SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
MECHANICAL TECHNOLOGY INCORPORATED
__________________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing,
(1) Amount previously paid:
______________________________________________________________
(2) Form, schedule or registration statement no.:
______________________________________________________________
(3) Filing party:
______________________________________________________________
(4) Date filed:
______________________________________________________________
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED
968 ALBANY-SHAKER ROAD LATHAM, NEW YORK 12110
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Mechanical Technology Incorporated will
be held at the offices of First Albany Companies Inc., 30 South Pearl Street,
Albany, New York (directions enclosed), on Wednesday, April 16, 1997, at
10:00 A.M. local time (refreshments will be served at 9:15 A.M.) for the
following purposes:
1. To elect nine Directors of the Company to hold office until the next
Annual Meeting of Shareholders of the Company.
2. To vote on the approval of Coopers & Lybrand as the auditors of the
Company.
3. To consider and transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 3, 1997, are
entitled to notice of and to vote at the meeting or any adjournment. The
Proxy Statement and Annual Report of the Company for the fiscal year ended
September 30, 1996, are enclosed.
Whether or not you expect to attend the meeting in person, kindly mark, sign,
date and return the enclosed Proxy in the envelope provided so that your
stock will be represented. Your Proxy is revocable up to the time it is
voted, and you may vote in person at the Annual Meeting even though you have
previously submitted your Proxy.
By Order of the Board of Directors
John Recupero Latham, New York
Secretary March 17, 1997
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO MARK, DATE, SIGN, AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED
968 ALBANY-SHAKER ROAD
LATHAM, NEW YORK 12110
PROXY STATEMENT
March 17, 1997
This Proxy Statement, first being mailed to shareholders on approximately
March 17, 1997, is furnished in connection with the solicitation by the Board
of Directors of proxies to be voted at the Annual Meeting of Shareholders to
be held on April 16, 1997, and at any adjournment thereof.
A proxy is enclosed for use at the meeting. The proxy may be revoked at any
time before it is exercised. If a shareholder specifies in this proxy how it
is to be voted on a matter as to which a choice is indicated, the proxy will
be voted in accordance with such specification. If no specification is made,
the proxy will be voted for the election of the nominees listed therein and
for approval of the auditors.
OUTSTANDING SHARES AND VOTING RIGHTS
All holders of Common Stock of record at the close of business on March 3,
1997, are entitled to notice of and to vote at the Annual Meeting of
Shareholders to be held on April 16, 1997, at the offices of First Albany
Companies Inc., 30 South Pearl Street, Albany, New York. At the close of
business on March 3, 1997, the Company had outstanding 5,899,201 shares of
Common Stock, which is the only class of securities entitled to vote at the
meeting. Each share of Common Stock entitles the holder thereof to one vote
on the matters to be voted upon by such shareholders.
ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, nine Directors are to be elected, each
to hold office until the next Annual Meeting of Shareholders and until a
successor shall be elected and shall qualify.
Management's nominees for Director, together with certain information
concerning them, are on the following pages. In the event that any of such
nominees shall become unavailable for any reason, it is intended that proxies
will be voted for substitute nominees designated by management.
The number of shares voted "for" the election of each person nominated for
election as a Director, as well as the number of shares as to which authority
is withheld from the proxies to vote for any individual nominee or for all of
management's nominees as a group and the number of shares held for customers
by brokers (or their nominees) and represented at the meeting but not voted
with respect to the election of Directors, will be tabulated by inspectors of
election appointed in accordance with the applicable provisions of the New
York Business Corporation Law. The nominees for election as Director
receiving a plurality of the votes which are cast at the meeting with respect
to the election of Directors will be elected. Thus, except that such action
may reduce the number of shares which are voted "for" the election of any
person nominated for election as a Director and may reduce the number of
votes which are cast at the meeting with respect to the election of
Directors, neither a shareholder's withholding of authority from the proxies
to vote his shares for any individual nominee or for all of management's
nominees as a group, nor the failure of brokers to vote, with respect to the
<PAGE>
election of Directors, shares held by them (or their nominees) for customers,
will otherwise affect the vote required for the election of Directors; the
nine nominees for election receiving the greatest number of votes will be
elected, without regard to the actual number of shares voted (or not voted)
for each or the total number of votes cast for all nominees.
YEAR FIRST
PRINCIPAL OCCUPATION BECAME A
NAME AGE OR EMPLOYMENT DIRECTOR
- ---------------------- --- ----------------------------- ---------
Dale W. Church 57 Lawyer, Private practice -
R. Wayne Diesel 51 Chief Executive Officr 1994
of the Company
Edward A. Dohring 63 President, SVG Lithography -
Systems, Inc.
