SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant
to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.
)
AMENDMENT
Filed by the Registrant [ X
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Filed by a Party other than the Registrant [
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Check the appropriate box:
[ ] Preliminary
Proxy Statement
[ ]
Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy
Statement
[ X ] Definitive Additional Materials
[
] Soliciting Material Pursuant to Section
240.14a-12
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(Name of Registrant as
Specified In Its Charter)
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(Name of Person(s)
Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
[ X ] No fee required
[ ] Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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to which transaction applies:
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to which transaction applies:
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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):
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transaction:
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[ ] 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.
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EXPLANATORY NOTE
Page 16
"Security Ownership of Certain
Beneficial Owners and Management"
Ira Sochet, 121 14th Street,
Belleair Beach, FL 33786, was inadvertently omitted in the table as a person known by
the Company to be a beneficial owner of more than 5% of the Company's common
stock.
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TAYLOR DEVICES,
INC.
90 TAYLOR DRIVE
NORTH TONAWANDA, NEW YORK 14120-0748
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO THE SHAREHOLDERS OF TAYLOR DEVICES,
INC.
NOTICE IS HEREBY GIVEN that the Annual
Meeting of Shareholders of TAYLOR DEVICES, INC. (the "Company") will be held at
the Millennium Buffalo, 2040 Walden Avenue, Buffalo, New York on November 3,
2017 at 11:00 a.m. for the following purposes:
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1.
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To elect one Class 1 director of
the Company to serve a three-year term to expire in 2020, or until the
election and qualification of his successor.
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To ratify the appointment of
Lumsden & McCormick, LLP as the independent registered public
accounting firm of the Company for the fiscal year ending May 31,
2018.
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To transact such other business as
may properly come before the meeting or any adjournment(s) or
postponement(s) thereof.
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The Board of Directors has fixed the
close of business on September 15, 2017 as the record date for determining which
shareholders shall be entitled to notice of and to vote at the Annual
Meeting. SHAREHOLDERS WHO
ARE UNABLE TO BE PRESENT PERSONALLY MAY
ATTEND THE MEETING BY PROXY. SUCH SHAREHOLDERS ARE REQUESTED TO DATE, SIGN
AND RETURN THE ENCLOSED PROXY. THE PROXY MAY BE
REVOKED AT ANY TIME
BEFORE IT IS VOTED.
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BY ORDER OF THE BOARD OF
DIRECTORS
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/s/ Reginald B. Newman
II
Reginald B. Newman
II
Secretary
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DATED:
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September 18, 2017
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North Tonawanda, New
York
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IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF
SHAREHOLDERS
The Proxy Statement and
the 2017 Annual Report to shareholders are available at
www.taylordevices.com/investors.html
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PROXY STATEMENT
FOR
THE
ANNUAL MEETING OF SHAREHOLDERS
OF
TAYLOR DEVICES, INC.
90 TAYLOR
DRIVE
NORTH TONAWANDA, NEW YORK 14120-0748
_________________________
TO BE HELD AT THE
MILLENNIUM BUFFALO
2040 WALDEN AVENUE
BUFFALO, NEW YORK
NOVEMBER 3,
2017
This Proxy Statement is furnished to
shareholders by the Board of Directors of Taylor Devices, Inc. in connection
with the solicitation of proxies for use at the Annual Meeting of Shareholders
to be held on November 3, 2017 at 11:00 a.m., and at any adjournments of the
meeting, for the purposes set forth in the accompanying Notice of Annual Meeting
of Shareholders. This Proxy Statement and the accompanying form of proxy
are being mailed to shareholders commencing on or about September 18,
2017.
If the enclosed form of proxy is properly executed and
returned, the shares represented by the proxy will be voted in accordance with
the proxy's instructions. Any proxy given pursuant to this solicitation
may be revoked by the shareholder at any time prior to its use by written notice
to the Secretary of the Company.
The Board of Directors has fixed the close of business
on September 15, 2017 as the record date for determining the holders of common
stock entitled to notice of and to vote at the meeting. On September 15,
2017, the Company had outstanding and entitled to vote a total of 3,454,894
shares of common stock. Each outstanding share of common stock is entitled
to one vote on all matters to be brought before the meeting.
For shares held in the name of a broker or other
nominee, the owner may vote such shares at the meeting if the owner brings with
him or her a letter from the broker or nominee confirming his or her ownership
as of the record date, and a legal proxy.
PROPOSAL 1
ELECTION OF
DIRECTORS
General
Each year directors comprising one of the
three Classes of the Board of Directors of the Company are proposed for election
by the shareholders, each to serve for a three-year term, or until the election
and qualification of his successor. The Board of Directors, acting upon
the recommendation of the Nominating Committee, is responsible for nominating
Mr. Newman as management's nominee to be elected to Class 1 at this Annual
Meeting for a term expiring in 2020. The candidate has previously served
as a director and was elected at prior annual meetings of
shareholders.
The persons named on the enclosed
form of proxy will vote all shares present at the Annual Meeting
for
the election of the nominee, unless a
shareholder, by his or her proxy, directs otherwise. Should
Mr. Newman
be unable to serve, proxies will be voted
in accordance with the best judgment of the person or persons acting under such
authority. Management expects that the nominee will be able to
serve.
5
The Company believes that the nominee has professional
experience in areas relevant to its strategy and operations. The Company
also believes that the nominee has other attributes necessary to guide the
Company and help the Board function effectively, including high personal and
professional ethics, the willingness to engage management and each other in a
constructive and collaborative fashion, the ability to devote significant time
to serve on the Board and its committees and a commitment to representing the
long-term interests of the shareholders. In addition to these attributes,
in each individual's biography set forth below, the Company has highlighted
specific experience, qualifications and skills that led the Nominating Committee
and the Board to conclude that each individual should continue to serve as a
director.
Class 1
Director Whose Term Will Expire in 2020
Reginald B. Newman II
, 79, has served as a director since 2006. He was employed by NOCO
Energy Corp., a diversified distributor and retailer of petroleum and other
energy related products from 1960, retiring in 2003. Mr. Newman is also
Chairman of Prior Aviation Service, Inc. in Buffalo, New York. Mr. Newman
received his B.S. degree in Business Administration from Northwestern University
in 1959. From 1959 to 1960, Mr. Newman was employed by the Ford Motor
Company of Dearborn, Michigan in the product planning department.
Mr. Newman is currently a director of
Dunn Tire LLC and a director and Chairman of Rand Capital Corporation, a
publicly traded company. He retired as a director of M&T Bank
Corporation, a publicly traded company, in 2009. Mr. Newman served as the
Chair of the Board of Trustees of the University at Buffalo Foundation, Inc.
from 1996-2008.
Mr. Newman received the 1997 Executive of
the Year award from the State University of New York at Buffalo. In 1998
Mr. Newman received the Walter P. Cooke Award for Notable and Meritorious
Service to the University presented by the University at Buffalo Alumni
Association. He received the President's Medal from the University in
2003, as well as their highest honor, the Norton Medal in 2006. He is a
former member of the Buffalo Niagara Partnership and was Chairman from 1996
through 1998. Mr. Newman was awarded an Honorary Degree from Canisius
College in 1997.
Mr. Newman's years of service on the
boards of other public companies provide him with insight and perspective from
which to view the Company's operations and the Board's activities. The
Company believes that Mr. Newman's education, positions and experience described
above qualify him to serve as a member of the Board of
Directors.
MANAGEMENT RECOMMENDS
THAT YOU VOTE "FOR" THE NOMINEE.
Class 2 Directors Whose Terms Will
Expire in 2018
Richard G. Hill
, 67, has served as a director since 1991. In November 1991, Mr.
Hill was appointed Vice President of the Company by the Board of
Directors. He had been employed previously by the Company since 1978 as
Vice President of Production. In addition, he has held key project
management positions with the Company on major aerospace and defense
contracts. From 1973 to 1978, Mr. Hill was employed by the Alliance Tool
and Die Company of Rochester, New York as a Project Leader and Design
Engineer. From 1970 to 1973, he was employed by the same firm as an
Engineer in Training, through a co-op program with the Rochester Institute of
Technology. Mr. Hill holds a B.S. degree in Electrical Engineering from
the Rochester Institute of Technology, awarded in 1973.
