Proxy Statement
Proxy Statement Rand Capital Corporation
Notice of annual meeting of shareholders
The 2000 Annual Meeting of Shareholders of Rand Capital Corporation (the
"Corporation") will be held on Thursday, April 13, 2000, at 10:00 am in Room
502, Rand Building, 14 Lafayette Square, Buffalo, New York, for the following
purposes:
1. To elect seven directors to hold office until the next Annual Meeting
of Shareholders and until their successors have been elected and
qualified;
2. To ratify the selection of Deloitte & Touche LLP as independent
auditors for the 2000 fiscal year for the Corporation; and
3. To consider and act upon such other business as may properly come
before the meeting.
Shareholders of record at the close of business on March 6, 2000 are entitled to
notice of and to vote at the meeting, and at any adjournment thereof.
March 15, 2000 By Order of the Board of Directors,
Buffalo, New York Reginald B. Newman II
Chairman
<PAGE>
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Rand Capital Corporation (the
"Corporation"), for the Annual Meeting of Shareholders to be held on Thursday,
April 13, 2000. Only shareholders of record at the close of business on March 6,
2000 are entitled to notice of and to vote at the meeting, and at any
adjournment thereof. On that date, the Corporation had outstanding 5,723,034
Common Shares, par value $.10 per share ("shares").
Each share entitles the holder to one vote. Shares cannot be voted at the
meeting unless the shareholder is present or represented by proxy. If the
enclosed form of proxy is returned properly executed, the shares represented
thereby will be voted at the meeting in accordance with the instructions
contained in the proxy, unless the proxy is revoked prior to its exercise. Any
shareholder who executes and delivers the accompanying form of proxy has the
right to revoke it at any time before it is voted. A shareholder may revoke a
proxy by executing a subsequently dated proxy or a notice of revocation,
provided such subsequent proxy or notice is delivered to the Corporation prior
to the taking of a vote, or by voting in person at the meeting. Proxies
submitted with abstentions and broker non-votes will be counted in determining
whether or not a quorum is present. Abstentions and broker non-votes will not be
counted in tabulating the votes cast on proposals submitted to shareholders.
This Proxy Statement and accompanying form of proxy are being mailed to
shareholders on or about March 15, 2000. A copy of the Corporation's 1999 Annual
Report, which contains financial statements, accompanies this Proxy Statement.
The cost of soliciting proxies in the accompanying form will be borne by the
Corporation. The Corporation does not expect to pay any compensation for the
solicitation of proxies, but may pay brokers, nominees, fiduciaries and other
custodians their reasonable fees and expenses for sending proxy materials to
beneficial owners and obtaining their instructions. In addition to solicitation
by mail, proxies may be solicited in person or by telephone by directors,
officers and regular employees of the Corporation, who will receive no
additional compensation therefor.
The Corporation's office is located at 2200 Rand Building, Buffalo, New
York 14203; telephone number 716-853-0802.
<PAGE>
Beneficial Ownership of Shares
Unless otherwise indicated, the following table sets forth beneficial
ownership of the Corporation's shares on March 6, 2000, by (a) persons known to
the Corporation to be beneficial owners of more than 5% of the outstanding
shares, (b) directors and nominees for director of the Corporation and (c) all
directors and officers of the Corporation as a group. Unless otherwise stated,
each person named in the table has sole voting and investment power with respect
to the shares indicated as beneficially owned by that person.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class
- ---------------------------------------------------------------------------------------
<S> <C> <C>
(a) More than 5% Owners:
Reginald B. Newman II 843,179 14.7
2440 Sheridan Drive, Tonawanda, NY
Willis S. McLeese 700,000 (2) 12.2
c/o 2200 Rand Building, Buffalo, NY
(b) Directors and Nominees for Director:
Allen F. Grum 61,128 1.1
Luiz F. Kahl 64,516 1.1
Erland E. Kailbourne 1,000 *
Ross B. Kenzie 155,000 2.7
Willis S. McLeese 700,000 (2) 12.2
Reginald B. Newman II 843,179 14.7
Jayne K. Rand 215,734 3.7
(c) All Directors and Officers as a group:
Eight persons 2,060,557 (3) 36.0
* Less than 1%
</TABLE>
(1) The beneficial ownership information presented is based upon
information furnished by each person or contained in filings made with
the Securities and Exchange Commission.
