xingsheng Zhang participates in the discussions and decisions regarding
salaries and incentive compensation for all of our executive officers, except
that Mr. Zhang is excluded from discussions regarding his own salary and
incentive compensation.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process on behalf
of the Board and is responsible for the retention of the Company's independent
auditors. Management has the primary responsibility for the financial
statements and the reporting process. The Company's independent auditors are
responsible for expressing an opinion on the conformity of our audited
financial statements to generally accepted accounting principles. The Audit
Committee currently consists of Messrs. Alan D. Bickell (Chair), Long Tao and
Weiying Zhang, all independent directors.
The Audit Committee has reviewed and discussed the audited financial statements
for the fiscal year ended December 31, 2003 with our management, has discussed
with our independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards), has received the written
disclosures required by Independent Standards Board No. 1 (Independence
Discussions with Audit Committees), and has discussed with our independent
auditors their independence. The Audit Committee has also considered whether
the provision of non-audit services by our auditors is compatible with
maintaining our auditors' independence. The Board adopted a written charter of
the Audit Committee in November 1999. The Board adopted amendments to the
charter in March 2003 and in January 2004. The Audit Committee Charter is
included in Exhibit A to this proxy statement.
Consistent with SEC policies regarding auditor independence, the Audit
Committee has responsibility for appointing, setting compensation and
overseeing the work of the independent auditors. In recognition of this
responsibility, the Audit Committee has established a policy to pre-approve all
audit and permissible non-audit services provided by the independent auditors.
Prior to engagement of the independent auditors for the next year's audit,
management submits an aggregate of services expected to be rendered by the
independent auditors during that year to the Audit Committee for approval,
along with the anticipated fees for those services. Management's report to the
Audit Committee categorizes all anticipated fees into one of the following four
classifications:
.. Audit services - include fees for audit work performed in the preparation of
financial statements, as well as work that generally only the independent
auditors can reasonably be expected to provide, including comfort letters,
statutory audits, and attestation services and consultation regarding
financial accounting and/or reporting standards.
.. Audit-Related services - include fees for assurance and related services
that are traditionally performed by the independent auditors, including due
diligence related to mergers and acquisitions, employee benefit plan audits,
and special procedures required to meet certain regulatory requirements.
.. Tax services - include fees for all services performed by the independent
auditors' tax personnel except those services specifically related to the
audit of the financial statements, and includes fees in the areas of tax
compliance, tax planning, and tax advice.
17
.. Other Fees - include fees associated with services not captured in the other
categories. The Company generally does not request such services from the
independent auditors.
Prior to engagement, the Audit Committee must pre-approve these services. The
fees are budgeted and the Audit Committee requires the independent auditors and
management to report actual fees versus the budget periodically throughout the
year. During the year, circumstances may arise when it may become necessary to
engage the independent auditors for additional services not contemplated in the
original pre-approval. In those instances, the Audit Committee requires
specific pre-approval before engaging the independent auditor.
The Audit Committee may delegate pre-approval authority to one or more of its
members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee
at its next scheduled meeting.
In 2003, the Audit Committee pre-approved all services provided by our
independent auditors.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements for
the fiscal year ended December 31, 2003 be included in the Company's Annual
Report on Form 10-K.
Submitted by the Audit Committee of the Board of Directors
Alan D. Bickell
Tao Long
Weiying Zhang
18
DIRECTOR INDEPENDENCE
The Board has determined that each of Alan D. Bickell, Chang Sun, Ying Wu, Tao
Long and Weiying Zhang is an "independent" director as defined by Nasdaq
National Market Rule 4200(a)(15).
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE PROCEDURES AND CHARTER
Pursuant to the Nominating and Corporate Governance Committee Charter (the
"Governance Charter"), our Governance Committee is responsible for identifying
prospective director nominees and recommending to the Board the director
nominees for each annual meeting of stockholders. In addition, the Governance
Committee develops and recommends to the Board the governance principles
applicable to the Company, oversees the evaluation of the Board and management,
recommends to the Board director nominees for each committee, and establishes
and administers Board and committee member compensation policy. The Corporate
Governance Charter sets forth details of the organization, responsibilities and
powers of the Governance Committee. A copy of the Governance Charter is
included in this proxy statement as Exhibit B.
RELIANCE ON EXCEPTIONAL AND LIMITED CIRCUMSTANCES EXCEPTIONS
The Board has determined that although James Ding is not an "independent"
director because Mr. Ding was an employee of AsiaInfo within the past three
years, it is in the best interests of AsiaInfo and its stockholders to have Mr.
Ding serves as a member of the Governance Committee of the Board. The Board has
determined that Mr. Ding's unique expertise and experience in China's
telecommunications industry will contribute to the identification and
nomination of qualified candidates to serve on the Board.
STOCKHOLDERS COMMUNICATIONS WITH BOARD OF DIRECTORS
In February 2004, the Board authorized and directed our management to establish
appropriate procedures for our stockholders to send communications to members
of the Board. You may communicate with the Board by sending a letter to
AsiaInfo Holdings, Inc., 4th Floor, Zhongdian Information Tower, 6 Zhongguancun
South Street, Haidian District, Beijing 100086, PRC, Attention: Legal
Department.
DIRECTOR ATTENDANCE AT STOCKHOLDERS MEETINGS
We have no requirements for our directors to attend the annual meetings of
stockholders. James Ding and Xingsheng Zhang attended the 2003 annual meeting
of stockholders.