Alan P. Goldberg 51 President & Co-Chief Executive 1996
Officer, First Albany Companies
Inc.
George C. McNamee 50 Chairman of the Board of the 1996
Company and Chairman & Co-Chief
Executive Officer, First Albany
Companies Inc.
Martin J. Mastroianni 52 President and Chief Operating -
Officer of the Company
E. Dennis O'Connor 57 Director-New Products and 1993
Technology, Masco Corporation
Dr. Walter L. Robb 68 President, Vantage Management, -
Inc.
Dr. Beno Sternlicht 69 President, Benjosh 1996
Management Corporation
CERTAIN INFORMATION REGARDING NOMINEES
Mr. Church has practiced law in private practice, government, and corporate
environments for over 30 years with specialties in U.S. and international
government contracting, developing companies, mergers and acquisitions, and
joint ventures. He currently serves as General Counsel to the American
Electronic Association, a Trustee of the National Security Industrial
Association, and as a director on various private corporations. His previous
experience includes working for the U.S. government's Central Intelligence
Agency and Department of Defense and as corporate counsel to establish
several companies in the "Silicon Valley" of California.
Mr. Diesel was elected Chief Executive Officer of the Company in February
1994 and prior to December 1996 also held the title of President. From
September 1991 to February 1994, he held various management positions with
Lawrence Group, Inc. and Lawrence Insurance Group, Inc.("LIG"), and was a
director of LIG until March 1996 (see "Securities Ownership of Certain
Beneficial Owners" in the section entitled "Additional Information", below);
since March 1996, Mr. Diesel has had no affiliation with Lawrence Group, Inc.
or any related company. He previously held senior management positions with
<PAGE>
KeyCorp and the State of New York. Following his election as President and
Chief Executive Officer of the Company in February 1994, Mr. Diesel was also
elected Chairman of the Board and Chief Executive Officer of the
Corporation's United Telecontrol Electronics, Inc. subsidiary ("UTE");
shortly thereafter, UTE filed for bankruptcy and was liquidated as a result
of events that occurred prior to Mr. Diesel's relationship with the Company
or with UTE.
Mr. Dohring has been Vice President of Silicon Valley Group ("SVG"), Inc.
since July 1992 and President of its SVG Lithography Systems, Inc. unit since
October 1994. From June 1992 to October 1994, he served as President of SVG's
Track Systems Division. He joined SVG from Rochester Instrument Systems, Inc.
where he served as President from April 1989 to June 1992. He has also held
management positions with General Signal, CVC Products, Bendix, Bell & Howell
and Veeco Instruments.
Mr. Goldberg is the President & Co-Chief Executive Officer and a Director of
First Albany Companies Inc. ("FAC", see "Securities Ownership of Certain
Beneficial Owners" in the section entitled "Additional Information", below).
He is Chairman of the Board of Trustees of the Albany Institute of History
and Art, Chairman of the Albany-Colonie Chamber of Commerce and a Director of
the Center for Economic Growth and the Albany Symphony Orchestra.
Mr. McNamee, Chairman of the Company's Board of Directors, is the Chairman &
Co-Chief Executive Officer and a Director of FAC (see "Securities Ownership
of Certain Beneficial Owners" in the section entitled "Additional
Information", below). Mr. McNamee is a member of the Board Directors of
MapInfo Corporation, The Meta Group, Inc., and Internet Shopping Network,
Inc. He also serves on the Board Directors of the New York State Science and
Technology Foundation, and is Chairman of the Regional Firms Advisory
Committee to the Board of the New York Stock Exchange.
Mr. Mastroianni was elected President and Chief Operating Officer of the
Company in December 1996. Prior to joining the Company, he served most
recently as Director, Transmission Power Delivery for the Electric Power
Research Institute (EPRI) where he was employed since 1992. Previously, from
1973 to 1992, he held senior management positions in the technology driven
test and measurement industries with Vacuum Components, Inc., Tenney
Engineering, Inland Vacuum Industries, Halocarbon Products, Inc., and Allied
Signal Corporation.
