SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant
to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.
)
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(e)(2))
[ X ] Definitive Proxy
Statement
[ ] Definitive Additional
Materials
[ ] Soliciting Material Pursuant to Section
240.14a-12
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TAYLOR DEVICES,
INC.
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(Name of Registrant as
Specified In Its Charter)
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(Name of Person(s)
Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
[ X ] No fee required
[ ] Fee computed
on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)
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Title of each class of securities
to which transaction applies:
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2)
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Aggregate number of securities to
which transaction applies:
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3)
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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):
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4)
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Proposed maximum aggregate
value of transaction:
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5)
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Total fee
paid:
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1
[ ] 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)
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Amount Previously
Paid:
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2)
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Form, Schedule or Registration
Statement No.:
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3)
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Filing
Party:
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4)
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Date
Filed:
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TAYLOR DEVICES,
INC.
90 TAYLOR DRIVE
NORTH TONAWANDA, NEW YORK 14120-0748
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO THE SHAREHOLDERS OF TAYLOR DEVICES,
INC.
NOTICE IS HEREBY GIVEN that the Annual
Meeting of Shareholders of TAYLOR DEVICES, INC. (the "Company") will be held at
the Buffalo Marriott Niagara, 1340 Millersport Highway, Amherst, New York on
November 5, 2010 at 11:00 A.M. for the following purposes:
1.
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To elect two Class 3 directors of
the Company to serve a three-year term expiring in 2013, or until the
election and qualification of their successors.
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2.
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To ratify the selection of Lumsden
& McCormick, LLP as the Independent Registered Public Accounting Firm
of the Company for fiscal year ending May 31, 2011.
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3.
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To transact such other business as
may properly come before the meeting or any adjournment(s) or
postponement(s) thereof.
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The Board of Directors has
fixed the close of business on September 24, 2010 as the record date for
determining which shareholders shall be entitled to notice of and to vote at the
Annual Meeting. SHAREHOLDERS WHO ARE UNABLE TO BE PRESENT PERSONALLY MAY
ATTEND THE MEETING BY PROXY. SUCH SHAREHOLDERS ARE REQUESTED TO DATE, SIGN
AND RETURN THE ENCLOSED PROXY. THE PROXY MAY BE REVOKED AT ANY TIME BEFORE
IT IS VOTED.
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BY ORDER OF THE BOARD OF
DIRECTORS
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/s/ Reginald B. Newman
II
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Reginald B. Newman
II
Secretary
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DATED:
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September 28, 2010
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North Tonawanda, New
York
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IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO
BE HELD ON NOVEMBER 5, 2010
The proxy statement and
the annual report to shareholders are available at
www.taylordevices.com/investors.html
3
PROXY STATEMENT
FOR
THE
ANNUAL MEETING OF SHAREHOLDERS
OF
TAYLOR DEVICES, INC.
90 TAYLOR
DRIVE
NORTH TONAWANDA, NEW YORK 14120-0748
_________________________
TO BE HELD AT THE BUFFALO
MARRIOTT NIAGARA
1340 MILLERSPORT HIGHWAY
AMHERST, NEW YORK
NOVEMBER 5,
2010
This Proxy Statement is
furnished to shareholders by the Board of Directors of Taylor Devices, Inc. in
connection with the solicitation of proxies for use at the Annual Meeting of
Shareholders to be held on November 5, 2010 at 11:00 A.M., and at any
adjournments of the meeting, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. This Proxy Statement and the
accompanying form of proxy are being mailed to shareholders commencing on or
about September 28, 2010.
If the enclosed form of
proxy is properly executed and returned, the shares represented by the proxy
will be voted in accordance with the proxy's instructions. Any proxy given
pursuant to this solicitation may be revoked by the shareholder at any time
prior to its use by written notice to the Secretary of the Company.
The Board of Directors has
fixed the close of business on September 24, 2010 as the record date for
determining the holders of common stock entitled to notice of and to vote at the
meeting. On September 24, 2010, the Company had outstanding and entitled
to vote a total of 3,230,968 shares of common stock. Each outstanding
share of common stock is entitled to one vote on all matters to be brought
before the meeting.
For shares held in the name
of a broker or other nominee, the owner may vote such shares at the meeting if
the owner brings with him or her a letter from the broker or nominee confirming
his or her ownership as of the record date, and a legal proxy.
Directions for attending the meeting may
be obtained at http://www.mapquest.com/
or by calling the Company at (716) 694-0800.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets
forth certain information regarding the beneficial ownership of the common stock
as of September 24, 2010, with respect to (i) each person known by the Company
to be the beneficial owner of more than 5% of the common stock, (ii) each of the
Company's directors and nominees for director, (iii) each Named Executive
Officer and (iv) all of the directors and executive officers as a group.
All information is based upon ownership filings made by such persons with the
Securities and Exchange Commission or upon information provided by such persons
to the Company.
There are no persons known by the Company
to be the beneficial owners of more than 5% of the Company's common
stock.
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Name of Beneficial
Owner
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Percentage of
Common Stock Owned
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Douglas P. Taylor
(1)
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120,142
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(2) (4)
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3.7
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Randall L. Clark
(3)
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45,000
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(4)
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1.4
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Reginald B. Newman II
(5)
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35,000
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(4)
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1.1
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Richard G. Hill
(1)
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115,789
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(4) (6)
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3.6
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John Burgess
(7)
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20,000
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(4)
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0.6
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All of the directors and executive
officers as a group (6 persons)
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351,931
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(8)
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10.9
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(1)
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Messrs. Taylor and Hill are
brothers‑in‑law and both are directors of Tayco Realty Corporation ("Tayco
Realty"), an affiliate of the Company.