Mr. Hill has served on the Founding Board
of Directors of the Center for Competitiveness of the Niagara Region and the
Advisory Board to The Center for Industrial Effectiveness. Mr. Hill also
served as Chairman for the Manufacturers Council of the Buffalo Niagara
Partnership, and also served as a board member and Secretary of the State
University of New York at Buffalo's UB Business Alliance Advisory
Board.
The Company believes that Mr. Hill's
engineering background, management experience and his extensive knowledge of the
Company's history, philosophy, financing, products, technology and personnel, as
well as its markets and customers, qualify him to serve as a member of the Board
of Directors.
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John Burgess
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72, has served as a director since 2007. Mr. Burgess is an Operating
Partner of Summer Street Capital LLC and director of Bird Technologies
Corporation of Solon, Ohio.
Mr. Burgess gained his expertise in
international strategy, manufacturing operations and organizational development
from his more than 35 years experience with middle market public and
privately-owned companies. Mr. Burgess served as President and CEO of Reichert,
Inc., a leading provider of ophthalmic instruments, and spearheaded the
acquisition of the company from Leica Microsystems in 2002, leading the company
until its sale in January 2007. Prior to the acquisition, Mr. Burgess
served as President of Leica's Ophthalmic and Educational Divisions before
leading the buyout of the Ophthalmic Division and the formation of Reichert,
Inc. Mr. Burgess earned a BS in Engineering from Bath University in
England, and an M.B.A. from Canisius College.
From 1996 to 1999, Mr.
Burgess was COO of International Motion Controls, a $200 million diversified
manufacturing firm. During his tenure, he led a significant acquisition
strategy that resulted in seven completed acquisitions and 16 worldwide
businesses in the motion control market. Previously, Mr. Burgess operated
a number of companies for Moog, Inc. and Carleton Technologies, including
service for six years as President of Moog's Japanese subsidiary, Nihon Moog
K.K. located in Hiratsuka, Japan.
As a result of the positions and
experience described above, Mr. Burgess demonstrates leadership skills with his
strong background in financial and accounting matters. He serves as
Chairman of the Audit Committee as well as the Audit Committee financial
expert. The Company believes that Mr. Burgess' academic background, and
his experience in executive positions at a range of companies in industries
related to that of the Company, qualify him to serve as a member of the Board of
Directors.
Nominees for Class 3 Directors Whose
Terms Will Expire in 2019
Douglas P. Taylor
,
69, has served as a director since 1976. Employed by the
Company since 1971, Mr. Taylor has held the positions of Director of Sales,
Director of Engineering, Vice-President and Executive Vice-President. He
was appointed President, CEO and Chairman of the Board in April
1991.
Mr. Taylor holds a B.S. degree in Mechanical
Engineering from the State University of New York at Buffalo, awarded in
1971.
Mr. Taylor is widely published within the
shock and vibration community with more than 75 publications. He is the
inventor or co-inventor of 35 patents. Since 1988, Mr. Taylor has hosted
internship programs for engineering students and is affiliated as an industrial
sponsor with the State University of New York at Buffalo, the Erie County State
of New York Board of Co-operative Educational Services and the North Tonawanda
New York Public School System.
Since 1991, Mr. Taylor has participated
in research projects in the field of earthquake protection in association with
the University at Buffalo's Civil, Structural and Environmental Engineering
Department and the Multidisciplinary Center for Earthquake Engineering
Research. As a result of this research, military technology from the Cold
War era is now being used worldwide for seismic and high wind protection of
commercial building and bridge structures.
In 1994, Mr. Taylor was named to the
American Society of Civil Engineers' Subcommittee on the Seismic Performance of
Bridges. In 1998, Mr. Taylor was appointed to an Oversight Committee of
the U.S. Department of Commerce, developing guidelines for the implementation of
damping technology into buildings and other structures, as part of the U.S.
National Earthquake Hazard Reduction Program. In 1998, Mr. Taylor was
awarded the Franklin and Jefferson Medal for his commercialization of defense
technology developed under the U.S. Government's Small Business Innovation
Research Program. In 1999, Mr. Taylor was awarded the Clifford C. Furnas
Memorial Award by the Alumni Association of the University at Buffalo for his
accomplishments in the field of engineering. In 2006, Mr. Taylor was named
to the American Society of Civil Engineers' Blast Protection of Buildings
Standards Committee. In 2006, Mr. Taylor was the recipient of the Dean's
Award for Engineering Achievement by the School of Engineering and Applied
Sciences at the State University of New York at Buffalo. Mr. Taylor was
named Structural Engineer of the Year (2006) by the Engineering Journal, "The
Structural Design of Tall and Special Buildings." In 2015, Mr. Taylor
received the Moisseiff Award for contributions to the science and art of
structural design from the American Society of Civil Engineers. Also
in 2015, Mr. Taylor was inducted into the Space Technology Hall of Fame by NASA
and the Space Foundation. Mr. Taylor is a founding member of the
International Association on Structural Control and Monitoring, and a life
member of the Association for Iron & Steel Technology.
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Mr. Taylor, as the Chief Executive
Officer, serves as the principal interface between management and the
Board. The Company believes that his wide-ranging roles throughout his
career at the Company provide him with significant leadership, industry,
marketing and international experience, which qualify him to serve as a member
of the Board of Directors.
Randall L. Clark
, 74, has served as a director since 1996.
He
is and has been the Chairman of Dunn Tire LLC since 1996. From 1992 to
1996, Mr. Clark was Executive Vice President and Chief Operating Officer of
Pratt & Lambert, until it was purchased by Sherwin Williams. Mr. Clark
holds a B.A. degree from the University of Pennsylvania, and earned his M.B.A.
from the Wharton School of Finance and Commerce.
Mr. Clark has been employed in the tire
industry for many years. He was named President of the Dunlop Tire
Corporation in 1980, was appointed to the Board of Directors in 1983, and named
President and Chief Executive Officer in 1984. He was one of seven chief
executives of operating companies appointed to the Group Management Board of
Dunlop Holdings, PLC. and was Chairman of the Board and Chief Executive Officer
of Dunlop Tire Corporation in North America from 1985 to 1991. In 2012 he
was inducted into the Tire Industry Association hall of fame.
From 1977 to 1980, Mr. Clark was Vice
President of Marketing for the Dunlop Tire Division. From 1973 to 1977, he
was employed by Dunlop as Director of Marketing at the company's Buffalo, NY
headquarters. From 1968 to 1973, Mr. Clark was employed by the B.F.
Goodrich Company.
Mr. Clark is currently a director of
Merchants Mutual Insurance Company. He recently retired as a director of
Computer Task Group, a publicly traded company, and The Ten Eleven Group.
Mr. Clark is a past President of the International Trade Council of Western New
York, past Chairman of the Buffalo Chamber of Commerce, and past Chairman of
Invest Buffalo Niagara. He is also a past Chairman of AAA of Western and
Central New York. Mr. Clark was appointed by Governor George Pataki and
served on the Council for the State University of New York at
Buffalo. Recently he retired from the Board of Trustees of the
University at Buffalo Foundation.
Mr. Clark brings to the Board significant
executive and operational corporate experience. His service as a director
of other public companies allows Mr. Clark to bring strong and effective
leadership to the Board, as well as unique strategic and business insights into
the Company. Mr. Clark's strong experience also facilitates his position
as Chairman of the Nominating and Compensation Committees. The Company
believes that these attributes qualify him to serve as a member of the Board of
Directors
.
Executive Officers
In addition to the individuals named
above, the following is the name, age and position of the other executive
officer of the Company.
Mark V. McDonough, 57, the Treasurer and
Chief Financial Officer of the Company, joined the Company in 2003. Mr.
McDonough is also a director of Tayco Realty Corporation, a wholly-owned
subsidiary of the Company. Before he joined the Company, Mr. McDonough
served as Director of Finance at Saint-Gobain Technical Fabrics, Inc.