Mr. O'Connor has been the Director of New Products and Technology for Masco
Corporation, Taylor, Michigan, a diversified manufacturer of building and
home improvement, and other specialty products for the home and family, since
April 1984. He is a member of the Board of Directors of the Inventor's
Council of Michigan, a Michigan non-profit corporation. The Company
understands that Mr. O'Connor was selected by Masco Corporation as its
designee on the Company's Board of Directors pursuant to agreements entered
into in connection with the 1992 transaction by which Masco sold 1,730,000
shares of the Company's Common Stock to subsidiaries of the Lawrence
Insurance Group, Inc. (see "Security Ownership of Certain Beneficial Owners"
in the section entitled "Additional Information", below); the Lawrence
Insurance Group, Inc. subsidiaries agreed to vote their shares to elect a
designee of Masco to the Company's Board of Directors so long as Masco
remains liable under a guarantee it had executed in connection with the
Company's obligations under a line of credit.
<PAGE>
Dr. Robb, now a management consultant and President of Vantage Management,
Inc., was until December 31, 1992 General Electric Company's("GE") Senior
Vice President for corporate research and development. He directed the GE
Research and Development Center, one of the world's largest and most
diversified industrial laboratories, and served on GE's Corporate Executive
Council. He serves on the Board of Directors of Marquette Electronics, Cree
Research, Celgene, and Neopath. He also serves on the Advisory Council of the
Critical Technology Institute and on the Council of the National Academy of
Engineering.
Dr. Sternlicht, one of the founders of the Company, has been President of
Benjosh Management Corporation, a management firm in New York, New York,
since 1976. He previously served as a Director of the Company from 1961 to
1992. Prior to 1985, he had held a number of positions with the Company. At
the time of his departure he served as Vice Chairman of the Board of
Directors and Technical Director.
Management recommends that you vote FOR election of the nine nominees listed
above as Directors of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although
it is not involved in day-to-day operating details. Members of the Board are
kept informed of the Company's business by various reports sent to them, as
well as by operating and financial reports made at Board and Committee
meetings by the officers of the Company. The Board of Directors held eight
meetings during fiscal 1996. All Directors attended at least 75% of all
meetings of the Board, and of all Board committees on which they serve, held
during fiscal 1996.
The Company's Board of Directors has established Audit, Compensation and
Nominating Committees. The Audit Committee (consisting of Messrs. Landgraf,
O'Connor, and Sternlicht) reviews with the independent auditors the plan and
results of the auditing engagement including the auditors' assessment of
internal accounting controls; it also recommends the appointment of the
public auditors to the Board of Directors. One Audit Committee meeting was
held during fiscal 1996. The Compensation Committee (consisting of Messrs.
Apkarian, Goldberg, and Landgraf) determines compensation for officers and
employee Directors, and the aggregate amount to be disbursed as incentive
compensation to Director and non-Director officer employees. Two Compensation
Committee meetings were held during fiscal 1996. The Nominating Committee
(consisting of Messrs. Diesel, Goldberg, and McNamee) considers the
performance of incumbent Directors, seeks out and interviews qualified
candidates for consideration as potential Directors, and recommends
candidates for designation by the full Board as the Board's nominees to stand
for election at the Annual Meeting of Shareholders and for election by the
Board to fill interim vacancies on the Board. At the present time, the
Nominating Committee has not established any procedures for consideration of
director-candidates submitted by shareholders. No meetings of the Nominating
Committee were held during Fiscal 1996.
APPROVAL OF AUDITORS
At the Annual Meeting, the shareholders will consider a proposal to ratify
the reappointment of Coopers & Lybrand as the auditors of the Company,
subject to the receipt of a satisfactory letter of engagement from such firm.
<PAGE>
Coopers & Lybrand have been the Company's auditors since 1978. While
approval of auditors by the shareholders is not required by the By-Laws of
the Company, management believes that it is an appropriate matter for
shareholder consideration. Should the Board's appointment of the auditors
not be ratified, other auditors will be appointed by the Board of Directors.
Representatives of Coopers & Lybrand are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and
to be available to respond to appropriate questions.
The Board of Directors recommends that shareholders vote FOR the ratification
of the appointment of Coopers & Lybrand as independent public accountants for
1997.