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with China Netcom Group and China Netcom
Edward Tian has served as a member of the Board of AsiaInfo since our inception
and is the beneficial owner of approximately 12.6% of our outstanding shares of
Common Stock. In June 1999, Dr. Tian became President and Chief Executive
Officer of China Netcom Corporation ("China Netcom") and in April 2002, he
became a Vice President of China Netcom's parent company, China Netcom
Communication Group Corporation ("China Netcom Group"). He has also served as
President of CNC International Communications Ltd. of China Netcom Group since
November 2003 and President of CNC Southern Communications Ltd. of China Netcom
Group since January 2004. Prior to joining China Netcom, Dr. Tian and James
Ding co-founded AsiaInfo in Dallas, Texas in 1993, and Dr. Tian served as
AsiaInfo's President until May of 1999. Along with China Telecommunications
Corporation, China United Telecommunications Corporation and China Mobile
Communications Corporation, China Netcom Group is one of the largest providers
of telecommunications and Internet services in China. Like most of the other
major participants in that industry, China Netcom Group and China Netcom
(collectively, China Netcom Group and China Netcom are referred herein as
"CNC") have entered into contracts with AsiaInfo for systems integration
services and software products from time to time. In 2003, those agreements
included the following:
In March 2003, we entered into a contract to provide CNC with hardware products
and related services to reconstruct the support systems of Tianjin
Communications Ltd. Our expected revenues from this contract, net of hardware
costs, are approximately $108,967.
In March 2003, we entered into a contract to provide CNC with hardware
products, our software product, AI Insight, and related services for its
database and management analysis system in Tianjin. Our expected revenues from
this contract, net of hardware costs, are approximately $1,865,668.
In March 2003, we entered into a contract to provide CNC with hardware
products, our software product, AIOBS, and related services in connection with
its broadband IP Metropolitan Area Network ("MAN") in Zhejiang Province. Our
expected revenues from this contract, net of hardware costs, are approximately
$427,094.
In March 2003, we entered into a contract to provide CNC with hardware products
and related services for its IDC value-added systems. Our expected revenues,
net of hardware costs, are approximately $63,826.
In April 2003, we entered into a contract to provide CNC with hardware products
and related services for its Nanjing MAN systems. Our expected revenues from
this contract, net of hardware costs, are approximately $293,346.
In April 2003, we entered into a contract to provide CNC with hardware
products, our software product, AINetXpert, and related services to expand the
capacity of its IP backbone network. Our expected revenues, net of hardware
costs, are approximately $776,528.
In June 2003, we entered into a contract to provide CNC with our integrated
accounting software product and related services for its integrated business
support systems. Our expected revenues from this contract are approximately
$514,880.
In June 2003, we entered into a contract to provide CNC with our software
products, AIOMS, and related services in connection with Chongqing broadband
network business operation supporting systems. Our expected revenues from this
contract are approximately $89,218.
In June 2003, we entered into a contract to provide CNC with hardware products
and related services for its MAN in Suzhou and Wuxi. Our expected revenues from
this contract, net of hardware costs, are approximately $352,451.
20
In June 2003, we entered into a contract to provide CNC with hardware products,
our software products, AIOBS, AINetXpert and AIDetack, and related services to
expand the capacity of MAN in Hebei Province. Our expected revenues from this
contract, net of hardware costs, are approximately $683,498.
In July 2003, we entered into a contract to provide CNC with hardware products,
our software products, AIMC and AIRadius, and related services for the IP Data
MAN project in Gansu Province. Our expected revenues from this contract, net of
hardware costs, are approximately $86,746.
In September 2003, we entered into a contract to provide CNC with hardware
products, our software product, AIOBS, and related services to expand the
capacity of the Internet data business billing systems in Beijing. Our expected
revenues from this contract, net of hardware costs, are approximately $778,751.
In September 2003, we entered into a contract to provide CNC with hardware
products and related services to expand the capacity of mainframeof its billing
systems in Tianjin. Our expected revenues, net of hardware costs, are
approximately $385,409.
In September 2003, we entered into a contract to provide CNC with hardware
products, our software product, AIOBS, and related services for its VOIP
project. Our expected revenues from this contract, net of hardware costs, are
approximately $62,687.
In September 2003, we entered into a contract to provide CNC with our software
products, AIOBS, and related services to reconstruct the billing system of
Beijing Communications Ltd. Our expected revenues from this contract are
approximately $116,219.
In November 2003, we entered into a contract to provide CNC with hardware
products, our software product, AIOBS, and related services in connection with
its 169 billing supporting systems. Our expected revenues from this contract,
net of hardware costs, are approximately $171,747.
In December 2003, we entered into a contract to provide CNC with professional
services for the IP network of the Beijing Telegraph Bureau. Our expected
revenues from this contract, net of hardware costs, are approximately $593,465.
In December 2003, we entered into a contract to provide CNC with hardware
products, our software products, AINetXpert and AIRadius, and related services
to optimize the DNS systems of Beijing Communications Ltd. Our expected
revenues from this contract, net of hardware costs, are approximately $251,199.
In December 2003, we entered into a contract to provide CNC with our software
product, AISP, and related services for a MANs system in Shandong province. Our
expected revenues from this contract are approximately $247,243.
In December 2003, we entered into a contract to provide CNC with our software
products, AIRadius and AILMS, and related services in connection with its
broadband billing system in Guangdong province. Our expected revenues from this
contract are approximately $84,812.
In December 2003, we entered into a contract to provide CNC with our software
product, AIOMS, and related services for its business operation supporting
systems in Chongqing. Our expected revenues from this contract are
approximately $340,439.
Each of the foregoing transactions was an arm's-length, negotiated transaction
on terms that we believe are no less favorable than terms we would have
received from an unrelated party. We will continue to recognize revenues from
the foregoing contracts in the current fiscal year, and anticipate that we will
enter into additional contracts with CNC in the current fiscal year and future
fiscal years.
