UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
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:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Rand Capital Corporation
(Name of
Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Proxy Statement Rand Capital Corporation
Rand Capital Corporation
2200 Rand Building
Buffalo, New York 14203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS
The 2015 Annual Meeting of
Shareholders of Rand Capital Corporation will be held on Thursday, April 23, 2015 at 10:30 a.m. in the Hilton Garden Inn, 10 Lafayette Square, Buffalo, New York, 14203 for the following purposes:
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1. |
To elect eight Directors to hold office until the next annual meeting of shareholders and until their successors have been elected and qualified. |
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2. |
To approve, by advisory vote, executive compensation. |
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3. |
To ratify the selection of Freed Maxick CPAs, P.C. as our independent registered public accounting firm for the year ending December 31, 2015. |
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4. |
To consider and act upon such other business as may properly come before the meeting. |
Shareholders of record at the close of business on March 6, 2015 are entitled to notice of, and to vote at the meeting, and any
adjournment thereof.
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March 20, 2015 |
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By order of the Board of Directors, |
Buffalo, New York |
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Reginald B. Newman II Chairman |
IMPORTANT NOTICE REGARDING
INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON
APRIL 23, 2015
THE
PROXY STATEMENT AND ANNUAL REPORT
TO SHAREHOLDERS IS AVAILABLE AT HTTP://MATERIALS.PROXYVOTE.COM/752185
Proxy 1
Proxy Statement Rand Capital Corporation
Rand Capital Corporation
2200 Rand Building
Buffalo, New York 14203
Proxy Statement
GENERAL INFORMATION
We are furnishing this Proxy Statement in connection with the solicitation of proxies by the Board of Directors of Rand Capital
Corporation (Rand or the Corporation) for the Annual Meeting of Shareholders to be held on April 23, 2015 (Annual Meeting). Only shareholders of record at the close of business on March 6, 2015
(Record Date) are entitled to notice of and to vote at the Annual Meeting, and at any adjournment thereof. On the Record Date, Rand had outstanding 6,328,538 Common Shares (net of treasury shares), par value $.10 per share
(shares).
Each share entitles the holder to one vote. Shares cannot be voted at the Annual Meeting unless the shareholder is
present or represented by proxy. If the enclosed form of proxy is returned properly executed and dated, the shares represented thereby will be voted at the Annual Meeting in accordance with the instructions contained in the proxy, unless the proxy
is revoked prior to its exercise. Any shareholder may revoke a proxy by executing a subsequently dated proxy or a notice of revocation, provided that the subsequent proxy or notice is delivered to us prior to the taking of a vote, or by voting in
person at the Annual Meeting.
Under the New York Business Corporation Law (the BCL) and our by-laws, the presence, in person
or by proxy, of the holders of a majority of the outstanding shares is necessary to constitute a quorum of the shareholders to take action at the Annual Meeting. The shares that are present at the Annual Meeting or represented by a proxy will be
counted for quorum purposes. Proxies submitted with abstentions and broker non-votes will be counted in determining whether or not a quorum is present. Under the BCL and our by-laws, once a quorum is established, Directors standing for election may
be elected by a plurality of the votes cast, and other matters expected to be brought before the Annual Meeting may be approved by a majority of votes cast in favor of or against the matter. Votes withheld, broker non-votes, and abstentions will not
be counted as votes cast on any matter and will have no effect on the results of the vote. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have
discretionary voting power for that particular item and has not received instructions from the beneficial owner.
This Proxy Statement and
accompanying form of proxy are being mailed to shareholders on or about March 20, 2015. A copy of Rands 2014 Annual Report, which contains financial statements, accompanies this Proxy Statement.
We will bear the cost of soliciting proxies in the accompanying form. We do not expect to pay any compensation for the solicitation of
proxies, but may pay brokers, nominees, fiduciaries and other custodians their reasonable fees and expenses for sending proxy materials to beneficial owners and obtaining their instructions. In addition to solicitation by mail, our Directors,
officers and employees may solicit proxies in person or by telephone, and they will receive no additional compensation therefor.
Our
office is located at 2200 Rand Building, Buffalo, New York 14203 and our telephone number is 716-853-0802.
Proxy 2
Proxy Statement Rand Capital Corporation
BENEFICIAL OWNERSHIP OF SHARES
Unless otherwise indicated, the following table sets forth beneficial ownership of our common shares on March 6, 2015, by (a) persons
known by us to be beneficial owners of more than 5% of the outstanding shares, (b) the Directors, nominees for Director, and the executive officers of Rand, and (c) all Directors and executive officers as a group. For purposes of the
table, the address for each of our Directors, nominees for Director and executive officers of Rand is c/o 2200 Rand Building, Buffalo, NY 14203. Unless otherwise stated, each person named in the table has sole voting and investment power with
respect to the shares indicated as beneficially owned by that person.
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Beneficial Owner |
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Amount and Nature of Beneficial Ownership (1) |
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Percent of Class (5) |
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(a) More than 5% Owners: |
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JAM Capital Partners Management, LLC
16 Boardwalk Plaza
St. Simons Island, GA 31522 |
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1,238,692 |
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19.6 |
% |
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Colmac Holdings Ltd.
8 King Street East, Suite 1901
Toronto, ON Canada |
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810,000 |
(2) |
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12.8 |
% |
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(b) Directors, nominees for Director and executive officers: |
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Allen F. Grum |
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116,142 |
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1.8 |
% |
Erland E. Kailbourne |
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20,000 |
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* |
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Ross B. Kenzie |
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100,000 |
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1.6 |
% |
Robert S. McLeese (2) |
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810,000 |
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12.8 |
% |
Reginald B. Newman II |
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189,538 |
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3.0 |
% |
E. Wycliffe Orr, Jr. (3) |
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1,238,692 |
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19.6 |
% |
Jayne K. Rand |
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115,433 |
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1.8 |
% |
Robert M. Zak |
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40,000 |
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* |
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Daniel P. Penberthy |
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67,800 |
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1.1 |
% |
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* Less than 1%. |
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(c) All Directors and executive officers as a group |
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(nine persons)(4) |
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2,697,605 |
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42.6 |
% |
(1) |
The beneficial ownership information presented is based upon information furnished by each person or contained in filings made with the Securities and Exchange Commission (SEC). |
(2) |
These shares are owned by Colmac Holdings Ltd., a corporation of which Mr. McLeese is the President, Chief Executive Officer and principal owner. |
(3) |
Mr. Orr, one of our directors, is a managing director of JAM Capital Partners Management, LLC. By virtue of his position with JAM Capital Partners Management, LLC, Mr. Orr has shared voting and investment
power over the 1,238,692 shares held by JAM Capital Partners Management, LLC. |
(4) |
Except with respect to Mr. Orr, as described in footnote 3, members of the group have sole voting and investment power over these shares. |
(5) |
Percent of Class calculated based on 6,328,538 shares outstanding at the Record Date. |
Proxy 3
Proxy Statement Rand Capital Corporation
PROPOSAL 1. ELECTION OF DIRECTORS
Eight Directors are to be elected at the Annual Meeting. Six nominees, Mr. Grum, Mr. Kailbourne, Mr. Kenzie, Mr. Newman,
Ms. Rand and Mr. Zak, were elected at the 2014 Annual Meeting of Shareholders. During 2014, Robert S. McLeese and E. Wycliffe Orr, Jr. each requested to join our Board of Directors. After evaluating these requests, the Governance and
Nominating Committee voted to recommend Mr. McLeese and Mr. Orr each as candidates for directors to the full Board of Directors. On January 29, 2015, the Board of Directors voted to increase its size from six directors to eight
directors and to elect Mr. McLeese and Mr. Orr to fill the two newly created directorships.