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(2)
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Includes 7,307 shares, held
beneficially and of record by Sandi Taylor, wife of Douglas P.
Taylor. As to all such shares, Mr. Taylor disclaims any beneficial
ownership
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(3)
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Mr. Clark also serves on the board
of directors of several other area corporations, including Computer Task
Group Inc., which is a publicly traded company.
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(4)
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Includes options granted to
directors and officers and which have not been exercised: 25,000 by Mr.
Taylor, 40,000 shares by Mr. Clark, 25,000 by Mr. Newman, 25,000 by Mr.
Hill and 20,000 by Mr. Burgess. These options were granted pursuant
to the 1998 Taylor Devices, Inc. Stock Option Plan ("1998 Plan"), the 2001
Taylor Devices, Inc. Stock Option Plan ("2001 Plan"), the 2005 Taylor
Devices, Inc. Stock Option Plan ("2005 Plan") and the 2008 Taylor Devices,
Inc. Stock Option Plan ("2005 Plan").
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(5)
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Mr. Newman also serves on the board
of directors of Rand Capital Corporation, which is a publicly traded
company.
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(6)
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Includes 27,365 shares, held
beneficially and of record by Joyce Taylor Hill, wife of Mr. Hill and
sister of Douglas P. Taylor. As to these shares, Mr. Hill disclaims
any beneficial ownership.
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(7)
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From 2002 until his retirement in
2008, Mr. Burgess served as the Chairman and Chief Executive Officer of
Reichert, Inc., a company engaged in the design, development, manufacture
and sale of ophthalmic and analytical
instruments.
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(8)
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Includes options of 16,000 shares
granted to Mark V. McDonough, Treasurer and Chief Financial Officer of the
Company, which have not been
exercised.
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PROPOSAL 1 -
ELECTION OF DIRECTORS
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 through the recommendation of the Nominating Committee, is
responsible for nominating Messrs. Taylor and Clark as management's nominees to
be elected to Class 3 at this Annual Meeting for a term expiring in 2013.
Both candidates have previously served as directors and have been elected at
prior annual meetings of shareholders.
The persons named on the
enclosed form of proxy will vote all shares present at the Annual Meeting
for
the election of the nominee, unless a
shareholder, by his or her proxy, directs otherwise. Should Messrs. Taylor
and Clark 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 nominees will be able to serve.
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The Company believes that
each of the nominees has professional experience in areas relevant to its
strategy and operations. The Company also believes that each of the
nominees has other attributes necessary to function as an effective Board and to
guide the Company, 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.
Nominees for Election as
Class 3 Directors Whose Terms Expire in 2010
Douglas P.
Taylor
,62, has served as a director since 1976.
Employed by Taylor Devices, Inc. since 1971, Mr. Taylor has held the positions
of Director of Sales, Director of Engineering, Vice-President and Executive
Vice-President. He was appointed President, CEO and Chairman of the Board
in April 1991.
Mr. Taylor holds a B.S. degree in
Mechanical Engineering from the State University of New York at Buffalo, awarded
in 1971.
Mr. Taylor is widely
published within the shock and vibration community with more than 60
publications. He is the inventor of 32 patents. Since 1988, Mr.
Taylor has hosted internship programs for engineering students, affiliated as an
industrial sponsor with the State University of New York at Buffalo, the Erie
County State of New York Board of Co-operative Educational Services and the
North Tonawanda, New York Public School System.
Since 1991, Mr. Taylor has
participated in research projects in the field of earthquake protection, in
association with the University at Buffalo's Civil, Structural and Environmental
Engineering Department and the Multidisciplinary Center for Earthquake
Engineering Research. As a result of this research, military technology
from the Cold War era is now being used worldwide for seismic and high wind
protection of commercial building and bridge structures.
In 1994, Mr. Taylor was
named to the American Society of Civil Engineers' Subcommittee on the Seismic
Performance of Bridges. In 1998, Mr. Taylor was appointed to an Oversight
Committee of the U.S. Department of Commerce, developing guidelines for the
implementation of damping technology into buildings and other structures, as
part of the U.S. National Earthquake Hazard Reduction Program. He holds
many awards, including the Franklin and Jefferson Medal for his
commercialization of defense technology developed under the U.S. Government's
Small Business Innovation Research Program and the Clifford C. Furnas Memorial
Award by the Alumni Association of the University at Buffalo for his
accomplishments in the field of engineering. In 2006, Mr. Taylor was the
recipient of the Dean's Award for Engineering Achievement by the School of
Engineering and Applied Sciences at the State University of New York at
Buffalo.
Mr. Taylor, as the Chief
Executive Officer, serves as the principal interface between management and the
Board. The Company believes that his wide-ranging roles throughout his
career at the Company provides him with significant leadership, industry,
marketing and international experience, which qualify him to serve as a member
of the board of directors.
Randall L.
Clark
, 67, has served as a director since 1996. He
is and has been the Chairman of Dunn Tire LLC since 1996. From 1992 to
1996, Mr. Clark was Executive Vice President and Chief Operating Officer of
Pratt & Lambert, until it was purchased by Sherwin Williams. Mr. Clark
holds a B.A. degree from the University of Pennsylvania, and earned his M.B.A.
from the Wharton School of Finance and Commerce.
