10KSB/A 1 l94154ae10ksba.txt SERVOTRONICS, INC. FORM 10KSB/A --------- U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------- FORM 10-KSB/A AMENDMENT TO FORM 10-KSB Filed Pursuant to THE SECURITIES EXCHANGE ACT OF 1934 SERVOTRONICS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) AMENDMENT NO. 1 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Annual Report on Form 10-KSB for the year ended December 31, 2001 as set forth in the pages attached hereto: PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; ------------------------------------------------------------- Compliance With Section 16(a) of the Exchange Act. ------------------------------------------------- Item 10. Executive Compensation. ---------------------- Item 11. Security Ownership of Certain Beneficial Owners and --------------------------------------------------- Management. ---------- Item 12. Certain Relationships and Related Transactions. ---------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. SERVOTRONICS, INC. Dated as of: April 29, 2002 By: /s/ Lee D. Burns --------------------------- Lee D. Burns Treasurer and Secretary Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] SERVOTRONICS, INC. AMENDMENT NO. 1 TO FORM 10-KSB FOR YEAR ENDED DECEMBER 31, 2001 Item 9. Directors, Executive Officers and Control Persons; Compliance With ------------------------------------------------------------------ Section 16(a) of the Exchange Act. --------------------------------- (a) DIRECTORS. The table below sets forth certain information regarding the directors of Servotronics, Inc. (the "Company"), each of whom was elected at the Company's 2001 Annual Meeting of Shareholders. The term of office of each director is until the next Annual Meeting of Shareholders and until his successor is elected and shall have qualified. Position with the Company and Principal Occupation and Business Experience Name Age for Past Five Years ---- --- ------------------------- Dr. William H. Duerig 80 Director of the Company since 1990; Physicist and Senior Program Manager for Kearfott Guidance & Navigation Corporation for more than five years prior to retirement in 1993. Donald W. Hedges 80 Director of the Company since 1967; self-employed attorney since 1988. Nicholas D. Trbovich, Jr. 41 Director of the Company since 1990; Vice President of the Company since 1990; Director of Corporate Development of the Company from 1987 to 1990; Director of e.Autoclaims. Dr. Nicholas D. Trbovich 66 Chairman of the Board of Directors, President and Chief Executive Officer of the Company since 1959. -2- (b) EXECUTIVE OFFICERS. The following is a listing of the Company's executive officers: Position with the Company and Principal Occupation and Business Experience Name Age for Past Five Years ---- --- ------------------------- Dr. Nicholas D. Trbovich 66 See table under "Directors." Nicholas D. Trbovich, Jr. 41 See table under "Directors." Raymond C. Zielinski 57 Vice President since 1990; Director of Manufacturing of the Company from 1983 to 1990. Lee D. Burns 60 Treasurer, Secretary and Chief Financial Officer of the Company since 1991; Controller and Assistant Treasurer of the Company from 1978 to 1991. Nicholas D. Trbovich, Jr. is the son of Dr. Nicholas D. Trbovich. There are no other family relationships between any of the directors or executive officers of the Company. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Based solely on its review of reports filed pursuant to Section 16(a) of the Securities Exchange Act or representations from directors and executive officers required to file such reports, the Company believes that all such filings required of its officers and directors were timely made, except as set forth below. In October 2001, each of three officers of the Company, Messrs. Nicholas D. Trbovich, Jr. (who is also a Company director), Lee D. Burns and Raymond C. Zielinski acquired, on a net basis, 220 shares of the Company's common stock by concurrently exercising options for 5,724 shares and surrendering to the Company 5,504 shares in payment of the exercise price and tax withholding. Upon advice of counsel, they proceeded to report these transactions