<PAGE>
ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
for services to the Company and its subsidiaries, during the Company's fiscal
year ended September 30, 1996 (and during the Company's two prior fiscal
years), of each person who served as Chief Executive Officer during such
year, and of all other persons who served as executive officers of the
Company during such year whose total annual compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------
Annual Long-Term
Compensation Compen-
sation
- -------------------------------------------------------------------------------
Name & Principal Fiscal Salary Bonus Other Restricted All
Position Year Annual Stock Other
Compen- Awards(1) Compen-
sation sation
- -------------------------------------------------------------------------------
R. Wayne Diesel 1996 $200,000 $ - - $ - $ 8,000(2)
President & CEO 1995 $190,764 $ - - $ 12,500 $ 4,452(2)
1994 $129,744 $ - - $ 12,500 $ -
- -------------------------------------------------------------------------------
Stephen Sullivan 1996 $130,310 $ - - $ - $ 4,840(2)
President, Ling 1995 $139,617 $ - - $ - $ 5,306(2)
Electronics, Inc. 1994 $118,927 $ - - $ - $ 4,838(2)
- -------------------------------------------------------------------------------
Douglas McCauley 1996 $110,807 $ 7,000 - $ - $ -
Vice-President 1995 $100,152 $ 5,000 - $ 625 $ 1,669(2)
Technology Group 1994 $105,000 $ - - $ 6,250 $ 4,200(2)
- -------------------------------------------------------------------------------
Stephen T. Wilson 1996 $107,903 $10,000 - $ - $ 2,620(2)
Chief Financial 1995 $ 60,846 $ - - $ - $ -
Officer 1994 $ - $ - - $ - $ -
- -------------------------------------------------------------------------------
Denis P. Chaves 1996 $ 99,167 $37,000 - $ - $ 3,966(2)
Vice-President, 1995 $ 95,000 $10,000 - $ 625 $ 3,800(2)
LAB and Advanced 1994 $ 93,500 $ 7,500 - $ - $ 3,800(2)
Products Divisions
- -------------------------------------------------------------------------------
(1) This column shows the market value on the date of grant of shares of the
Company's Common Stock awarded under the Company's Restricted Stock Incentive
Plan. The Plan expired on December 31, 1994. The restrictions on these
shares lapse on a scheduled basis as determined by the Board of Directors at
the time of grant or upon death. The recipient has voting and dividend rights
to the shares from the date of award. The aggregate holdings/value of shares
of Restricted Stock, as to which the restrictions have not lapsed, on
September 30, 1996 (based on a price on that date of $1.75 per share) by the
individuals listed in this table, including the awards shown in this column,
are: Mr. Diesel, 28,000 shares/$49,000; Mr. Sullivan, 1,000 shares/$1,750;
Mr. McCauley, 6,000 shares/$10,500 and Mr. Chaves, 2,000 shares/$3,500. In
November 1996, the Board of Directors took action to accelerate the vesting
of shares held by Messrs. Diesel (23,000 shares), McCauley (1,500 shares),
and Chaves (1,500 shares) that were still subject to restrictions under the
<PAGE>
Plan; as a result, all restrictions under the Plan have lapsed as to all
shares held by Messrs. Diesel and Chaves, while 4,000 shares held by Mr.
McCauley remain subject to restrictions under the Plan.
(2) Represents Company matching contributions of $1.00 for each $1.00
contributed by the named individual to the 401(k) Savings Plan up to a
maximum of 4% of base pay.
COMPENSATION COMMITTEE REPORT
COMPENSATION POLICIES FOR OFFICERS. The Company's compensation program for
executive officers and employee directors currently consists of an annual
salary and bonus payments which are primarily designed to reward performance.
For the year 1996, the Committee used the following criteria in making
compensation decisions for executive officers:
* Company and individual affiliate financial performance.
* Implementation of programs to improve working capital
and cash flow, and to diversify the Company's product
offerings and strengthen its technology resources.
* Resolution of major outstanding issues with the U.S.
Government.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Diesel was appointed Chief
Executive Officer effective February 1994 and prior to December 1996, also
held the title of President. He was recruited from outside the Company and
had previously held senior management positions in the insurance and banking
industries, and with New York State. The compensation package offered Mr.
Diesel took into consideration his experience and expertise; the size,
diversity and needs of the business; and compensation levels at companies of
comparable size and industry. The compensation package included: (1) a base
salary, effective February 4, 1994; (2) the potential for cash incentive
bonuses based on performance; and (3) stock grants under the Company's
Restricted Stock Incentive Plan. For the period October 1, 1994 through
September 30, 1996 there were no changes to his annual compensation and no
cash incentive bonuses were paid. The Committee did, however, take action in
November 1996 to accelerate the vesting of 23,000 shares held by Mr. Diesel
that were still subject to restrictions under the Restricted Stock Incentive
Plan; as a result, all restrictions under the Plan have lapsed as to all
shares held by Mr. Diesel.
Compensation Committee
Stanley I. Landgraf, Chairman
Harry Apkarian
Alan P. Goldberg
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors ("Committee") approves
all of the policies under which compensation is paid or awarded to the
Company's officers and employee directors. The Committee consists of two
non-employee Directors (Mr. Landgraf and Mr. Goldberg) and one employee
Director (Mr. Apkarian). Mr. Lawrence A. Shore, formerly a Director of the
<PAGE>
Company who was not re-elected at the Company's 1996 Annual Meeting of
Shareholders on May 16, 1996, also served on the Compensation Committee while
he was a member of the Board.
