SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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|_| Preliminary Proxy Statement
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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
GYRODYNE COMPANY OF AMERICA, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
102 FLOWERFIELD
SAINT JAMES, NEW YORK 11780
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON
JANUARY 19, 2001
TO THE SHAREHOLDERS OF GYRODYNE COMPANY OF AMERICA, INC.
NOTICE IS HEREBY GIVEN, pursuant to the Bylaws, that the Annual Meeting of
Shareholders (the "Annual Meeting") of Gyrodyne Company of America, Inc. (the
"Company"), will be held at Flowerfield, Mills Pond Road, Saint James, New York,
on Friday, January 19, 2001 at 11:00 o'clock in the forenoon, Eastern Time.
The purpose of the Annual Meeting is to consider and vote upon the following
matters:
1. To elect two (2) Directors to a three year term of office, and until their
successors shall be elected and shall qualify;
2. To ratify the engagement of Holtz Rubenstein & Co., LLP, independent
accountants as auditors of the Company and its subsidiaries for the Fiscal Year
ending April 30, 2001;
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. By order of the Board of Directors, only Shareholders
of Record at the close of business December 13, 2000 are entitled to notice of
and to vote at the Annual Meeting, or any adjournment thereof. Enclosed in this
mailing are the Notice of the 2000 Annual Meeting of Shareholders, Proxy
Statement, Proxy Card and Attendance Registration.
To obtain an admittance card for the Meeting, please complete the enclosed
Attendance Registration form and return it with your Proxy Card. If your shares
are held by a bank or broker, you may obtain an admittance card by returning the
Attendance Registration form they forwarded to you. If you do not receive an
Attendance Registration form, you may obtain an admittance card by sending a
written request, accompanied by proof of share ownership to the undersigned. For
your convenience, we recommend that you bring your admittance card to the Annual
Meeting so you can avoid registration and proceed directly to the Meeting.
However, if you do not have an admittance card by the time of the Meeting,
please bring proof of share ownership to the registration area where our staff
will assist you.
By Order of the Board of Directors,
Peter Pitsiokos, Corporate Secretary
December 15, 2000
YOUR VOTE IS IMPORTANT
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. HOWEVER,
WE ENCOURAGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE PROXY IN THE ENCLOSED
ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. GIVING YOUR
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING,
BUT WILL HELP ASSURE A QUORUM AND AVOID FURTHER PROXY SOLICITATION COSTS.
ATTENDANCE AT THE ANNUAL MEETING IS LIMITED TO SHAREHOLDERS, THEIR PROXIES AND
INVITED GUESTS OF THE COMPANY. FOR IDENTIFICATION PURPOSES, "STREET NAME"
SHAREHOLDERS WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING STOCK
OWNERSHIP AS OF THE RECORD DATE.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
IN GENERAL
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors (the "Board") of Gyrodyne Company of America, Inc. (
the "Company") for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held January 19, 2001 at 11:00 a.m., Eastern Time at
Flowerfield, Mills Pond Road, Saint James, New York 11780 and at any and all
adjournments thereof.
VOTING SECURITIES AND PROXIES
The Board has fixed the close of business on December 13, 2000, as the Record
Date for the determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting. The securities which may be voted at the Annual Meeting
consist of shares of common stock of the Company. Holders of Common Stock are
entitled to one vote per share. Shareholders do not have cumulative voting
rights. It is necessary for a Quorum that record holders of a majority of the
shares be represented by proxy or in person at the Annual Meeting. The number of
shares of Common Stock outstanding on the Record Date was 1,117,583 par value $1
per share, the Company's only authorized class of stock. This Proxy Statement
and the enclosed proxy card were mailed commencing on or about December 15,
2000.
Proxies solicited by the Board will be voted in accordance with the instructions
given therein. Where no instructions are indicated, proxies will be voted "FOR"
the election of the nominees for director, and "FOR" ratification of the
appointment of the independent auditor. Directors shall be elected by a majority
of the votes cast. If you do not return your duly signed proxy card, your shares
cannot be voted unless you attend the Annual Meeting and vote in person or
present a duly signed proxy at the Annual Meeting. Proxies solicited hereby will
be tabulated by inspectors of election designated by the Board of Directors, who
will not be directors or officers of the Company. After the final adjournment of
the Annual Meeting, the proxies will be returned to the Company for safekeeping.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of December 13, 2000 those persons or entities
known by the Company to be Beneficial Owners of more than 5% of the Company's
Common Stock $1 par value, its only equity security.
