DEF 14A of Taylor Devices, Inc.
Filed Sep 8, 2023 · FY20230001376474-23-000430
General
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, named Mr. Timothy Sopko as management’s nominee to be elected at this Annual Meeting. 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. Sopko 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. 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. Timothy J. Sopko, 57, has served as a director since 2020. Mr. Sopko’s business experience spans more than thirty years in Aerospace (Military and Civil), Industrial as well as Commercial markets with a primary focus in the areas of Engineering, Product Development, Program Management, Operations, and Business Management. Prior to joining Taylor Devices as CEO in April 2019, Mr. Sopko was Vice President and General Manager of Carleton Technologies Inc. (d.b.a. Cobham Mission Systems) in Orchard Park, New York, a Department of Defense Contractor. While there, he also held the positions of General Manager, Director of Engineering and Programs, Director of Engineering and Director of Business Development. Under Mr. Sopko’s leadership as VP and GM, Carleton successfully grew annual sales from $110m to over $200m. After nine years of Design Engineering and Program Management in industry (1988-1997), Mr. Sopko co-founded Comprehensive Technical Solutions Inc., a New York State S-corporation that provides product design engineering services to companies across the United States as well as produces and supports a portfolio of internally funded products. Mr. Sopko is a Mechanical Engineering graduate of The State University of New York at Buffalo where he was also a member of the University’s Mechanical and Aerospace Dean’s Advisory Board for over ten years. Mr. Sopko is also an author and/or co-author on several US Patents. The combination of Mr. Sopko’s knowledge and experience in various management positions within the industry is the basis for the Nominating Committee’s appointment of Mr. Sopko to serve as a member of the Board of Directors. MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEE.
Class 1 Director Whose Term Will Expire in 2024
Class 1 Director Whose Term Will Expire in 2024 John Burgess, 78, has served as a director since 2007 and is currently the Chairman of the Board of Directors. Mr. Burgess gained his international strategy, manufacturing operations and organizational development expertise from his more than 40 years of 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 formation of Reichert, Inc. From 1996 to 1999, Mr. Burgess was COO of International Motion Controls, a $200 million diversified manufacturing firm. During his tenure there, he led a significant acquisition strategy that resulted in seven completed acquisitions and sixteen worldwide businesses in the motion control market. Previously, Mr. Burgess operated a number of companies for Moog, Inc., and Carleton Technologies, including six years as President of Moog’s Japanese subsidiary, Nihon Moog K.K. located in Hiratsuka, Japan. Moog, Inc. is the global leader in electro-hydraulic servo control technology with focus on the aerospace and defense sectors. It was recognized as one of The 100 Best Companies to Work for in America by Fortune Magazine. Mr. Burgess earned a Bachelor of Science in Engineering from Bath University in England, and a Master of Business Administration from Canisius College. Currently Mr. Burgess is a Director of Bird Technologies Corporation of Solon, Ohio. 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. F. Eric Armenat, 64, has served as a director since 2018. Mr. Armenat has 40 years of business experience across a myriad of industries both private and public. He most recently served as the President and Chief Executive Officer of Multisorb Filtration Group which he successfully spearheaded the sale of in early 2018 from a private equity owner. Multisorb is the world leader in the active packaging industry solving complex technical challenges in the pharmaceutical, food, and industrial markets. From 2012 to 2016, Mr. Armenat served as President and Chief Executive Officer for several companies owned by private equity. These companies included healthcare delivery, medical waste collection and disposal as well as active packaging. He was responsible for the successful business improvement and eventual divestiture of the companies. From 2009 to 2012, Mr. Armenat served as Chief Operating Officer of Avox Systems (Zodiac Aerospace), a leading supplier of aircraft oxygen systems. From 1994 to 2009, he served as Vice President of Operations and then President and General Manager of Carleton Technologies (Cobham Mission Systems), a global leader of technology for the military and commercial aviation markets. Mr. Armenat also worked as an Operations Management Consultant with Ernst and Young beginning in 1984. Mr. Armenat earned his Bachelor of Science Degree in Industrial Engineering from Southern Illinois University and his MBA in Finance and Accounting from St. Bonaventure University. He also proudly served in the United States Air Force. Mr. Armenat’s management and industry experience enable him to provide the Board with a perspective on the Company’s business, operations, and strategic issues. The Company believes that Mr. Armenat's education, positions and experience described above qualify him to serve as a member of the Board of Directors.