Each of the nominees was
recommended for re-election by the Governance and Nominating Committee, which is comprised of non-employee, independent Directors. Each of the nominees has consented to serve as a Director if elected. If at the time of the Annual Meeting any nominee
should be unable to serve, it is the intention of the persons designated as proxies to vote, in their discretion, for such other person as may be designated as a nominee by the Board of Directors.
Director Independence
The Board
of Directors affirmatively determined that five of the non-employee Directors, Erland E. Kailbourne, Ross B. Kenzie, Reginald B. Newman II, Jayne K. Rand and Robert M. Zak are Independent Directors under the rules of the SEC and under
the rules and guidelines of the NASDAQ Stock Market including without limitation NASDAQ Rule 5605(a)(2) and, therefore, that a majority of Rands eight-person Board of Directors is currently independent as so defined. The Board of Directors has
determined that there are no relationships between Rand and the Directors classified as independent other than service on its Board of Directors and compensation paid to Directors.
The nominees for the 2015 Election of Directors have been selected by the Independent Directors of the Board upon the recommendation of
Rands Governance and Nominating Committee comprised solely of independent Directors in compliance with NASDAQ Rule 5605(e)(1).
Three of the Directors are deemed to be interested persons under Section 2(a)(19) of the Investment Company Act of 1940, as
amended (Investment Company Act) with respect to Rand: Allen F. Grum because he is an executive officer of Rand, and Robert S. McLeese and E. Wycliffe Orr, Jr., because each of them directly or indirectly owns, controls or holds, with
power to vote, more than 5% of Rands outstanding common shares. Persons who are Interested Persons are not independent directors under the rules and guidelines of the NASDAQ Stock Market.
The independence determination of the Board of Directors under the SEC rules and under the NASDAQ Stock Market rules and guidelines also
included conclusions that:
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each of the members of the Audit Committee, the Governance and Nominating Committee, and the Compensation Committee are independent under the applicable NASDAQ rules and guidelines and SEC rules for purposes of
determining independence for each of those committees; |
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the 2014 compensation of the executive officers was determined by a majority of the Independent Directors of the Board; |
Proxy 4
Proxy Statement Rand Capital Corporation
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each of the members of the Audit Committee also meets the additional independence requirements under SEC Rule 10A-3(b) and NASDAQ Rule 5605(a)(2); and |
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each of the members of the Compensation Committee also meet the independence requirements under the rules and guidelines of the NASDAQ Stock Market, including without limitation, NASDAQ Rule 5605(d) and 5605(a)(2).
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Rands Chairman, Mr. Newman, serves as chair of meetings of the Independent Directors. It is currently
contemplated that executive sessions of the Independent Directors will occur at least twice during the fiscal year ending December 31, 2015, in addition to separate meetings of standing committees of the Board of Directors.
Board Leadership Structure
Reginald B. Newman II has served as Chairman of the Board of the Corporation since 1996 and is not an interested person under
Section 2(a)(19) of the Investment Company Act with respect to Rand. His long standing business experience is invaluable to the Corporations Board discussions. Robert M. Zak was appointed Vice Chair on November 5, 2014 and is not an
interested person under Section 2(a)(19) of the Investment Company Act with respect to Rand. Allen F. Grum has served as President since 1996 and is an interested person under Section 2(a)(19) of the Investment
Company Act with respect to Rand. The Corporation believes that separating the Chairman and President (CEO) roles provides independent oversight of the Corporation, enhanced leadership to the independent Directors, and a check on management.
The Boards Role in Risk Oversight
The Boards role in the Corporations risk oversight process consists of receiving regular reports from Rands senior management
on areas of material risk to the Corporation, including operational, financial, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate Committee in the case of risks that are under the purview of a particular
Committee) reviews these reports from the Corporation to understand and provide input on management of these risks.
Shareholder Communications
Communications to an individual Director, to non-management Directors as a group, or to the entire Board, should be addressed as
follows: Reginald B. Newman, II, Security Holder Board Communications, 2200 Rand Building, Buffalo, New York, 14203, with an indication of the individual or subgroup (if any) to whose attention the communication is directed. All security holder
communications addressed in that manner will be delivered directly to Mr. Newman, who will receive communications for the Board and non-management Directors, and who will deliver the communication unopened to any individual indicated Director.
Meeting Attendance
Each of the Directors
elected at the 2014 Annual Meeting of Shareholders attended the 2014 Annual Meeting of Shareholders, and each of the current nominees are expected to do so this year. Directors are expected to attend the Annual Meeting, but such attendance is not
required.
Proxy 5
Proxy Statement Rand Capital Corporation
Information Regarding Directors, Nominees for Director, and Officers
The following table provides information concerning all persons who are Directors, nominees for Director, or executive officers of Rand. Rand
is not part of a fund complex.
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Name, Age and Address |
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Position(s) held with Fund |
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Length of Time Served (1) |
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Business Experience and Occupations During Last Five
Years |
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Other Director-
ships (2) |
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Directors who are
Interested Persons (3) |
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Allen F. Grum (57)
c/o 2200 Rand Building
Buffalo NY 14203 |
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President of Rand and a Director |
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1996 |
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President and Chief Executive Officer since 1996. Prior thereto, Mr. Grum served as Senior Vice President of Rand Capital Corporation commencing in June 1995. From 1994 to 1995, Mr. Grum was Executive Vice President of
Hamilton Financial Corporation and from 1991-1994 he served as Senior Vice President of Marine Midland Mortgage Corporation. Mr. Grum serves on a number of Boards of Directors of companies in which Rand Capital Corporation has an investment.