21
STOCK PRICE PERFORMANCE
The following graph shows a comparison of cumulative total stockholder returns
for AsiaInfo's Common Stock, the S&P Information Technology Sector and the
Nasdaq Stock Market Index for U.S. and foreign companies. The graph assumes the
investment of $100 on March 2, 2000, the date of AsiaInfo's initial public
offering. The data regarding AsiaInfo assumes an investment at the initial
public offering price of $24.00 per share of AsiaInfo's Common Stock. The
performance shown is not necessarily indicative of future performance.
[CHART]
ASIAINFO HOLDINGS NASDAQ U.S. & S&P 500 INFORMATION
INC. FOREIGN INDEX TECHNOLOGY
Feb00 100.00 100.00 100.00
Mar00 252.08 95.85 106.73
Apr00 181.25 80.67 97.07
May00 188.02 70.93 86.89
Jun00 186.20 83.05 96.88
Jul00 148.96 78.73 92.25
Aug00 131.25 87.98 102.59
Sep00 78.91 76.82 83.38
Oct00 50.52 70.36 78.55
Nov00 32.55 54.13 62.38
Dec00 39.06 51.46 55.54
Jan01 72.66 57.76 65.49
Feb01 52.34 44.71 47.15
Mar01 50.52 38.28 41.16
Apr01 52.08 44.05 48.13
May01 52.87 43.95 45.73
Jun01 82.29 45.02 46.27
Jul01 74.79 42.19 43.52
Aug01 59.38 37.57 38.03
Sep01 49.54 31.16 30.56
Oct01 55.63 35.17 35.87
Nov01 70.12 40.19 41.99
Dec01 72.58 40.61 41.17
Jan02 53.88 40.27 41.74
Feb02 46.25 36.07 35.89
Mar02 54.83 38.49 38.12
Apr02 42.42 35.21 33.39
May02 51.67 33.68 32.11
Jun02 55.21 30.54 28.21
Jul02 23.79 27.75 25.86
Aug02 19.04 27.46 25.54
Sep02 13.90 24.48 21.07
Oct02 12.96 27.80 25.76
Nov02 33.21 30.94 30.11
Dec02 26.42 27.94 25.77
Jan03 16.46 27.64 25.33
Feb03 15.46 28.01 25.98
Mar03 16.79 28.10 25.67
Apr03 18.08 30.69 27.98
May03 19.96 33.47 30.34
Jun03 34.00 34.04 30.32
Jul03 33.04 36.41 32.00
Aug03 28.71 38.04 33.83
Sep03 28.04 37.57 33.61
Oct03 29.46 40.63 36.38
Nov03 28.96 41.28 36.96
Dec03 27.83 42.14 37.94
22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of March 1, 2004 of (i) each person (including
any "group" as that term is used in section 13(d)(3) of the Exchange Act) known
to AsiaInfo to beneficially own more than 5% of our Common Stock, (ii) each
director or director nominee of AsiaInfo, (iii) each executive officer of
AsiaInfo, and (iv) all directors and executive officers of AsiaInfo as a group.
Common Stock
------------------------
Number of Shares
Beneficially Percent
Name of Beneficial Owner/(1)/ Held/(2)/ of Class
---------------------------- ---------------- --------
Warburg Pincus Ventures, L.P./(3)/.......................... 4,025,105
Warburg Pincus Ventures International, L.P./(3)/............ 4,025,105
12/F St. George's Building, 2 Ice House
Street, Central, Hong Kong
Subtotal.................................................... 8,050,210 17.73%
James Ding/(4)/............................................. 2,640,313 5.81%
Xingsheng Zhang/(5)/........................................ 271,347
Alan D. Bickell/(6)/........................................ 134,400 *
Chang Sun/(7)/.............................................. 21,250 *
Steve Zhang/(8)/............................................ 319,500 *
Ying Han/(9)/............................................... 375,000 *
Michael Zhao/(10)/.......................................... 421,298 *
Tao Long/(11)/.............................................. 5000 *
Ying Wu..................................................... -- --
Weiying Zhang............................................... -- --
Edward S. Tian/(12)/........................................ 5,730,950 12.62%
Chao Wang/(13)/............................................. 15,000
James Li/(14)/.............................................. 174,932
All directors and executive officers as a group (13 persons) 10,108,990 22.26%
--------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise noted above, the address for each of the beneficial owners
is c/o AsiaInfo Holdings, Inc., 4/F Zhongdian Information Tower, 6
Zhongguancun South Street, Haidian District, Beijing 100086, PRC.
(2) This table is based on information supplied by executive officers,
directors and stockholders of AsiaInfo and on Schedules 13D or 13G filed
with the SEC. Beneficial ownership is determined in accordance with the
rules of the SEC. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of our Common
Stock subject to options or warrants held by that person that are currently
exercisable or will become exercisable within 60 days after March 1, 2004
are deemed beneficially owned and outstanding, but such shares are not
deemed outstanding for purposes of computing percentage ownership of any
other person. Unless otherwise indicated in the footnotes below, the
persons and entities named in the table have sole voting and investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable.
(3) Voting and investment control over the shares of Common Stock owned by
Warburg Pincus Ventures, L.P. and Warburg Pincus Ventures International,
L.P. is held by Warburg, Pincus & Co., the corporate general partner and
investment manager of both limited partnerships, and not by any single
individual.
(4) Includes 1,852,366 shares held by Mr. Ding; 86,947 shares held in a grantor
retained annuity trust for the benefit of Mr. Ding and his family; 6,000
shares held in a revocable trust for the benefit of Rene Ding; and options
to acquire beneficial ownership of 695,000 shares that are currently
exercisable or will become exercisable within 60 days after March 1, 2004.
(5) Includes 71,347 shares held by Mr. Zhang, and options to acquire beneficial
ownership of 200,000 shares that are currently exercisable or will become
exercisable within 60 days after March 1, 2004.