Mr. Clark has been employed
in the tire industry for many years. He was named President of the Dunlop
Tire Corporation in 1980, was appointed to the Board of Directors in 1983, and
named President and Chief Executive Officer in 1984. He was one of seven
chief executives of operating companies appointed to the Group Management Board
of Dunlop Holdings, plc., and was Chairman of the Board and Chief Executive
Officer of Dunlop Tire Corporation in North America from 1985 to
1991.
From 1977 to 1980, Mr.
Clark was Vice President of Marketing for the Dunlop Tire Division. From
1973 to 1977, he was employed by Dunlop as Director of Marketing at the
company's Buffalo, NY headquarters. From 1968 to 1973, Mr. Clark was
employed by the B.F. Goodrich Company.
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Mr. Clark is currently a
Director of Computer Task Group, a publicly traded company, Lifetime Healthcare
Companies, Merchants Mutual Insurance Company and HSBC-WNY. He is also a
Director of Curtis Screw and The Ten Eleven Group. He is a past
President of the International Trade Council of Western New York, past Chairman
of the Buffalo Chamber of Commerce, past Chairman of the Buffalo Niagara
Enterprise, a Director of the Amherst Industrial Development Agency, and
Chairman of Univera Healthcare. He serves on the Board of Trustees of the
American Heart Association, and is past Chairman and a Director of AAA of
Western and Central New York. Mr. Clark was appointed by Governor George
Pataki and served on the Council for the State University of New York at
Buffalo. Recently he was appointed to the Board of Trustees of the
University at Buffalo Foundation.
Mr. Clark brings to the
Board significant executive and operational corporate experience. His
service as a director of other public companies has assisted Mr. Clark in
bringing strong and effective leadership to the Board, as well as unique
strategic and business insights into the Company. Mr. Clark's strong
experience has also facilitated his position as Chairman of the Nominating and
Compensation Committees. The Company believes that these attributes
qualify him to serve as a member of the board of directors.
Class 1 Director Whose
Term Expires in 2011
Reginald B. Newman
II
, 72, has served as a director since 2006. He
was employed by NOCO Energy Corp., a diversified distributor and retailer of
petroleum and other energy related products from 1960, retiring in 2003.
Mr. Newman is also Chairman of Prior Aviation Service, Inc., Buffalo, New
York. Mr. Newman received his B.S. degree in Business Administration from
Northwestern University in 1959.
From 1959 to 1960, Mr.
Newman was employed by the Ford Motor Company of Dearborn, Michigan, in the
product planning department.
Mr. Newman is currently a
Director of Dunn Tire LLC and a Director and Chairman of Rand Capital
Corporation. He retired as a Director of M&T Bank Corporation, a
publicly traded company, in 2009. Mr. Newman was the Chair of the Board of
Trustees of the University at Buffalo Foundation, Inc. from
1996-2008.
Mr. Newman received the
1997 Executive of the Year, awarded by the State University of New York at
Buffalo. In 1998 Mr. Newman received the Walter P. Cooke Award for Notable
and Meritorious Service to the University presented by the University at Buffalo
Alumni Association. He received the President's Medal from the University
in 2003, as well as their highest honor, the Norton Medal in 2006. He is a
former member of the Buffalo Niagara Partnership and was Chairman from 1996
through 1998. Mr. Newman was awarded an Honorary Degree from Canisius
College in 1997.
Mr. Newman's years of
service on the boards of other public companies provide him with additional
insights and perspectives from which to view the Company's operations and the
Board's activities. The Company believes that Mr. Newman's education,
positions and experience described above qualify him to serve as a member of the
board of directors.
Class 2 Directors Whose
Terms Expire in 2012
Richard G.
Hill
, 60, has served as a director since 1991. In
November 1991, Mr. Hill was appointed Vice President of Taylor Devices, Inc. by
the Board of Directors. He had been employed previously by Taylor Devices,
Inc. since 1978 as Vice President of Production. In addition, he has held
key project management positions with the Company on major aerospace and defense
contracts. From 1973 to 1978, Mr. Hill was employed by the Alliance Tool
and Die Company of Rochester, New York as a Project Leader and Design
Engineer. From 1970 to 1973, he was employed by the same firm as an
Engineer in Training, through a co-op program with the Rochester Institute of
Technology. Mr. Hill holds a B.S. degree in Electrical Engineering from
the Rochester Institute of Technology, awarded in 1973.
Mr. Hill has served on the
Founding Board of Directors of the Center for Competitiveness of the Niagara
Region and the Advisory Board to The Center for Industrial Effectiveness.
Mr. Hill also served as Chairman for the Manufacturers Council of the Buffalo
Niagara Partnership, and also served on the State University of New York at
Buffalo's UB Business Alliance Advisory Board, as well as holding the seat of
Secretary.
7
The Company believes
that Mr. Hill's management experience and his extensive knowledge of the
Company's history and philosophy, its products, technology and personnel, as
well as its markets and customers, qualify him to serve as a member of the board
of directors.
John
Burgess
, 65, has served as a director since 2007.
Mr. Burgess gained his international strategy, manufacturing operations and
organizational development expertise from his more than 35 years experience with
middle market public and privately-owned companies. Mr. Burgess served as
President and CEO of Reichert, Inc. a leading provider of ophthalmic
instruments, and spearheaded the acquisition of the company from Leica
Microsystems in 2002, leading the company until its sale in January 2007.
Prior to the acquisition, Mr. Burgess served as President of Leica's Ophthalmic
and Educational Divisions before leading the buyout of the Ophthalmic Division
and formation of Reichert, Inc. Mr. Burgess earned a BS in Engineering
from Bath University in England, and an M.B.A. from Canisius
College.