His in-depth knowledge of Rand Capital Corporations operations, and the industries in which the Corporation operates makes Mr. Grum qualified to serve as a Director. |
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None |
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Robert S. McLeese (61)
c/o 2200 Rand Building Buffalo, NY 14203 |
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Director |
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2015 |
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President and Chief Executive Officer of Colmac Holdings, Ltd. since 1977, which holds the stock of various other companies and invests excess funds; founder and President of Access Capital Corp. since 1990, which provides advice to
developers, lenders, purchasers and sellers of independent power projects and assists in negotiating financing for such persons or entities; and Chairman and Chief Executive Officer of ACI Energy, Inc., which is an owner-operator of solid fuelled
power plants. Mr. McLeeses skills as a chartered accountant and his experience investing in both private and public companies makes Mr. McLeese qualified to serve as a Director of Rand. |
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None |
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E. Wycliffe Orr, Jr. (37)
c/o 2200 Rand Building Buffalo, NY 14203 |
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Director |
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2015 |
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Managing Director of JAM Capital Partners Management since September 2013. Mr. Orr was previously a research analyst with Privet Fund Management, which is a hedge fund, from 2011 to 2013 and a portfolio manager for Timbervest
Crossover Partners II, L.P., which is a real estate private equity firm, from 2006 to 2009. Mr. Orrs experience evaluating equity and debt investments in both private and public companies makes Mr. Orr qualified to serve as a
Director of Rand. |
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None |
Proxy 6
Proxy Statement Rand Capital Corporation
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Directors who are not Interested Persons |
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Erland E. Kailbourne (73)
c/o 2200 Rand Building
Buffalo, NY 14203 |
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Director |
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1999 |
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Chairman of Albany International, Inc. since May 2009. Prior thereto, from January 2006 until May 2010, Mr. Kailbourne was Chairman of Financial Institutions, Inc. and its subsidiary Five Star Bank. He retired as Chairman and Chief
Executive Officer (New York Region) of Fleet National Bank, a banking subsidiary of Fleet Financial Group, Inc., in 1998. From 1995 2000, he was Vice Chairman State University of New York (SUNY). He was Chairman and Chief Executive Officer of
Fleet Bank, also a subsidiary of Fleet Financial Group, Inc., from 1993 until its merger into Fleet National Bank in 1997. He is a Director of the New York ISO, Financial Institutions, Inc. and Five Star Bank, Albany International Corporation,
Allegany Co-op Insurance Company, Conemaugh Valley Insurance Company, and The Thomas and Laura Moogan Foundation. Mr. Kailbournes extensive banking and financial experience provide necessary attributes as a Director of Rand. |
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Chairman of Albany International, Inc.,
Director of Financial Institutions, Inc. and its subsidiary Five Star Bank |
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Ross B. Kenzie (83)
1961 Wehrle Drive Suite 5
Buffalo, NY 14221 |
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Director |
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1996 |
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Mr. Kenzie has been retired since 1989. Prior thereto, he was the Chairman of the Board and Chief Executive Officer of Goldome Bank, Buffalo, NY, a savings bank, from 1980. Prior thereto, Mr. Kenzie was Executive Vice President
and Director of Merrill Lynch Pierce Fenner & Smith as well as Merrill Lynch & Co. Mr. Kenzie is a former Director of Biophan Technologies, Inc. and Natural Nano, Inc., development companies specializing in highly marketable business
devices and naturally occurring nanotube technologies; and a former Director of Merchants Mutual Insurance Company. Mr. Kenzies banking and financial experience in addition to his involvement with emerging companies, provide invaluable
expertise as a Director of Rand. |
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None |
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Reginald B. Newman II (77) 50 North
Airport Drive Buffalo, NY 14225 |
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Director and Chairman of Board |
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1987 |
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Mr. Newman has been Chairman of the Board since 1996. Mr. Newman is the Chairman of Prior Aviation Service, Inc., the Fixed Base Operator (FBO) at Buffalo Niagara International Airport, Buffalo, NY. He is a Director of Dunn
Tire LLC and Taylor Devices, Inc. and former Director of M&T Bank Corporation. Mr. Newmans involvement with small businesses provides necessary skills as a Director of Rand. |
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Director of Taylor Devices, Inc. |
Proxy 7
Proxy Statement Rand Capital Corporation
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Jayne K. Rand (54)
c/o 2200 Rand Building Buffalo, NY 14203 |
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Director |
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1989 |
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Since 1993, Miss Rand has been a Vice President of M&T Bank. Miss Rands banking experience and credit underwriting abilities provide necessary expertise as a Director of Rand. |
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None |
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Robert M. Zak (57)
250 Main Street Buffalo, NY 14202 |
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Director and Vice Chair of the Board |
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2005 |
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Since 1995, Mr. Zak has been President and Chief Executive Officer of Merchants Mutual Insurance Company, which operates under the trade name Merchants Insurance Group. Mr. Zak joined Merchants in 1985. Prior to that, his career was
in public accounting. Mr. Zaks executive leadership and public accounting experience provide desirable attributes as a Director of Rand. |
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Director of Manning & Napier, Inc. |
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Non-Director Executive
Officers |
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Daniel P. Penberthy (52)
c/o 2200 Rand Building Buffalo, NY 14203 |
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Executive Vice President, Treasurer and Chief Financial Officer of Rand |
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N/A |
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Mr. Penberthy has served as Treasurer of Rand since August 1997. Since January 2002, Mr. Penberthy has served as Executive Vice President, and he has continued to serve as the Chief Financial Officer since 1997. From 1993 to 1997,
Mr. Penberthy served as Chief Financial Officer for both the Greater Buffalo Partnership (formerly the Chamber of Commerce) and the Greater Buffalo Convention and Visitors Bureau. Prior thereto, from 1990 to 1993, Mr. Penberthy was employed by
Greater Buffalo Development Foundation and KPMG. |
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None |
(1) |
Indicates initial year in which person became Director. All Directors terms of office will be through the next annual meeting of shareholders and until their successors have been elected and qualified.
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Indicates directorships of companies with a class of equity securities registered under Section 12 of the Securities Exchange Act, subject to the requirements of Section 15(d) of the Securities Exchange Act, or
registered as an investment company under the Investment Company Act. |
(3) |
Mr. Robert S. McLeese and Mr. E. Wycliffe Orr, Jr., each, directly or indirectly, own, control or hold, with power to vote, more than 5% of Rands outstanding securities, and Mr. Allen F.
Grum is an officer of Rand, and are each deemed to be interested persons under Section 2(a)(19) of the Investment Company Act. |
The Board of Directors of the Company unanimously recommends a vote FOR the election
of the nominees named in this Proxy Statement.
Proxy 8
Proxy Statement Rand Capital Corporation
Approximate Value of Investments in Rand
The following table indicates the range of value as of March 6, 2015 of the common shares of Rand (the Fund) beneficially
owned by each Director and nominee for Director of Rand. Rand is not part of a family of investment companies.
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Name of Director or Nominee |
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Dollar Range of Equity Securities in the
Fund |
(a) |
Directors who are not Interested Persons: |
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Erland E. Kailbourne |
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$50,000 - $100,000 |
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Robert M. Zak |
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Over $100,000 |
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Ross B. Kenzie |
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Over $100,000 |
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Reginald B. Newman, II |
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Over $100,000 |
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Jayne K. Rand |
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Over $100,000 |
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(b) |
Directors who are Interested Persons: |
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Allen F. Grum |
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Over $100,000 |
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Robert S. McLeese |
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Over $100,000 |
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E. Wycliffe Orr, Jr. |
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None |
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COMMITTEES AND MEETING DATA
The Committees of the Board of Directors have the following members:
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Compensation Committee |
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Governance and
Nominating Committee |
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Audit Committee |
Robert M. Zak (Chair) |
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Erland E. Kailbourne (Chair) |
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Ross B. Kenzie (Chair) |
Erland E. Kailbourne |
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Ross B. Kenzie |
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Erland E. Kailbourne |
Jayne K. Rand |
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Jayne K. Rand |
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Robert M. Zak |
In 2014, the Corporation compensated its Directors for attendance at the following meetings: the full Board
met five times, the Audit Committee met five times, the Governance and Nominating Committee met two times and the Compensation Committee met three times. All Directors attended 100% of the total number of meetings of the Board of Directors and the
total number of meetings of Committees of the Board that the respective Director was eligible to attend during 2014.
Compensation Committee
The Compensation Committee is comprised of independent Board members, each of whom meet the independence requirements of the
NASDAQ Stock Market and applicable law, and advises the independent members of the Board of Directors with respect to the compensation of the executive officers and reviews the criteria that form the basis for management compensation. None of the
persons on the Compensation Committee are interested persons as defined in Section 2(a)(19) of the Investment Company Act.
Proxy 9
Proxy Statement Rand Capital Corporation
The compensation levels of Rands President/CEO and Executive Vice President were
recommended by Rands Compensation Committee and approved by the independent members of the Board of Directors, representing a majority of its membership.
The Compensation Committees Charter may be accessed at Rands website, www.randcapital.com.
Governance and Nominating Committee
The primary purposes of the Governance and Nominating Committee include:
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developing, recommending to the Board and assessing corporate governance policies for Rand; |
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overseeing the evaluation of the Board and its Committees; |
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recommending to the Board of Directors the individuals qualified to serve on Rands Board of Directors for election by shareholders at each annual meeting of shareholders, and recommending to the Board of Directors
candidates to fill vacancies on the Board of Directors. |
The Governance and Nominating Committees Charter may be
accessed at Rands website, www.randcapital.com. None of the persons on the Governance and Nominating Committee are interested persons as defined in Section 2(a)(19) of the Investment Company Act. The Governance and Nominating
Committee is comprised of members each of whom meet the independence requirements of the NASDAQ Stock Market.