Class 3 Director Whose Term Will Expire in 2025
Class 3 Director Whose Term Will Expire in 2025 Robert M. Carey, 78, has served as a director since 2020. Mr. Carey brings over forty-five years of experience ranging from General Management to consultative work to the Company. He was the General Manager of the Reichert Analytical Instruments group from 2001 to 2009. The company manufactures and internationally sells a variety of analytical measurement instruments for use in medicine, food processing, and biotechnology research. Mr. Carey was the Principal at CMA, Ltd from 1990 to 2001. CMA, Ltd provides consulting services to the manufacturing sector in the area of organization, operational change, and strategic planning. Mr. Carey was also a Partner in Decision Processes International (DPI) from 1999 to 2001. DPI is an international strategic planning consultancy working with companies of all sizes. In 1979 Mr. Carey joined Wilson Greatbatch Ltd. (now Integer Holdings) as North American Sales Manager. Mr. Greatbatch held the patents for the implantable pacemaker. The eponymously named company is the world’s leader in implantable power sources. In 1981 Mr. Carey was named Vice President of Wilson Greatbatch and General Manager of the Electrochem Division. Electrochem manufactures and internationally sells high energy batteries used in rugged or remote environments such as space, oil and gas drilling, the military and the ocean. He earned a Bachelor of Science in Microbiology from the State University of California, Long Beach, and a Master of Business Administration from the State University of New York at Buffalo. Mr. Carey served in the U.S. Army achieving the rank of Captain. The Company believes that Mr. Carey’s experience in strategic planning for technical manufacturing companies and his knowledge of lean manufacturing, related statistical techniques, and team-based organization structures qualify him to serve as a member of the Board of Directors. Alan R. Klembczyk, 57, has served the Company as President and as a member of the Board of Directors since June 1, 2018. Since graduating from the University of Buffalo in 1987 with a degree in Mechanical Engineering, Mr. Klembczyk has held key positions in Sales, Engineering and Executive Management at Taylor Devices. Over the last 34 years, he has held titles such as Design Engineer, Assistant Chief Engineer, Chief Engineer, Vice President of Sales & Engineering and was appointed President of the Company and Member of the Board of Directors in 2018. Mr. Klembczyk has been responsible for establishing new Sales & Marketing policies and has been directly involved with defining internal Company policy and strategic direction in cooperation with all levels of Taylor Devices’ Management. He has been an integral part of the team that managed upgrades to the Quality System and obtaining third party certification to International Standards ISO 9001, ISO 14000 and Aerospace Standard AS9100. Mr. Klembczyk has served for many years on the Technical Advisory Group for the US Shock and Vibration Information & Analysis Center (SAVIAC) and the Shock and Vibration Exchange (SAVE). In 2019, he received the Distinguished Service Award from SAVE. Additionally, he has been a tutorial and course instructor for various organizations internationally and has participated in technical conferences and symposia. He is a founding member and first co-chair of the Industry Partner Committee of the US Resiliency Council. Mr. Klembczyk has participated in many research projects for products for military & aerospace, industrial, and structural applications. He has served as Program Manager for many of these projects and has worked with academia including the University at Buffalo’s MCEER: Earthquake Engineering to Extreme Events, among others. He has published several papers describing unique applications for structural dampers, tuned mass dampers, vibration isolators, shock absorbers, and shock isolators and holds US Patents for some of these components. These papers have been published by SAVE, SAVIAC, the Society for Experimental Mechanics (SEM) and the Applied Technology Council (ATC). 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.