under the SEC rules applicable to "small acquisitions," and accordingly, these individuals respectively reported these transactions on a Form 5 filed with the SEC within 45 days after December 31, 2001. Counsel now advises that, under the SEC rules applicable to reporting of option exercises, the transactions should be reported on a Form 4 filed not later than the tenth day of the month following the subject transaction. Item 10. Executive Compensation. ---------------------- DIRECTORS' FEES. Under the Company's standard compensation arrangements with directors who are not employees, they are paid a yearly director's fee of $10,000 plus a per meeting fee of $650 and reimbursement of actual expenses for attendance at Board meetings. Directors who are also employees do not receive the director's and/or meeting fees. Members of -3- the Audit Committee of the Board are paid a yearly Audit Committee fee of $1,500 plus a per meeting fee of $450 and reimbursement of actual expenses for attendance at Audit Committee meetings other than Audit Committee meetings held on the same day as a Board meeting. COMPENSATION TABLE. The following table shows the compensation paid by the Company to each executive officer of the Company whose total salary and bonus from the Company and its subsidiaries exceeded $100,000 during any of the last three fiscal years (the "Named Officers"). SUMMARY COMPENSATION TABLE Long Term Annual Compensation Compensation ------------------------------------ --------------- Awards ------ Other Securities Annual Underlying All Other Name and Compen- Options/SAR's Compen- Principal Position Year Salary Bonus (1) sation (2) (No. of Shares) sation (3) ------------------ ---- -------- --------- ---------- --------------- ---------- Dr. Nicholas D. Trbovich................. 2001 $337,301 $30,000 $29,484 45,000 $18,344 Chairman, President and 2000 328,875 -- 31,250 37,800 11,069 CEO 1999 318,654 50,000 26,907 -- 14,437 Raymond C. Zielinski..................... 2001 $120,423 $10,000 $ 4,846 8,000 $ 8,786 Vice President 2000 118,478 -- -- 7,500 4,790 1999 108,942 7,500 -- -- 7,533 Nicholas D. Trbovich, Jr................. 2001 $120,423 $10,000 $ 7,633 24,000 $18,410 Director, Vice President 2000 108,596 -- 54,508 18,400 7,551 1999 91,347 7,500 1,525 -- 967 Lee D. Burns............................. 2001 $110,327 $10,000 -- 8,000 $ 6,834 Treasurer, Secretary and CFO 2000 105,379 -- $29,172 7,500 4,239 1999 91,347 7,500 -- -- 612
--------------------- (1) The "Bonus" column of the compensation table above includes discretionary incentive payments authorized by the Board of Directors and paid in the year indicated in the table. No bonuses were paid in the year 2000. Discretionary payments authorized for 2002 will be included in the compensation table for 2002 to the extent they are paid in that year. The Board of Directors has made no commitment for incentive payments in subsequent years. -4- (2) Includes for Dr. Trbovich $29,484, $31,250 and $25,000 in 2001, 2000 and 1999, respectively, $4,846 for Mr. Zielinski in 2001, $7,633 and $54,508 for Mr. Trbovich, Jr. in 2001 and 2000, respectively, and $29,172 for Mr. Burns in 2000, for untaken vacation pursuant to a policy that is generally applicable to all employees of the Company; these amounts reflect accrued vacation earned and expensed by the Company over several years and prior to when the payment was received. (3) All Other Compensation for 2001 includes (i) an allocation of 2,005, 1,351, 1,351 and 1,238 shares for Dr. Trbovich, Mr. Zielinski, Mr. Trbovich, Jr. and Mr. Burns, respectively, of common stock of the Company under the Servotronics, Inc. Employee Stock Ownership Plan valued as of November 30, 2001 (the date of the allocation) at the closing price on the American Stock Exchange on that date of $5.15 per share; and (ii) $6,814, $1,828, $10,107 and $459 to Dr. Trbovich, Mr. Zielinski, Mr. Trbovich, Jr. and Mr. Burns, respectively, for life insurance and health care benefits, but excludes $2,078 each, the excess of the fair market value of stock options exercised by Mr. Trbovich, Jr., Mr. Zielinski and Mr. Burns in 2001 over the grant price; and (iii) also excludes $24,000 of a pension related accrual for Dr. Trbovich to achieve benefit parity based on actuarially determined formulas. STOCK OPTIONS. The following tables give information with respect to stock options granted to, exercised or owned by the Named Officers during 2001. OPTION GRANTS IN LAST FISCAL YEAR (Individual Grants) % of Total Number of Options Securities Granted to Underlying Employees Exercise of Expiration Name Options Granted (#) in Fiscal Year Base Price ($/Sh) Date ---- ------------------- -------------- ----------------- ---------- Dr. Nicholas D. Trbovich 45,000 48.4% $4.38 9/5/11 Raymond C. Zielinski 8,000 8.6% $4.38 9/5/11 Nicholas D. Trbovich, Jr. 24,000 25.8% $4.38 9/5/11 Lee D. Burns 8,000 8.6% $4.38 9/5/11
-5- AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES Value of Number of Unexercised Shares Unexercised Securities In-The-Money Acquired Underlying Options at Options at on Value Fiscal Year-End: Fiscal Year End: Name of Officer Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable --------------- -------- -------- ------------------------- ------------------------- Dr. Nicholas D. Trbovich -- -- 75,600/45,000 $44,415/$30,150 Raymond C. Zielinski 5,724 $2,078 13,300/8,000 $8,813/$5,360 Nicholas D. Trbovich, Jr. 5,724 $2,078 36,800/24,000 $21,620/$16,080 Lee D. Burns 5,724 $2,078 13,300/8,000 $8,813/$5,360
EMPLOYMENT AGREEMENT. Dr. Trbovich has an employment agreement with the Company pursuant to which he is entitled to receive minimum direct compensation of $341,445 per annum, or such greater amount as the Company's Board of Directors may determine, and lifetime health and life insurance benefits. In the event of Dr. Trbovich's death or total disability during the term of the employment agreement, he or his estate is entitled to receive 50% of the compensation he is receiving from the Company at the time of his death or disability during the remainder of the term of the employment agreement. Also, in the event of (i) a breach of the agreement by the Company, (ii) a change in control of the Company, as defined, or (iii) a change in the responsibilities, positions or geographic office location of Dr. Trbovich, he is entitled to terminate the agreement and receive a payment of 2.99 times his average annual compensation from the Company for the preceding five years. If this provision is invoked by Dr. Trbovich and the Company makes the required payment, the Company will be relieved of any further liability under the agreement notwithstanding the number of years covered by the agreement prior to termination. In the event the agreement is not extended by the Company beyond the scheduled -6- expiration date (September 30, 2006), as such date may be extended, Dr. Trbovich will be entitled to a severance payment equal to nine months' salary and benefits. Item 11. Security Ownership of Certain Beneficial Owners and Management. -------------------------------------------------------------- (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table lists the persons that owned beneficially, as of April 12, 2002, more than 5% of the outstanding shares of common stock of the Company, based on the Company's records. Unless otherwise stated, each person has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by that person. Name and Address of Amount and Nature of Percent of Beneficial Owner Beneficial Ownership Class (1) -------------------------- -------------------------- ---------- Servotronics, Inc. Employee Stock Ownership Trust (2) 854,960 (2) 35.7% 1110 Maple Street P.O. Box 300 Elma, New York 14059 Dr. Nicholas D. Trbovich 404,115 (3) 16.1% 1110 Maple Street P.O. Box 300 Elma, New York 14059 Harvey Houtkin (4) 198,944 (4) 8.3% 160 Summit Avenue Montvale, New Jersey 07645 ------------------- (1) Percent of class is based upon 2,392,141 shares of common stock outstanding as of April 12, 2002 plus, in the case of Dr. Trbovich, the shares underlying his stock options, all of which are presently exercisable. (2) The trustees of the Servotronics, Inc. Employee Stock Ownership Trust--Nicholas D. Trbovich, Jr., Lee D. Burns and Raymond C. Zielinski--direct the voting of unallocated shares. The participants