Nomination of
Directors
The Governance and Nominating Committee, as part of the responsibilities under its Charter, oversees the
identification of qualified individuals to serve on the Board.
We seek Directors who have the required and appropriate
skills and characteristics, including business experience and personal skills in finance, marketing, business and other areas that are expected to contribute to an effective board and who meet the criteria set forth in Rands Corporate
Governance Guidelines. We identify new Director candidates from prominent business persons and professionals in the communities Rand serves or who have a shared interest in the types of investments in which Rand transacts. We consider nominees of
shareholders in the same manner as other nominees.
If a Board vacancy occurs, or if the size of the Board is changed, the
Governance and Nominating Committee may recommend the candidate to the Board. The Board may appoint the new Director to fill any unexpired term of the seat. Annually, the Governance and Nominating Committee will recommend a slate of new and/or
continuing candidates for the Board of Directors. The Board will select a slate of nominees for Director from recommendations of the Governance and Nominating Committee, and submit the slate of nominees to be voted on by shareholders at Rands
next annual meeting of shareholders.
Proxy 10
Proxy Statement Rand Capital Corporation
Rands by-laws provide that an annual meeting of shareholders shall be
held on the fourth Tuesday in April, or such other time within 30 days before or after such date as the Chairman or Board of Directors shall determine. The number of Directors is determined by the Board of Directors, but in no event may it be less
than three.
Criteria and Diversity
In considering whether to recommend any candidate for inclusion in the Boards slate of recommended director nominees,
including candidates recommended by shareholders, the Governance and Nominating Committee will apply the criteria set forth in Rands Corporate Governance Guidelines. These criteria include the candidates experience, business skill set
and the ability to act in the interests of all shareholders. Our Corporate Governance Guidelines specify that the value of diversity on the Board should be considered by the Governance and Nominating Committee in the director identification and
nomination process. The Governance and Nominating Committee seeks nominees with a broad diversity of experience, professions, skills, and backgrounds. The Governance and Nominating Committee does not assign specific weights to particular criteria
and no particular criterion is necessarily applicable to all prospective nominees. Rand believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and
abilities that will allow the Board to fulfill its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.
Procedure for Shareholders to Nominate Directors
Any shareholder who intends to present a Director nomination proposal for consideration at the 2016 Annual Meeting and intends
to have that proposal included in the proxy statement and related materials for the 2016 Annual Meeting must deliver a written copy of the proposal to Rand no later than the deadline, and in accordance with the procedures specified under
Shareholder Proposals in this proxy statement, and in accordance with the requirements of SEC Rule 14a-8.
If a
shareholder does not comply with the foregoing procedures, the shareholder may use the procedures set forth in Rands by-laws, although Rand would not in the latter case be required to include the nomination as a proposal in its proxy statement
and proxy card mailed to shareholders in connection with the 2016 Annual Meeting of Shareholders.
The shareholder
nomination proposal referred to above must set forth (1) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (2) a representation that the shareholder is a shareholder of
record of Rand common shares entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the proposal; (3) a description of the arrangements or understandings between
the shareholder and each nominee or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are being made by the shareholder; (4) such other information regarding each nominee proposed by the
shareholder as would have been required to be included in a proxy statement filed under the proxy rules of the SEC had each nominee been nominated or intended to be nominated by the Board of Directors; and (5) the consent of each nominee to
serve as a Director of the Corporation if elected. The
Proxy 11
Proxy Statement Rand Capital Corporation
Governance and Nominating Committee may refuse to acknowledge a proposal for the nomination of any person not made in accordance with the foregoing procedure. Recommendations for nominees should
be sent to: Rand Capital Corporation, Attention: Board Nominations, 2200 Rand Building, Buffalo, New York 14203.
Rand did
not receive any nominations from shareholders for the 2015 Board of Directors election.
Code of Ethics
Rand has adopted a Code of Ethics which applies to Rands chief executive officer, chief financial officer, and vice
president of finance, and a Business Ethics Policy applicable to Rands Directors, officers and employees. The Code of Ethics and the Business Ethics Policy are available in the Governance section of Rands website at www.randcapital.com.
They are also available in print to any shareholder who requests it. Rand will disclose any substantive amendments to, or waiver from provisions of, the Code of Ethics made with respect to the chief executive officer, chief financial officer or vice
president of finance via its website.
Audit Committee
The Board of Directors has determined that none of the members of the Audit Committee are interested persons as defined in
Section 2(a)(19) of the Investment Company Act. The Audit Committee is comprised of independent members, all of whom meet the independence requirements of the NASDAQ Stock Market and the rules of the SEC. The Board of Directors has determined
that Ross B. Kenzie is an Audit Committee financial expert (as defined by SEC regulations) (see Mr. Kenzies relevant work experience in the Table under Information Regarding Directors, Nominees for Directors and Officers).
Mr. Kenzie is an independent member of Rands Board of Directors (as defined by SEC and NASDAQ Stock Market regulations).
The
Audit Committees charter may be accessed at Rands website, www.randcapital.com. The Audit Committee reviews the scope and results of the annual audit, receives reports from Rands independent public accountants, and reports the
Audit Committees findings and recommendations to the Board of Directors.
The Audit Committee has adopted necessary reporting
procedures for the confidential submission, receipt, retention and treatment of accounting and auditing complaints.
Proxy 12
Proxy Statement Rand Capital Corporation
Independent Registered Public Accountant (Independent Accountant)
Fees
The aggregate fees for each of the last two fiscal years for services rendered by our auditing firm, Freed Maxick CPAs, P.C.
(Freed) are as follows:
Audit Fees
This category consists of fees for the audit of annual consolidated financial statements, review of consolidated financial statements included
in quarterly reports on Form 10-Q and services that are normally provided by the independent accountant in connection with statutory and regulatory filings or audit engagements for those fiscal years.
Audit fees for professional services provided by Freed for the fiscal years ended December 31, 2014 and 2013 were $72,175 and $71,675,
respectively.
Audit Related Fees
This category consists of assurance and related services by the independent accountant that are reasonably related to the performance of the
audit and review of financial statements and are not reported under audit fees.
During the fiscal year ended December 31, 2014,
there were $3,800 in audit related fees for assurance and related services. During the fiscal year ended December 31, 2013, there were no audit related fees for assurance and related services.
Tax Fees
This category
consists of professional services rendered by the independent accountant for tax compliance and tax planning. The services for the fees disclosed under this category include tax return preparation and technical advice provided by Freed.
During the fiscal years ended December 31, 2014 and 2013, tax fees were $25,850 and $20,000, respectively.
All Other Fees
This
category consists of fees not covered by Audit Fees, Audit Related Fees and Tax Fees.
For the fiscal years ended December 31, 2014
and 2013, Rand did not receive or pay for any products or services in this category from Freed.
For fiscal years 2014 and 2013, all of
the services of Freed described in the above categories were pre-approved by the Audit Committee.
Estimates of annual audit, quarterly
review and tax fees to be paid during the year are submitted annually to the Audit Committee for its review and pre-approval and then budgeted for by Rand. All other non-audit services must be pre-approved by the Audit Committee prior to engagement,
as required by the Audit Committees Charter.
Proxy 13
Proxy Statement Rand Capital Corporation
Audit Committee Report
The Audit Committee has reviewed and discussed Rands audited consolidated financial statements with management. In addition, the Audit
Committee has discussed with Rands independent accountants, Freed Maxick CPAs, P.C., the matters required to be discussed by Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1 AU section 380), as adopted
by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received the written disclosures and the letter
from the independent accountants required by the Public Company Accounting Oversight Board regarding the independent accountants communications with the Audit Committee concerning independence, and has discussed the independent
accountants independence with the independent accountants.