From 1996 to 1999, Mr. Burgess was COO of International Motion
Controls (IMC), 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 and was recognized as one of The 100 Best
Companies to Work For in America by
Fortune Magazine
.
Currently Mr. Burgess is an
Operating Partner of Summer Street Capital LLC and Director of Bird Technologies
Corporation of Solon, Ohio.
As a result of the
positions and experience described above, Mr. Burgess demonstrates leadership
skills and a strong background in financial and accounting matters. He
serves 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 our own, qualify him to serve as a
member of the board of directors.
Management recommends
that you vote "FOR" each of the Nominees
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BOARD OF DIRECTORS AND
CORPORATE GOVERNANCE
Board Leadership
Structure.
The positions of Chief Executive Officer
("CEO") and Chairman of the Board are both held by Mr. Douglas Taylor. The
Board believes that the combined role of Chairman and CEO is the most effective
leadership structure for the Company and in the best interests of its
shareholders. It serves to promote strong and consistent leadership,
allowing management to speak with a single voice and delineate primary
responsibility for management of the Company. The Board believes that Mr.
Taylor is best suited to serve as Chairman because, as CEO, he is most
knowledgeable regarding the Company's business, can best identify strategic
priorities and opportunities, and thus lead discussion at the Board level to
execute the Company's strategy. The Board also believes that the combined
role of Chairman and CEO facilitates the flow of information between the Board
and executive management. In considering its leadership structure, the
Board believes that the majority of independent directors serving on the Board,
and the Company's strong corporate policies and procedures, appropriately
balance the combined roles of Chairman and CEO.
Board Risk
Oversight.
Risk management is primarily the
responsibility of the Company's management; however, the Board has
responsibility for overseeing management's identification and management of
those risks. The Board considers risks in making significant business
decisions and as part of the Company's overall business strategy. The
Board and its committees, as appropriate, discuss and receive periodic updates
from senior management regarding significant risks to the Company in connection
with the annual review of the Company's business plan and its review of budgets,
strategy and major transactions.
Each of the Board's
committees assists the Board in overseeing the management of the Company's risks
within the areas delegated to that committee, which in turn reports to the full
Board, as appropriate. The Audit Committee is responsible for risks
relating to its review of the Company's financial statements and financial
reporting processes, the evaluation of the effectiveness of internal control
over financial reporting, and compliance with legal and regulatory
requirements. The Compensation Committee is responsible for monitoring
risks associated with the design and administration of the Company's
compensation programs. The Nominating Committee oversees risk as it
relates to the Company's corporate governance processes. Each
committee has full access to management.
8
MEETINGS AND
COMMITTEES
In fiscal 2010, the Board
of Directors met three times with all of the directors in attendance. All
Board members traditionally attend the annual meeting, notwithstanding that the
Company does not have a policy with regard to attendance. In 2009, all
Board members attended the annual meeting.
The Executive
Committee
, between meetings of the Board of Directors
and to the extent permitted by law, exercises all of the powers and authority of
the Board in the management of the business of the Company. The Executive
Committee is comprised of Messrs. Taylor, Hill and Newman. The
Committee did not meet in fiscal 2010.
The Audit
Committee,
comprised of Messrs. Clark, Newman and
Burgess and chaired by Mr. Burgess, is governed by an Audit Committee Charter
which has been adopted by the Board of Directors. The Charter was revised
on August 12, 2009 to provide for review of any related party transactions by
the Audit Committee and was attached as an Appendix to the Company's proxy
statement dated September 28, 2009 in connection with the Company's annual
meeting of shareholders. Mr. Burgess also serves as the Audit Committee
financial expert. The Audit Committee met five times in fiscal 2010 with
all members in attendance. Messrs. Clark, Newman and Burgess are
independent directors within the meaning of Rule 5605(c)(2)(A) of the applicable
NASDAQ Capital Market listing standards. See also below.
The Nominating
Committee
, comprised of Messrs. Clark, Newman and
Burgess and chaired by Mr. Clark, met three times in fiscal 2010 with all
members in attendance. The Nominating Committee Charter was attached as an
Appendix to the proxy statement dated September 29, 2008 in connection with the
Company's annual meeting of shareholders.
The Compensation
Committee
, comprised of Messrs. Clark, Newman and
Burgess and chaired by Mr. Clark, reviews the compensation of the Company's
executive officers and makes recommendations in that regard to the Board as a
whole. The Committee also administers the Company's stock option
plans. The Compensation Committee met twice in fiscal 2010 with all
members in attendance. The Compensation Committee Charter was attached as
an Appendix to the proxy statement dated September 29, 2008 in connection with
the Company's annual meeting of shareholders.
Messrs. Clark, Newman and
Burgess are independent directors within the meaning of Rule 5605 of the
applicable NASDAQ Capital Market listing standards.
The Audit Committee
Report
The information contained
in this Audit Committee Report shall not be deemed to be soliciting material, or
deemed to be filed with or incorporated by reference in filings with the U.S.
Securities and Exchange Commission, or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934.
As required by the terms of
the Audit Committee Charter, the undersigned members of the Audit Committee
have:
1.
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reviewed and
discussed the Company's audited financial statements with management of
the Company;
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2.
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reviewed and
discussed with the Company's independent registered public accounting firm
the matters required to be discussed by the Statement on Auditing
Standards No. 114, as adopted by the Public Company Accounting Oversight
Board in Rule 3200T;
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3.