(6) Includes 59,400 shares held by the Alan D. Bickell Family Trust and options
to acquire beneficial ownership of 75,000 shares that are currently
exercisable or will become exercisable within 60 days after March 1, 2004.
(7) Mr. Sun, a director of AsiaInfo, is a Managing Director of Warburg, Pincus
& Co., which manages Warburg Pincus Ventures, L.P. and Warburg Pincus
Ventures International L.P. Figure includes options to acquire beneficial
ownership of 21,250 shares that are currently exercisable or will become
exercisable within 60 days after March 1, 2004.
23
(8) Includes options to acquire beneficial ownership of 319,500 shares that are
currently exercisable or will become exercisable within 60 days after March
1, 2004.
(9) Includes options to acquire beneficial ownership of 375,000 shares that are
currently exercisable or will become exercisable within 60 days after March
1, 2004.
(10) Includes 106,923 shares held by Mr. Zhao and options to acquire beneficial
ownership of 314,375 shares that are currently exercisable or will become
exercisable within 60 days after March 1, 2004.
(11) Includes options to acquire beneficial ownership of 5,000 shares that are
currently exercisable or will become exercisable within 60 days after
March 1, 2004.
(12) Includes 2,128,079 shares held directly by Dr. Tian; 190,792 shares held
in the S.T. China 2000 Qualified Grantor Retained Annuity Trust for the
benefit of Dr. Tian and his family; 190,792 shares held in the Q.K. 2000
Qualified Grantor Retained Annuity Trust for the benefit of Dr. Tian and
his family; 4,000 shares held in a revocable trust for the benefit of Dr.
Tian's daughter, Stephanie Tian; 2,007,287 shares held by Dr. Tian's wife,
Qin Kong; and options to acquire beneficial ownership of 1,210,000 shares
that are currently exercisable or will become exercisable within 60 days
after March 1, 2004.
(13) Includes options to acquire beneficial ownership of 15,000 shares that are
currently exercisable or will become exercisable within 60 days after
March 1, 2004.
(14) Includes options to acquire beneficial ownership of 174,932 shares that
are currently exercisable or will become exercisable within 60 days after
March 1, 2004.
24
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires AsiaInfo's executive officers and
directors, and persons who own more than 10% of a registered class of
AsiaInfo's equity securities, to file certain reports regarding ownership of,
and transactions in, AsiaInfo's securities with the SEC. Such executive
officers, directors and 10% stockholders are also required by SEC rules to
furnish AsiaInfo with copies of all Section 16(a) forms that they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, AsiaInfo believes that for the
year ended December 31, 2003, all reporting persons complied with Section 16(a)
filing requirements except that Mr. Fan Bao, former Senior Vice President and
Chief Strategy Officer of AsiaInfo, was late in reporting a transaction that
occurred in February 2003, Mr. Ding was late in reporting a transaction that
occurred in May 2003, and Mr. Zhao was late in reporting a transaction that
occurred in May 2003.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2005
Stockholder proposals which are intended to be presented by such stockholders
at AsiaInfo's 2005 Annual Meeting of stockholders must be received by the
Secretary of AsiaInfo at the Company's principal executive offices no later
than November 18, 2004 in order to be considered for inclusion in the proxy
statement and form of proxy/voting instruction card relating to that meeting
pursuant to Rule 14a-8 under the Exchange Act. In order for notice of a
proposal submitted outside of Rule 14a-8 to be considered "timely" within the
meaning of Rule 14a-4(c), such proposal must be received prior to January 31,
2005.
OTHER MATTERS
The Board knows of no other matters to be submitted to the Annual Meeting. If
any other matters properly come before the Annual Meeting, then the persons
named in the enclosed form of proxy will vote the shares they represent in such
manner as the Board may recommend.
To the extent that this Proxy Statement is incorporated by reference into any
other filing by AsiaInfo under the Securities Act or the Exchange Act, the
sections of this proxy statement titled "Compensation Committee Report," "Audit
Committee Report," (to the extent permitted by the rules of the SEC) and "Stock
Price Performance" will not be deemed incorporated unless specifically provided
otherwise in such filing.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James Ding
----------------------------------
James Ding
Chairman of the Board of
Directors
March 15, 2004
Beijing, PRC
25
Exhibit A
ASIAINFO HOLDINGS, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee of AsiaInfo Holdings, Inc. (the "Corporation") shall
provide assistance to the Corporation's directors in fulfilling their
responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices, and the
quality and integrity of the financial reports of the Corporation. The Audit
Committee's primary duties and responsibilities are to:
.. Oversee that management has maintained the reliability and integrity of the
accounting policies and financial reporting and disclosure practices of the
Corporation.
.. Oversee that management has established and maintained processes to assure
that an adequate system of internal control is functioning within the
Corporation.
.. Oversee that management has established and maintained processes to assure
compliance by the Corporation with all applicable laws, regulations and
corporate policy.
.. Oversee the performance of the Corporation's internal accountants.
The Audit Committee will fulfill these responsibilities primarily by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board. At least one member of the Audit Committee shall be an "audit
committee financial expert" as defined by the Securities Exchange Commission
(the "SEC"). The members of the Audit Committee shall meet the independence and
experience requirements of the Nasdaq Stock Market, Inc., Section 10A(m)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the SEC. Audit Committee members may enhance their
familiarity with finance and accounting by participating in educational
programs conducted by the Corporation or an outside consultant. The Audit
Committee shall have the authority to retain special legal, accounting or other
consultants or experts to advise the Audit Committee.
The members of the Audit Committee shall be appointed by the Board at regular
meetings of the Board and shall serve for unlimited one year terms, or until
their successors have been duly elected and qualified. Unless a Chairperson is
elected by the full Board, the members of the Audit Committee may designate a
Chairperson by majority vote of the full Audit Committee membership.