Mr. Shore and Mr. Apkarian are both former Chief Executive Officers of the
Company. Mr. Shore had served as the Company's Chief Executive Officer from
July 1992 until February 1993. Mr. Apkarian was Chief Executive Officer of
the Company from 1961 until 1991 and was Chairman of the Board of Directors
from 1984 until his resignation from this position in August 1993. Mr.
Apkarian does not vote on matters pertaining to his own compensation.
Mr. Goldberg is Co-Chief Executive Officer of First Albany Companies Inc.
("FAC") (see "Security Ownership of Certain Beneficial Owners", below).
During fiscal 1996, First Albany Corporation, a wholly-owned subsidiary of
FAC, acted as placement agent in connection with a private placement of
1,333,333 shares of the Company's Common Stock, pursuant to which the Company
raised approximately $1.9 million of additional capital (net of expenses of
the offering), for which First Albany Corporation was paid a fee.
During fiscal 1996, FAC purchased 909,091 shares of the Company's Common
Stock from the New York State Superintendent of Insurance as the court-
ordered liquidator of United Community Insurance Company ("UCIC"). In
connection with this purchase, FAC also acquired certain rights to an
obligation ("Term Loan") due from the same finance company ("FCCC") to whom
the Company was obligated under the Note Payable, due December 31, 1996; at
September 30, 1996, the Note Payable had an outstanding principal balance of
$3.0 million and accrued interest of $1.1 million. FCCC is in default of its
Term Loan to UCIC. FAC, as the owner of the rights to the Term Loan, filed
suit seeking payment. Collateral for the FCCC Term Loan includes the
Company's Note Payable to FCCC. FAC has exercised its rights to the
collateral securing the Term Loan, including the right to obtain payment on
the Note Payable directly from the Company. The Company and FAC have entered
into an agreement dated as of December 27, 1996 under which the Company
issued to FAC 1.0 million shares of Common Stock in full satisfaction
of the Note Payable. On December 27, 1996, the last sale price of the
Company's Common Stock, as reported by NASDAQ, was $2.00 per share.
Until his resignation from such positions in March 1996, Mr. R. Wayne Diesel,
Chief Executive Officer and a Director of the Company, was a member of the
Board of Directors of Lawrence Insurance Group, Inc., and served on the
Compensation Committee of the Lawrence Insurance Group, Inc. Board; Mr.
Albert W. Lawrence, formerly a Director of the Company who was not re-elected
at the Company's 1996 Annual Meeting of Shareholders on May 16, 1996, is
Chairman of the Board of Lawrence Insurance Group, Inc. (see "Security
Ownership of Certain Beneficial Owners").
EMPLOYMENT AGREEMENTS
The Company has an agreement with Mr. Diesel which provides that Mr. Diesel
will receive an annual base salary of $200,000 and is eligible to receive
incentive compensation at the discretion of the Compensation Committee. Per
this agreement, Mr. Diesel was awarded an initial grant under the Company's
Restricted Stock Incentive Plan of 10,000 shares; in December 1994, the
Committee awarded Mr. Diesel an additional 25,000 shares under such Plan. The
agreement also states that if Mr. Diesel is removed from the position of
President and CEO for reasons other than cause during his first three years
of employment, the Company will pay him severance payments equivalent to a
maximum of one year's base salary plus insurance benefits.
<PAGE>
The Company has an agreement with Mr. Mastroianni which provides that Mr.
Mastroianni will receive an annual base salary of $150,000. Per this
agreement, Mr. Mastroianni was awarded initial stock options under the
Company's Incentive Stock Option Plan for 30,000 shares; in addition Mr.
Mastroianni will receive additional stock options for up to 120,000 shares if
defined profit targets are exceeded for fiscal 1997. The agreement also
states that if Mr. Mastroianni is removed from the position of President for
reasons other than cause during his first three years of employment, the
Company will pay him severance payments equivalent to a maximum of one year's
base salary.
The Company also has an agreement with Mr. Apkarian terminating on September
30, 1997 or upon Mr. Apkarian's retirement, whichever occurs first. This
agreement provides that Mr. Apkarian will continue as an employee and a
Director of the Company at an annual salary of $130,000. The agreement also
provides an annual bonus of $10,000 which he will use to purchase $250,000 of
term life insurance. Upon his retirement, an annual pension supplement of
$50,000 will be paid until September 30, 1997, and if Mr. Apkarian dies
during this period, a survivor's benefit payment of $25,000 per year will be
paid to his spouse, if then living, for the remainder of the payment period.