Prior to that time, he had been employed as Corporate Controller with
International Motion Control, Inc. Both are manufacturing companies in the
Western New York region.
CORPORATE GOVERNANCE
Board Committees and
Meetings
During the fiscal year ended May 31,
2017, the Board of Directors met three times with all of the directors in
attendance. All Board members traditionally attend the annual meeting,
notwithstanding that the Company does not have a policy with regard to
attendance. All five Board members attended the Company's Annual Meeting
of Shareholders held on October 28, 2016.
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The Executive
Committee
, between meetings of the Board of Directors
and to the extent permitted by law, exercises all of the powers and authority of
the Board in the management of the business of the Company. The Executive
Committee is comprised of Messrs. Taylor, Hill and Newman. The Committee
did not meet in fiscal 2017.
The Audit Committee
represents and assists the Board of Directors with its
oversight of the integrity of the Company's financial statements and internal
controls, the Company's compliance with legal and regulatory requirements, the
independent auditor's qualifications and independence and the performance of the
Company's internal audit function and independent auditor. Except as otherwise
required by applicable laws, regulations or listing standards, all major
decisions are considered by the Board of Directors as a whole.
The Audit Committee, comprised of Messrs.
Clark, Newman and Burgess and chaired by Mr. Burgess, is governed by an Audit
Committee Charter which was revised and adopted by the Board of Directors on
August 12, 2015. Mr. Burgess also serves as the Audit Committee financial
expert. The Audit Committee met five times in fiscal 2017, with all
members in attendance.
The Compensation
Committee
, comprised of Messrs. Clark, Newman and
Burgess and chaired by Mr. Clark, reviews the compensation of the Company's
executive officers and makes recommendations in that regard to the Board as a
whole. The Committee also administers the Company's stock option
plans. The Compensation Committee met twice in fiscal 2017, with all
members in attendance. The Compensation Committee Charter was revised by
the Board on August 14, 2014 and is attached as Appendix A to this Proxy
Statement.
The Nominating
Committee,
comprised of Messrs. Clark, Newman and Burgess
and chaired by Mr. Clark, is responsible for identifying and evaluating
individuals qualified to become Board members and recommending to the Board
candidates to stand for election or re-election as directors. The
Nominating Committee met twice in fiscal 2017, with all members in
attendance. The Nominating Committee Charter was revised by the Board on
August 14, 2014 and is attached as Appendix B to this Proxy
Statement.
Independence.
Messrs.
Clark, Newman and Burgess are independent directors within the meaning of Rule
5605 of the applicable Nasdaq Capital Market listing standards.
Nominating Committee
The Nominating Committee is governed by
the terms of its Charter with respect to the consideration and selection of
nominees proposed for election to the Board of Directors, including those
recommended by shareholders.
The Criteria and
Procedures.
The Company strives to have a Board of
Directors which will work diligently to promote the long-term interests of the
Company and its shareholders. To that end, the Nominating Committee
Charter sets forth certain director qualification criteria (the "Criteria")
which the Nominating Committee and the Board believes are necessary for a
director of the Company to possess, and provides a description of the procedures
to be followed when making a recommendation as to any nominee. So long as
any individual proposed by shareholders meets the Criteria, the Nominating
Committee will consider such recommendations on the same basis as other
candidates. The Criteria include integrity, reputation, judgment,
knowledge, independence, experience and accomplishments, board interaction,
skills and long-term commitment. The Committee is required to apply the
Criteria to candidates recommended by a Nominating Committee member, other
directors and management, as well as to any candidate meeting the Criteria
recommended by shareholders.
During the selection process, the
Nominating Committee seeks inclusion and diversity within the Board and adheres
to the Company's policy of maintaining an environment free from discrimination
based upon race, color, religion, national origin, sex, age, disability, sexual
preference or orientation, marital status or any other unlawful factor.
The Board strives to nominate directors with a variety of complementary skills
so that, as a group, the Board will possess the appropriate talent, skills and
expertise to oversee the Company's business.
The Nominating Committee annually reviews
the requirements relating to diversity and recommends to the Board any changes
it believes appropriate to reflect best practices. In addition, the Board
assesses annually its overall effectiveness by means of a self-evaluation
process. This evaluation includes, among other things, an assessment of
the overall composition of the Board, including a discussion as to whether the
Board has adequately considered diversity, among other factors, in identifying
and discussing director candidates.
9
The Evaluation Process.
The Nominating Committee Charter also
describes the process for identifying and evaluating nominees for director,
including those nominated by shareholders. In each instance, the
Nominating Committee must assess the Board's present and anticipated strengths
and needs, based upon the Company's current and future needs. The
selection of candidates is intended to provide the Board with an appropriate
balance of expertise or experience in accounting and finance, technology,
management, international business, compensation, corporate governance,
strategy, industry knowledge and general business matters.
Management's Nominee.
Messrs. Clark and Burgess recommended Mr.
Newman as management's proposed Class 1 Director nominee to stand for election
by shareholders at this Annual Meeting. In addition to other Criteria, any
nominee recommended to fill a vacancy on the Nominating, Audit or Compensation
Committee must meet independence standards set forth in of Rule 5605 of the
NASDAQ Capital Market listing standards.
Nominees by
Shareholders
.
Shareholders of the Company may make
their suggestions for a director nominee to the entire Board of Directors or to
any individual director, by a submission directed to the Company's Corporate
Secretary's Office. The Corporate Secretary's Office will then forward the
recommendation, together with all supporting documentation, to Mr. Clark, as
Chairman of the Nominating Committee. Supporting documentation must
include a detailed background of the proposed candidate and demonstrate how the
candidate meets the Criteria.
Recommendations should be sent c/o
Corporate Secretary's Office, Taylor Devices, Inc., 90 Taylor Drive, P. O.
Box 748, North Tonawanda, NY 14120-0748.
Communicating with the Board of
Directors
Although the Board of Directors does not
have a formal procedure for shareholders to send communications to the Board of
Directors, a shareholder may communicate with the Company at its website at
www.taylordevices.com/Investors.htm. The Company will relay communications
to specified individual directors if an express request to do so is included in
the shareholder communication.
Code of Ethics
On August 23, 2003, the Company adopted a
Code of Ethics (the "Code") which is a compilation of written standards
reasonably designed to deter wrongdoing and promote honest and ethical
conduct. Code requirements include, among others, the preparation of full,
fair, timely and understandable disclosure in documents that the Company files
with and submits to the SEC; compliance with governmental laws, rules and
regulations; prompt internal reporting of violations to the Code; and
accountability for adherence to the Code. There have been no amendments to
the Code since its adoption.
Board Leadership
Structure
The positions of Chief Executive Officer
("CEO") and Chairman of the Board are both held by Mr. Douglas Taylor. The
Board believes that the combined role of Chairman and CEO is the most effective
leadership structure for the Company and in the best interests of its
shareholders. It serves to promote strong and consistent leadership,
allowing management to speak with a single voice and delineate primary
responsibility for management of the Company. The Board believes that Mr.
Taylor is best suited to serve as Chairman because, as CEO, he is most
knowledgeable regarding the Company's business, can best identify strategic
priorities and opportunities, and thus, more effectively lead discussion at the
Board level to execute the Company's strategy. The Board also believes
that the combined role of Chairman and CEO facilitates the flow of information
between the Board and executive management. In considering its leadership
structure, the Board believes that the majority of independent directors serving
on the Board, and the Company's strong corporate policies and procedures,
appropriately balance the combined roles of Chairman and CEO.
10
Board Risk Oversight
Risk management is primarily the
responsibility of the Company's management; however, the Board has
responsibility for overseeing management's identification and management of
those risks. The Board considers risks in making significant business
decisions and as part of the Company's overall business strategy. The
Board and its committees, as appropriate, discuss and receive periodic updates
from senior management regarding significant risks, if any, to the Company in
connection with the annual review of the Company's business plan and its review
of budgets, strategy and major transactions.
Each Board committee assists the Board in
overseeing management of the Company's risks within the areas delegated to that
committee, and is tasked with reporting to the full Board, as appropriate.