The Audit Committee may form and delegate authority to subcommittees consisting
of one or more members when appropriate, including the authority to grant
preapprovals of audit and permitted non-audit services, provided that decisions
of such subcommittee to grant preapprovals shall be presented to the full Audit
Committee at its next scheduled meeting.
III. MEETINGS
The Audit Committee shall meet at least quarterly, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Audit Committee should meet at least annually with management, the Chief
A-1
Financial Officer of the Corporation, and the independent accountants,
separately, to discuss any matters that the Audit Committee or each of these
groups believe should be discussed privately. In addition, the Audit Committee
or its Chairperson should meet with the independent accountants and management
quarterly to review the Corporation's financial statements and the independent
accountants' independence, consistent with Section IV below.
The Audit Committee may request that any officer or employee of the
Corporation, or the Corporation's outside counsel or independent accountants,
attend any meeting of the Audit Committee or meet with any members of the Audit
Committee. Meetings may also be held between the Audit Committee and the
Corporation's investment bankers or financial analysts.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and reassess, at least annually, the adequacy of this Charter, and
make recommendations to the Board, as conditions dictate, to update this
Charter.
2. Review with management and the independent accountants the Corporation's
annual financial statements, and discuss with the independent accountants
the matters required to be discussed by Statement of Auditing Standards No.
61 ("SAS 61").
3. Review with management and the independent accountants the Corporation's
10-Q prior to its filing or prior to the release of earnings, including a
discussion with the independent accountants of the matters required to be
discussed by SAS 61. The Chairperson of the Audit Committee may represent
the entire Audit Committee for purposes of this review.
4. Review with management and the independent accountants the effect of
off-balance sheet financing structures and any regulatory or accounting
initiatives on the Corporation's financial statements.
5. Understand and review the adequacy of the Corporation's disclosure in its
filings on Forms 10-K and 10-Q under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operation," particularly
with respect to the critical accounting policies disclosed thereunder.
6. Review the disclosure in the Corporation's periodic reports required by
Section 13a of the Exchange Act with respect to any preapproval by the Audit
Committee of non-audit services to be performed by the independent
accountants.
7. Review and discuss quarterly reports from the independent accountants on:
. all critical accounting policies and practices to be used;
. any alternative treatments of financial information within generally
accepted accounting principles that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the independent accountants;
. other material written communications between the independent
accountants and management, such as any management letter or schedule of
unadjusted differences;
. Any significant changes in the accounting policies of the Corporation
and accounting and financial reporting proposals that may have
significant impact on the Corporation's financial reports.
Independent Accountants
8. Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment or termination of the
independent accountants. Matters that should be reviewed at least on an
annual basis include:
. the background, experience and qualifications of the senior members of
the independent audit team;
A-2
. the fees to be paid to the independent accountant;
. the qualifications, performance and independence of the lead partner of
the independent auditor;
. the independent accountant's process for internal review of accounting
judgments and quality control procedures, including an examination of
those issues with which the national office of the independent
accountant was consulted by the Corporation's audit team; and
. the independent accountant's peer review process.
The Audit Committee and the Board have the ultimate authority and
responsibility to select, evaluate, and where appropriate, replace the outside
auditor. The Audit Committee should participate in the planning and staffing of
the audit each year and changes in key personnel on the audit team should be
approved by the Audit Committee. The Audit Committee should also evaluate
annually whether to adopt a policy to rotate independent accountants on a
regular basis. The independent accountants shall report directly to the Audit
Committee. The independent accountants are ultimately accountable to the Audit
Committee and the entire Board for such accountants' review of the financial
statements and controls of the Corporation. On an annual basis, the Audit
Committee should review and discuss with the accountants all significant
relationships the accountants have with the Corporation to ensure the
accountants' independence.
9. Oversee the independence of the accountants by:
. receiving from the accountants, on a periodic basis, a formal written
statement delineating all relationships between the accountants and the
Corporation consistent with Independence Standards Board Standard No. 1
("ISB 1");
. reviewing, and actively discussing with the Board, if necessary, and the
accountants, on a periodic basis, any disclosed relationships or
services between the accountants and the Corporation or any other
disclosed relationships or services that may impact the objectivity and
independence of the accountants;
. preapproving all auditing services and permitted non-audit services to
be performed for the Corporation by the independent accountants, subject
to the de minimus exceptions for non-audit services described in Section
10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to the completion of the audit;
. reviewing and advising the Board in connection with any proposed hiring
by the Corporation of any employee or former employee of the independent
accountants who has worked on the Corporation's account; and
. recommending, if necessary, that the Board take certain action to
satisfy itself of the auditor's independence.
10. Ensure the rotation of the lead (or coordinating) audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit as required by law.
Financial Reporting Process
11. In consultation with the independent accountants and the internal auditors,
review the integrity of the Corporation's financial reporting processes,
both internal and external.
12. Review on an annual basis the performance of the internal auditors and make
recommendations to the Board regarding the appointment, termination or
replacement of the internal auditors.
13. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing department.
A-3
14. Establish regular systems of reporting to the Audit Committee by each of
management, the independent accountants and the internal auditors regarding
any significant judgments made in management's preparation of the financial
statements, any significant difficulties encountered during the course of
the review or audit, including any restrictions on the scope of work or
access to required information, or any significant accounting issue that
arises.
15. Review the reports to management prepared by the internal auditors and any
responses from management.
16. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements. The Audit Committee shall be
responsible for the resolution of such disagreements.
17. Periodically meet with management to review the Corporation's major
financial risk exposures and understand the steps management have taken to
control such risks.
