-----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, RnKuMIcYPjqu0WcikbtTbNNwScX+NjoaL6Y2rFCqhElufqpZMQ6Yp3Z3CXojH2YJ KgnuRgJa+6gL/EYaruUSfQ== 0001110550-07-000034.txt : 20070601 0001110550-07-000034.hdr.sgml : 20070601 20070601150539 ACCESSION NUMBER: 0001110550-07-000034 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20070601 FILED AS OF DATE: 20070601 DATE AS OF CHANGE: 20070601 EFFECTIVENESS DATE: 20070601 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: 07893996 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 proxy.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(3) (2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 240.14a-12 SERVOTRONICS, INC. ------------------------------------------------ (Name of Registrant as Specified in its Charter) ------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computer on table below per Exchange Act Rules 14a-6(i) (4) and 0-11. 1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- 3) Per unit price or other underlying value of transaction 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): - -------------------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- 5) Total fee paid: [ ] 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. 1) Amount Previously Paid: - -------------------------------------------------------------------------------- 2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- 3) Filing Party: - -------------------------------------------------------------------------------- 4) Date Filed: - -------------------------------------------------------------------------------- [HEADER OMMITTED] 1110 MAPLE STREET, P.O. BOX 300-ELMA, NEW YORK 14059-0300 716-655-5990 FAX 716-655-6012 DR. NICHOLAS D. TRBOVICH Chairman and President June 1, 2007 Dear Fellow Shareholder: The Annual Meeting of Shareholders will take place on June 29, 2007 at 2:30 p.m. at the Hilton Garden Inn, 4201 Genesee Street, Buffalo, New York 14225. You are cordially invited to attend. The enclosed Notice of Annual Meeting and Proxy Statement describe the matters to be acted upon during the meeting. The meeting will also include a report on the state of Servotronics, Inc.'s business. To ensure your representation at the meeting, even if you are unable to attend, please sign the enclosed Proxy Card and return it in the postage paid envelope. If you have any questions in regard to completing your proxy, please call our Corporate Secretary, Michael D. Trbovich at (716) 655-5990. Your continued interest and support is very much appreciated. Sincerely, Dr. Nicholas D. Trbovich SERVOTRONICS, INC. 1110 Maple Street P.O. Box 300 Elma, New York 14059 NOTICE OF 2007 ANNUAL SHAREHOLDERS' MEETING To the Shareholders: Notice is hereby given that the 2007 Annual Meeting of the Shareholders of Servotronics, Inc. (the "Company") will be held at the Hilton Garden Inn, 4201 Genesee Street, Buffalo, New York 14225, on Friday, June 29, 2007 at 2:30 p.m., Buffalo time, for the following purposes: 1. To elect four directors to serve until the next Annual Meeting of Shareholders and until their successors are elected and qualified. 2. To transact such other business as may properly come before the meeting or any adjournments thereof. Only shareholders of record at the close of business on May 22, 2007 are entitled to notice of and to vote at the meeting or any adjournments thereof. Dr. Nicholas D. Trbovich CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER Dated: June 1, 2007 - -------------------------------------------------------------------------------- SHAREHOLDERS ARE URGED TO VOTE BY SIGNING, DATING AND MAILING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. - -------------------------------------------------------------------------------- June 1, 2007 SERVOTRONICS, INC. 1110 Maple Street P.O. Box 300 Elma, New York 14059 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 29, 2007 The following information is furnished in connection with the Annual Meeting of Shareholders of SERVOTRONICS, INC. (the "Company") to be held on June 29, 2007 at 2:30 p.m., Buffalo time, at the Hilton Garden Inn, 4201 Genesee Street, Buffalo, New York 14225. A copy of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 2006 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 Corporate Secretary, 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 1, 2007. 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 Corporate Secretary 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, by 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) personally or by telephone or other electronic communications, and arrangements may be made with 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. 100 Wall Street, 24th Floor, New York, New York 10005, to assist in the solicitation of proxies and will pay that firm a fee of approximately $3,000 plus expenses. VOTING INFORMATION The record date for determining shares entitled to vote has been fixed at the close of business on May 22, 2007. On such date there were outstanding 2,329,102 shares of common stock of the Company, $.20 par value ("Common Stock"), entitled to one vote each. 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. Pursuant to SEC rules, shareholder proposals must have been received by April 23, 2007, which date is 45 days before the date (June 6) on which the Company mailed its proxy materials for last year's annual meeting, to be considered at the 2007 Annual Meeting. At April 23, 2007, the Company had not received notice of any intention to submit any other matter; and, therefore, the named proxies have discretion to vote on any other matter that comes before the meeting. 1 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) as having voted in accordance with the directions and statements on the form of proxy. 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 2006 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 following table sets forth certain information regarding the nominees for election to the Company's Board of Directors.
POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATION NAME AGE AND BUSINESS EXPERIENCE FOR PAST FIVE YEARS ---- --- -------------------------------------------------- Dr. William H. Duerig 85 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 85 Director of the Company since 1967; self-employed attorney since 1988. Nicholas D. Trbovich, Jr. 47 Director of the Company since 1990; Executive Vice President of the Company since 2006; Vice President of the Company from 1990 to 2006. Dr. Nicholas D. Trbovich 71 Chairman of the Board of Directors, President and Chief Executive Officer of the Company since 1959.
2 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 Dr. Duerig and Mr. Hedges. 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, policies and financial accounting and operation controls and safeguards. The Board has (i) determined that Dr. Duerig and Mr. Hedges are independent pursuant to Section 121A of the listing standards of the American Stock Exchange ("AMEX") and (ii) designated Dr. Duerig as the Company's "Audit Committee financial expert." The Audit Committee performs all the functions required to be performed by the Company's independent directors. The Company's full Board of Directors performs the functions of all other committees and in lieu thereof as permitted by the Company's By-Laws and the current AMEX listing standards. The Board of Directors does not have a standing nominating or compensation committee. Pursuant to Board resolutions, the full Board of Directors approves/ratifies all director nominees after they are determined by the independent Directors. See "Director Nominating Process" on page 5. Additionally, the independent directors determine the compensation of the Chief Executive Officer and determine/recommend the compensation for all other Executive Officers and such determinations/recommendations are then subsequently submitted to the full Board of Directors for approval/ratification. During the fiscal year ended December 31, 2006, the Audit Committee met 7 times and the Board of Directors met 10 times. No Director attended less than 100% of the meetings held. Each Director is expected to attend the Annual Meeting of Shareholders. In 2006, the Annual Meeting of Shareholders was attended by all Directors. 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 Charter for the Audit Committee is available on the Company's website at www.servotronics.com. Management of the Company has primary responsibility for preparing financial statements of the Company as well as the Company's financial reporting process. Freed Maxick & Battaglia, CPAs, PC, ("FM&B") acting as independent auditors, is responsible for expressing an opinion on the conformity of the Company's audited financial statements with U.S. 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 2006 with the Company's management. 3 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. 3. The Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, and has discussed with FM&B 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, 2006, 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 --------------- Dr. William H. Duerig, Chairman Donald W. Hedges DIRECTORS' COMPENSATION Under the Company's compensation arrangements, non-employee directors are paid a yearly director's fee of $10,000 plus a per meeting fee of $700 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 $2,500 plus a per meeting fee of $500 and reimbursement of actual expenses for attendance at Audit Committee meetings. The following table contains information with respect to the compensation paid to the non-employee directors for the year ended December 31, 2006. Fees Earned or Option Name Paid in Cash (1) Awards (2) ---- ---------------- ---------- William H. Duerig $25,500 -- Donald W. Hedges $25,500 -- (1) Includes cash compensation earned by the Directors during the fiscal year 2006. (2) No options were awarded in 2006. As of December 31, 2006, each of Dr. Duerig's and Mr. Hedges' stock option holdings in the Company consisted of: 12,600 options with an exercise price of $8.50 expiring on March 24, 2008; 15,000 options with an exercise price of $3.8125 expiring on July 7, 2010; 16,000 options with an exercise price of $4.38 expiring on September 6, 2011; 18,000 options with an exercise price of $2.045 expiring on April 11, 2013; and 7,500 options with an exercise price of $4.70 expiring on December 30, 2015. All stock options are currently exercisable. 