The Audit Committee is responsible for risks relating to its review of the
Company's financial statements and financial reporting processes, the evaluation
of the effectiveness of internal control over financial reporting, and
compliance with legal and regulatory requirements. The Compensation
Committee is responsible for monitoring risks associated with the design and
administration of the Company's compensation programs. The
Nominating Committee oversees risk as it relates to the Company's corporate
governance processes. Each committee has full access to
management. In addition, the Audit Committee meets regularly with the
Company's independent auditors.
Report of the Audit Committee for the
Fiscal Year Ended May 31, 2017
The information contained in this Audit
Committee Report shall not be deemed to be soliciting material, or deemed to be
filed with or incorporated by reference in filings with the U.S. Securities and
Exchange Commission ("SEC"), or subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934.
As required by the terms of the Audit
Committee Charter, the undersigned members of the Audit Committee
have:
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reviewed and discussed the
Company's audited financial statements with management of the
Company;
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2.
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reviewed and discussed with the
Company's independent registered public accounting firm the matters
required to be discussed by
the Public Company
Accounting Oversight Board
Auditing Standards No. 16
(Communication With Audit Committees);
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3.
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received the written disclosures
and the letter from Lumsden & McCormick, LLP, as required by the
Public Company Accounting Oversight Board regarding Lumsden &
McCormick's communications with the Audit Committee concerning
independence, and has discussed with Lumsden & McCormick their
independence; and
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4.
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based on the foregoing, the Audit
Committee has recommended to the Company's Board of Directors that the
Company's audited financial statements be included in its Annual Report on
Form 10-K for fiscal 2017 for filing with the
SEC.
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Respectfully
submitted,
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John Burgess
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Randall L. Clark
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Reginald B. Newman II
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Director Compensation
Each member of the Board of Directors
receives a $3,500 quarterly retainer fee.
The Audit Committee meets independently
of the Board of Directors not less than four times each year. Each
committee member receives a fee of $1,000 per committee meeting. The
Secretary or Assistant Secretary of the meeting receives an additional fee of
$500 per meeting for secretarial services.
The Nominating Committee meets
independently of the Board of Directors not less than twice a year. Each
committee member receives a fee of $500 per committee meeting. The
Secretary or Assistant Secretary of the meeting receives an additional fee of
$250 per meeting for secretarial services.
The Compensation Committee meets
independently of the Board of Directors not less than twice a year. Each
committee member receives a fee of $500 per committee meeting. The
Secretary or Assistant Secretary of the meeting receives an additional fee of
$250 per meeting for secretarial services.
Pursuant to the formula set forth in the
2015 Taylor Devices, Inc. Stock Option Plan, on April 18, 2017, the fixed date
of the grant, each director and the Company's Chief Financial Officer were
granted options to purchase 5,000 shares of the Company's stock. The
exercise price on April 18, 2017 was $13.80, which was the fair market value for
a share of common stock according to the terms of the 2015 Plan. The fair
market value is the mean between the high and low prices for a share of common
stock as quoted by NASDAQ on the date of the grant. If there is only one
price quoted for the day of the grant, the fair market value shall be such
price; and if no such price is quoted for the day of the grant, the fair market
value shall be the previous closing price. In the event that no previous
closing price is available, then the fair market value of one share of Common
Stock on the day the option is granted shall be determined by the Committee or
by the Board.
Director Compensation
Table
|
Name
|
Fees
earned
or
paid in
cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other
compensation
($)
|
Total
($)
|
|
John Burgess
|
$21,000
|
None
|
$16,484
|
None
|
None
|
$1,000
|
$38,484
|
|
Randall L. Clark
|
$21,000
|
None
|
$16,484
|
None
|
None
|
$1,000
|
$38,484
|
|
Reginald B. Newman II
|
$21,000
|
None
|
$16,484
|
None
|
None
|
$1,000
|
$38,484
|
Assumptions made in the valuation of
option awards are described in Note 14 to the Company's Consolidated Financial
Statements included in the Company's Annual Report to Shareholders accompanying
this Proxy Statement.
EXECUTIVE
COMPENSATION
Overview of Compensation
Program
The primary purpose of the Compensation
Committee is to annually review and approve the Company's overall compensation
philosophy and establish corporate goals and objectives in accordance with such
philosophy.
Duties and
Responsibilities
In keeping with its primary purpose, the
committee annually evaluates the performance of the Company's executive
officers; determines and approves the compensation of the CEO, including
individual elements of salary, bonus, supplemental retirement, incentive and
equity compensation, and determines and approves executive officer (non-CEO)
compensation, incentive compensation plans and equity-based plans. In its
deliberations, the committee considers company performance, compensation at
comparable companies, past years' compensation to the company's executive
officers and other relevant factors.
The following table sets forth certain
information concerning compensation of and stock options held by the Company's
Chief Executive Officer, Chief Financial Officer and Vice President.
Summary Compensation
Table
|
Name
and
principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Nonequity
incentive
plan
compensation
($)
|
Change in
pension value and
nonqualified
eferred
compensation
earnings
($)
|
All
other
compensation
($)
|
Total
($)
|
|
Douglas P. Taylor
Chairman,
President,
Chief Executive Officer
|
2017
2016
|
$215,414
$215,246
|
-
$255,545
|
None
None
|
$16,484
$16,667
|
-
-
|
None
None
|
$70,750
1
$63,250
2
|
$302,648
$550,708
|
|
Mark V. McDonough
Chief
Financial Officer
|
2017
2016
|
$147,753
$145,742
|
-
$174,684
|
None
None
|
$16,484
$16,667
|
-
-
|
None
None
|
$55,750
$48,250
|
$219,987
$385,343
|
|
Richard G. Hill
Vice
President
|
2017
2016
|
$169,271
$169,139
|
-
$201,005
|
None
None
|
$16,484
$16,667
|
-
-
|
None
None
|
$70,750
3
$63,250
4
|
$256,505
$450,061
|
Pursuant to its Management Bonus Policy,
for the fiscal year ended May 31, 2017, the Company did not pay bonuses
to the executive officers named in the Summary Compensation Table above.
Under the policy, the Compensation Committee may approve payment for performance
based on an amount, calculated in the aggregate for all participants, and of no
more than 15% of net income of the Company for the fiscal year then
ended.
Option awards include 5,000 options
awarded to Mr. Taylor in 2016 and 2017; 5,000 options awarded to Mr. Hill
in 2016 and 2017; and 5,000 options awarded to Mr. McDonough in 2016 and
2017. See also Security Ownership of Certain Beneficial Owners and
Management.
Assumptions made in the valuation of
option awards are described in Note 14 to the Company's Consolidated Financial
Statements included in the Company's Annual Report to Shareholders accompanying
this Proxy Statement.
1
Includes
$14,000 for fees Mr. Taylor earned as a Director in fiscal year
2017.
2
Includes $14,000 for
fees Mr. Taylor earned as a Director in fiscal year 2016.
3
Includes $14,000 for fees Mr. Hill earned
as a Director in fiscal year 2017.
4
Includes $14,000 for fees Mr. Hill earned as
a Director in fiscal year 2016.
14
Outstanding Equity Awards at Fiscal 2017
Year-End
|
|
Option
Awards
|
Stock
Awards
|
|
Name
|
Number
of
securities
underlying
unexercised
options
(#)
exercisable
|
Number of
securities
underlying
unexercised
options
(#)
unexercisable
|
Equity
incentive plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number of
shares or
units of
stock that
have not
vested
(#)
|
Market
value of
shares
or
units of
stock that
have not
vested
($)
|
Equity
incentive
plan
awards:
Number of
unearned
shares,
units or
other
rights that
have not
vested
(#)
|
Equity
incentive plan
awards:
Market or
payout value
of unearned
shares, units
or other
rights
that
have not
vested
($)
|
|
Douglas P.