18. Review disclosures made by the Corporation's Chief Executive Officer and
Chief Financial Officer during their certification process for the Form
10-K and 10-Q regarding adequacy or any significant deficiencies in the
design or operation of internal controls or material weaknesses therein and
any fraud involving management or other employees who have a significant
role in the Corporation's internal controls.
19. Consider with management and the independent auditor whether any changes to
the Corporation's internal controls are appropriate in light of
management's assessment.
20. Review with the independent auditor and management regarding (a) the
adequacy and effectiveness of the systems of internal controls, accounting
practices, and disclosure control procedures; and (b) current accounting
trends and developments, and take such action with respect thereto as may
be deemed appropriate.
Legal Compliance/General
21. Review, with the Corporation's counsel, any legal matter that could have a
significant impact on the Corporation's financial statements and any
material reports or inquiries received from regulators or governmental
agencies.
22. Participate in the preparation of the report of the Audit Committee
required by the rules of the Securities and Exchange Commission to be
included in the Corporation's annual proxy statement.
23. Obtain assurance from the independent accountants that the Corporation's
annual audits have been conducted in accordance with Section 10A of the
Exchange Act.
24. Review and consider the adequacy of the Corporation's policies on related
party transactions and establish regular systems for the reporting of such
transactions to the Audit Committee.
25. Establish procedures for the receipt, retention and treatment of complaints
received by the Corporation regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
26. Consulting with the board of directors of the Corporation regarding
adoption of a Code of Business Conduct and Ethics applicable to all
employees and directors and required by the rules of the Nasdaq Stock
Market and adopt procedures for monitoring and enforcing compliance with
such Code of Business Conduct and Ethics.
26. As requested by the board of directors of the Corporation, review and
investigate conduct alleged to be in violation of the Corporation's Code of
Business Conduct and Ethics, and adopt as necessary or appropriate,
remedial, disciplinary or other measures with respect to such conduct.
27. Review earnings press releases, as well as Corporation policies with
respect to earnings press releases, financial information and earnings
guidance provided to analysts and rating agencies.
A-4
28. Discuss Corporation policies with respect to risk assessment and risk
management, and review contingent liabilities and risks that may be
material to the Corporation and major legislative and regulatory
development s which could materially impact the Corporation's contingent
liabilities and risks.
29. Report to the Board on the outcome of all meetings of the Audit Committee.
30. Maintain minutes or other records of meetings and activities of the Audit
Committee.
V. POLICY FOR REPORTING VIOLATIONS AND COMPLAINTS
The Company's policy for reporting violations and complaints is attached as
Annex A.
VI. LIMITATION OF THE AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the independent accountants.
* * *
Last updated: January 15, 2004
A-5
ANNEX A
ASIAINFO HOLDINGS, INC.
POLICY FOR REPORTING VIOLATIONS AND COMPLAINTS
I. Introduction
One of our Company's most valuable assets is its integrity. Protecting this
asset is the job of everyone in the Company. We have established the AsiaInfo
Code of Ethics to help our employees understand and comply with the laws and
regulations applicable to our business and to maintain the highest standards of
ethical conduct. This policy is meant to supplement our Code of Ethics by
encouraging employees to report any suspected violations or concerns as to
compliance with laws, regulations, public disclosure requirements, our Code of
Ethics or other Company policies, or any complaints or concerns regarding the
Company's accounting, internal accounting controls, or auditing matters. Please
note that, as a public company in the United States, AsiaInfo is required by
law to allow its employees to report any such complaints or concerns on an
anonymous basis, and is prohibited from taking any retaliatory action against
an employee for making a report.
II. Obligation to Report Suspected or Actual Violations; Anonymous Reporting
A. Reporting Generally
It is every employee's obligation to report suspected or actual violations
of laws, government rules and regulations, the Company's Code of Ethics or
other Company policies. You should also report any suspected violations of the
laws and rules that govern the reporting of the Company's financial
performance, and any complaint or concern regarding the Company's accounting,
internal accounting controls, public disclosure requirements, or auditing
matters.
You may report any such matters directly to your supervisor or manager or by
the procedures set forth below. As noted below, supervisors and managers are
required to report to a Compliance Officer any time they receive a report of a
concern about our compliance with laws, the Code of Ethics or other Company
policy, any notice of any suspected wrong-doing by any Company employee,
officer or director, or any complaint or concern about the Company's
accounting, internal accounting controls, public disclosure or auditing
matters. The Compliance Officers who should be notified are either of the
following:
Ying Han, Chief Financial Officer
Adams Lin, Legal Counsel
B. Anonymous Reporting
Alternatively, if you wish to report any such matters anonymously, you may
do so by mailing a description of the suspected violation or other complaint or
concern to AsiaInfo's Audit Committee at:
AsiaInfo Holdings, Inc. - Audit Committee
c/o Mr. Long Tao
Beijing Investment Consultants, Inc.
6th floor, Tower East Gate Plaza
No. 29 DongZhong Street
Dongcheng District
Beijing, 100027
III. Treatment and Retention of Complaints and Reports
Each supervisor and manager shall report any suspected violation, concern or
complaint reported to such person by employees or other sources to a Compliance
Officer to assure proper treatment and retention of complaints, concerns or
notices of potential violations. In addition, employees should take note that
persons
A-6
outside the Company may report complaints or concerns about suspected
violations, or concerns regarding internal accounting controls, accounting or
auditing matters. Any such concerns or complaints should be reported
immediately on receipt to a Compliance Officer.
Supervisors and managers as well as the Compliance Officers shall promptly
consider the information, reports or notices received by them under this policy
or otherwise. The Compliance Officers shall take appropriate action, including
investigation, if appropriate, in accordance with the law, governmental rules
and regulations, the Company's Code of Ethics and otherwise consistent with
good business practice.