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received the written
disclosures and the letter from the independent accountants, as required
by Public Company Accounting Oversight Board in Rule 3526 ("Communication
With Audit Committees Concerning Independence") as adopted by the Public
Company Accounting Oversight Board in Rule 3600T, and has discussed with
the independent accountant, the independent accountants' independence;
and
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9
4.
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Based on the
foregoing, the Audit Committee has recommended to the Company's Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for fiscal 2010 for filing with the
Securities and Exchange Commission
("SEC").
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Respectfully
submitted,
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John Burgess
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Randall L. Clark
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Reginald B. Newman
II
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Nominating Committee
The Nominating Committee is
governed by the terms of the Nominating Committee Charter and its Attachments
(together, the "Charter") with respect to the consideration and selection of
nominees, including those recommended by shareholders, proposed for election to
the Board of Directors.
The Criteria and
Procedures.
The Company strives to have
a Board of Directors which will work diligently to promote the long-term
interests of the Company and its shareholders. To that end, the Charter
sets forth certain director qualification criteria (the "Criteria") which the
Nominating Committee believes are necessary for a director of the Company to
possess, and provides a description of the procedures to be followed when making
a recommendation as to any nominee. So long as any individual proposed by
shareholders meets the Criteria, the Nominating Committee will consider such
recommendations on the same basis as other candidates. The Criteria
include integrity, reputation, judgment, knowledge, independence, experience and
accomplishments, board interaction, skills and long-term commitment. The
Committee is to apply the Criteria to candidates recommended by a Nominating
Committee member, other Directors and management, as well to any candidate
meeting the Criteria recommended by shareholders.
During the selection
process, the Nominating Committee seeks inclusion and diversity within the Board
and adheres to the Company's policy of maintaining an environment free from
discrimination based upon race, color, religion, national origin, sex, age,
disability, sexual preference or orientation, marital status or any other
unlawful factor. The Board strives to nominate directors with a variety of
complementary skills so that, as a group, the Board will possess the appropriate
talent, skills and expertise to oversee the Company's business.
The Nominating Committee
annually reviews the requirements relating to diversity and recommends to the
Board any changes it believes appropriate to reflect best practices. In
addition, the Board assesses annually its overall effectiveness by means of a
self-evaluation process. This evaluation includes, among other things, an
assessment of the overall composition of the Board, including a discussion as to
whether the Board has adequately considered diversity, among other factors, in
identifying and discussing director candidates.
The Evaluation
Process.
The Charter also describes
the process for identifying and evaluating nominees for director, including
those nominated by shareholders. In each instance, the Nominating
Committee is to assess the Board's present and anticipated strengths and needs,
based upon the Company's current and future needs. The selection of
candidates is intended to provide the Board with an appropriate balance of
expertise or experience in accounting and finance, technology, management,
international business outside of the United States, compensation, corporate
governance, strategy, industry knowledge and general business
matters.
Management's
Nominees.
Messrs. Newman and Burgess
recommended both Messrs. Taylor and Clark as management's proposed Class 3
Director nominees to stand for election by shareholders at this Annual
Meeting. In addition to other Criteria, any nominee recommended to fill a
vacancy on the Nominating, Audit or Compensation Committee will be required to
meet independence standards set forth in of Rule 5605 of the NASDAQ Capital
Market listing standards.
10
Nominees by
Shareholders
.
Shareholders of the Company
may make their suggestions for a director nominee to the entire Board of
Directors, or to any individual director, by a submission directed to the
Company's Corporate Secretary's Office. The Corporate Secretary's Office will
then forward the recommendation, together with all supporting documentation, to
Mr. Clark, as Chairman of the Nominating Committee. Supporting
documentation must include a detailed background of the proposed candidate, and
demonstrate how the candidate meets the Criteria. In fiscal year 2010, one
self-nominated shareholder was proposed to the Nominating Committee as a
candidate for director.
Recommendations should be
sent c/o Corporate Secretary's Office, Taylor Devices, Inc., 90 Taylor Drive, P.
O. Box 748, North Tonawanda, NY 14120-0748.
Director
Compensation
Each member of the Board of
Directors receives a fee of $2,500 for each Board meeting attended. The
Secretary or Assistant Secretary of the meeting receives an additional fee of
$2,250 per meeting for secretarial services.
The Audit Committee meets
independently of the Board of Directors not less than four times each
year. Each committee member receives a fee of $1,000 per meeting.
The Secretary or Assistant Secretary of the meeting receives an additional fee
of $500 per meeting for secretarial services.
The Nominating Committee
meets independently of the Board of Directors not less than once a year.
Each committee member receives a fee of $500 per meeting. The Secretary or
Assistant Secretary of the meeting receives an additional fee of $250 per
meeting for secretarial services.
The Compensation Committee
meets independently of the Board of Directors not less than twice a year.
Each committee member receives a fee of $500 per meeting. The Secretary or
Assistant Secretary of the meeting receives an additional fee of $250 per
meeting for secretarial services.
Pursuant to the formula set
forth in the 2008 Plan, on April 18, 2010, the fixed date of the grant, each
director was granted options to purchase 5,000 shares of the Company's
stock. The exercise price on April 18, 2010 was $6.35, which was the
fair market value for a share of common stock according to the terms of the
Plan. The fair market value is the mean between the high and low prices
for a share of common stock as quoted by NASDAQ on the date of the
grant. If there is only one price quoted for the day of the grant, the
fair market value shall be such price; and if no such price is quoted for the
day of the grant, the fair market value shall be the previous closing
price. In the event that no previous closing price is available, then the
fair market value of one share of Common Stock on the day the option is granted
shall be determined by the Committee or by the Board.