Taylor
|
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
|
None
|
None
|
$ 6.3500
$
5.6850
$11.2850
$ 7.7400
$
8.9851
$12.2000
$16.4000
$13.8000
|
4/18/20
4/18/21
4/18/22
4/18/23
4/18/24
4/18/25
4/18/26
4/18/27
|
None
|
None
|
None
|
None
|
|
Mark V.
McDonough
|
4,000
4,000
5,000
5,000
5,000
5,000
5,000
|
None
|
None
|
$ 6.1700
$
8.0550
$ 7.7400
$
8.9851
$12.2000
$16.4000
$13.8000
|
7/23/17
8/07/22
4/18/23
4/18/24
4/18/25
4/18/26
4/18/27
|
None
|
None
|
None
|
None
|
|
Richard G. Hill
|
5,000
5,000
|
None
|
None
|
$16.4000
$13.8000
|
4/18/26
4/18/27
|
None
|
None
|
None
|
None
|
Employment and Change in Control
Agreements
As of August 26, 2014, Messrs. Taylor,
Hill and McDonough (each, an "Executive") entered into Employment Agreements
with the Company (together, the "Agreements"). By their terms, the
Agreements expire on December 31, 2017, provided however, that, upon written
notice given by either party to the other at least 30 days prior to the
expiration date, either of the Agreements may be renewed by mutual agreement of
the parties. Prior to any renewal by the Company, the Board of Directors
(acting, in the case of Mr. Taylor or Mr. Hill, by a majority of its
disinterested members), is required to conduct a comprehensive evaluation and
review of the performance of the Executive for purposes of determining whether
to renew his Agreement. Under the Agreements, Messrs. Taylor, Hill and
McDonough are entitled to receive base salaries of not less than $212,034 per
year, $166,781 per year and $144,941 per year, respectively, together with such
employee benefits and perquisites as were available to them immediately prior to
August 26, 2014. The Company retains the right to terminate each Executive
for "Cause," without compensation. "Cause" is defined to include personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of law, or willful material breach of the Agreement. If the
Company terminates an Executive without cause, or if an Executive resigns
because the Company has failed to appoint him to the office he currently holds,
or makes any material change in his functions, duties, or responsibilities, the
terminated Executive is entitled to a payment equal to the greater of the
payments due him for the remaining term, or 1.2 times the average of his three
preceding years' cash compensation plus contributions to employee benefit
plans. In the event of a "Change in Control," as defined in the
Agreements, followed by termination of the Executive's employment, the Company
has agreed to pay each Executive a sum equal to the greater of the payments due
him for the remaining term, or 2.99 times the average of the five preceding
years' cash compensation, plus contributions to employee benefit plans, except
that the sum shall be reduced to an amount that does not include an "excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code.
If an Executive voluntarily terminates his employment absent
any Change in Control, the Agreements provide that the Executive will not
compete with the Company for a period of two years in any location where the
Company has made sales within the five years preceding such
termination.
15
Security Ownership of
Certain Beneficial Owners and Management
The following table sets forth certain
information regarding the beneficial ownership of the Company's common stock as
of September 8, 2017, with respect to (i) each person known by the Company to be
the beneficial owner of more than 5% of the Company's common stock, (ii) each of
the Company's directors and nominees for director, (iii) each named executive
officer and (iv) all of the directors and executive officers as a group.
All information is based solely upon ownership filings made by such persons with
the Securities and Exchange Commission, or upon information provided by such
persons to the Company.
Name of Beneficial Owner
|
Number of
Shares
|
|
Percentage
of
Common Stock Owned
|
|
|
|
|
|
|
|
|
|
|
|
|
Ira Sochet
|
|
196,936
|
|
|
|
|
5.7
|
|
|
121 14th Street
|
|
|
|
|
|
|
|
|
|
Belleair Beach. FL 33786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reginald B. Newman II
|
40,500
|
|
(1)
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
Richard G. Hill
|
121,234
|
|
(1) (2) (3)
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
John Burgess
|
55,000
|
|
(1)
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
Douglas P. Taylor
|
133,484
|
|
(1) (2)
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
Randall L. Clark
|
60,000
|
|
(1) (4)
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
Mark V. McDonough
|
37,000
|
|
(1)
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
All of the directors and executive
officers as a group
|
447,218
|
|
|
|
13.0
|
|
|
(1)
|
Includes options granted to
directors and officers which have not been exercised: 20,000 by Mr.
Newman, 10,000 by Mr. Hill, 50,000 by Mr. Burgess, 40,000 by Mr. Taylor,
50,000 by Mr. Clark and 29,000 by Mr. McDonough. These options were
granted pursuant to the 2005 Taylor Devices, Inc. Stock Option Plan ("2005
Plan"), the 2008 Taylor Devices, Inc. Stock Option Plan ("2008 Plan"), the
2012 Taylor Devices, Inc. Stock Option Plan ("2012 Plan") and the 2015
Taylor Devices, Inc. Stock Option Plan ("2015 Plan").
|
|
(2)
|
Messrs. Taylor and Hill are
brothers-in-law.
|
|
(3)
|
Includes 24,351 shares, held
beneficially and of record by Joyce Taylor Hill, wife of Mr. Hill and
sister of Mr. Taylor. As to these shares, Mr. Hill disclaims any
beneficial ownership.
|
|
(4)
|
Includes 10,000 shares, held
beneficially and of record by Suzanne Jones Clark, wife of Mr.
Clark. As to these shares, Mr. Clark disclaims any beneficial
ownership.
|
Indemnification Insurance for
Directors and Officers
On August 24, 2017, the Company purchased
a director and officer indemnification insurance policy written by the Federal
Insurance Company through Chubb. The renewal was for a one year period at
an annual premium of $54,145. The policy provides indemnification benefits
and the payment of expenses in actions instituted against any director or
officer of the Company for claimed liability arising out of his conduct in such
capacities. No payments or claims for indemnification or expenses have
been made under any directors' and officers' insurance policies purchased by the
Company.
The Company has entered into Indemnity
Agreements with its directors and certain officers. Although the Company's
by-laws and the New York Business Corporation Law (the "BCL") authorize the
Company to indemnify directors and officers, neither require the directors and
officers to be indemnified during the pendency of litigation or specify the
times at which the Company is obligated to reimburse an indemnified person for
expenses. The Indemnity Agreements provide that the Company will advance
litigation expenses to the person indemnified while the action is pending, upon
the indemnified person's assurance (as required by the BCL) that the advance
will be returned if the indemnified person is ultimately found not to be
entitled to it.
16
Equity Compensation Plan
Information
The following table sets forth
information regarding equity compensation plans of the Company as of May 31,
2017.
|
|
.
|
|
Equity Compensation Plan
Information
|
|
Plan
Category
|
|
Number of
securities
to be issued upon
exercise of
outstanding
options,
warrants, and rights
(a)
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity
compensation
plans (excluding
securities reflected
in
column
(a)
)
(c)
|
|
Equity compensation plans approved
by security holders
|
|
|
|
|
|
|
|
|
2005 Stock Option Plan
2008
Stock Option Plan
2012 Stock Option Plan
2015 Stock Option
Plan
|
|
25,500
63,000
113,250
51,750
|
|
$
4.48
$ 8.07
$11.67
$15.97
|
|
-
-
-
108,250
|
|
Equity compensation plans not
approved by security holders
|
|
|
|
|
|
|
|
|
2004
Employee
Stock Purchase Plan (1)
|
|
-
|
|
-
|
|
225,004
|
|
Total
|
|
53,500
|
|
|
|
333,254
|
|
(1)
|
The Company's 2004 Employee
Stock Purchase Plan (the "Employee Plan") permits eligible employees to
purchase shares of the Company's common stock at fair market value through
payroll deductions and without brokers' fees. Such purchases are
without any contribution on the part of the
Company.
|
OTHER
PLANS
The Company adopted an Employee Stock
Purchase Plan in 2004. As of September 7, 2017, there are 225,004 shares
available for sale to qualified employees. The Company also provides
a 401(k) plan.
TRANSACTIONS WITH
MANAGEMENT AND OTHERS
None.