<TABLE>
<CAPTION>
Type of Number of Percent of
Name and Address Ownership shares Owned Class
---------------- --------- ------------ -----
<S> <C> <C> <C>
K Capital Partners, LLC
441 Stuart Street, 6th Floor
Boston, Massachusetts 02116 Beneficial 142,550 12.76
Catherine Papadakos
Village of the Green
2481-C Oakleaf Lane
Clearwater, FL 33763-1236 Beneficial 113,839 10.19
Gyrodyne Company of America, Inc.
St. James, NY 11780 (A) Beneficial 78,346 7.01
Private Capital Management, Inc.
3003 Tamiami Trail North
Naples, Florida 33940 Beneficial 67,186 6.01
</TABLE>
(A) Since the Company has the authority to direct the HSBC Bank, USA, the
Trustee of the Gyrodyne Pension Plan, to vote the securities of the
Company held by the Pension Fund, Gyrodyne Company of America, Inc. has
been listed above as the beneficial owner of the 78,346 shares held by the
HSBC Bank, USA as Trustee for the Gyrodyne Pension Fund. The Board of
Directors intends to instruct the trustees of the Pension Fund to vote
"FOR" the election of the nominees for director and "FOR" ratification of
the appointment of the independent auditor.
2
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
The By-Laws of the Company provide that there shall be not less than three (3),
nor more than nineteen (19) directors. The number of directors of the Company is
presently fixed by resolution of the Board of Directors at six (6). There are
three (3) classes of directors serving staggered terms of office with each class
to consist, as nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. Upon the expiration of the term of
office for a class of directors, the nominees for that class are elected for a
three (3) year term to serve until the election and qualification of their
successors. Each properly executed Proxy received will be voted for the election
of the two (2) nominees named below as directors to serve until the designated
Annual Meeting of Shareholders shown below or until their respective successors
shall be elected and shall qualify. The nominees have consented to be named as
nominees in the Proxy Statement and to serve as directors if elected.
Should any nominee become unable or unwilling to accept a nomination or
election, the persons named in the enclosed Proxy will vote for the election of
a nominee designated by the Board.
Following are the nominees who are currently directors of the Company. They were
elected to their current term of office at the 1997 Annual Meeting of
Shareholders. Information concerning the nominees, showing the year when first
elected as a director of the Company, the age, principal occupation and
principal affiliations, is as follows:
Nominees for Director - Term Expiring in 2003
John H. Marburger III
Director since 1996
Age 59
John H. Marburger III is a Professor of Physics, State University of New York at
Stony Brook and Director of Brookhaven National Laboratories. Formerly President
of State University of New York at Stony Brook.
Paul L. Lamb
Director since 1997
Age 55
Paul L. Lamb is a Partner of Lamb & Barnosky, LLP and Chairman of the Board of
Directors of Gyrodyne Company of America, Inc..
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES FOR
DIRECTOR. THIS IS IDENTIFIED AS ITEM 1 ON THE ENCLOSED PROXY CARD.
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND NOMINEES
The following table sets forth as of December 13, 2000 the outstanding voting
securities beneficially owned by the directors and executive officers and the
number of shares owned by directors and executive officers as a group.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Percentage of
Name & Positions With Shares of stock Common Stock
The Company Beneficially Owned Owned
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stephen V. Maroney, President, CEO, Treasurer and Director 13,512 1.21%
-----------------------------------------------------------------------------------------------------------------
Peter Pitsiokos, Exec. Vice President, Secretary & General Counsel 9,756 (A) (B)
-----------------------------------------------------------------------------------------------------------------
Robert H. Beyer, Director 6,745 (C) (B)
-----------------------------------------------------------------------------------------------------------------
Robert F. Friemann, Director 2,861 (B)
-----------------------------------------------------------------------------------------------------------------
Paul L. Lamb, Chairman of the Board of Directors 9,406 (D) (B)
-----------------------------------------------------------------------------------------------------------------
John H. Marburger III, Director 3,531 (B)
-----------------------------------------------------------------------------------------------------------------
Philip F. Palmedo, Director 7,466 (B)
-----------------------------------------------------------------------------------------------------------------
All Directors and Executive
Officers as a Group (Seven (7) Persons) 53,277 4.77%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Does not include his wife's and minor children's ownership of 447 shares
in which he denies any beneficial interest.