in the related plan have the right to direct the voting of shares which have been allocated to their respective accounts; if a participant does not direct the -7- vote, the trustees may direct the vote of that participant's shares. As of April 12, 2002, approximately 356,716 shares have been allocated to the accounts of participants and approximately 498,244 shares (20.8% of the shares outstanding) remain unallocated. (3) This amount includes (i) 32,309 shares held by a charitable foundation for which Dr. Trbovich serves as a trustee; (ii) an option to acquire 120,600 shares; (iii) approximately 40,160 shares allocated to Dr. Trbovich's account under the Servotronics, Inc. Employee Stock Ownership Plan; and (iv) approximately 3,084 shares beneficially owned by certain of Dr. Trbovich's children (as to which Dr. Trbovich disclaims beneficial interest). This amount does not include the shares beneficially owned by certain of Dr. Trbovich's other relatives. (4) Based on a statement on Schedule 13G, as last amended on February 8, 2002, filed by Mr. Houtkin with the Securities and Exchange Commission. According to Mr. Houtkin's statement, he has sole voting and investment power with respect to 188,972 shares and shared voting and investment power with respect to 9,972 shares. Mr. Houtkin disclaims beneficial ownership in additional shares owned by other members of his family. (b) SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth, as of April 12, 2002, information as to the beneficial ownership of shares of common stock of the Company held by each director and by all directors and officers as a group (each individual listed in the following table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by that person, except as otherwise indicated): Name of Amount and Nature of Percent of Beneficial Owner Beneficial Ownership Class (1) ---------------- -------------------- ---------- Dr. Nicholas D. Trbovich 404,115 (2) 16.1% Nicholas D. Trbovich, Jr. 94,325 (3) 3.9% Donald W. Hedges 28,836 (4) 1.2% Dr. William H. Duerig 27,693 (5) 1.2% All directors and executive officers as a group 1,121,908 (6)(7) 42.4% -------------------- -8- (1) Percent of class is based upon 2,392,141 shares of common stock outstanding as of April 12, 2002 plus the number of shares subject to stock options held by the indicated person or group. (2) See note (3) to the table in "Security Ownership of Certain Beneficial Owners." (3) This amount includes 60,800 shares which Mr. Trbovich, Jr. has the right to acquire under stock options which are currently exercisable and approximately 18,711 shares allocated to Mr. Trbovich, Jr.'s account under the Servotronics, Inc. Employee Stock Ownership Plan. Does not include shares held by the Servotronics, Inc. Employee Stock Ownership Trust (the "ESOT") as to which Mr. Trbovich, Jr. serves as one of three trustees. See note (6) below and the table in "Security Ownership of Certain Beneficial Owners." (4) This amount includes 24,100 shares which Mr. Hedges has the right to acquire under stock option plans all of which are currently exercisable. Mr. Hedges has sole voting and investment power with respect to 4,261 shares and shared voting and investment power with respect to 475 shares. (5) This amount includes 24,100 shares which Dr. Duerig has the right to acquire under a stock option plan all of which are currently exercisable. Dr. Duerig has sole voting with respect to 3,593 shares. (6) Includes unallocated shares held by the ESOT over which certain officers, as trustees of the ESOT, may be deemed to have voting power, as well as shares allocated to the accounts of all officers as a group under the related plan. See the table in "Security Ownership of Certain Beneficial Owners" and note (2) thereto. (7) See notes (2) through (5) above. Item 12. Certain Relationships and Related Transactions. ---------------------------------------------- During 2001 and 2000, Dr. Trbovich's son, Nicholas D. Trbovich, Jr., served as an officer and director of the Company and received the compensation disclosed in the Summary Compensation Table in Item 10. See also, the discussion under "Employment Agreement" in Item 10. -9-