-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DZ9i8MSBomnMpd5OSPaIAAm5qsIAapRq6MbS3mYhlfJuedf8KRQc+DrZ921jgeQL u2hdezyHujiEn8KB6WPMsQ== 0001110550-02-000117.txt : 20020618 0001110550-02-000117.hdr.sgml : 20020618 20020618152824 ACCESSION NUMBER: 0001110550-02-000117 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVOTRONICS INC /DE/ CENTRAL INDEX KEY: 0000089140 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 160837866 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07109 FILM NUMBER: 02681461 BUSINESS ADDRESS: STREET 1: 1110 MAPLE ST CITY: ELMA STATE: NY ZIP: 14059 BUSINESS PHONE: 7166335990 MAIL ADDRESS: STREET 1: P O BOX 300 STREET 2: ELMA STATE: NY ZIP: 14059-0300 DEF 14A 1 def14a.txt PROXY June 18, 2002 SERVOTRONICS, INC. 1110 Maple Street P.O. Box 300 Elma, New York 14059 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 3, 2002 The following information is furnished in connection with the Annual Meeting of Shareholders of SERVOTRONICS, INC. (the "Company") to be held on July 3, 2002 at 2:30 p.m., Buffalo time, at the Center for Tomorrow, North Campus, State University of New York at Buffalo, Flint Road (Off Maple Road), Amherst, New York 14226. A copy of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 2001 accompanies this Proxy Statement. Additional copies of the Annual Report, Notice, Proxy Statement and form of proxy may be obtained without charge from the Company's Treasurer, 1110 Maple Street, P.O. Box 300, Elma, New York 14059. This Proxy Statement and proxy card are first being mailed to shareholders on or about June 18, 2002. SOLICITATION AND REVOCABILITY OF PROXIES The enclosed proxy for the Annual Meeting of Shareholders is being solicited by the directors of the Company. The proxy may be revoked by a shareholder at any time prior to the exercise thereof by filing with the Treasurer of the Company a written revocation or duly executed proxy bearing a later date. The proxy may be revoked by a shareholder attending the meeting, withdrawing such proxy and voting in person. The cost of soliciting the proxies on the enclosed form will be paid by the Company. In addition to the use of mails, proxies may be solicited by employees of the Company (who will receive no additional compensation therefore) by means of personal interview and telephone or telegraph, banks, brokerage houses and other institutions, nominees and/or fiduciaries to forward the soliciting material to their principals and to obtain authorization for the execution of proxies. The Company may, upon request, reimburse banks, brokerage houses and other institutions, nominees and fiduciaries for their expenses in forwarding proxy material to their principals. The Company has retained the services of InvestorCom, Inc. 800 Third Avenue, 17th Floor, New York, New York 10022, to assist in the solicitation of proxies and will pay such firm a fee of approximately $4,000 plus expenses. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF The record date for determining shares entitled to vote has been fixed at the close of business on May 28, 2002. On such date there were outstanding 2,392,141 shares of common stock of the Company, $.20 par value ("Common Stock"), entitled to one vote each. 1 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table lists the persons that owned beneficially, as of April 12, 2002, more than five percent of the outstanding Common Stock, based on the Company's records including copies furnished to the Company of schedules filed by shareholders with the Securities and Exchange Commission ("SEC"). Unless otherwise stated, each person has sole voting and investment power with respect to the shares 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 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 198,944 (4) 8.3% 78 Lafayette Avenue Suffern, New York 10901 - -------------------- (1) Percent of class is based upon 2,392,141 shares 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 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. 2 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 executive officer and by all directors and executive 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% Raymond C. Zielinski 35,800 (4) 1.5% Lee D. Burns 32,896 (5) 1.4% Donald W. Hedges 28,836 (6) 1.2% Dr. William H. Duerig 27,693 (7) 1.2% All directors and executive officers as a group 1,121,908 (8)(9) 42.4%