Based on the Audit Committees review and discussions referred to
above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Rand Capital Corporations Annual Report on Form 10-K for the year ended December 31, 2014 for filing with
the Securities and Exchange Commission.
This report is respectfully submitted by the Audit Committee of the Board of Directors.
Ross B. Kenzie, Chair
Erland E. Kailbourne
Robert M. Zak
The information provided in the preceding Audit Committee Report will not be deemed to be soliciting material or filed
with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of section 18 of the Securities Exchange Act, unless in the future the Corporation specifically requests that the information be treated as
soliciting material or specifically incorporates it by reference into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.
Proxy 14
Proxy Statement Rand Capital Corporation
COMPENSATION DISCUSSION AND ANALYSIS
Rands principal executive officer is its President, Allen F. Grum, and Rands principal financial officer is its Executive Vice
President/Chief Financial Officer, Daniel P. Penberthy. They are Rands Named Executive Officers (NEOs).
The President
and Executive Vice President serve as the Management and Investment Committee of Rands wholly owned subsidiary, Rand Capital SBIC, Inc. (Rand SBIC), and are parties to a Profit Sharing Plan (the Profit Sharing Plan) of
Rand SBIC that was adopted by Rand as a requirement for the licensing of Rand SBIC as a Small Business Investment Company by the U.S. Small Business Administration (SBA).
The Compensation Committee, all of the members of which are independent members of the Board, makes determinations and recommendations to the
Board of Directors with respect to the compensation of the NEOs. Each of the members (i) satisfies all of the independence requirements under the current rules and guidelines of the NASDAQ Stock Market as discussed under the Director
Independence section of the Proxy Statement; (ii) are outside Directors (as defined in the regulations pursuant to Section 162(m) of the Code and (iii) are non-employee Directors (as defined in Rule 16b-3 of the
Securities Exchange Act of 1934). The Compensation Committees responsibilities and authority are set forth in the Compensation Committee Charter which is disclosed on the Rand Capital website. The Compensation Committee recommendations are
then reviewed by the independent members of the Board, who are responsible for establishing such compensation. Rands President is responsible for the compensation of Rands staff other than the NEOs.
Introduction
This Compensation
Discussion and Analysis is designed to provide shareholders with an understanding of our compensation philosophy and objectives as well as the analysis that we performed in setting executive compensation. It discusses the Compensation
Committees determination of how and why, in addition to what, compensation actions were taken for the NEOs.
Objectives of Rands
Compensation Programs and What they are Designed to Reward
Rand depends on the management and analytical abilities of its NEOs for its
long-term success and the enhancement of long-term shareholder value. The objectives of Rands compensation programs are to provide appropriate levels of compensation, reward above average corporate performance, recognize individual initiative
and achievement, attract and retain qualified individuals to contribute to Rands success, and motivate management to enhance shareholder value.
Key Elements of Rands Compensation Plans and Why they are Paid:
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Base Salary Base salaries should meet the objectives of attracting and retaining the management talent needed to operate the business successfully. Individual salary amounts are not determined by formulas, but
instead reflect the Compensation Committees judgment with respect to each NEOs responsibility, performance, experience and past compensation, internal equity considerations and other factors, including retention. Annually, the Board, on
recommendation of the Compensation Committee, sets base salaries for the NEOs that it believes are appropriate given the scope of their duties and responsibilities. |
Proxy 15
Proxy Statement Rand Capital Corporation
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Bonus Rand provides the opportunity to earn bonuses to its NEOs and staff based on the Compensation Committees and Boards evaluation of performance and results, as well as to motivate them to achieve
results that exceed the annual budget or provide value to the Corporation. The bonus is based on a qualitative consideration of individual and company performance. The Compensation Committee considers, and may make appropriate adjustments for,
unusual items that are deemed to be outside the control of the executives. For 2014, a total of $53,990 was awarded to the NEOs. |
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Profit Sharing Plan Rand provides long-term incentives to its NEOs through the Profit Sharing Plan, which allows them to participate in the growth of its portfolio and aligns their long-term interests with those
of Rands shareholders. The terms of Rands license to operate Rand SBIC require that it maintain a profit sharing plan, which provides for payment by Rand of designated percentages of net realized capital gains (net of all realized
capital losses and unrealized depreciation) of Rand SBIC. Amounts paid or accrued pursuant to the Profit Sharing Plan cannot exceed 20% of Rands net income. The Compensation Committee does not have discretion to change the amounts due under
the Profit Sharing Plan. For 2014, a total of $846,010 was earned by the NEOs pursuant to the Profit Sharing Plan. This amount was accrued in 2014 and is expected to be substantially paid in 2015 following the receipt of proceeds from realized gains
and related escrows. |
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Equity Although we believe that equity ownership by management incentivizes management to increase shareholder value, restrictions imposed by the Investment Company Act preclude Rand from offering stock options
or other equity incentives to its NEOs at any time when they participate in a profit sharing plan. |
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Standard Employee Benefits Rand provides employee benefits that are considered competitive and necessary to attract and retain talented personnel. Rand maintains a 401(k) plan for its employees under which
participants may elect to contribute up to 20% of their compensation on a pretax basis, to a maximum of $17,500 ($23,000 if age 50 or over) for 2014. Rand makes a contribution of 1% of compensation for each participant and matches participant
contributions up to 5% of compensation. Rand may also elect to contribute discretionary amounts under the 401(k) plan as determined by the Board. No discretionary amounts have been contributed since the 401(k) plans inception. Rand also
provides life insurance and automobile reimbursement benefits to its NEOs. |
Consideration of Prior Shareholder Advisory Vote on Executive
Compensation
At our Annual Meeting, we will provide our shareholders the opportunity to vote to approve, on an advisory basis, the
compensation of our NEOs. At the 2014 Annual Meeting, our shareholders cast 2,143,514 votes, or 81%, in favor of approving the compensation, and 501,714 votes, or 19% against. Our Compensation Committee and Board value the opinions expressed by our
shareholders, including the non-binding advisory vote on executive compensation. We are mindful of the strong support our shareholders expressed for our philosophy of linking compensation to our operating objectives and the enhancement of
shareholder value. As a result, our Compensation Committee took the results of the vote into account when determining that our 2014, and anticipated 2015, executive compensation policies should largely remain consistent with our policies in prior
years and should continue to emphasize the performance, alignment, and retention objectives described above.
Proxy 16
Proxy Statement Rand Capital Corporation
How the Amounts of Each Element of the Compensation are Determined and How They Fit Into Rands
Overall Compensation Objectives
Salary, Bonus and Profit Sharing
The Compensation Committee determined that the salary paid to NEOs for the 2014 fiscal year was in the best interests of shareholders. A
discretionary bonus payment was paid for 2014 to each of Mr. Grum and Mr. Penberthy, and the NEOs also earned a profit sharing payment under the Profit Sharing Plan. In making its determination, the Compensation Committee considered
whether the salaries, bonuses and profit sharing amounts due to its NEOs were consistent with the compensation philosophy described above.
The
Analysis Used in Setting Compensation Levels
When making individual compensation decisions for NEOs, the Compensation Committee takes
many factors into account, including the individuals role and responsibilities, performance, and experience; the overall performance of Rand; the recommendations of Board Committee Chairs; the individuals past compensation; and
comparison to the other NEO of Rand. The Compensation Committee may engage a compensation consultant to provide insight into setting compensation levels.