In addition, the agreement provides for the payment of club dues and the use
of a Company automobile for which Mr. Apkarian pays 50% of the lease
payments.
DIRECTORS COMPENSATION
Directors who are not officers or employees receive Director's fees of $750
for each Board meeting attended. Directors also are reimbursed for travel
expenses incurred in attending meetings.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG MECHANICAL TECHNOLOGY
INCORPORATED (MKTY), S&P 500 INDEX, AND S&P HIGH TECH COMPOSITE INDEX (1)
S&P
Measurement Period S&P High Tech
(Fiscal Year Covered) MKTY 500 Index Index
- --------------------- ------ --------- ---------
Measurement Pt-9/30/91 $ 100 $ 100 $ 100
FYE 9/30/92 $ 100 $ 111 $ 102
FYE 9/30/93 $ 70 $ 125 $ 123
FYE 9/30/94 $ 3 $ 130 $ 143
FYE 9/30/95 $ 45 $ 169 $ 226
FYE 9/30/96 $ 70 $ 203 $ 277
(1) Assumes that $100 was invested on September 30, 1991 in Mechanical
Technology Inc. Common Stock, the S&P 500 and the S&P High Tech composite
Index, and that all dividends were reinvested.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 3, 1997 in respect of
each person known by the Company to be the beneficial owner of more than 5%
of its outstanding Common Stock.
Amount of
Beneficial Percent
Name Address Ownership of Class
- ------------------ -------------------- ------------ --------
First Albany 30 South Pearl St. 2,035,698(A) 34.5%
Companies Inc. Albany, N.Y. 12207
Lawrence Insurance 500 Fifth Avenue 820,909(B) 13.9%
Group, Inc. New York, N.Y. 10110
(A) On May 7, 1996, First Albany Companies Inc. ("FAC") purchased 909,091
shares of the Company's Common Stock previously owned by United Community
Insurance Company ("UCIC", a subsidiary of Lawrence Insurance Group, Inc.
("LIG") which is undergoing a court-ordered liquidation). According to the
Schedule 13D Amendment No. 3, dated May 8, 1996, filed by FAC with respect to
the purchase of these shares, FAC paid $1.50 per share (a total of
$1,363,637) for the shares previously owned by UCIC; also according to FAC's
Schedule 13D Amendment No. 3, the funds for its purchase of the 909,091
shares previously owned by UCIC came from working capital. In addition, in
connection with FAC's purchase of the shares previously owned by UCIC, FAC
was granted an irrevocable proxy to vote those shares at the Company's Annual
Meeting of Shareholders held on May 16, 1996.
The purchase by FAC of the shares previously owned by LIG's UCIC subsidiary,
when combined with shares previously purchased by FAC in open-market
transactions, gave FAC ownership of 1,035,698 shares of the Company's Common
Stock (approximately 29% of the then outstanding shares), and resulted in FAC
becoming the Company's largest shareholder.
At the Company's Annual Shareholders' Meeting held on May 16, 1996 Messrs.
George C. McNamee and Alan P. Goldberg, Co-Chief Executive Officers of FAC,
were elected to the Company's Board of Directors. Incumbent Directors Albert
W. Lawrence and Lawrence A. Shore (who were among the nominees for re-
election to the Board proposed in the Proxy Statement for the Meeting
prepared by the Company's management but whose re-election was opposed by FAC
in its Proxy Statement for solicitation of proxies in opposition to
management's solicitation) were not re-elected to the Board, and accordingly
their terms as Directors of the Company expired at the Meeting; all other
incumbent Directors (i.e., Messrs. R. Wayne Diesel, Harry Apkarian, Stanley
I. Landgraf, and E. Dennis O'Connor), whose re-election was supported by FAC
in its Proxy Statement, were re-elected to the Board.
At its organizational meeting following the Shareholders' Meeting, the newly-
constituted Board elected George C. McNamee as its Chairman, and re-elected
R. Wayne Diesel as President and Chief Executive Officer. In addition, the
Board voted to increase the number of Directors from 6 to 7, and elected Dr.
Beno Sternlicht, a co-founder of the Company, to fill the newly-created
position.
<PAGE>
As a result of the foregoing share purchases and elections, a change in
control of the Company may be deemed to have occurred.