4 CODE OF ETHICS The Company has adopted a Code of Ethics and Business Conduct that applies to all directors, officers and employees of the Company as required by the listing standards of the AMEX. The Code is available on the Company's website at www.servotronics.com and the Company intends to disclose on this website any amendment to the Code. Waivers under the Code, if any, will be disclosed under the rules of the SEC and the AMEX. DIRECTOR NOMINATING PROCESS The determination of the individuals to be nominated for the Board of Directors is made by the independent Directors. This determination is then subsequently submitted to the full Board of Directors for approval/ratification. The Board has determined that Dr. Duerig and Mr. Hedges are independent under the AMEX listing standards. The Board has not adopted specific minimum criteria for director nominees. Nominees are identified by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to the Company's business and who are willing to continue in services are considered for re-nomination. If any member of the Board does not wish to continue in service, the Board first considers the appropriateness of the size of the Board and then considers factors that it deems are in the best interests of the Company and its shareholders in identifying and evaluating a new nominee. The Board will consider director nominees from any reasonable source, including nominees suggested by incumbent Board members and management as well as shareholder recommendations tendered in accordance with the Company's advance notice provisions. The Company does not currently employ an executive search firm, or pay a fee to any other third party, to locate qualified candidates for director positions. SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS Shareholders who wish to contact the Board of Directors or any of its members may do so by addressing their written correspondence to Board of Directors, 1110 Maple Street, P.O. Box 300, Elma, New York 14059. Correspondence directed to an individual Board member will be referred, if appropriate, to that member. Correspondence not directed to a particular Board member will be referred, if appropriate, to the Chairman of the Audit Committee. EXECUTIVE OFFICERS The following is a listing of the Company's current executive officers:
POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATION NAME AGE AND BUSINESS EXPERIENCE FOR PAST FIVE YEARS ---- --- ------------------------------------------- Dr. Nicholas D. Trbovich 71 Chairman of the Board of Directors, President and Chief Executive Officer of the Company since 1959. Nicholas D. Trbovich, Jr. 47 Director of the Company since 1990; Executive Vice President of the Company since 2006; Vice President of the Company from 1990 to 2006.
5
Cari L. Jaroslawsky 38 Treasurer and Chief Financial Officer of the Company since 2005; CPA Consultant/Controller for the Company for more than five years prior to 2005. Michael D. Trbovich 44 Corporate Secretary of the Company since 2005; Corporate Administration and Liaison for the Company for more than five years prior to 2005.
Nicholas D. Trbovich, Jr. and Michael D. Trbovich are the sons of Dr. Nicholas D. Trbovich. There are no other family relationships between any of the directors or executive officers of the Company. SUMMARY COMPENSATION TABLE The following table contains information with respect to the annual compensation for the year ended December 31, 2006 for the Company's Chief Executive Officer and the two most highly compensated Executive Officers who were serving as Executive Officers at December 31, 2006 (the "Named Executive Officers").