(2) Shares are owned by Colmac Holdings, Ltd., a corporation of which Mr.
McLeese is the Chairman and principal owner.
(3) Except as indicated above, members of the group have sole voting and
investment power over these shares.
<PAGE>
1. Election Of Directors
Seven directors are to be elected at the meeting, each to serve until the
next Annual Meeting of Shareholders and until his or her successor has been
elected and qualified. Unless marked to the contrary, the proxies received will
be voted FOR the election of the seven nominees named below.
Each of the nominees is presently a member of the Board of Directors, and
was elected at the Corporation's last Annual Meeting of Shareholders. Each of
the nominees has consented to serve as director, if elected. If at the time of
the meeting any nominee should be unable to serve, it is the intention of the
persons designated as proxies to vote, in their discretion, for such other
persons as may be designated as a nominee by the Board of Directors.
Information Regarding the Nominees
*Allen F. Grum, 42, became a director of the Corporation in 1996. He has
served as the President and Chief Executive Officer of the Company since January
1996. Prior to becoming President, Mr. Grum served as Senior Vice President of
the Company commencing in June 1995. From 1994 to June 1995, he was Executive
Vice President of Hamilton Financial Corporation, and from 1991-1994 he served
as Senior Vice President of Marine Midland Mortgage Corporation. Mr. Grum is
also a director of a number of private companies and ARIA Wireless Systems,
Inc., a marketer of wireless radio transmission communication equipment.
Luiz F. Kahl, 63, became a director in January 1997. He has been President
of The Vector Group, LLC, Williamsville, NY, a private investment company since
February 1996. Prior thereto, he was the President of the Carborundum Company,
and Chief Executive Officer of BP Advanced Materials, Niagara Falls, NY,
subsidiaries of British Petroleum plc, manufacturers of high technology ceramic
materials since 1984.
Erland E. Kailbourne, 59, became a director in April 1999. Since October
1998 he has been Chief Executive Officer and President, John R. Oishei
Foundation. Prior thereto, he was Chairman and Chief Executive Officer of Fleet
National Bank, New York Region and Chairman and Chief Executive Officer of
Security Norstar Bank. Mr. Kailbourne is also on the Board of Directors of
Albany International Corporation, Adelphia Communications and Bush Industries.
Ross B. Kenzie, 68, became a director in 1996. Mr. Kenzie has been retired
since 1990. Prior thereto, he was the Chairman of the Board and Chief Executive
Officer of Goldome Bank, Buffalo, NY, a savings bank, since 1980.
*Willis S. McLeese, 86, became a director in 1986. Since 1976, Mr. McLeese
has been the Chairman of Colmac Holdings Limited, Toronto, Ontario, Canada,
which develops, owns and operates cogeneration and alternative energy electric
power generating plants.
*Reginald B. Newman II, 62, became a director in 1987 and has been Chairman
of the Board since 1996. Mr. Newman has been President of NOCO Energy
Corporation, Tonawanda, NY, a petroleum distributor, since 1960. Mr. Newman is
also a director of M&T Bank, a financial institution headquartered in Buffalo,
NY.
Jayne K. Rand, 39, became a director in 1989. Since 1993, Ms. Rand has been
a Vice President of M&T Bank. From 1989 to 1993, Ms. Rand was an Assistant Vice
President of Marine Midland Bank.
* Designates Directors and nominees for Director who are "interested persons"
within the meaning of Section 2(a) (19) of the Investment Company Act of
1940, as amended (the "1940 Act"). Mr Newman and Mr. McLeese are included
in this category as a result of their percentage ownership of shares.
<PAGE>
Committees and Meeting Data
The following Committees of the Board of Directors have the members
indicated below:
Audit Committee Compensation Committee Governance Committee
--------------- ---------------------- --------------------
*Willis S. McLeese Ross B. Kenzie Jayne K. Rand
Luiz F. Kahl Luiz F. Kahl Ross B. Kenzie
Jayne K. Rand Jayne K. Rand Erland E. Kailbourne
The Audit Committee considers and recommends to the Board of Directors the
selection of the Corporation's auditors and the range of their services. It
reviews with the auditors the plan and results of the annual audit, the adequacy
of the Corporation's system of internal accounting controls and the costs of the
auditor's services.
The Compensation Committee is responsible for setting the compensation of
the senior executive officers, reviewing the criteria that form the basis for
management's recommendations for officer and employee compensation and reviewing
management's recommendations in this regard.