Director Compensation – Fiscal 2023
Director Compensation – Fiscal 2023 The Chairman of the Board of Directors receives an $11,000 quarterly retainer fee and the other two non-employee members of the Board of Directors receive a $7,000 quarterly retainer fee. The Audit Committee meets independently of the Board of Directors not less than five times each year. Each committee member receives a fee of $2,000 per committee meeting. The Nominating Committee meets independently of the Board of Directors not less than twice a year. Each committee member receives a fee of $1,000 per committee meeting. The Compensation Committee meets independently of the Board of Directors not less than twice a year. Each committee member receives a fee of $1,000 per committee meeting. Pursuant to the formula set forth in the 2018 Taylor Devices, Inc. Stock Option Plans on April 18, 2023, the fixed date of the grant, each director and the Company's Chief Financial Officer were granted options to purchase 7,000 shares of the Company's stock. The exercise price on April 18, 2023 was $19.96, which was the fair market value for a share of common stock according to the terms of the 2018 Plan. The fair market value is the mean between the high and low prices for a share of common stock as quoted by NASDAQ on the date of the grant. If there is only one price quoted for the day of the grant, the fair market value shall be such price; and if no such price is quoted for the day of the grant, the fair market value shall be the previous closing price. In the event that no previous closing price is available, then the fair market value of one share of Common Stock on the day the option is granted shall be determined by the Committee or by the Board.
Director Compensation Table
Director Compensation Table
Director Compensation Table
| Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | | John Burgess | $59,000 | - | $47,017 | - | - | - | $106,017 | | F. Eric Armenat | $43,000 | - | $47,017 | - | - | - | $90,017 | | Robert M. Carey | $43,000 | - | $47,017 | - | - | - | $90,017 |
Director Compensation Table
Assumptions made in the valuation of option awards are described in Note 14 to the Company's Consolidated Financial Statements included in the Company's Annual Report to Shareholders accompanying this Proxy Statement.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock awards ($) | Option awards ($) | Nonequity incentive plan compensation ($) | Change in pension value and nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | | Timothy J. Sopko Chief Executive Officer | 2023 2022 | $257,500 $250,000 | $181,242 $69,691 | None None | $47,017 $12,586 | - - | None None | $24,071 $22,650 | $509,830 $354,927 | | Alan R. Klembczyk President | 2023 2022 | $242,050 $235,000 | $170,368 $65,511 | None None | $47,017 $12,586 | - - | None None | $10,433 $9,812 | $469,868 $322,909 | | Mark V. McDonough Chief Financial Officer | 2023 2022 | $155,570 $220,000 | $109,498 $61,329 | None None | $6,717 $12,586 | - - | None None | $7,755 $9,228 | $279,540 $303,143 | | Paul M Heary Chief Financial Officer | 2023 | $165,000 | $116,135 | None | $47,017 | | None | $5,415 | $333,566 |
Summary Compensation Table
The above table reflects all compensation for the year and, for the two Chief Financial Officers, includes compensation for time within the year when the person was not a named executive officer. Pursuant to its Management Bonus Policy, for the fiscal year ended May 31, 2023, the Company paid bonuses to the executive officers named in the Summary Compensation Table above. Under the policy, the Compensation Committee may approve payment for performance based on an amount, calculated in the aggregate for all participants, and of no more than 15% of net income of the Company for the fiscal year then ended. Option awards include 7,000 and 5,000 options awarded to Mr. Sopko in 2023 and 2022; 7,000 and 5,000 options awarded to Mr. Klembczyk in 2023 and 2022; 5,000 and 1,000 options awarded to Mr. McDonough in 2022 and 7,000 options awarded to Mr. Heary in 2023. See also Security Ownership of Certain Beneficial Owners and Management. Assumptions made in the valuation of option awards are described in Note 14 to the Company's Consolidated Financial Statements included in the Company's Annual Report to Shareholders accompanying this Proxy Statement. Outstanding Equity Awards at Fiscal 2023 Year-End