Director Compensation
Table
Name
|
Fees
earned
or
paid
in
cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other
compensation
($)
|
Total
($)
|
John Burgess
|
$15,000
|
None
|
$12,875
|
None
|
None
|
$750
|
$28,625
|
Randall L. Clark
|
$15,000
|
None
|
$12,875
|
None
|
None
|
$750
|
$28,625
|
Reginald B. Newman
II
|
$15,000
|
None
|
$12,875
|
None
|
None
|
$750
|
$28,625
|
Current Directors and
Officers
For information concerning Messrs.
Taylor, Hill, Clark, Newman and Burgess,
see
"PROPOSAL 1 - ELECTION OF
DIRECTORS" above.
Mark V. McDonough, (50),
the Treasurer and Chief Financial Officer of the Company, joined the Company in
2003. Mr. McDonough is also a director of Tayco Realty. Before he joined
the Company, Mr. McDonough served as
11
Director of Finance
at Saint-Gobain Technical Fabrics, Inc. Prior to that time, he had been
employed as Corporate Controller with International Motion Control, Inc.
Both are manufacturing companies in the Western New York region.
Section 16(a) Beneficial
Ownership Reporting Compliance
Based solely on a review of
Forms 3 and 4 furnished to the Company during the 2010 fiscal year, as well as
written representations from the Company's directors and executive officers that
no Form 5 was required, all reporting persons filed the required forms on a
timely basis, with the exception of a Form 4 filed on behalf of Mr. McDonough
one business day after the filing deadline.
Code of
Ethics
On August 23, 2003, the
Company adopted a Code of Ethics (the "Code") which is a compilation of written
standards reasonably designed to deter wrongdoing and promote honest and ethical
conduct. Code requirements include, among others, the preparation of full,
fair, timely and understandable disclosure in documents that the Company files
with and submits to the SEC; compliance with governmental laws, rules and
regulations; prompt internal reporting of violations to the Code; and
accountability for adherence to the Code. There have been no amendments to
the Code since its adoption.
EXECUTIVE
COMPENSATION
The following table sets forth certain
information concerning compensation of and stock options held by the Company's
Chief Executive Officer, Executive Vice President and Chief Financial
Officer.
Summary Compensation
Table
Name
and
principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Nonequity
incentive
plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other
compensation
($)
|
Total
($)
|
Douglas P. Taylor
Chairman,
President,
Chief Executive Officer
|
2010
2009
|
$212,997
$210,242
|
$100,194
None
|
None
None
|
$12,875
$5,304
|
-
-
|
None
None
|
$30,850
1
$33,350
2
|
$356,916
$248,896
|
Richard G. Hill
Executive
Vice President
|
2010
2009
|
$167,483
$166,083
|
$78,810
None
|
None
None
|
$12,875
$5,304
|
-
-
|
None
None
|
$30,850
3
$33,350
4
|
$290,018
$204,737
|
Mark V. McDonough
Chief
Financial Officer
|
2010
2009
|
$119,474
$119,899
|
$59,039
None
|
None
None
|
$5,450
$7,756
|
-
-
|
None
None
|
$23,100
$23,100
|
$207,093
$150,755
|
For the fiscal year ended
May 31, 2010, pursuant to an informal management policy, 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, of no more than 15% of net income of the Company for the fiscal
year then ended.
Option awards include 5,000
options awarded to Mr. Taylor in both 2010 and 2009, 5,000 options awarded to
Mr. Hill in both 2010 and 2009 and 4,000 options awarded to Mr. McDonough in
both 2010 and 2009.
Assumptions made in the
valuation of option awards are described in Note 14 to the Company's
Consolidated Financial Statements included in the Company's Annual Report to
Shareholders accompanying this Proxy Statement.
1
Includes $7,500 for fees Mr. Taylor earned as a Director in fiscal year
2010.
2
Includes $10,000 for fees Mr. Taylor earned as a
Director in fiscal year 2009.
3
Includes $7,500 for fees Mr.
Hill earned as a Director in fiscal year 2010.
4
Includes
$10,000 for fees Mr. Hill earned as a Director in fiscal year
2009.
|
|
12
Outstanding
Equity Awards at Fiscal Year-End
.
|
Option
Awards
|
Stock
Awards
|
Name
|
Number of
securities
underlying
unexercised
options
(#)
exercisable
|
Number
of
securities
underlying
unexercised
options
(#)
unexercisable
|
Equity
incentive plan
awards:
Number of
securities
underlying
unexercised
unearned
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number of
shares or
units
of
stock that
have not
vested
(#)
|
Market
value of
shares or
units of
stock that
have not
vested
($)
|
Equity
incentive
plan
awards:
Number
of
unearned
shares,
units or
other
rights
that have
not vested
(#)
|
Equity
incentive plan
awards:
Market
or
payout value
of unearned
shares, units
or other rights
that have not
vested
($)
|
Douglas P.
Taylor
|
5,000
5,000
5,000
5,000
5,000
|
None
|
None
|
$5.885
$5.575
$5.205
$2.830
$6.350
|
4/18/16
4/18/17
4/18/18
4/18/19
4/18/20
|
None
|
None
|
None
|
None
|
Richard G.