(B) Less than 1%.
3
<PAGE>
(C) Does not include his wife's ownership of 1,638 shares in which he denies
any beneficial interest.
(D) Includes 7,498 shares of Company stock held by Lamb & Barnosky, LLP Profit
Sharing Trust. Mr. Lamb is a Trustee of the Profit Sharing Trust and a
partner in Lamb & Barnosky, LLP.
DIRECTOR COMPENSATION
Directors who are full-time salaried employees of the Company are not
compensated for their service on the Board or any committee. Non-employee
directors are paid an annual fee of $7,500.00, $1,000.00 for each Director's
meeting attended, $500.00 for each committee meeting attended and travel and
lodging expenses where appropriate. All compensation is paid in cash. During
Fiscal Year 1999, Director Stephen V. Maroney was paid compensation of $76,135
in his capacity as Director of Real Estate Development. Mr. Maroney's
compensation as Director of Real Estate Development ceased upon his appointment
as President, CEO and Treasurer of the Company. There was no additional
compensation paid by the Company to any other Director for Fiscal Years 1999 or
2000.
Non-Employee Director's Compensation Plan and Stock Option Plan
The Non-Employee Director's Compensation Plan (the "Compensation Plan"),
approved by the shareholders in 1996, allowed outside Directors to elect to
receive all of their annual Director's fees and meeting fees in shares of the
Company's Common Stock. Since the inception of the Compensation Plan, all
Directors elected to receive all of their annual Director's fees and meeting
fees in shares of the Company's Common Stock. The Compensation Plan was
administered by the Non-Employee Director's Compensation Plan Committee. The
following individuals, who are not eligible to participate in the Compensation
Plan, served on the Committee: Stephen V. Maroney, Chairman, Frank D'Alessandro,
Peter Pitsiokos. The Committee did not meet in Fiscal Year 2000. Based upon the
terms of the 1996 approval, the Compensation Plan terminated in February 2000.
The Company adopted a non-qualified stock option plan for all non-employee
Directors of the Company in October 1996. Each non-employee Director was granted
an initial 2,500 options on the date of adoption of the plan. These options are
exercisable in three equal annual installments commencing on the first
anniversary date subsequent to the grant. Additionally each non-employee
Director was granted 1,250 options on each January 1st from 1997 through 2000,
respectively. These additional options are exercisable in full on the first
anniversary date subsequent to the date of grant.
A summary of the Company's various fixed stock option plans as of April 30, 2000
and 1999, and changes during the years then ended is presented below:
<TABLE>
<CAPTION>
Years Ended April 30,
------------------------------------------------------
2000 1999
---------------------- -----------------------
Weighted Weighted
Average Average
Exercise Exercise
Fixed Stock Options Shares Price Shares Total
------------------- ------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of year 84,579 $14.94 112,662 $15.37
Granted 26,000 20.09 12,500 15.25
Exercised (7,115) 13.63 (4,783) 10.06
Canceled (18,487) 14.42 (35,800) 17.07
------- -------
Outstanding, end of year 84,977 $16.74 84,579 $14.94
======= =======
Options exercisable at year end 67,977 $15.93 64,854 $14.67
======= =======
Weighted average fair value of
options granted during the year $ 3.93 $ 2.04
====== ======
</TABLE>
4
<PAGE>
The following table summarizes information about stock options
outstanding at April 30, 2000:
Options Outstanding Options Exercisable
-------------------------------------- -----------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Price Outstanding Life Price Outstanding Price
-------------- ----------- ----------- -------- ----------- ---------
$11.80 - $14.81 30,750 4.02 $12.67 30,750 $12.67
$15.63 - $17.26 17,227 1.57 $16.72 16,227 $16.69
$19.98 - $21.01 37,000 4.94 $20.13 21,000 $20.11
Shares reserved for future issuance at April 30, 2000 are comprised of the
following:
Shares issuable upon exercise of stock options under the
Company's Non-Employee Director Stock Option Plan 67,000
Shares issuable under the Company's Non-Employee
Director Stock Compensation Plan 21,448
Shares issuable upon exercise of stock options under
the Company's stock incentive plan 214,033
Shares issuable under the Company's stock grant incentive plan 3,150
--------
305,631
========
Interest of Directors in Transactions with the Company
Mr. Paul L. Lamb, Chairman of the Board of Directors, is a partner in the law
firm of Lamb & Barnosky, LLP, which performs legal services for the Company and
is paid its usual and customary fees for those services. In Fiscal Year 2000,
total fees paid to Lamb & Barnosky, LLP were $184,395.