Upon a report to a Compliance Officer, all notices or reports of suspected
violations, complaints or concerns received pursuant to this policy shall be
recorded in a log, indicating the description of the matter reported, the date
of the report and the disposition thereof, and the log shall be retained for
five years. The log shall be maintained by the Compliance Officers.
IV. Statement of Non-Retaliation
It is a federal crime for anyone to retaliate intentionally against any
person who provides truthful information to a law enforcement official
concerning a possible violation of any federal law. Moreover, the Company will
not permit any form of intimidation or retaliation by any officer, employee,
contractor, subcontractor or agent of the Company against any employee because
of any lawful act done by that employee to:
. provide information or assist in an investigation regarding any conduct
which the employee reasonable believes constitutes a violation of laws,
rules, regulations, the Company's Code of Ethics, or any Company
policies; or
. file, testify, participate in, or otherwise assist in a proceeding
relating to a violation of any law, rule or regulation.
Any such action is a violation of Company policy and should be reported
immediately under this policy.
V. Statement of Confidentiality
The Company will, to the extent reasonably possible, keep confidential both
the information and concerns reported under this policy, and its discussions
and actions in response to those reports and concerns. In the course of its
investigation, however, the Company may find it necessary to share information
with others on a "need to know" basis.
* * *
A-7
Exhibit B
ASIAINFO HOLDINGS, INC
NOMINATING AND CORPORATE GOVERNANCE
COMMITTEE CHARTER
Purpose
The purpose of the Nominating and Corporate Governance Committee (the
"Committee") of the Board of Directors (the "Board") of AsiaInfo Holdings, Inc.
(the "Company") is to ensure that the Board is properly constituted to meet its
fiduciary obligations to stockholders and the Company, and to ensure that the
Company has and follows appropriate governance standards. To carry out this
purpose, the Committee shall: (1) assist the Board by identifying prospective
director nominees and recommending to the Board the director nominees for each
annual meeting of stockholders; (2) develop and recommend to the Board the
governance principles applicable to the Company; (3) oversee the evaluation of
the Board and management; (4) recommend to the Board director nominees for each
committee; and (5) establish and administer Board and committee member
compensation policy.
Organization
.. Commencing [date], the Committee shall replace and become the successor
committee to the heretofore existing Nominating Committee of the Board.
.. The Committee shall have at least [2] members.
.. Except as otherwise permitted by law and unless otherwise specifically
determined by the Board to be in the best interests of the Company, all
members of the Committee must be independent.
(a) For purposes of the Committee, a director will not be "independent"
(i) unless the Board affirmatively determines that the director has no
material relationship with the Company (other than as a director or
shareholder), either directly or as a partner, shareholder or officer
of an organization that has a material relationship with the Company,
(ii) if the director is a former employee of the Company, until three
years after the employment ended,
(iii) if the director is, or in the past three years has been, affiliated
with or employed by a present or former auditor of the Company (or
present or former auditor of an affiliate of the Company), until
three years after the end of either the affiliation or employment
with the auditor or the auditing relationship,
(vi) if the director is, or in the past three years has been, part of an
interlocking directorate in which an executive officer of the Company
serves on the compensation committee of another company that employs
the director, or
(v) if the director has, or in the past three years has had, an immediate
family member in any of the categories listed in (iii) or (iv).
.. The Board will designate a member of the Committee to be the chairman of the
Committee.
.. The Committee will create its own rules of procedure, including rules
regarding notice of meetings, quorum and voting.
.. The Committee may create subcommittees to perform particular functions,
either generally or in specific instances.
.. Minutes will be kept with regard to each meeting of the Committee, which
will record all actions taken by the Committee. Copies of the minutes of
each meeting of the Committee will be sent to all members of the Committee.
B-1
Responsibilities and Powers
In order to carry out the purposes described above, the Committee will have the
following duties.
1. Any time the Committee is informed that the Board is considering adding a
member to fill a vacancy or a newly created position, and any other time the
Committee determines that the Board should consider adding a member, the
Committee shall conduct a search for a person or persons to be added to the
Board, and make recommendations to the Board as a result of the search.
2. To the extent the Committee deems appropriate, the Committee shall retain
search firms to assist in searches by the Committee for persons to be added
to the Board.
3. The Committee shall adopt criteria which the Committee will apply in its
selection of new directors.
4. At least annually, the Committee shall review the performance of each member
of the Board.
5. The Committee shall review the Board's annual evaluation of its own
performance.
6. The Committee shall consult from time to time with the Chairman of the Board
to obtain his views about whether new members should be added to the Board
and about whether current members should be re-nominated or replaced.
7. The Committee shall develop and periodically review corporate governance
guidelines relating to the membership and functioning of the Board of
Directors and any other matters the Committee deems appropriate.
8. The Committee shall recommend appropriate corporate governance guidelines,
and any proposed changes to those corporate governance guidelines, to the
Board.
9. In connection with its development and review of corporate governance
guidelines, the Committee shall consult with the Company's legal counsel
(which may include either or both of the Company's internal and external
legal counsel) about relevant legal requirements and consult other experts
about any other matters the Committee deems appropriate in connection with
its development and review of corporate governance guidelines.
10. The Committee shall review with the Company's general counsel at least
annually the extent to which the Company and its Directors are complying
with the Company's corporate governance guidelines, and, if necessary,
recommend to the Board steps to improve compliance with the corporate
governance guidelines.
11. The Committee shall conduct an annual evaluation of its own performance.
12. The Committee shall conduct an annual review of this Charter and recommend
to the Board any changes the Committee deems appropriate.
13. The Committee shall ensure that independent members of the Board convene
executive sessions regularly.
14. The Committee shall evaluate and recommend termination of membership of
individual directors in accordance with the Board's governance principles,
for cause or for other appropriate reasons.