17
PROPOSAL 2
RATIFICATION OF THE
APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee engaged Lumsden &
McCormick, LLP to serve as the Company's independent registered public
accounting firm for the fiscal year ending May 31, 2018. Although the
Audit Committee is not required to do so, it is submitting its expected
selection for ratification to the Annual Meeting in order to ascertain the views
of the shareholders. The Audit Committee will not be bound by the vote of
the shareholders; however, if the proposed selection is not ratified, the Audit
Committee will revisit its selection.
A representative of Lumsden &
McCormick, LLP will be present at the meeting, will be available to respond to
appropriate questions and will have the opportunity to make a statement if he or
she desires to do so.
The Audit Committee approves all
professional services, including tax related services, provided to the Company
by Lumsden & McCormick, LLP. With regard to "Audit and Audit-Related"
services, the Committee reviews the annual audit plan and approves the estimated
audit budget in advance. The aggregate fees billed by Lumsden &
McCormick, LLP for professional services to the Company were $94,000 and $92,000
for the fiscal years ended May 31, 2017 and 2016.
Audit Fees
The aggregate fees billed by Lumsden
& McCormick, LLP for professional services rendered in connection with the
audit of the Company's annual financial statements, the review of the Company's
quarterly financial statements and services that are normally provided in
connection with statutory and regulatory filings or engagements were $83,000 and
$81,000 for the fiscal years ended May 31, 2017 and 2016.
Audit-Related Fees
There were no aggregate fees billed by
Lumsden & McCormick, LLP for professional assurance and related services
reasonably related to the performance of the audit of the Company's financial
statements, but not included under Audit Fees, for the fiscal years ended May
31, 2017 and 2016.
Tax Fees
The aggregate fees billed by Lumsden
& McCormick, LLP for professional services for tax compliance, tax advice
and tax planning were $11,000 for the fiscal years ended May 31, 2017 and
2016.
All Other Fees
None.
Pre-approval Policies and
Procedures
The Audit Committee has adopted a policy
that requires advance approval of all audit, audit-related, tax services and
other services performed by the independent auditor. The policy provides
for pre-approval by the Audit Committee of specifically defined audit and
non-audit services. Unless the specific service has been previously
pre-approved with respect to that year, the Audit Committee must approve the
permitted service before the independent auditor is engaged to perform
it.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
APPOINTMENT OF LUMSDEN & MCCORMICK, LLP AS THE COMPANY'S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MAY 31, 2018 BE
RATIFIED AND URGES YOU TO VOTE "FOR" THIS PROPOSAL.
18
GENERAL
INFORMATION
Voting
Under t
he Business
Corporation Law of New York ("BCL") and the Company's By‑laws, the presence, in
person or by proxy, of a majority of the outstanding common shares is necessary
to constitute a quorum of the shareholders to take action at the Annual
Meeting. The shares which are present or represented by a proxy will be
counted for quorum purposes regardless of whether or not a broker with
discretionary authority fails to exercise discretionary voting authority (a
"broker non-vote") with respect to any particular matter.
A nominee standing for election must be
elected by a plurality of votes cast at the Annual Meeting, and if elected,
serve in the class of directors to which he is elected. Withheld votes and
broker non-votes will have no effect on the vote for a nominee.
Any other actions properly brought before
the meeting, including Proposal 2, ratification of Lumsden & McCormick, LLP
as the Company's independent registered public accounting firm for the fiscal
year ending May 31, 2018, requires a majority of the votes cast at the
meeting by shareholders entitled to vote. Abstentions will have the same
effect as a vote against the action. Broker non-votes will have no effect
on the vote upon the action.
For voting purposes, all proxies marked
"for," "against," "abstain," or "withhold authority" will be counted in
accordance with such instruction as to each item.
Expenses
The expenses of this solicitation,
including the costs of preparing and mailing this Proxy Statement and
accompanying material, will be borne by the Company. The Company has
retained the services of Regan & Associates, Inc. to assist in the
solicitation of proxies under a contract providing for payment of $7,000,
including out-of-pocket expenses. In addition to solicitations by mail,
Regan & Associates, Inc. and regular employees of the Company may solicit
proxies in person, by mail or by telephone, but no employee of the Company will
receive any compensation for solicitation activities in addition to his or her
regular compensation. Expenses may also include the charges and expenses
of brokerage houses, nominees, custodians and fiduciaries for forwarding proxies
and proxy materials to beneficial owners of shares.
Shareholder Proposals for the 2018
Annual Meeting
Procedures for a nomination by a
shareholder for election as a director are described under "
Nominees by
Shareholders
" on page 8 of this Proxy Statement.
Proposals of shareholders intended to be
presented to the year 2018 Annual Meeting of Shareholders must be received by
the Secretary of the Company prior to May 21, 2018 for inclusion in the Proxy
Statement and form of proxy. Shareholders wishing to propose a matter for
consideration at the 2018 Annual Meeting of Shareholders must follow certain
specified advance notice procedures set forth in the Company's by-laws, a copy
of which is available upon written request to: Reginald B. Newman II, Secretary,
Taylor Devices, Inc., 90 Taylor Drive, P.O. Box 748, North Tonawanda, New York
14120‑0748.
The by-laws designate procedures for the
calling and conduct of a meeting of shareholders, including, but not limited to,
specifying who may call the meeting, what business may be conducted, the
procedures with respect to the making of shareholder proposals, and the
procedures and requirements for shareholder nomination of directors.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Exchange Act
requires the Company's executive officers, directors and controlling
shareholders to file initial reports of ownership and reports of changes of
ownership of the Company's common stock with the Securities and Exchange
Commission and the Company. Based solely on a review of Forms 3, 4 and 5
furnished to the Company during the 2016 fiscal year, all reporting persons
filed the required forms in accordance with the provisions of Section
16(a).
19
Financial and Other
Information
The financial statements of the Company for the fiscal
year ended May 31, 2017 are contained in the Company's 2017 Annual Report which
accompanies this Proxy Statement.
OTHER MATTERS
The
Board of Directors knows of no other matters to be voted upon at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of proxy to vote on
such matters in accordance with their judgment.
|
|
By Order of the Board of
Directors
|
|
|
/s/Reginald B. Newman
II
|
|
|
Reginald B. Newman
II
|
|
Dated:
|
September 18, 2017
|
Secretary
|
|
|
North Tonawanda, New
York
|
|
20
APPENDIX A
CHARTER OF THE
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF TAYLOR DEVICES,
INC.
(Revised August 14,
2014)
Purpose
The primary purpose of the committee is
to have direct responsibility to:
-
Review and approve the company's
overall compensation philosophy and the corporate goals and objectives within
such philosophy;
-
In conjunction with the other
independent directors (as directed by the board), evaluate the CEO's and
executive officers' performance in light of those goals and
objectives;
-
Together with the other independent
directors (as directed by the board), determine and approve the CEO's
compensation based on this evaluation;
-
Review and approve executive officer
(non-CEO) compensation, incentive compensation plans and equity-based
plans.
Composition
At least two members.
The committee shall consist of at least two directors. The
board shall designate a committee member as the chairperson of the committee, or
if the board does not do so, the committee members shall appoint a committee
member as chairperson by a majority vote of the authorized number of committee
members.
Independence.
All committee members shall be independent as defined in the Nasdaq
listing standards, as they may be amended from time to time (the "listing
standards"). In addition, all committee members shall qualify as
"non-employee directors" within the meaning of SEC Rule 16b-3.
Appointment.
Subject to any requirements of the listing standards, the board may
appoint and remove committee members in accordance with the company's
by-laws. Committee members shall serve for such terms as may be fixed by
the board, and in any case at the will of the board whether or not a specific
term is fixed.
Duties and
Responsibilities
Compensation goals.
The committee shall review and approve at least annually the
company's overall compensation philosophy and the corporate goals and objectives
within such philosophy.
Determination of Executive Officer
Compensation.
The committee shall:
-
Evaluate at least annually the
performance of the company's executive officers in light of the corporate
goals and objectives. For purposes of this charter, "executive officers"
mean the individuals classified by the company as officers for purposes of SEC
rules under Section 16 of the Securities Exchange Act of
1934.