BOARD MEETINGS, COMMITTEES AND MEMBERSHIP
Attendance
There were seven regular meetings of the Board of Directors during Fiscal Year
2000 (May 1, 1999 through April 30, 2000). Each Director attended 75% of the
aggregate number of meetings of the Board of Directors of the Company, except
for Mr. Goudes and Mr. Marburger. Mr. Marburger did not attend two (2) meetings.
Mr. Goudes resigned effective November 28, 2000.
Committees
The committees consist of the Audit Committee, Executive Committee, Executive
Compensation Committee, Nominating Committee and Stock Option Committee.
The Executive Committee consists of four non-employee members and Mr. Maroney.
Directors presently serving on the Executive Committee include Mr. Lamb
(Chairman), Mr. Friemann, Mr. Marburger, Mr. Maroney and Mr. Palmedo. The
Executive Committee exercises all the authority of the Board of Directors in the
management and business affairs of the Company during the intervals between
meetings of the Board except with respect to certain matters that by statute may
not be delegated by the Board of Directors. The committee met eight times during
FY 2000.
The Audit Committee consists of independent directors, in accordance with the
existing requirements of NASDAQ. The functions of the Audit Committee include
meeting with the Company's independent auditors
5
<PAGE>
annually to review financial results, audited financial statements, internal
financial controls and procedures and audit plans and recommendations. The Audit
Committee also recommends the selection, retention or termination of the
Company's independent auditors, approves services provided by the independent
public accountants before providing such services, and evaluates the possible
effect the performance of such services will have on the accountants'
independence. The committee met once during FY 2000 and its members were Mr.
Friemann, Mr. Lamb and Mr. Palmedo.
The Executive Compensation Committee consists entirely of non-employee directors
and oversees the Company's compensation and benefit policies and programs. It
recommends to the Board annual salaries, bonuses and other benefits for elected
officers. The Committee met once in FY 2000 and its members are Mr. Beyer and
Mr. Friemann.
The Nominating Committee consists entirely of non-employee directors and
recommends guidelines to the Board regarding the size and composition of the
Board and criteria for the selection of nominees. It also recommends the slate
of director nominees to be included in the proxy statement and recommends
candidates for vacancies which may occur. The Committee met one time during FY
2000 and its members were Mr. Beyer, Mr. Goudes and Mr. Lamb. (Current members:
Mr. Beyer, Mr. Friemann and Mr. Palmedo)
The Stock Option Committee consists entirely of non-employee directors not
eligible to participate in the Company's 1993 Stock Incentive Plan or other
stock option plans for the benefit of Company employees. The primary functions
of the Stock Option Committee include the review and administration of employee
stock option plans for the benefit of officers and key employees. It also
recommends to the Board stock options and awards. The Committee met once during
FY 2000 and its members are Mr. Beyer and Mr. Friemann.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
A review of all Forms 3 and 4 filed with the Company indicates that none of the
executive officers or directors were late in filing any required Forms 3 or
Forms 4 with the Securities and Exchange Commission for fiscal year 2000. A
review of prior year filings indicates that no 10% holder of Gyrodyne Common
Stock $1 par value failed to file timely reports.
REPORT OF THE AUDIT COMMITTEE
Pursuant to newly adopted rules by the Securities and Exchange Commission (the
SEC) and the National Association of Securities Dealers, Inc. (the NASD), the
Audit Committee of Gyrodyne Company of America, Inc. has issued the following
report and affirmed that:
(i) All financial reports (Form 10-QSB and 10-KSB) issued subsequent to March
15, 2000 are reviewed by both the Company's independent auditors and the members
of this committee prior to filing such reports with the SEC.