15. The Committee shall review, approve and monitor the Company's code of
ethics for senior financial officers.
16. The Committee shall conduct an annual review on succession planning, report
its findings and recommendations to the Board, and work with the Board in
evaluating potential successors to executive management positions.
17. The Committee shall make regular reports to the Board.
* * *
B-2
AsiaInfo YOUR VOTE IS IMPORTANT
Holdings, Inc. VOTE BY TELEPHONE OR THE INTERNET
24 Hours a Day, 7 Days a Week
INTERNET TELEPHONE MAIL
-------- --------- ----
https://www.proxyvotenow.com/asi 1-866-593-3363
o Go to the website address o Use any touch-tone telephone. o Mark, sign and date
listed above. o Have your Proxy Form ready. your proxy card.
o Have your Proxy Form ready. o Follow the simple recorded o Detach your proxy card.
o Follow the simple OR instructions. OR o Return your proxy
instructions that appear on your card in the postage-paid
computer screen. envelope provided.
CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
----------------------------------------------------------------------------------------------------------------------
1-866-593-3363
CALL TOLL-FREE TO VOTE
DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET
[ ] PLEASE VOTE, DATE, [X]
SIGN, AND RETURN Votes must be indicated
PROMPTLY IN THE (x) in Black or Blue ink.
RETURN ENVELOPE.
1. Election of Director THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2. FOR AGAINST ABSTAIN
FOR WITHHOLD [ ] 2. Proposal to ratify the appointment of Deloitte [ ] [ ] [ ]
ALL [ ] FOR ALL [ ] EXCEPTIONS [ ] Touche Tohmatsu as AsiaInfo's independent
auditors for fiscal year 2004.
Nominee: 01-Xingsheng Zhang; 02-Ying Wu and
03-Tao Long (INSTRUCTIONS: To withhold
authority to vote for any nominee, mark the
"Exceptions" box and write the nominee's
name in the space provided below.)
* Exceptions ----------------------------- The shares represented by this proxy when properly executed will be voted in
the manner directed herein by the undersigned stockholder(s). IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2. If any other matters
properly come before the meeting, the persons named in this proxy will vote
in their discretion, provided that they will not vote in the election of
directors for persons for whom authority to vote has been withheld.
S C A N L I N E
PLEASE SIGN exactly as your name appears at left. Joint owners should each
sign. Executors, administrators, trustees, etc. should so indicate when
signing. If signer is a corporation, please sign full name by duly authorized
officer.
Date Share Owner sign here Co-Owner sign here
TO THE HOLDERS OF
COMMON STOCK OF
AsiaInfo Holdings, Inc.
The Bank of New York, (the "transfer agent"), has received advice that the
2004 Annual Meeting of stockholders of AsiaInfo Holdings, Inc. (the "Annual
Meeting") will be held at 4th Floor, Zhongdian Information Tower, 6
Zhongguancun South Street, Haidian District, Beijing, PRC, on April 19,
2004, at 4:00 p.m., local time, for the purposes set forth in the enclosed
Notice of Meeting.
The attached proxy is being solicited by the Board of Directors of
AsiaInfo. If you are desirous of having the individuals named in the
attached proxy card vote your common stock for or against the proposals or
any of them, at the Annual Meeting, kindly execute and forward to the
transfer agent the attached proxy. The enclosed postage paid envelope is
provided for this purpose. This proxy should be executed in such manner as
to show clearly whether you desire the individuals named in the attached
proxy card to vote for or against the proposals or any of them, as the case
may be. The proxy MUST be forwarded in sufficient time to reach the
transfer agent before 4:00 p.m., New York time, Friday, April 16, 2004.
Only the registered holders of record at the close of business on March 1,
2004 will be entitled to execute the proxy.
Due to the limited amount of time available before the proxy deadline, the
proxy can be faxed (with the original to follow by mail) to the transfer
agent at +1(212) 815-4219.
The Bank of New York.
Date: March 15, 2004
--------------------------------------------------------------------------------
AsiaInfo Holdings, Inc.
2004 ANNUAL MEETING OF STOCKHOLDERS, APRIL 19, 2004.
The undersigned stockholder(s) of AsiaInfo Holdings, Inc., a Delaware
corporation, hereby acknowledge(s) receipt of the Notice of 2004 Annual Meeting
of stockholders and Proxy Statement, each dated March 15, 2004, and hereby
appoint(s) Adams Lin, Ying Han and each of them, proxies and attorneys-in-fact,
with full power of substitution, on behalf and in the name of the undersigned,
to represent the undersigned at the 2004 Annual Meeting of stock-holders of
AsiaInfo Holdings, Inc., to be held on April 19, 2004 at 4:00 p.m., local time,
at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian
District, Beijing, PRC and at any adjournment or adjournments thereof, and to
vote all shares of common stock which the under-signed would be entitled to vote
if then and there personally present, on the matters set forth on the reverse
side.
This form of proxy must be signed by you or your attorney duly authorized
in writing or, in the case of a corporation, must either be under its common
seal or under the hand of an officer or attorney duly authorized.
In order to be valid, this form of proxy with the power of attorney or
other authority, if any under which it is signed, must be deposited with the
transfer agent no later than 4:00 p.m., New York time, on Friday, April 16, 2004
in order to be counted in the Annual Meeting on April 19, 2004. You may also
vote your shares in person at the Annual Meeting. Due to the limited amount of
time available before the proxy deadline, the completed proxy can be faxed (with
the original to follow by mail) to the transfer agent, at +1(212) 815-4219.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
If you have any comments ASIAINFO HOLDINGS, INC.
please mark this box [_] P.O. BOX 11169
-------------------- NEW YORK, N.Y. 10203-0169
------------------------ ------------------------
(Continued and to be dated and signed on the reverse side.)