Hill
|
5,000
5,000
5,000
5,000
5,000
|
None
|
None
|
$5.885
$5.575
$5.205
$2.830
$6.350
|
4/18/16
4/18/17
4/18/18
4/18/19
4/18/20
|
None
|
None
|
None
|
None
|
Mark V.
McDonough
|
2,000
2,000
4,000
4,000
4,000
|
None
|
None
|
$3.030
$6.170
$6.170
$6.040
$3.510
|
8/02/15
8/02/16
7/23/17
8/05/18
8/12/19
|
None
|
None
|
None
|
None
|
Equity Compensation Plan
Information
The following table sets forth
information regarding equity compensation plans of the Company as of May 31,
2010.
|
|
|
Equity Compensation
Plan Information
|
Plan
Category
|
|
Number of
securities to
be issued upon exercise
of outstanding options,
warrants, and rights
(a)
|
|
Weighted-average
exercise price of
outstanding
options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity
compensation
plans (excluding
securities reflected
in
column
(a)
)
(c)
|
Equity compensation plans
approved by security holders
|
|
|
|
|
|
|
|
1998 Stock Option Plan
2001
Stock Option Plan
2005 Stock Option Plan
2008 Stock Option
Plan
|
|
10,000
14,250
138,500
31,000
|
|
$4.50
$4.13
$5.09
$5.80
|
|
-
-
-
108,250
|
Equity compensation
plans
not approved by security
holders
|
|
|
|
|
|
|
.
|
2004
Employee
Stock
Purchase Plan (1)
|
|
-
|
|
-
|
|
236,542
|
Total
|
|
193,750
|
|
|
|
344,792
|
(1)
|
The Company's 2004 Employee
Stock Purchase Plan (the "Employee Plan") permits eligible employees to
purchase shares of the Company's common stock at fair market value through
payroll deductions and without brokers' fees. Such purchases are
without any contribution on the part of the Company. As of May 31,
2010, 236,542 shares were available for
issuance.
|
13
Employment
Agreements
As of December 1, 2000,
Messrs. Taylor and Hill (each, an "Executive") entered into Employment
Agreements with the Company (together, the "Agreements"). The Agreements,
by their terms, expire on December 31, 2010, provided however, that, upon
written notice given by either party to the other at least 30 days prior to the
expiration date, this Agreement may be renewed by mutual agreement of the
parties. Prior to any renewal of this Agreement by the Company, the Board
of Directors of the Company, acting by a majority of its disinterested members,
shall conduct a comprehensive evaluation and review of the performance of the
Executive for purposes of determining whether to renew the Agreement.
Under the Agreements, Messrs. Taylor and Hill are entitled to receive base
salaries of not less than $174,000 per year and $138,000, respectively, together
with such employee benefits and perquisites as were available to them
immediately prior to December 1, 2000. Should the Executive voluntarily
resign, the Company may, in the discretion of the Board, pay the Executive a
severance payment which the Board may determine at the time. The Company
retains the right to terminate each Executive for "Cause", without
compensation. "Cause" is defined to include personal dishonesty,
incompetence, willful misconduct, any breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of law, or willful material breach of the Agreement. If the Company
terminates either Executive without cause, or if either Executive resigns
because the Company has failed to appoint him to the office he currently holds,
or makes any material change in his functions, duties, or responsibilities, then
the terminated Executive is entitled to a payment equal to the greater of the
payments due him for the remaining term or 1.2 times the average of his three
preceding years' cash compensation plus contributions to employee benefit
plans. In the event of a "Change of Control," as defined in the
Agreements, followed by termination of the Executive's employment, the Company
has agreed to pay each Executive a sum equal to the greater of the payments due
him for the remaining term, or 2.99 times the average of the five preceding
years' cash compensation plus contributions to employee benefit plans. If
an Executive voluntary terminates his employment when there has not been a
Change in Control, then the Agreements provide that the Executive will not
compete with the Company for a period of one year in any city, town or county
where the Company's principal office is located.
Indemnification
Insurance for Directors and Officers
On August 24, 2010, the
Company purchased a director and officer indemnification insurance policy
written by the Federal Insurance Company through Chubb. The renewal was
for a one‑year period at an annual premium of $47,000. 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 New York Business Corporation Law (the "BCL") and the By-laws
authorize the Company to indemnify directors and officers, they do not 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.
OTHER
PLANS
The Company adopted an
Employee Stock Purchase Plan in 2004. As of September 24, 2010, there are
235,847 shares available for sale to qualified employees. The
Company also provides a 401(k) plan.
TRANSACTIONS WITH
MANAGEMENT AND OTHERS
None.
14
PROPOSAL 2 -
RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee engaged Lumsden &
McCormick, LLP to serve as the Company's independent registered public
accounting firm for the fiscal year ending May 31, 2011.
Although the Audit Committee is not
required to do so, it is submitting its expected selection for ratification to
the Annual Meeting in order to ascertain the views of the shareholders.
The Audit Committee will not be bound by the vote of the shareholders; however,
if the proposed selection is not ratified, the Audit Committee will revisit its
selection.
The Board of Directors
recommends that the selection of Lumsden & McCormick, LLP as
the
Company's independent registered public accounting firm for the fiscal year
ending
May 31, 2011 be ratified and urges you to vote "FOR" this
Proposal.
A representative of Lumsden
& McCormick, LLP will be present at the meeting, will be available to
respond to appropriate questions and will have the opportunity to make a
statement if he or she desires to do so.