Summary Compensation Table
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | 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 ($) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) | | Timothy J. Sopko | 5,000 5,000 5,000 7,000 | None | None | $9.8500 $11.9500 $9.5250 $19.9550 | 04/18/30 04/22/31 04/18/32 04/18/33 | None | None | None | None | | Alan R. Klembczyk | 3,000 3,000 3,000 5,000 5,000 5,000 5,000 7,000 | None | None | $12.8000 $19.2550 $12.2792 $11.9750 $9.8500 $11.9500 $9.5250 $19.9550 | 08/12/25 08/03/26 08/04/27 04/18/29 04/18/30 04/22/31 04/18/32 04/18/33 | None | None | None | None | | Mark V. McDonough | 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 1,000 | None | None | $8.9851 $12.2000 $16.4000 $13.8000 $10.3000 $11.9750 $9.8500 $11.9500 $9.5250 $19.9550 | 04/18/24 04/18/25 04/18/26 04/18/27 04/18/28 04/18/29 04/18/30 04/22/31 04/18/32 04/18/33 | None | None | None | None | | Paul M. Heary | 7,000 | None | None | $19.9550 | 04/18/33 | None | None | None | None |
Pay vs. Performance
Pay vs. Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial and operational performance of the Company. The Compensation Committee did not consider the pay versus performance disclosure when making its compensation decisions for the 2023 fiscal year. As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial and operational performance of the Company for each of the last two completed fiscal years. The table below summarizes compensation values both previously reported in our Summary Compensation Table, as well as the adjusted values required in this section for Fiscal 2023 and 2022.
Pay versus Performance Tables
Pay versus Performance Tables
Pay versus Performance Tables
| | Summary Compensation Table Total for CEO ($) | Compensation Actually Paid to CEO ($) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers ($) | Average Compensation Actually Paid to Non-CEO Named Executive Officers ($) | Value of Initial Fixed $100 Investment Based On: Total Shareholder Return ($) | Net Income (Loss) ($) | | 2023 | $509,830 | $509,830 | $360,991 | $360,991 | $155 | $6,287,358 | | 2022 | $354,927 | $354,927 | $313,026 | $313,026 | $78 | $2,239,423 |
Pay versus Performance Tables
| | 2023 CEO ($) | 2022 CEO ($) | 2023 Non-CEO Named Executive Officer ($) | 2022 Non-CEO Named Executive Officer ($) | | Total Compensation from Summary Compensation Table | $509,830 | $354,927 | $360,991 | $313,026 | | Subtract: Grant date fair value or equity awards granted during the covered year | $(47,017) | $(12,586) | $(33,584) | $(12,586) | | Add: Fair value as of end of covered year of equity awards granted during covered year that were outstanding and unvested as of end of covered year | - | - | - | - | | Add: Change in fair value from end or prior year to end of current year for equity awards granted in prior years that were outstanding and unvested at end of current year | - | - | - | - | | Add: Fair value as of vesting date of equity awards that were granted and vested in same year | $47,017 | $12,586 | $33,584 | $12,586 | | Add: Change in fair value from end of prior year to vesting date of equity awards granted in prior years that vested in covered year | - | - | - | - | | Subtract: Fair value at end of prior year of equity awards granted in prior years that failed to vest (forfeited) in covered year | - | - | - | - | | Add: Dollar amount of dividends or other earnings paid on equity awards in covered year prior to vesting date that are not included in total compensation for covered year | - | - | - | - | | Compensation actually paid | $509,830 | $354,927 | $360,991 | $313,026 |
Pay versus Performance Tables
The above table reflects averages for all named executive officers within the covered year and, for the two Chief Financial Officers, includes compensation for time not serving as an executive officer.
Indemnification Insurance for Directors and Officers
Indemnification Insurance for Directors and Officers On August 23, 2023, the Company purchased a director and officer indemnification insurance policy written by the Cincinnati Insurance Company. The renewal was for a one-year period at an annual premium of $58,064,. 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.