Specifically, the Committee has considered factors such as:
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total compensation in relation to Rands size, and the composition and performance of its investments and total investment capital available; |
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Rands success in identifying appropriate investment opportunities and returns on its investments; |
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the value of Rands assets in accordance with Accounting Standards Codification 820 fair value measurement; |
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the responsibilities and duties of the NEOs; |
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whether there has been any adjustment or potential recovery of prior payments resulting from the restatement of prior performance measures upon which bonus or profit sharing awards were based (no such adjustments or
recovery occurred during 2013 or 2014); and |
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realized income from investment exits in the consolidated Rand and Rand SBIC portfolios. |
Evaluating
Performance
The Compensation Committee evaluates the performance of the NEOs annually, and consults with the other Directors and
Committee Chairs regarding that performance. The Compensation Committee also seeks the advice of the President in connection with the performance evaluation for the other NEO; however, the President is not present when the Compensation Committee
meets to evaluate his performance and recommend compensation for the NEOs.
Proxy 17
Proxy Statement Rand Capital Corporation
Individual Performance
The Compensation Committee uses discretion in a qualitative evaluation of individual performance and considers the following factors, among
others, in recommending to the Board any annual bonus awards to the NEOs: the input of other Board Committee Chairs, and each NEOs contribution to Rands leadership, management, strategic planning, business development, and investment
returns.
Change of Control and Termination Benefits
Rand does not provide any employment contracts, or change of control or termination benefits to its employees.
Accounting and Tax Treatments of Compensation
The Compensation Committees policy is to structure compensation in a way that allows it to be fully deductible, where doing so will
further the purposes of the executive compensation programs. The Committee also considers it important to retain flexibility to design compensation programs that recognize a full range of criteria important to Rands success, even where
compensation payable under the programs may not be fully deductible.
Compensation Consultant
During 2012, the Compensation Committee engaged, at Rands expense, The Burke Group to serve as compensation consultant to the
Compensation Committee. The Committee assessed the independence of The Burke Group (and any individuals working on the Corporations account on The Burke Groups behalf) in accordance with NASDAQ Listing Rules and determined that its work
on behalf of the Compensation Committee raised no conflict of interest. Following such determination, The Burke Group was engaged as an independent advisor to provide the following services:
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To review NEO compensation levels; |
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To review compensation levels in an appropriate peer group of Rand; |
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To review compensation levels as reported in survey data for the Financial Industry; and |
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To review Rands overall compensation strategy, including base salary, bonus, profit sharing plan and equity, identifying industry best practices, trends, and areas for improvement. |
The Burke Group delivered its report to the Compensation Committee in 2013, noting that the unique nature of Rands corporate structure,
market capitalization, asset base, and regulatory requirements creates challenges in both establishing and implementing the Corporations overall compensation strategy. Other than changes to the NEOs base salary, the Compensation
Committee did not make changes to the key elements of Rands compensation programs as a result of the report. The Compensation Committee remains focused on the best means to align managements and Rands interests to enhance
shareholder value. The Compensation Committee anticipates using an independent advisor periodically.
Proxy 18
Proxy Statement Rand Capital Corporation
Profit Sharing Plan
We believe Rands salaries, bonuses and the Profit Sharing Plan create an appropriate focus on long-term objectives and promote NEO
retention. The terms of the SBAs license for Rands SBIC subsidiary require it to maintain a profit sharing plan that provides for payment of the designated percentages of the net realized capital gains (net of all unrealized capital
losses and unrealized depreciation) of the SBIC that are provided for in the Profit Sharing Plan to our NEOs. The Compensation Committee does not have discretion to change the amounts due under the Profit Sharing Plan.
Under the Profit Sharing Plan, Rand pays its NEOs cumulative profit sharing payments equal to 12% of realized capital gains of Rand SBIC, net
of realized capital losses and unrealized depreciation of Rand SBIC, for each fiscal year of Rand SBIC, computed in accordance with the Profit Sharing Plan and Rands interpretation of the Profit Sharing Plan.
The profit sharing payments are shared equally between Rands two NEOs, who are fully vested in the Profit Sharing Plan. Under the
Investment Advisers Act of 1940 (Section 205 (b)(3)) requirements, the aggregate amount which may be paid or accrued under the Profit Sharing Plan and any other incentive based plan maintained by Rand during any fiscal year, may not exceed 20% of
Rands net income after taxes, as defined, for that fiscal year. In accordance with Investment Company Act requirements, a majority of the members of the Board who were not interested persons approved the Profit Sharing Plan on the basis that
it is reasonable and fair to Rands shareholders, and does not involve overreaching of Rand or its shareholders on the part of any person concerned.
In 2014, Rand recognized approximately $7.2 million of net realized gains before income taxes from the sale of shares of three portfolio
companies, the shutdown of one business and other adjustments of prior realized gains and losses. In addition, as of December 31, 2014, Rand had recorded unrealized depreciation under the Profit Sharing Plan on three portfolio investments in
the amount of $1.0 million. For the Profit Sharing Plan year 2014, a total of $846,010 was payable to the named NEOs, which is expected to be substantially paid in 2015 following the receipt of proceeds from realized gains and the remainder
following release of funds from related escrows in 2016.
Disbursement Triggers on Non-Equity Incentive Compensation
Realized gains from portfolio exits are typically received in a combination of lump sum payment (cash), and a release of escrow twelve to
twenty-four months following closing. Profit sharing payments under the Profit Sharing Plan that are accrued by the Corporation are typically retained, and disbursed to the NEOs upon the receipt of cash proceeds. If a loss or deduction to funds held
in escrow occurs due to certain post-closing adjustments or claims, the pro-rata profit sharing obligation payable to NEOs under the Profit Sharing Plan will be forfeited.
In 2014 a total of $435,650 of funds held in escrow receivable from realized gains recognized in 2013 were forfeited, resulting in a $52,280
reduction in previously accrued profit sharing amounts due to NEOs under the Profit Sharing Plan.
Proxy 19
Proxy Statement Rand Capital Corporation
Risk Considerations in our Compensation Program
The compensation of the NEOs consists of fixed and variable compensation. The fixed (or salary) portion of compensation is designed to provide
a steady income so executives do not feel pressured to focus exclusively on short-term gains or annual stock price performance, which may be to the detriment of long-term appreciation and other business metrics. The variable (cash bonus and profit
sharing) portions of compensation are designed to reward both short- and long-term corporate performance. For short-term performance, bonuses are qualitatively determined by the Compensation Committee and approved by the Board. For long-term
performance, profit sharing is determined based on realized income from portfolio investment exits, net of realized and unrealized losses and depreciation. In addition, the following risk mitigation components exist:
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Bonus payments are not tied directly to specific financial metrics, which reduces the risk that management is inappropriately incented to achieve desired targets and performance metrics; |
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Maintenance of the Profit Sharing Plan is required under the terms of the SBAs license for our SBIC subsidiary, and the SBAs requirement to maintain the Profit Sharing Plan suggests that it believes that the
Profit Sharing Plan provides for compensation to participants in an appropriate manner and in appropriate amounts; |
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Profit sharing payments are limited by the Investment Advisors Act of 1940 to 20% of Rands net income after taxes as defined in any fiscal year; |
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The Board, Compensation Committee and independent accountants review all profit sharing calculations prior to disbursement; |
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The NEOs personal investment portfolios include significant amounts of Rands shares, which aligns their interests with the interests of our shareholders in Rands long-term success and stock price
appreciation; |
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The Profit Sharing and bonus plan each have been in place for a number of years, and we have seen no evidence that they encourage unnecessary or excessive risk taking; |
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Rand has specific quarterly reporting, review and approval processes with its Board of Directors, which we believe are adequately designed to prevent manipulation by any employee, including our NEOs; and
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The compensation and bonus of non-executive officers are qualitatively determined by the President, which we believe encourages a balanced approach to overall corporate performance. |
Proxy 20
Proxy Statement Rand Capital Corporation
Conclusion
Through the compensation and incentive structure described above, a significant portion of the amounts that may be payable as compensation have
been, and will continue to be, contingent on Rands performance, and realization of incentive benefits is closely linked to increases in long-term shareholder value. Rand remains committed to this philosophy of pay for performance, recognizing
the volatility of Rands business may result in highly variable compensation from year to year.