The Audit Committee
approves all professional services, including tax related services, provided to
the Company by Lumsden & McCormick, LLP. With regard to "Audit and
Audit-Related" services, the Committee reviews the annual audit plan and
approves the estimated audit budget in advance. The aggregate fees billed
by Lumsden & McCormick, LLP for professional services to the Company were
$79,850 and $89,300 for the fiscal years ended May 31, 2010 and 2009.
Audit
Fees
The aggregate fees billed
by Lumsden & McCormick, LLP for professional services rendered in connection
with the audit of the Company's annual financial statements, the review of the
Company's quarterly financial statements and services that are normally provided
in connection with statutory and regulatory filings or engagements were $70,400
and $72,700 for the fiscal years ended May 31, 2010 and 2009.
Audit-Related
Fees
The aggregate fees billed
by Lumsden & McCormick, LLP for professional assurance and related services
reasonably related to the performance of the audit of the Company's financial
statements, but not included under Audit Fees, were none and $7,600 for the
fiscal years ended May 31, 2010 and 2009.
Tax Fees
The aggregate fees billed
by Lumsden & McCormick, LLP for professional services for tax compliance,
tax advice and tax planning were $9,450 and $9,000 for the fiscal years ended
May 31, 2010 and 2009.
All Other
Fees
None.
Pre-approval Policies
and Procedures
The Audit Committee has
adopted a policy that requires advance approval of all audit, audit-related, tax
services, and other services performed by the independent auditor. The
policy provides for pre-approval by the Audit Committee of specifically defined
audit and non-audit services. Unless the specific service has been
previously pre-approved with respect to that year, the Audit Committee must
approve the permitted service before the independent auditor is engaged to
perform it.
15
SHAREHOLDER
COMMUNICATIONS AND PROPOSALS
Although the Board of
Directors does not have a formal procedure for shareholders to send
communications to the Board of Directors, a shareholder may communicate with the
Company at its website at www.taylordevices.com/Investors.htm.
The Company will relay communications to specified individual directors if an
express request to do so is included in the shareholder
communication.
Procedures for a nomination
by a shareholder for election as a director are described under "
Nominees by
Shareholders
" on page 11 of this Proxy Statement.
Proposals of shareholders
intended to be presented to the year 2011 Annual Meeting of Shareholders must be
received by the Secretary of the Company prior to May 31, 2011 for inclusion in
the Proxy Statement and form of proxy. Shareholders wishing to propose a
matter for consideration at the 2010 Annual Meeting of Shareholders must follow
certain specified advance notice procedures set forth in the Company's By‑Laws,
a copy of which is available upon written request to: Reginald B. Newman II,
Secretary, Taylor Devices, Inc., 90 Taylor Drive, P.O. Box 748, North Tonawanda,
New York 14120‑0748.
The By‑Laws designate
procedures for the calling and conduct of a meeting of shareholders, including,
but not limited to, specifying who may call the meeting, what business may be
conducted, the procedures with respect to the making of shareholder proposals,
and the procedures and requirements for shareholder nomination of
directors.
The Company will provide
without charge, on the written request of any person from whom a proxy is
solicited, a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 2010. A written request should be addressed to Kathleen
A. Nicosia, Shareholder Relations Manager, 90 Taylor Drive, North Tonawanda, New
York 14120-0748.
FINANCIAL
STATEMENTS
The financial statements of
the Company are contained in the Company's 2010 Annual Report which accompanies
this Proxy Statement.
OTHER
MATTERS
Voting
Under t
he Business Corporation Law of New York ("BCL") and the Company's
By‑laws, the presence, in person or by proxy, of a majority of the outstanding
common shares is necessary to constitute a quorum of the shareholders to take
action at the Annual Meeting. The shares which are present or represented
by a proxy will be counted for quorum purposes regardless of whether or not a
broker with discretionary authority fails to exercise discretionary voting
authority with respect to any particular matter.
Directors standing for
election must be elected by a plurality of votes cast at the Annual Meeting, and
if elected, serve in the class of Directors to which they are elected. Any
other action properly brought before the meeting, including ratification of
Lumsden & McCormick, LLP as the Company's independent registered public
accounting firm for the fiscal year ending May 31, 2011, requires a majority of
the votes cast at the meeting by shareholders entitled to vote.
For voting purposes, all
proxies marked "for", "against", "abstain", or "withhold authority" will be
counted in accordance with such instruction as to each item. In no event
will an abstention be counted as a vote cast. No broker non‑votes will be
counted for any item.
Expenses
The expenses of this
solicitation, including the costs of preparing and mailing this Proxy Statement
and accompanying material, will be borne by the Company. The Company has
retained the services of Regan & Associates, Inc. to assist in the
solicitation of proxies under a contract providing for payment of $5,250, plus
reimbursement of reasonable out‑of‑pocket expenses. In addition to
solicitations by mail, Regan & Associates, Inc. and regular employees of the
Company may solicit proxies in person, by mail or by telephone, but no employee
of
16
the Company will
receive any compensation for solicitation activities in addition to his or her
regular compensation. Expenses may also include the charges and expenses
of brokerage houses, nominees, custodians and fiduciaries for forwarding proxies
and proxy materials to beneficial owners of shares.
The Board of Directors
knows of no other matters to be voted upon at the Annual Meeting. If any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed form of proxy to vote on such matters in
accordance with their judgment.
|
By Order of the Board of
Directors
|
|
/s/ Reginald B. Newman
II
|
|
Reginald B. Newman
II
|
Dated:
|
September 28, 2010
|
Secretary
|
|
North Tonawanda, New
York
|
|