(ii) Audited financial statements have been reviewed and discussed with
management.
(iii) We have reviewed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 pertaining to communications
with Audit Committees.
(iv) We have received from and discussed with the auditors, disclosures
regarding the auditors' independence as required by Independence Standards Board
Standard No. 1.
(v) Based on our review of and discussion about the audited financial
statements, we have recommended they be included in the Company's Annual Report
on Form 10-KSB.
(vi) The members of the Company's Audit Committee qualify as being independent
as defined in the applicable standards issued by the NASD.
6
<PAGE>
(vii) The Board of Directors has adopted a written charter for the Audit
Committee which is included in this proxy statement as Appendix A.
Members of the Committee
Robert F. Friemann
Paul L. Lamb
Philip F. Palmedo
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Executive
Compensation Committee of the Board. The Committee reviews and recommends
compensation for executive officers. The Committee's recommendations are
considered by the Board's non-employee directors.
The goal of the Company's Executive Compensation Committee is to ensure that an
appropriate relationship exists between executive compensation and the creation
of shareholder value, while at the same time motivating and retaining key
employees. Salary guidelines for executive officers are established by comparing
responsibilities of the position to similar positions in other comparable
companies. The Company has long believed in the importance of aligning the
interests of executives and shareholders through stock ownership by key
employees. The primary components of compensation, base salary and stock option
awards are designed to accomplish the Committee's goals.
The Committee evaluates management based on the Company's financial and
non-financial performance recognizing that land and property management
constitute the major portion of the Company's business activities.
Comparisons of the Company's compensation levels with those of similar land
management and property rental organizations are extremely limited and primarily
based on estimates since most are privately owned and not required to make
public disclosures. In light of these estimations, it is the Committee's opinion
that the Company's level of overall compensation is competitive and in the low
to mid range on a comparative basis.
It is the position of both the Executive Compensation and the Stock Option
Committees that management's performance can best be evaluated based on its
ability to formulate, oversee and administer corporate strategy, which itself is
the product of Board action and direction. For the foreseeable future, that
strategy is to focus primarily on continued progress in the real estate
operation, principally the development of Flowerfield.
In establishing the compensation for Messrs. Maroney and Pitsiokos, the
Committee observes the policy set forth above for Executive Officers. No
specific weighting is applied to the various factors in determining total
compensation.
MEMBERS OF THE COMMITTEE
Robert F. Friemann, Chairman
Robert H. Beyer
EMPLOYMENT CONTRACTS, OTHER COMPENSATION AND CERTAIN TRANSACTIONS
The Company has a one year employment agreement with Mr. Maroney, who was
appointed President, Chief Executive Officer and Treasurer of the Company in
March, 1999. The employment contract provides for an annual base salary of
$175,000.00. In connection with the Company's appointment of Mr. Pitsiokos as
Executive Vice President, General Counsel and Secretary, the Company also
entered into a one year employment contract with an annual base salary of
$115,000.00. Both contracts provide for a severance payment equivalent to six
months salary in the event of a change in control.
During the fiscal years ended April 30, 2000 and April 30, 1999 three Directors
or Officers received remuneration in excess of $100,000 in such capacity.
7
<PAGE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
Long term Compensation
------------------------------------
Annual Compensation Awards Pay outs
-----------------------------------------------------------------
Securities
Underlying
Other Annual Restricted Options LTIP
Name and Salary Bonus Compensation Stock /LSARs Payout All Other
Principal Position Year ($) ($) ($) Award ($) (#) ($) Compensation
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen V. Maroney
President & CEO 2000 176,269 0 4,875(A) 0 7,500 0 0
President & CEO 1999 20,856 0 0 0 0 0 0
Dir.of Real Estate Devlp 1999 76,135 0 59,500(A) 0 1,250 0 0
Peter Pitsiokos
Exec.V.P. and Secretary 2000 130,020 0 72,764(B) 0 3,500 0 0
Dimitri P. Papadakos
Former President & CEO 1999 111,536 0 66,172(C) 0 0 0 0
</TABLE>
(A) Mr. Maroney received shares for his services as Company Director with a fair
market value of $4,875 in FY00 and $14,500 in FY99. The FY 2000 distribution
represents fees earned prior to his appointment as President. Pursuant to his
Consulting Agreement with the Company in FY99, Mr. Maroney also received stock
payments in lieu of cash with a fair market value of $45,000. The Registrant has
concluded that aggregate amounts of personal benefits to any of the current
executives does not exceed the lesser of $50,000 or 10% of compensation and
bonuses reported above for the named executive officers, and that the
information set forth in tabular form above is not rendered materially
misleading by virtues of the omission of such personal benefits.