(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 (8) below and the table in "Security Ownership of Certain Beneficial Owners." (4) This amount includes 13,300 shares which Mr. Zielinski has the right to acquire under stock options which are currently exercisable and approximately 15,190 shares allocated to Mr. Zielinski's account under the Servotronics, Inc. Employee Stock Ownership Plan. Does not include shares held by the Servotronics, Inc. "ESOT" as to which Mr. Zielinski serves as one of the three trustees. See note (8) below and the table in "Security Ownership of Certain Beneficial Owners." (5) This amount includes 13,300 shares which Mr. Burns has the right to acquire under stock options which are currently exercisable and approximately 11,057 shares allocated to Mr. Burns's account under the Servotronics, Inc. Employee Stock Ownership Plan. Does not include shares held by the Servotronics, Inc. "ESOT" as to which Mr. Burns serves as one of the three trustees. See note (8) below and the table in "Security Ownership of Certain Beneficial Owners." (6) 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. (7) 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 and investment power with respect to 3,593 shares. 3 (8) 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. (9) See notes (2) through (7) above. EXECUTIVE OFFICERS The following is a listing of the Company's executive officers:
Position with the Company and Principal Occupation Name Age and Business Experience for Past Five Years ---- --- -------------------------------------------------------- Dr. Nicholas D. Trbovich 67 See table under "Election of Directors." Nicholas D. Trbovich, Jr. 42 See table under "Election of Directors." Raymond C. Zielinski 57 Vice President since 1990. Lee D. Burns 61 Treasurer and Secretary and Chief Financial Officer since 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. 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 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. In 2001 each of the two non-employee directors was granted options to acquire 16,000 shares of the Company's common stock, exercisable at the market price on date of grant. The options may be exercised in increments of 25% on the 6 month, one year, two year and three year anniversaries of the grant date. 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") 4
Long Term Annual Compensation Compensation ------------------- ------------ Awards Other Securities Annual Underlying All Other Name and Compen- Options/SARs 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, 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 to be paid in 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. (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 of common stock 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 $24,000 of a pension related accrual for Dr. Trbovich to achieve benefit parity based on actuarially determined formulas. STOCK OPTIONS. The following tables give information with respect to stock options granted to, exercised or owned by the Named Officers during 2001. 5
Option Grants In Last Fiscal Year --------------------------------- (Individual Grants) % of Total Number of Options Securities Granted to Underlying Employees Exercise of Expiration Name of Officer Options Granted (#) in Fiscal Year Base Price ($/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 Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values --------------------------------- Number of Value of Securities Unexercised Underlying in-the-money Shares Options at Fiscal Options at Acquired on Value 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
- ------------------- PROPOSAL 1 ELECTION OF DIRECTORS The By-Laws of the Company provide that there shall be not less than three directors nor more than nine and that the number of directors to be elected at the Annual Meeting of Shareholders shall be fixed by the Board of Directors. The Board of Directors has fixed the number of directors to be elected at the meeting at four. Each person so elected shall serve until the next Annual Meeting of Shareholders and until his successor is elected and shall have qualified. Each nominee is currently serving as a director of the Company and was elected at the Company's 2001 Annual Meeting of Shareholders. The directors believe that all of the nominees are willing and able to serve as directors of the Company. If any nominee at the time of election is unable or unwilling to serve or is otherwise unavailable for election, the enclosed proxy will be voted in accordance with the best judgment of the person or persons voting the proxy. Each nominee, to be elected as a director, must receive the affirmative vote of a plurality of the votes cast at the meeting. The table below sets forth certain information regarding the nominees for election to the Company's Board of Directors. 6
Position with the Company and Principal Occupation Name Age and Business Experience 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. 42 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 67 Chairman of the Board of Directors, President and Chief Executive Officer of the Company since 1959.