Based on the factors discussed
above, the independent members of the Board approved no change to 2015 salary levels of the NEOs. Based on the same factors, in January 2015 the independent members of the Board approved profit sharing and discretionary bonus payments to
Mr. Grum and Mr. Penberthy for their services in 2014. Rand accrued such payments in its 2014 financial statements.
Proxy 21
Proxy Statement Rand Capital Corporation
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K
with management and, based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Compensation Committee
Robert M. Zak, Chair
Erland E. Kailbourne
Jayne K. Rand
The information provided in the preceding Compensation Committee Report will not be deemed to be soliciting material or
filed with the SEC or subject to Regulation 14A or 14C, or to the liabilities of section 18 of the Securities Exchange Act, unless in the future the Corporation specifically requests that the information be treated as soliciting material
or specifically incorporates it by reference into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.
Compensation Committee Interlocks and Insider Participation
During the last fiscal year, none of the members of the Compensation Committee was an officer or employee or former officer or employee of Rand
or had any relationship with respect to Rand that would require disclosure under Regulation S-K, Item 404.
Proxy 22
Proxy Statement Rand Capital Corporation
Summary Compensation Table
The following table sets forth information with respect to the compensation paid or earned for the 2014, 2013 and 2012 fiscal years to each
NEO. Rand is not part of a fund complex.
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Name and Principal Position (1) |
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Year |
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Salary (2) |
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Bonus (2)(3) |
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Non-Equity Incentive Plan Compensation(3)(7) (Profit Sharing Plan) |
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All Other Compensation (4)(5) |
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Total Compensation (6) |
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Allen F. Grum, |
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2014 |
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$ |
217,350 |
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$ |
26,995 |
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$ |
423,005 |
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$ |
20,800 |
(4) |
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$ |
704,854 |
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President and Chief Executive Officer |
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$ |
16,704 |
(5) |
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2013 |
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$ |
210,000 |
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$ |
0 |
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$ |
443,622 |
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$ $ |
15,300 16,709 |
(4) (5) |
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$ |
685,631 |
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2012 |
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$ |
186,430 |
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$ |
51,731 |
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$ |
123,269 |
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$ $ |
12,851 17,839 |
(4) (5) |
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$ |
392,120 |
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Daniel P. Penberthy, Executive Vice |
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2014 |
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$ |
201,825 |
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$ |
26,995 |
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$ |
423,005 |
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$ |
20,800 |
(4) |
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$ |
683,460 |
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President and Chief Financial Officer |
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$ |
10,835 |
(5) |
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2013 |
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$ |
195,000 |
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$ |
0 |
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$ |
443,622 |
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$ $ |
15,300 10,810 |
(4) (5) |
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$ |
664,732 |
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2012 |
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$ |
170,980 |
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$ |
51,731 |
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$ |
123,269 |
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$ $ |
10,986 11,907 |
(4) (5) |
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$ |
368,873 |
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(1) |
Mr. Grum is Rands principal executive officer, and Mr. Penberthy is Rands principal financial officer. Neither of them has an employment contract with Rand. |
(2) |
Represent amounts earned, prior to employee 401(k) contributions as described in footnote (4). |
(3) |
Bonuses and non-equity incentive plan compensation were fully accrued as of December 31 of the respective year and expected to be paid following receipt of realized gain proceeds distributed after completion of the
escrow holdback period, which typically occurs in a 12 24 month period following exit from an investment. |
(4) |
Included within the indicated compensation payment are contributions by Rand to its 401(k) plan, which is available to all Rand employees. Under the 401(k) plan, participants may elect to contribute up to 20% of their
compensation on a pretax basis by salary reduction up to a maximum of $17,500 ($23,000 if age 50 or over) for 2014. For eligible employees, Rand makes a contribution of 1% of compensation and matches employee contributions up to 5% subject to IRS
annual compensation and contribution limits. In addition, Rand may elect to contribute an annual discretionary amount as determined by the Board of Directors. In 2014, 2013 and 2012, Rand did not make a discretionary contribution to the 401(k) plan.
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(5) |
Amount indicated includes the cost of life insurance, disability insurance and business automobile reimbursement benefits. |
(6) |
Non-equity incentive compensation from the Corporations Profit Sharing Plan approximated 61% of total compensation for the NEOs in 2014. Total salary and bonus for the NEOs approximated 34%, 30% and 60% of total
compensation in 2014, 2013 and 2012, respectively. |
(7) |
Non-equity incentive plan compensation consists of payments under the Profit Sharing Plan (in each case 6% of net realized capital gains of Rand SBIC). |
Proxy 23
Proxy Statement Rand Capital Corporation
Option Plan
Rand does not have any outstanding equity awards, options or stock vesting rights.
Pension Benefits
Rand does not provide
any tax-qualified defined benefit plan or supplemental executive retirement plan, or similar plan that provides for specified retirement payments or benefits.
DIRECTOR COMPENSATION
During 2014, under
Rands standard compensation arrangements with Directors, the Chairman of the Board received an annual Chairman retainer of $7,500 and each non-employee Director received an annual fee of $7,500 plus $1,500 for attendance at each meeting of the
Board of Directors. Audit Committee and Compensation Committee members received $1,000 for each meeting attended and Governance and Nominating Committee members received $750 for each meeting attended. Rand reimburses Directors for reasonable out of
pocket expenses incurred in attending Board and Committee meetings.
The following table sets forth information with respect to the
compensation paid to or earned by each non-employee Director for the 2014 fiscal year. Rand did not pay or accrue any other compensation to the following Directors for the 2014 fiscal year.
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Erland E. Kailbourne |
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24,500 |
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Ross B. Kenzie |
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21,500 |
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Reginald B. Newman, II |
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22,500 |
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Jayne K. Rand |
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19,500 |
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Robert M. Zak |
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23,000 |
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Rands Directors and executive officers, and persons who
own more than ten percent of Rands shares, to file with the SEC initial reports of stock ownership and reports of changes to stock ownership. Reporting persons are required by SEC regulations to furnish Rand with all Section 16(a) reports
they file.
To our knowledge, based solely on review of the copies of such reports furnished to Rand and written representations that no
other reports were required, Rand believes all Section 16(a) filing requirements applicable to its executive officers, Directors and greater than ten percent beneficial owners of Rands shares were complied with during the fiscal year
ended December 31, 2014.
Directors and Officers Liability Insurance
Rand has an insurance policy from Illinois National Insurance Company effective December 31, 2014 that indemnifies (1) Rand for any
obligation incurred as a result of its indemnification of its Directors and officers under the provisions of the New York Business Corporation Law and Rands by-laws, and (2) Rands Directors and officers as permitted under the New
York Business
Proxy 24
Proxy Statement Rand Capital Corporation
Corporation Law and Rands by-laws. The policy covers all Directors and officers of Rand for the 12 months ending December 31, 2015 for a total premium of $25,032. No sums have been
paid to Rand or its Directors or officers under the insurance contract.
PROPOSAL 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Subject to the rules of the SEC, we are providing shareholders with the opportunity to vote at the Annual Meeting on an advisory resolution,
commonly referred to as a say-on-pay proposal, which will express whether or not they approve of the compensation paid to Rands NEOs and is required by Section 14A of the Securities Exchange Act of 1934, as amended. The
compensation of Rands NEOs is described under the heading Compensation Discussion and Analysis in this proxy statement.