(B) Mr. Pitsiokos received 525 shares from stock awards granted in FY 98 with a
value of $10,533 and 4,093 shares from options with SAR'S granted in FY95, 75%
of which was amortized this fiscal year with a value of $61,942. In addition, he
had compensation related to his auto lease of $289.
(C) The 1999 "Other Annual Compensation" represents the fair market value of
4,375 excess shares exercised on 8/7/98 and restricted until 2/5/99.
1993 Stock Incentive Plan
In 1993, the shareholders adopted a stock incentive plan (the "Plan") under
which participants may be granted Incentive Stock Options ("ISOs"),
Non-Qualified Stock Options ("NQSOs") or Stock Grants. The purpose of the Plan
is to promote the overall financial objectives of the Company and its
shareholders by motivating those persons selected to participate in the Plan to
achieve growth in shareholder value and retain the association of those
individuals who are instrumental in achieving this growth. Such options or
grants become exercisable at various intervals based upon vesting schedules as
determined by the Stock Option Committee. The options expire between July 2001
through August 2005.
The ISOs may be granted to employees and consultants of the Company at a price
not less than the fair market value on the date of grant. All such options are
authorized and approved by the Board of Directors, based on recommendations of
the Stock Option Committee.
ISOs may be granted along with Stock Appreciation Rights which permit the holder
to tender the option to the Company in exchange for stock, at no cost to the
optionee, that represents the difference between the option price and the fair
market value on date of exercise. NQSOs may be issued with Limited Stock
Appreciation Rights which are exercisable, for cash, in the event of a change of
control. In addition, an incentive kicker may be provided for
8
<PAGE>
Stock Grants, ISOs and NQSOs, which increases the number of grants or options
based on the market price of the shares at exercise versus the option price. A
reload feature may also be attached which permits the optionee to tender
previously purchased stock, in lieu of cash, for the purchase of the options and
receive additional options equal to the number of shares tendered.
Information as to the stock options and stock grants is summarized as
follows:
<TABLE>
<CAPTION>
Stock Stock
Stock Options and Grants: Options Grants Total
------------------------- ------- ------ -----
<S> <C> <C> <C>
Available at April 30, 1998 72,662 5,850 78,512
Stock grants canceled -- (300) (300)
Stock options canceled (38,925) -- (38,925)
Stock options issued at $9.89 to $20.19 per share 8,750 -- 8,750
Stock grants exercised -- (2,625) (2,625)
Stock options exercised at $9.89 per share (8,750) -- (8,750)
------- ------ -------
Available at April 30, 1999 33,737 2,925 36,662
======= ====== =======
Stock grants awarded -- 400 400
Stock options canceled (17,237) -- (17,237)
Stock options issued at $20.02 per share 18,500 -- 18,500
Stock grants exercised -- (3,325) (3,325)
Stock options exercised at $15.63 to $17.26 per share (3,273) -- (3,273)
------- ------ -------
Available at April 30, 2000 31,727 -- 31,727
------- ------ -------
Exercisable at April 30, 2000 20,227 -- 20,227
======= ====== =======
</TABLE>
On October 28, 1999, the Board of Directors granted Stock Options to eight (8)
employees and officers totaling 18,500 shares of which 1,500 were canceled. As
of that same date, 400 stock grants were awarded to four (4) employees.
AGGREGATED OPTION/LSAR EXERCISED IN LAST FISCAL YEAR
AND FY-END OPTION/LSAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/LSAR's at Options/LSAR's at
Acquired on Value April 30, 2000 April 30, 2000 ($)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Stephen V. Maroney
President and CEO -- -- 12,000/4,750 $36,113/$1,807
Peter Pitsiokos
Exec. V.P. and Secretary 4618 $93,122 7,750/1,750 $15,733/$0
</TABLE>
Ratification of Appointment of Independent Auditors
(Proposal 2)
The Board of Directors, upon the recommendation of the Audit Committee,
comprised entirely of outside directors, has appointed Holtz Rubenstein & Co.,
LLP ("HR") of 125 Baylis Road, Melville, New York 11747, as independent public
accountants of the Company and its subsidiaries for the current Fiscal Year, and
to perform such other professional services, if any, as may be required of them.