As discussed more fully under "Compensation Committee Interlocks and Insider
Participation", above, FAC acquired certain rights to the Term Loan due from
FCCC (the finance company to whom the Company is obligated under the Note
Payable), and the Company and FAC have entered into an agreement dated as of
December 27, 1996 under which the Company issued to FAC 1.0 million shares
of Common Stock in full satisfaction of the Note Payable
Messrs. McNamee and Goldberg may be deemed the beneficial owners of at least
a portion of the shares owned by FAC. However, Messrs. McNamee and Goldberg
disclaim such beneficial ownership.
(B) 363,636 of these shares are owned of record by United Republic Insurance
Company ("URIC"), and the balance are owned of record by wholly-owned
subsidiaries of URIC as follows: Global Insurance Company - 349,068 shares;
and Senate Insurance Company - 108,205 shares. 78.6% of the outstanding stock
of URIC is owned by Lawrence Insurance Group, Inc. ("LIG"); the remaining
21.4% is owned by United Community Insurance Company, another subsidiary of
LIG which is under the control of the Superintendent of Insurance of the
State of New York and is undergoing a court ordered liquidation. While the
shares of the Company's Common Stock owned by URIC and its subsidiaries are
still held of record as set forth previously, the SEC Form 10-Q Report of LIG
for the quarter ended March 31, 1996 discloses that LIG disposed of those
shares during that quarter by selling them to Lawrence Group, Inc.; to date,
however, no transfer of such shares on the Company's records has been made,
nor has such a transfer been requested.
According to the April 22, 1996 Proxy Statement of Lawrence Insurance Group,
Inc. for its May 23, 1996 Annual Meeting of Stockholders, Lawrence Group,
Inc. is the beneficial owner of approximately 93% of the outstanding shares
of the common stock of Lawrence Insurance Group, Inc. The Company understands
that Albert W. Lawrence (formerly a Director of the Company) is, along with
Barbara C. Lawrence, his wife, the owner of 100% of the common stock of
Lawrence Group, Inc.; as a result, Mr. and Mrs. Lawrence may be deemed to be
the beneficial owners of the shares of the Company's Common Stock held of
record by URIC and its subsidiaries and referred to in the preceding
paragraph.
In May 1996 Lawrence Group Inc. filed a legal action against the Company and
FAC, challenging certain actions taken by the Company's Board of Directors in
connection with its approval under Section 912 of the New York Business
Corporation Law of FAC's purchase of the 909,091 shares of the Company's
Common Stock previously owned by UCIC. Management believes the action is
without merit, and is vigorously defending the matter; a motion to dismiss
the complaint has been filed and is pending.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock by (i) each
Director and nominee for Director of the Company, (ii) each named executive
officer described in the section of this Proxy Statement captioned "Executive
Compensation", and (iii) all present Directors and Officers of the Company as
a group, as of March 3, 1997.
<PAGE>
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(1) Class
------------------- ------------- ----------
Harry Apkarian 288,001(2) 4.9%
Denis P. Chaves 2,600 *
Dale W. Church -0- *
R. Wayne Diesel 35,000(3) *
Edward A. Dohring -0- *
Alan P. Goldberg 2,097,364(4) 35.6%
Stanley I. Landgraf 1,000 *
Douglas McCauley 8,000(2) *
George C. McNamee 2,135,698(4) 36.2%
Martin J. Mastroianni -0- *
E. Dennis O'Connor -0- *
Dr. Walter L. Robb 9,000 *
Dr. Beno Sternlicht 126,250(5) 2.1%
Stephen Sullivan 5,000(2) *
Stephen T. Wilson -0- *
All present Directors and 2,663,215(2),(3),(4),(5) 45.1%
Officers as a group (12 persons)
- -------------------------------------
* Percentage is less than 1.0% of the outstanding Common Stock.
(1)To the best of the Company's knowledge, based on information reported by
such Directors and officers or contained in the Company's shareholder
records. Except as otherwise indicated, each of the named persons is
presumed to have sole voting and investment power with respect to all shares
shown. None of the Company's present Directors or officers other than
Messrs. Goldberg and McNamee (see "Security Ownership of Certain Beneficial
Owners," above), Mr. Apkarian, and Dr. Sternlicht beneficially own more than
1% of the Company's outstanding Common Stock; all present Directors and
officers as a group beneficially own, in the aggregate, approximately 45.1%
of the Company's outstanding Common Stock.
(2)Includes shares granted under the Company's Restricted Stock Incentive
Plan which are still subject to forfeiture as follows: Mr. Apkarian, 1,500
shares; Mr. McCauley, 4,000 shares; and Mr. Sullivan, 500 shares. All
present Directors and officers as a group, 6,000 shares.
(3)Does not include 100 shares held by Mr. Diesel's wife as custodian for
their minor child; Mr. Diesel disclaims beneficial ownership of such shares.