The Compensation Committee and the Board of Directors have developed the philosophy and policies described in the Compensation Discussion and
Analysis for the purpose of attracting, retaining, and motivating NEOs who will help Rand achieve its strategic and financial goals. The Compensation Discussion and Analysis and the tabular disclosures regarding NEO compensation, together with the
accompanying narrative disclosures, allow you to view the trends in compensation and the application of our compensation philosophy and practice over the years presented.
Shareholders are being asked to vote on the following advisory resolution:
RESOLVED, that the shareholders of Rand Capital Corporation approve the compensation paid to its NEOs as disclosed in this proxy
statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion.
Your vote is advisory and will not be binding upon the Board of Directors. Nevertheless, the Compensation Committee and the Board of Directors
will take into account the outcome of the vote when considering future executive compensation arrangements. We believe that both Rand and its shareholders will benefit by maintaining a constructive dialogue between the Board and Rands
shareholders. This proposal is one aspect of Rands corporate governance program and practices that helps to promote a dialogue that is intended to develop long-term shareholder value.
Section 14A of the Exchange Act also requires that shareholders have the opportunity, at least once every six years, to cast an advisory
vote with respect to whether future executive compensation advisory votes will be held every one, two, or three years. At our 2011 Annual Meeting of Shareholders held on April 29, 2011, our shareholders indicated their preference for an
advisory vote on the compensation of our NEOs to be held annually, which annual frequency was also the recommendation of our Board. Our Board subsequently determined that we will hold an advisory vote to approve the compensation of our NEOs on an
annual basis until the next required vote on the frequency of such advisory votes, or until the Board otherwise determines that a different frequency for such votes is in the best interests of our shareholders.
Our Board of Directors recommends that you vote FOR the approval of Rands compensation of its NEOs as disclosed in this proxy
statement pursuant to the compensation disclosure rules of the SEC.
Proxy 25
Proxy Statement Rand Capital Corporation
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected Freed Maxick CPAs, P.C. (Freed), independent registered public accounting firm, as our auditors
for the fiscal year ending December 31, 2015. Although shareholder approval of the selection of Freed is not required by the Investment Company Act or our by-laws, our Board of Directors believes that it is advisable to give shareholders an
opportunity to ratify this selection. If this proposal is not approved by our shareholders at the 2015 Annual Meeting, our Audit Committee will reconsider its selection of Freed.
Representatives of Freed are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions from shareholders.
Our Board of Directors recommends that you
vote FOR the ratification of the selection of Freed as our independent registered public accounting firm for the 2015 fiscal year.
OTHER
BUSINESS
Rand does not know of any other matters that will come before the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons designated as proxies to vote in accordance with their best judgment on such matters.
Proxy 26
Proxy Statement Rand Capital Corporation
Shareholder Proposals for the 2016 Annual Meeting
Shareholder proposals intended to be presented at the 2016 Annual Meeting of Shareholders must be received at Rands offices not later
than November 21, 2015 to be considered for inclusion in Rands proxy statement and form of proxy for that meeting.
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March 20, 2015 |
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By Order of the Board of Directors |
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Reginald B. Newman II |
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Chairman of the Board |
It is important that proxies be returned promptly. Shareholders are urged to sign, date and return the
proxy in the enclosed envelope, to which no postage need be affixed if mailed in the United States. If you attend the Annual Meeting you may, if you wish, withdraw your proxy and vote in person.
Proxy 27
Proxy Statement Rand Capital Corporation
Multiple Copies of our Annual Report and Proxy Statement (Householding)
When more than one holder of Rand common stock shares the same address, we may deliver only one annual report and one proxy statement to that
address unless we have received contrary instructions from one or more of those shareholders. Similarly, brokers and other intermediaries holding shares of Rand common stock in street name for more than one beneficial owner with the same
address may deliver only one annual report and one proxy statement to that address if they have received consent from the beneficial owners of the stock.
Rand will deliver promptly upon written or oral request a separate copy of the annual report and proxy statement to any shareholder, including
a beneficial owner of stock held in street name, at a shared address to which a single copy of either of those documents was delivered. To receive additional copies of our annual report and proxy statement, you may call or write Elspeth
A. Donaldson, Office Manager, Rand Capital Corporation, 2200 Rand Building, Buffalo, New York 14203, telephone (716) 853-0802 or email her at eadonaldson@randcapital.com. You may also access a copy of Rands annual report and proxy
statement on our website, www.randcapital.com, or via the SECs home page, www.sec.gov.
You may also contact Miss Donaldson at
the address or telephone number above if you are a shareholder of record of Rand and you wish to receive a separate annual report and proxy statement in the future, or if you are currently receiving multiple copies of our annual report and proxy
statement and want to request delivery of a single copy in the future. If your shares are held in street name and you want to increase or decrease the number of copies of our annual report and proxy statement delivered to your household
in the future, you should contact the broker or other intermediary who holds the shares on your behalf.
Proxy 28
Proxy Statement Rand Capital Corporation
FINANCIAL STATEMENTS AVAILABLE
A copy of Rands 2014 Annual Report containing audited financial statements accompanies this Proxy Statement.
Rand will provide without charge to each shareholder upon written request a copy (without exhibits, unless otherwise requested) of
Rands Annual Report on Form 10-K required to be filed with the Securities and Exchange Commission (SEC) for the year ended December 31, 2014. Requests for copies should be addressed to Investor Relations, Rand Capital
Corporation, 2200 Rand Building, Buffalo, New York, 14203. Requests may also be directed to (716) 853-0802 or to eadonaldson@randcapital.com via email. Copies may also be accessed electronically by means of the SECs home page on the
internet at http://www.sec.gov.
FINAL PAGE OF PROXY STATEMENT
Proxy 29
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RAND CAPITAL
CORPORATION ATTN:
ELSPETH DONALDSON 2200
RAND BUILDING BUFFALO,
NY 14203 |
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VOTE BY INTERNET - www.proxyvote.com |
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Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting
instruction form. |
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS |
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If you would like to reduce the costs incurred by our company in
mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. |
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VOTE BY PHONE - 1-800-690-6903 |
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Use any touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. |
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VOTE BY MAIL |
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Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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To withhold authority to vote for any individual nominee(s), mark For All
Except and write the number(s) of the nominee(s) on the line below. |
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The Board of Directors recommends
you vote FOR the following: |
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1. |
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Election of Directors |
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Nominees |
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01 |
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Allen F. Grum |
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02 Erland E. Kailbourne |
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03 Ross B. Kenzie
04 Robert S. McLeese 05 Reginald B. Newman II |
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06 |
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E. Wycliffe Orr, Jr. |
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07 Jayne K. Rand |
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08 Robert M. Zak |
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The Board of Directors recommends you vote FOR proposals
2 and 3: |
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Abstain |
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To approve, by advisory vote, executive compensation. |
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To ratify the selection of Freed Maxick CPAs, P.C. as our independent registered public accounting firm for the year ending December 31, 2015. |
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NOTE: Such other business as may properly come
before the meeting or any adjournment thereof. |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Signature (Joint Owners)
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement,
Form 10-K is/are available at www.proxyvote.com. |
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RAND CAPITAL CORPORATION
Annual Meeting of Shareholders
April 23, 2015 10:30 AM
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Jayne K. Rand and Allen F. Grum as proxies, each with the power to appoint a substitute, and hereby
authorizes them to represent and to vote as designated below all the shares of Common Stock of Rand Capital Corporation (the Company) held of record by the undersigned at the annual meeting of shareholders of the Company to be held on
April 23, 2015 or any adjournment hereof. This proxy,
when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors recommendations.
Continued and to be signed on reverse side |
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