The directors recommend a vote FOR the four nominees listed above. Unless instructed otherwise, proxies will be voted FOR these nominees. ADDITIONAL COMPANY INFORMATION COMMITTEES AND MEETING DATA The Board of Directors has an Audit Committee comprised of Messrs. Hedges and Duerig . The Audit Committee meets with the Company's independent auditors and reviews with them matters relating to corporate financial reporting and accounting procedures and policies, the adequacy of financial, accounting and operating controls, the scope of the audit and the results of the audit. The Audit Committee is also charged with the responsibility of submitting to the Board of Directors any recommendations it may have from time to time with respect to financial reporting and accounting practices and policies and financial, accounting and operation controls and safeguards. Other than the functions performed by the Audit Committee, all functions of individual committees are performed by the Board of Directors. During the fiscal year ended December 31, 2001, the Audit Committee met 5 times and the Board of Directors met 10 times. No director attended less than 100% of the meetings held. REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee serves as the representative of the Board of Directors for general oversight of the Company's financial accounting and reporting, systems of internal control, audit process, and monitoring compliance with standards of business conduct. The Board of Directors has adopted a charter for the Audit Committee. Management of the Company has primary responsibility for preparing financial statements of the Company as well as the Company's financial reporting process. PricewaterhouseCoopers LLP, acting as independent auditors, are responsible for expressing an opinion on the conformity of the Company's audited financial statements with generally accepted accounting principles. In this context, the Audit Committee hereby reports as follows: 1. The Audit Committee has reviewed and discussed the audited financial statements for fiscal year 2001 with the Company's management. 2. The Audit Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, "Communications with Audit Committees." 7 3. The Audit Committee has received the written disclosures and the letter letter from the independent auditors required by Independence Standards Standards Board No. 1, "Independence Discussions with Audit Committees," and has discussed with PricewaterhouseCoopers LLP the matter of that firm's independence. 4. Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of Directors of the Company, and the Board of Directors has approved, that the audited financial statements be included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001, for filing with the Securities and Exchange Commission. Each member of the Audit Committee is independent as defined under the listing standards of the American Stock Exchange. AUDIT COMMITTEE --------------- Donald W. Hedges, Chairman Dr. William H. Duerig 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. 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 salary 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 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. 8 CERTAIN TRANSACTIONS AND RELATIONSHIPS 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 Executive Compensation Table; See also, the discussion under "Employment Agreement". INDEPENDENT PUBLIC ACCOUNTANTS PricewaterhouseCoopers LLP, which has served as the Company's independent public accountants since 1976, has been selected by the Board of Directors as the independent public accountants for the Company's current fiscal year. A representative of PricewaterhouseCoopers is expected to be present at the meeting with the opportunity to make a statement if he desires to do so and will be available to respond to appropriate questions of shareholders. During 2001, the Company paid PricewaterhouseCoopers $63,800 in related audit fees and $47,500 related to tax services. There were no other fees paid to PricewaterhouseCoopers. VOTING INFORMATION The presence, in person or by properly executed proxy, of the holders of shares of Common Stock entitled to cast a majority of the votes entitled to be cast by the holders of all outstanding shares of Common Stock is necessary to constitute a quorum. The form of proxy submitted by the Company's management confers on the named proxies the authority to vote in their discretion on any other matter submitted for a vote at a meeting as to which the Company did not have notice on or before May 7, 2002, which date is 45 days before the date (June 21) on which the Company mailed its proxy materials for last year's annual meeting. At May 7, 2002, the Company had not received notice of any intention to submit any other matter. Shares of Common Stock represented by a properly signed, dated and returned proxy will be treated as present at the meeting for the purposes of determining a quorum. Proxies relating to "street name" shares of Common Stock that are voted by brokers will be counted as shares of Common Stock (1) present for purposes of determining the presence of a quorum and (2) having voted in accordance with the directions and statements on the form of proxy. SHAREHOLDER PROPOSALS Shareholder proposals must be received at the Company's offices no later than February 18, 2003, in order to be considered for inclusion as a stockholder proposal in the Company's proxy materials for the 2003 Annual Meeting. OTHER MATTERS So far as the directors are aware, no matters other than the election of directors will be presented to the meeting for action on the part of the shareholders. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote thereon the shares to which the proxy relates in accordance with their best judgment. By Order of the Directors DR. NICHOLAS D. TRBOVICH Chairman of the Board, President and Chief Executive Officer Elma, New York 9 -----END PRIVACY-ENHANCED MESSAGE-----