The appointment of HR has been ratified by the
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shareholders every year since 1990. The Board is requesting ratification of HR
as independent public accountants. This firm has no financial interest in the
Company or any connection with the Company other than as auditors and
independent public accountants.
In the event the proposal is defeated, the adverse vote will be considered a
direction to the Board to select other independent public accountants for the
next fiscal year. However, because of the expense and difficulty of making any
substitution of independent public accountants after the beginning of a fiscal
period, it is contemplated that the appointment for 2001 will be permitted to
stand unless the Board finds other reasons for making the change.
Representatives of HR are expected to be present at the annual shareholders
meeting, will be given an opportunity to make a statement if they desire to do
so, and are expected to be available at a designated time during the meeting to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL. THIS
IS IDENTIFIED AS ITEM 2 ON THE ENCLOSED PROXY CARD.
OTHER MATTERS
Management does not know of any other matters that may be presented. If any
other matters properly come before the Annual Meeting or adjournments thereof,
the persons named in the enclosed Proxy will vote on such matters in accordance
with their best judgment pursuant to the discretionary authority included in the
proxy.
The cost of soliciting proxies will be paid by the Company. In addition to
solicitation by mail, Officers, Directors, and regular employees of the Company
may, without compensation other than their regular compensation, solicit Proxies
by telephone, by fax or in person. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward solicitation materials to
their principals and the Company will reimburse the expense of so doing. In
addition, Georgeson Shareholder Communications, Inc., a proxy solicitation firm,
will assist the Company in soliciting proxies for the Annual Meeting and will be
paid a fee of $4,000 plus out-of-pocket expenses.
Any shareholder executing the enclosed Proxy has the right to revoke it at any
time prior to its exercise by delivering to the Company a written revocation or
a duly executed proxy bearing a later date, or by attending the Annual Meeting
and voting in person. However, if you are a shareholder whose shares are not
registered in your own name, you will need appropriate documentation from your
record holder to attend the Annual Meeting and to vote personally at the Annual
Meeting.
FINANCIAL STATEMENTS
Accompanying this Proxy Statement is the Annual Report for the latest Fiscal
Year ended April 30, 2000 which includes an audited Balance Sheet for the year
then ended, and audited Statements of Income and Cash Flow for each of the two
most recent fiscal years.
2001 STOCKHOLDER'S PROPOSALS
Any Shareholder's proposal intended to be presented at the 2001 Annual Meeting
of Shareholders must, in accordance with Rule 14a-8 of the Proxy Rules of the
Securities and Exchange Commission, be received at the Company's principal
executive office on or prior to August 23, 2001, in order to be included in the
Company's Proxy Statement and Form of Proxy relating to such annual meeting.
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APPENDIX A
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of non-employee directors who
are independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
- Review and recommend to the directors the independent auditors to be selected
to audit the financial statements of the corporation and its divisions and
subsidiaries.
- Meet with the independent auditors and financial management of the corporation
to review the scope of the proposed audit for the current year and the audit
procedures to be utilized, and at the conclusion thereof review such audit,
including any comments or recommendations of the independent auditors.
- Review with the independent auditors and financial and accounting personnel,
the adequacy and effectiveness of the accounting and financial controls of the
corporation, and elicit any recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the adequacy of
such internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
- Review with quarterly and annual financial statements contained in the annual
report to shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Any changes in
accounting principles should be reviewed.
- Provide sufficient opportunity for independent auditors to meet with the
members of the audit committee without members of management present. Among the
items to be discussed in these meetings are the independent auditors' evaluation
of the corporation's financial, accounting, and auditing personnel, and the
cooperation that the independent auditors received during the course of the
audit.
- Submit the minutes of all meetings of the audit committee to, or discuss the
matters discussed at each committee meeting with, the board of directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in its
judgment, that is appropriate.
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