ALL OTHER NAME AND COMPEN- PRINCIPAL POSITION YEAR SALARY BONUS SATION (1) TOTAL ------------------ ---- ------ ----- ---------- ----- Dr. Nicholas D. Trbovich................. 2006 $407,333 $40,000 $39,765 $487,098 Chairman, President and CEO Nicholas D. Trbovich, Jr................. 2006 $186,547 $25,000 $36,250 $247,797 Director, Executive Vice President Raymond C. Zielinski..................... 2006 $151,800 $8,000 $20,510 $180,310 Vice President
(1) All Other Compensation for 2006 includes (i) an allocation of 1,180 shares, 1,180 shares, and 1,003 shares for Dr. Trbovich, Mr. Trbovich, Jr. and Mr. Zielinski, respectively, of Common Stock under the Servotronics, Inc. Employee Stock Ownership Plan valued as of November 30, 2006 (the date of the allocation) at the closing price on the AMEX of $8.10 per share; (ii) $7,787, $387 and $1,481 to Dr. Trbovich, Mr. Trbovich, Jr. and Mr. Zielinski, respectively, for life insurance; (iii) $15,488, $23,818 and $10,903 paid for Dr. Trbovich, Mr. Trbovich, Jr. and Mr. Zielinski, respectively, for health insurance and medical related expenses, and $6,934 and $2,489 for personal use of company cars to Dr. Trbovich and Mr. Trbovich, Jr., respectively. EMPLOYMENT AGREEMENTS Dr. Trbovich and Mr. Trbovich, Jr. have employment agreements with the Company pursuant to which they are entitled to receive minimum salary compensation of $412,300 and $188,820 per annum respectively, or such greater amount as the Company's Board of Directors may determine, and individual and spousal lifetime health and life insurance benefits. In the event of Dr. Trbovich's or Mr. Trbovich, Jr.'s death or total disability during the term of the employment agreement, they or their estate is entitled to receive 50% of the compensation they are receiving from the Company at the time of their 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 6 control of the Company, as defined, or (iii) a change in the responsibilities, positions or geographic office location of Dr. Trbovich or Mr. Trbovich, Jr., they are entitled to terminate the agreement and receive a payment of 2.99 times their average annual compensation from the Company for the preceding five years. If this provision is invoked by Dr. Trbovich or Mr. Trbovich, Jr. 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. The term of the agreement extends to and includes July 1, 2010 for Dr. Trbovich and extends to and includes July 1, 2011 for Mr. Trbovich, Jr., provided, however the term of the agreement will be automatically extended for one additional year beyond its then expiration date unless either party has notified the other in writing that the term will not be extended. If the Company elects not to extend the agreement, Dr. Trbovich and/or Mr. Trbovich, Jr. will be entitled to a severance payment equal to nine months' salary and benefits. OUTSTANDING EQUITY AWARDS AT 2006 FISCAL YEAR END The following table shows information with respect to the value of unexercised options held by the Named Executive Officers as of December 31, 2006. All of the options granted to the Named Executive Officers are currently exercisable.
OPTION AWARDS ---------------------------------------------------------- NUMBER OF SECURITIES UNDERLYING OPTION OPTION UNEXERCISED EXERCISE EXPIRATION NAME OF OFFICER OPTIONS (#) PRICE DATE ---------------------------------- ----------------------- ---------------- ----------------- Dr. Nicholas D. Trbovich 37,800 $8.50 03/24/2008 37,800 $3.8125 07/07/2010 45,000 $4.38 09/06/2011 50,000 $2.045 04/11/2013 25,000 $4.70 12/30/2015 Nicholas D. Trbovich Jr. 18,400 $8.50 03/24/2008 18,400 $3.8125 07/07/2010 24,000 $4.38 09/06/2011 27,000 $2.045 04/11/2013 15,000 $4.70 12/30/2015 Raymond C. Zielinski 5,800 $8.50 03/24/2008 7,500 $3.8125 07/07/2010 8,000 $4.38 09/06/2011 9,000 $2.045 04/11/2013 7,500 $4.70 12/30/2015
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Nicholas D. Trbovich, Jr., Executive Vice President of the Company, is an inventor or co-inventor of certain issued patents and patent pending applications that are used in the business of a subsidiary of the Company. The patents have been and are currently used by the subject subsidiary on a royalty-free basis with Mr. Trbovich, Jr.'s consent. 