-
At least annually, together with the
other independent directors (as directed by the board), in light of the
corporate goals and objectives and the performance evaluations, determine and
approve the compensation of the CEO, including individual elements of salary,
bonus, supplemental retirement, incentive and equity compensation. At
least annually, determine and approve executive officer (non-CEO)
compensation, incentive compensation plans and equity-based plans.
21
-
Review, as the committee considers
appropriate in setting executive officer compensation, company performance and
relative shareholder return, compensation at comparable companies, past years'
compensation to the company's executive officers, and other relevant
factors.
-
Review and approve all employment
agreements, separation and severance agreements, and other compensatory
contracts, arrangements, perquisites and payments with respect to the CEO, and
review and make recommendations to the board regarding all such agreements,
contracts, arrangements, perquisites and payments with respect to other
executive officers.
-
In any deliberations or voting to
determine the compensation of the CEO, the CEO must not be present; however,
in any deliberations regarding the compensation of other executive officers,
the committee may elect to invite the CEO to be present but not vote.
Non-employee director
compensation.
The committee shall recommend to the
board of directors compensation programs for non-employee directors, committee
chairpersons and committee members, consistent with any applicable requirements
of the listing standards for independent directors and including consideration
of cash and equity components of this compensation.
Equity plan awards.
The committee shall grant stock options, restricted stock and other
discretionary awards under the company's stock option and other equity incentive
plans, and otherwise exercise the authority of the board of directors with
respect to the administration of the company's stock-based and other incentive
compensation plans. Grants or awards to the CEO shall require the approval
of the independent directors. The committee may delegate to one or more
officers designated by the committee the authority to make grants of options and
restricted stock to eligible individuals other than directors and officers,
provided that the committee shall have fixed the exercise price or a formula for
determining the exercise price for each grant, approved the vesting schedule,
authorized any alternative provisions as are necessary or desirable to
facilitate legal compliance or to ensure the effectiveness or tax-qualified
status of the award under the laws of countries outside the U.S. when grants are
made to non-U.S. employees, approved the form of documentation evidencing each
grant, and determined the number of shares or the basis for determining such
number of shares by position, compensation level or category of personnel.
Any officer to whom such authority is delegated shall regularly report to the
committee the grants so made.
Evaluate and approve stock and
incentive plans.
The committee shall periodically
review and make recommendations to the board concerning the company's stock and
incentive compensation plans. The committee shall approve all equity
arrangements and plans, and amendments to these arrangements or plans that may
be exempt from the general requirement of the listing standards to obtain
stockholder approval of equity arrangements, plans and amendments, or for which
approval by the committee is otherwise appropriate or required under applicable
laws or listing standards.
Committee report.
The committee shall after each fiscal year prepare a committee
report on executive compensation for distribution among the entire Board of the
Company, including a discussion of the committee's compensation policies
applicable to executive officers.
Other functions.
The committee may perform any other activities consistent with this
charter, the company's corporate governance documents and applicable listing
standards, laws and regulations as the committee or the board considers
appropriate.
Annual performance
review.
The committee shall evaluate its own
performance as a committee and this charter on an annual
basis.
22
Meetings, reports and
resources
Meetings.
The committee shall meet as often as it determines is necessary, but not
less than annually. The committee may also hold special meetings or act by
unanimous written consent as the committee may decide consistent with the
company's by-laws. The committee may meet in separate executive sessions
with other directors, the CEO and other company employees, agents or
representatives invited by the committee.
Procedures.
The committee may establish its own procedures, including the formation
and delegation of authority to subcommittees, in a manner not inconsistent with
this charter, the company's by-laws and other corporate governance documents,
applicable laws or regulations, or the listing standards. The chairperson
or majority of the committee members may call meetings of the committee. A
majority of the authorized number of committee members shall constitute a quorum
for the transaction of committee business, and the vote of a majority of the
committee members present at a meeting at which a quorum is present shall be the
act of the committee, unless in either case a greater number is required by this
charter, the by-laws or the listing standards. The committee shall keep
written minutes of its meetings and deliver copies of the minutes to the
corporate secretary for inclusion in the corporate records.
Reports.
The committee shall provide to the board at an appropriate time, before
the preparation of the company's proxy statement for its annual meeting, the
report of the compensation committee. The committee shall report to the
board annually the results of the annual review by the committee of its own
performance. The committee shall further report to the board on the major
items covered by the committee at each committee meeting, and provide additional
reports to the board as the committee may determine to be
appropriate.
Committee access and
information.
The committee is at all times
authorized to have direct, independent and confidential access to the company's
other directors, management and personnel to carry out the committee's
purposes. The committee is authorized to obtain at the company's expense
compensation surveys, reports on the design and implementation of compensation
programs for the company's directors, officers and employees, and other data and
documentation as the committee considers appropriate.
Committee advisers and
funding.
The committee shall have sole authority
to retain at the company's expense and terminate any compensation consulting
firm, independent counsel or other advisers to the committee and to approve the
related fees and other retention terms.
Reliance on others.
Nothing in this charter is intended to preclude or impair the
protection provided in Section 717 of the New York Business Corporation Law for
good faith reliance by members of the committee on reports or other information
provided by others.
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24
APPENDIX B
Taylor Devices,
Inc.
NOMINATING COMMITTEE
CHARTER
(Revised August 14,
2014)
The
Nominating Committee of Taylor Devices, Inc. shall be a standing committee of
the Board of Directors; and shall be comprised of not fewer than three members
of the Board, all of whom shall be "independent" within the meaning of
applicable NASD listing standards. Such standards are set forth on
Attachment A, "Director Independence Standards," and may be revised from time to
time.
In its
consideration and selection of nominees proposed for election to the Board of
Directors, the Nominating Committee shall at all times be governed by the
"Director Nominating Process and Policy," attached as Attachment B; and shall
take into account the qualifications set forth on Attachment C, "Director
Qualification Criteria."
The
Nominating Committee shall consider recommendations for director nominees made
by shareholders (including self-nominees) on the same basis as other candidates,
so long as the individuals proposed by shareholders meet Taylor's Director
Qualification Criteria, and each submission is accompanied by the information
required in paragraph 4 of Attachment B.
Shareholder recommendations for director nominees may be made in writing c/o the
Corporate Secretary's Office, at the address shown on Attachment D, "Shareholder
Communications with the Board," or electronically at Taylor's internet web
site.
Attachment A -
Director Independence
Standards
Attachment B -
Director Nominating Process and
Policy
Attachment C -
Director Qualification
Criteria
Attachment D -
Shareholder Communications with the
Board
As approved by the Board of Directors of Taylor Devices, Inc.
on August 14, 2014
25
ATTACHMENT A
Taylor Devices,
Inc.
Director Independence Standards
The
Board of Directors of Taylor Devices, Inc. has adopted Director Independence
Standards to assist in its determination of director independence. To be
considered "independent" for purposes of these standards, the Board must
determine that the director has no material relationship with Taylor, other than
as a director, that would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. In each case, the Board will
broadly consider all relevant facts and circumstances and will apply the
following standards, based on the independence standards established by the
NASD:
1. A director will not be considered "independent" if the
following conditions are present:
-
The director is, or at any time during the past three
years, was employed by Taylor or by any parent or subsidiary of
Taylor;
-
The director, or a Family Member of the director, accepted
any payments from Taylor or any parent or subsidiary of Taylor in excess of
$120,000 during the current or any of the past three fiscal years, other
than compensation for Board or Board committee service; payments arising
solely from investments in Taylor's securities; compensation paid to a
family member who is a non-executive employee of Taylor; benefits under a
tax-qualified retirement plan or non-discretionary spending; or certain
loans permitted under Section 13(k) of the Securities Exchange Act of
1934;
-
The director is a Family Member of an individual who is, or
at any time during the past three years was, employed by Taylor or by any
parent or subsidiary of Taylor as an executive officer;
-
The director, or a Family Member of the director, is a
partner in, or a controlling shareholder or an executive officer of, any
organization to which Taylor made, or from which Taylor received, payments
(other than payments arising solely from investments in Taylor's securities
or payments under non-discretionary charitable contribution matching
programs) for property or services in the current or any of the past three
fiscal years that exceed 5% of the recipient's consolidated gross revenues
for that year, or $200,000, whichever is more;
-
The director, or a Family Member of the Director, was
employed as an executive officer of another entity where at any time during
the past three years any of Taylor's present executives serve on that
entity's compensation committee; or
-
The director, or a Family Member of the Director, is a
current partner or employee of Taylor's outside auditor or worked on
Taylor's audit at any time during any of the past three years.