(4)Includes 2,035,698 shares owned by First Albany Companies Inc.; see
"Security Ownership of Certain Beneficial Owners". However, Messrs. McNamee
and Goldberg disclaim beneficial ownership of such shares.
(5)Does not include 26,650 shares owned by Dr. Sternlicht's wife or 18,150
shares held by Dr. Sternlicht's wife as custodian for their children; Dr.
Sternlicht disclaims beneficial ownership of such shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities
<PAGE>
of the Company. Officers, directors and greater than ten percent sharehold-
ers are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based on Company records and other information, the Company believes that all
SEC filing requirements applicable to its directors and officers with respect
to the Company's fiscal year ended September 30, 1996 were complied with.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report to Shareholders accompanies this Proxy Statement.
The Company's Annual Report on Form 10-K for the year ended September 30,
1996, as filed with the Securities and Exchange Commission, may be obtained
by addressing a written request to the Investor Relations Department at the
Company's corporate headquarters (968 Albany-Shaker Road, Latham, NY 12110).
PROPOSALS OF SECURITY HOLDERS
Proposals by security holders intended to be presented at the Company's
Annual Meeting of Shareholders held in 1998 must be received by the Company
before October 10, 1997, in order to qualify for inclusion in the Company's
Proxy Statement relating to that meeting.
OTHER MATTERS
Management does not know of any matters which will be brought before the
meeting other than those specifically set forth in the notice thereof. If
any other matter properly comes before the meeting, however, it is intended
that the shares represented by proxies will be voted with respect thereto in
accordance with the best judgment of the persons voting them.
In June 1996 the Board of Directors adopted amendments to the Company's By-
Laws relating to the indemnification of the Company's officers and
Directors against claims asserted against them in their capacities as such.
As amended, the By-Laws require the Company to indemnify its Directors and
officers against such claims to the fullest extent permitted by the New
York Business Corporation Law ("BCL"), obligate the Company to advance such
persons the costs of their defense against such claims, and contain other
provisions designed to ensure for such persons the maximum protection
possible against such claims. Prior to these amendments, the By-Laws
contained only limited indemnity protection for such persons. In addition
to indemnification by the Company under these By-Law provisions, the
Company continues to maintain indemnification insurance covering all
officers and Directors of the Company and its subsidiaries, as permitted by
BCL Section 726. The current policy has an annual premium cost of $86,000,
and is written by Continental Casualty Company and Royal Indemnity Company.
All expenses incurred in connection with this solicitation of proxies will be
borne by the Company.
By Order of the Board of Directors
John Recupero
Secretary
Latham, New York
March 17, 1997
<PAGE>
Appendix A - Proxy Card
MECHANICAL TECHNOLOGY INCORPORATED
968 Albany-Shaker Road Latham, New York 12110
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes any proxy heretofore given to vote such
shares, and hereby ratifies and confirms all that said proxies may do by
virtue hereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE SHAREHOLDER. IF AUTHORITY TO
VOTE FOR ITEM 1, ELECTION OF DIRECTORS, IS NOT SPECIFICALLY WITHHELD, THE
PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN THE PROXY STATEMENT. IF NO
CHOICE IS SPECIFIED WITH RESPECT TO ITEM 2, THE PROXY WILL BE VOTED FOR THIS
PROPOSAL.
The undersigned hereby appoints George C. McNamee and R. Wayne Diesel, or
either of them, as proxies to vote all the stock of the undersigned with all
the powers which the undersigned would possess if personally present at the
Annual Meeting of the Shareholders of Mechanical Technology Incorporated, to
be held at the offices of First Albany Companies Inc., 30 South Pearl Street,
Albany, New York, at 10:00 a.m. on April 16, 1997, or any adjournment
thereof, as follows:
1.ELECTION OF DIRECTORS:
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Dale W. Church Alan P. Goldberg E. Dennis O'Connor
R. Wayne Diesel George C. McNamee Dr. Walter L. Robb
Edward A. Dohring Martin J. Mastroianni Dr. Beno Sternlicht
2.PROPOSAL TO APPROVE THE REAPPOINTMENT OF COOPERS & LYBRAND AS AUDITORS.
FOR AGAINST ABSTAIN
3.IN THEIR DISCRETION, UPON ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE MEETING.
Date___________,1997 ___________________________________________
Please sign exactly as name appears on
this proxy. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee,
or guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
_____________________________________________
Please provide Social Security Number or Tax
Identification Number
Attendance at Meeting:
No____ Yes____ Number attending____
<PAGE>