7 The Board has determined that Dr. Duerig and Mr. Hedges are independent pursuant to Section 121A of the listing standards of the AMEX. The Board of Directors has an Audit Committee comprised of Dr. Duerig and Mr. Hedges. The Board does not have a standing nominating or compensation committee. The Board of Directors approves/ratifies all director nominees after they are determined by the independent directors. Additionally, the independent directors determine the compensation of the Chief Executive Officer and determine/recommend the compensation for all other Executive Officers and such determinations/recommendations are then subsequently submitted to the full Board of Directors for approval/ratification. OWNERSHIP OF COMPANY STOCK SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table lists the persons that owned beneficially, as of May 22, 2007, 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 ("ESOT") (2) 783,630 (2) 33.6% 1110 Maple Street P.O. Box 300 Elma, New York 14059 Dr. Nicholas D. Trbovich (3) 583,278 (3) 23.1% 1110 Maple Street P.O. Box 300 Elma, New York 14059 Nicholas D. Trbovich, Jr. (4) 142,866 (4) 5.9% 1110 Maple Street P.O. Box 300 Elma, New York 14059 Harvey Houtkin (5) 352,088 (5) 15.1% 160 Summit Avenue Montvale, New Jersey 07645 - --------------------
(1) Percent of class is based upon 2,329,102 shares of Common Stock outstanding as of May 22, 2007 plus, in the case of Dr. Trbovich and Nicholas D. Trbovich, Jr., the shares underlying their stock options, all of which are presently exercisable. 8 (2) The trustees of the ESOT -- Dr. Nicholas D. Trbovich and Nicholas D. Trbovich, Jr. -- 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 May 22, 2007, approximately 412,262 shares have been allocated to the accounts of participants and approximately 371,368 shares remain unallocated. (3) This amount includes (i) 32,309 shares held by a charitable foundation for which Dr. Trbovich serves as a trustee; (ii) 195,600 shares which Dr. Trbovich has the right to acquire under stock options which are currently exercisable and (iii) approximately 44,983 shares allocated to Dr. Trbovich's account under the Servotronics, Inc. Employee Stock Ownership Plan. This amount does not include the shares beneficially owned by certain of Dr. Trbovich's other relatives. Except as set forth above, does not include shares held by the ESOT as to which Dr. Trbovich serves as one of the two trustees. See note (2) above. (4) This amount includes (i) 102,800 shares which Mr. Trbovich, Jr. has the right to acquire under stock options which are currently exercisable and (ii) approximately 24,252 shares allocated to Mr. Trbovich, Jr.'s account under the Servotronics, Inc. Employee Stock Ownership Plan. Except as set forth above, does not include shares held by the ESOT as to which Mr. Trbovich, Jr. serves as one of two trustees. See note (2) above. (5) Based on a statement on Schedule 13D, as last amended on February 12, 2004, 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 190,000 shares and shared voting and investment power with respect to 162,088 shares. Mr. Houtkin disclaims beneficial ownership in additional shares owned by other members of his family. SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth, as of May 22, 2007, information as to the beneficial ownership of shares of Common Stock of the Company held by each director, Named Executive Officer, executive officer 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 583,278 (2) 23.1% Nicholas D. Trbovich, Jr. 142,866 (3) 5.9% Donald W. Hedges 73,836 (4) 3.1% Dr. William H. Duerig 72,693 (5) 3.0% Raymond C. Zielinski 65,023 (6) 2.7% Cari L. Jaroslawsky 7,500 (7) 0.3% Michael D. Trbovich 34,120 (8) 1.4% All directors and officers as a group 1,350,684 (9) 47.6% - -------------------- 9 (1) Percent of class is based upon 2,329,102 shares of Common Stock outstanding as of May 22, 2007 plus the number of shares subject to stock options held by the indicated person or group. (2) See note (9) below and note (3) to the table in "Security Ownership of Certain Beneficial Owners." (3) See note (9) below and note (4) to the table in "Security Ownership of Certain Beneficial Owners." (4) This amount includes 69,100 shares which Mr. Hedges has the right to acquire under stock options 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 69,100 shares which Dr. Duerig has the right to acquire under stock options which are currently exercisable. (6) This amount includes (i) 37,800 shares which Mr. Zielinski has the right to acquire under stock options which are currently exercisable and (ii) approximately 13,199 shares allocated to Mr. Zielinski's account under the Servotronics, Inc. Employee Stock Ownership Plan. (7) This amount represents 7,500 shares which Mrs. Jaroslawsky has the right to acquire under stock options which are currently exercisable. (8) This amount includes (i) 24,500 shares which Mr. Trbovich has the right to acquire under stock options which are currently exercisable and (ii) approximately 8,084 shares allocated to Mr. Trbovich's account under the Servotronics, Inc. Employee Stock Ownership Plan. (9) See notes (2) through (8) above. Also 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. 