2.
For
purposes of these standards, a "Family Member" includes a person's spouse,
parents, children, and siblings, whether by blood, marriage or adoption, or
anyone residing in such person's home.
26
ATTACHMENT B
Taylor Devices,
Inc.
Director Nominating Process and Policy
The following is the process and policy
that the Nominating Committee of Taylor shall follow when selecting nominees for
director to the Board of Directors of the Company.
1 The Committee shall utilize the
Director Qualification Criteria established by the Committee to select the most
qualified candidates.
2. The Committee shall solicit candidate
recommendations from Committee members, other Directors and
management.
3. The Committee may engage the services of
search firms and advisors to help the Committee identify and screen potential
director nominees.
4. The Committee shall consider
recommendations for director nominees made by shareholders and other sources
(including self-nominees) if these individuals meet the Director Qualification
Criteria. For consideration by the Committee, the submission must be sent
to the Corporate Secretary's Office and shall include a detailed background of
the suggested candidate demonstrating how the individual meets the Director
Qualification Criteria. If a candidate proposed by a shareholder or other
source meets the Director Qualification Criteria, the individual will be
considered on the same basis as other candidates.
5. The Committee shall assess the Board's
current and anticipated strengths and needs based upon the Board's current
profile and Taylor's current and future needs. The Committee should select
candidates so that the Board has an appropriate balance of expertise or
experience in accounting and finance, technology, management, international
business outside of the United States, compensation, corporate governance,
strategy, industry knowledge and general business matters.
6. The Committee shall screen the slate of
director candidates to identify the individuals who best fit the Director
Qualification Criteria and the Committee's assessment of the Board's
needs.
7. During the selection process, the
Committee shall seek inclusion and diversity within the Board and adhere to
Taylor's policy of maintaining an environment free from discrimination based
upon race, color, religion, national origin, sex, age, disability, sexual
preference or orientation, marital status or any other unlawful
factor.
8. Prior to nomination of a new director,
the Committee may retain an advisor to check the references and background on
the candidate. In addition, the Committee will follow other prudent practices
prior to nomination, such as interviews of the potential nominee with Board
members and senior management.
9. Based upon the results of the foregoing,
the Committee shall (a) recommend for election by the Board, a candidate to fill
a vacancy or a newly created directorship, or (b) for each annual meeting,
recommend for nomination by the Board a slate of directors for the election by
shareholders.
27
ATTACHMENT C
Taylor Devices,
Inc.
Director Qualification Criteria
Taylor
Devices, Inc. strives to have a Board of Directors consisting of members who
will work diligently to promote the long-term interests of the Taylor and its
shareholders. Taylor's Nominating Committee and the Board of Directors will take
into account the following criteria when determining the qualifications of a
candidate for director.
1. INTEGRITY. Directors should have
the highest level of integrity and ethical character and share Taylor's
values.
2. REPUTATION. Directors should have
reputations, both personal and professional, consistent with Taylor's image and
reputation.
3. JUDGMENT. Directors should have the
ability to exercise sound business judgment on a broad range of
issues.
4. KNOWLEDGE. Directors should be
financially literate and have a sound understanding of business strategy,
business environment, corporate governance and board operations.
5. INDEPENDENCE. Directors who are not
current or former management should meet the Director Independence
Standards. In addition, directors should be independent in their thought
and judgment so that they represent the long-term interests of all shareholders
of Taylor.
6. EXPERIENCE AND ACCOMPLISHMENTS.
Directors should have significant experience, and proven performance in
professional endeavors. In particular, directors should have experience as
a CEO, COO, CFO, or other high level business or leadership position in
companies, government, educational or other non-profit institutions.
7. BOARD INTERACTION. Directors should
value board and team performance over individual performance, demonstrate
respect for others and facilitate superior board performance. Directors
should be actively involved in the Board and its decision-making.
8. COMMITMENT. Directors should be
able and willing to devote the required amount of time to Taylor's affairs,
including preparing for and attending meetings of the Board and its committees.
Other board memberships, current occupation, meeting attendance and preparedness
at meetings should be taken into consideration.
9. SKILLS. Directors should have
expertise in one or more of the following areas: accounting and finance,
technology, management, international business outside of the United States,
compensation, corporate governance, strategy, industry knowledge and general
business matters.
10. LONG-TERM COMMITMENT. Directors should have the
ability and commitment to serve on the Board for an extended
period.
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ATTACHMENT D
Taylor Devices,
Inc.
Shareholder Communications with the Board
Shareholders of Taylor Devices, Inc. may communicate with the Board of Directors
or individual directors through the Corporate Secretary's Office of Taylor, as
follows:
Taylor
Devices, Inc.
Corporate Secretary
90 Taylor Drive
PO Box 748
North
Tonawanda, New York 14120-0748
Shareholder communications received by the Corporate Secretary's Office shall be
handled in the following manner:
1. Shareholder communications will be
reviewed by the Corporate Secretary's Office to determine the appropriate
action.
2. Any communications that (a) allege or
report misconduct or fiscal improprieties, (b) raise issues about internal
accounting controls or other accounting or audit matters, or (c) raise
concerns about other significant matters will be directed to the Chairman of the
Audit Committee.
3. If a shareholder communication requests
information about Taylor, the Board, or any individual director, and the request
can be answered with information that can be shared publicly, the Corporate
Secretary's Office may respond without notifying the directors.
4. If a shareholder communication makes a
recommendation for a director nominee to Taylor's Board of Directors, the
Corporate Secretary's Office will forward the recommendation and supporting
information to the Chairman of the Nominating Committee.
5. If a shareholder communication is of
another nature, the Corporate Secretary's Office will determine if a response is
appropriate and can be made by Taylor. If a response is appropriate, the
Company may respond directly on behalf of the Board or any of the
directors.
6. The Corporate Secretary's Office will
periodically provide the Chairman of the Board, the Chairman of the Audit
Committee, or the Chairman of the Nominating Committee, as appropriate, with
information about the number and types of shareholder communications received,
the number of responses sent, and the disposition, if applicable.
7. Copies of shareholder communications
shall be provided to any director upon the director's request. If a director
requests that all shareholder communications sent to the director care of the
Company be forwarded to him, the Corporate Secretary's Office shall promptly
forward all such communications to the director.
8. The Corporate Secretary's Office will
keep copies of all shareholder communications for a period of time consistent
with Taylor's records retention policy.
9. Taylor does not guarantee the
confidentiality of any communication from shareholders.
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30
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas P. Taylor
and Reginald B. Newman II, and each of them, with full power of substitution, as
proxies for the undersigned at the Annual Meeting of Shareholders of TAYLOR
DEVICES, INC. to be held at the Millennium Buffalo, 2040 Walden Avenue, Buffalo,
New York
on November 3, 2017 at 11:00 A.M., and
at any adjournment thereof, to vote and act with respect to all common shares of
the Company which the undersigned would be entitled to vote, with all the power
the undersigned would possess if present in person.
Please mark, sign and date, and promptly return
this proxy form using the enclosed envelope. When properly completed, it
will be voted exactly as you instruct. If you sign and return this proxy,
without otherwise completing it, your shares will be voted FOR Items 1 and
2 and in the discretion of the proxies on any other business that may
properly come before the meeting or any adjournment(s) or postponement(s)
thereof.
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Please sign exactly as your name(s) appears
on this card. Joint owners should each sign individually. When
signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation or
partnership, please sign in full corporate or partnership name by an
authorized officer.
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Signature 1
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Signature 2
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