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 executive officers and directors and greater than 10% beneficial owners were timely made. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM As previously disclosed on Form 8-K, on September 7, 2005, the Audit Committee of the Company's Board of Directors terminated PricewaterhouseCoopers LLP ("PWC") as the Company's independent registered public accounting firm. The audit reports of PWC on the Company's consolidated financial statements as of and for the two most recent fiscal years ended December 31, 2004 did not contain any adverse opinion or disclaimer of opinion, nor were these opinions modified as to uncertainty, audit scope or accounting principles. During the Company's two fiscal years ended December 31, 2004 and through September 7, 2005, there 10 were no disagreements between the Company and PWC on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PWC, would have caused it to make a reference to the subject matter of the disagreement in connection with its audit report which did not occur. The Company provided PWC with a copy of its Form 8-K disclosure and requested that PWC furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether PWC agreed with the Company's statements. PWC agreed that there were no disagreements, and issued the letter. On September 7, 2005, the Audit Committee engaged FM&B, effective September 8, 2005, to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2005. During the Company's two fiscal years ended December 31, 2004, and subsequently through the effective date of the engagement of FM&B, neither the Company nor any person acting on behalf of the Company consulted with FM&B with respect to the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, or any other matters or reportable events listed in Item 304 (a)(1)(iv) of Regulation S-B. From August 16, 2005 to October 20, 2005 RSM McGladrey, Inc., a business services company, was retained by the Audit Committee of the Company's Board of Directors to investigate and report to the Audit Committee with respect to certain management-discovered unauthorized practices by a former financial officer of the Company with respect to the Company's payroll accounts. The Directors of FM&B are co-employed by RSM McGladrey, Inc. FM&B has been selected by the Board of Directors as the independent public accountants for the Company's current fiscal year. A representative of FM&B 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. The following table shows the fees paid or accrued by the Company for the audit and other services provided by FM&B and RSM McGladrey, Inc. for fiscal years 2006 and 2005. 2006 2005 -------- -------- Audit Fees (1)....................... $ 71,050 $ 63,000 Tax Fees (2)......................... 33,223 1,713 All Other Fees (3)................... 1,446 35,704 -------- -------- Total................................ $105,719 $100,417 ======== ======== - ------------------- (1) Audit fees represent fees for professional services provided in connection with the audit of the Company's financial statements and review of the Company's quarterly financial statements and audit services provided in connection with other statutory or regulatory filings. (2) Tax fees principally included fees for tax preparation and tax consulting services. (3) Primarily for a forensic accounting report by RSM McGladrey, Inc. 11 The Audit Committee pre-approves audit and non-audit services provided by FM&B and RSM McGladrey, Inc. The Audit Committee of the Board of Directors has considered whether provision of the services described above is compatible with maintaining our accountant's independence and has determined that such services have not adversely affected FM&B'S independence. SHAREHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING PROPOSALS FOR THE COMPANY'S PROXY MATERIAL Shareholder proposals must be received at the Company's offices no later than February 4, 2008, in order to be considered for inclusion, if appropriate, as a shareholder proposal in the Company's proxy materials for the 2008 Annual Meeting. Such proposals must also meet the other requirements established by the SEC for shareholder proposals. PROPOSALS TO BE INTRODUCED AT THE ANNUAL MEETING BUT NOT INTENDED TO BE INCLUDED IN THE COMPANY'S PROXY MATERIAL For any shareholder proposal to be presented in connection with the 2008 Annual Meeting of Shareholders, a shareholder must give timely written notice thereof to the Company in compliance with the advance notice provisions of the federal securities laws. To be timely, a qualified shareholder must give written notice to the Company at the Company's offices not later than April 17, 2008. 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 12 -----END PRIVACY-ENHANCED MESSAGE-----