The Governance Committee is responsible for recommending committee
memberships, ensuring the annual performance evaluation of the President is
completed, and considering and recommending nominees for the Board of Directors.
The Committee will consider a nominee for election to the Board recommended by a
shareholder if the shareholder submits to the Committee a written proposal which
includes the qualifications of the proposed nominee and the consent of the
proposed nominee to serve if elected.
In 1999, the full board met on six occasions, the Audit Committee met
twice, and the Governance Committee and the Compensation Committee met once.
Each incumbent director attended at least 78% of the aggregate number of
meetings of the Board of Directors and of the Committees of the Board of which
he or she was a member during the year.
* Designates "interested persons" as noted above. Statement of Financial
Position Years Ended December 31, 1999 and 1998
<PAGE>
Executive Officers
In addition to Mr. Grum, the executive officers of the company include:
Daniel P. Penberthy, 37, has served as Treasurer of the Corporation since
August 1997. Mr. Penberthy is also currently enrolled in the State University of
Buffalo MBA program. From 1993 to 1997, Mr. Penberthy served as Chief Financial
Officer for both the Greater Buffalo Partnership (formerly the Chamber of
Commerce) and the Greater Buffalo Convention and Visitors Bureau. Prior thereto,
from 1990 to 1993 Mr. Penberthy served as a Senior Associate with the Greater
Buffalo Development Foundation, a regional business development organization.
Prior to 1990, Mr. Penberthy was employed by KPMG, a public accounting firm.
Compensation
The following table sets forth information with respect to the compensation
paid or accrued by the Corporation in the 1999 fiscal year to each director, and
to each executive officer of the Corporation with aggregate compensation from
the Corporation in excess of $60,000. The Corporation is not part of a fund
complex.
Name and Position Pension or Retirement
Aggregate Benefits Accrued as
Compensation Part of Company Expenses
------------ ------------------------
Allen F. Grum, President, Director $ 120,462 $ 7,055 (1)
Ross B. Kenzie, Director $ 5,500 0
Willis S. McLeese, Director $ 5,750 0
Reginald B. Newman II, Director $ 6,250 0
Jayne K. Rand, Director $ 4,750 0
Luiz F. Kahl, Director $ 5,000 0
Erland E. Kailbourne, Director $ 4,000
Nora B. Sullivan, Executive Vice President $ 97,920 5,875 (1)
Daniel P. Penberthy, Treasurer $ 70,200 4,201 (1)
(1) Included within the indicated compensation is payment of Corporation
contributions to the Corporation's 401(k) Profit Sharing Plan. To date, an
aggregate of $51,634 has been deferred for payment to Mr. Grum, Ms.
Sullivan and Mr. Penberthy. Under the plan, participants may elect to
contribute up to 20% of their compensation on a pretax basis by salary
reduction. For eligible employees, the Corporation makes a discretionary
flat contribution of 1% of compensation and matches an eligible
contribution of up to a maximum of five percent (5%). In addition, the
Corporation may contribute an annual discretionary amount as determined by
the Board of Directors. In 1999, the Corporation did not make a
discretionary contribution to the 401(k) Plan.
<PAGE>
Director Compensation
During 1999, under the Corporation's standard compensation arrangements
with directors, each non-employee director received an annual fee of $1,000 plus
$750 for attendance at each meeting of the Board of Directors and $250 for each
separate meeting of a Committee. The Chairman of the Board, Mr. Newman, receives
an annual fee of $2,500 plus $750 for attendance at Board meetings.
Stock Options/Stock Appreciation Rights
Restrictions imposed on registered investment companies by the Investment
Company Act of 1940 preclude the Corporation from offering stock options or
stock appreciation rights incentive packages to its employees. The Corporation
does not have any other forms of restricted stock or employee share benefit
plans.
Section Sixteen (a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
ten percent of the Corporation's stock, to file with the Securities and Exchange
Commission initial reports of stock ownership and reports of changes in stock
ownership. Reporting persons are required by SEC regulations to furnish the
Corporation with all Section 16(a) reports they file.
To the Corporation's knowledge, based solely on review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners were
complied with during the fiscal year ended December 31, 1999.
Directors' and Officers' Liability Insurance
The Corporation has an insurance policy from Underwriters at Llyods of
London that indemnifies (1) the Corporation for any obligation incurred as a
result of the Corporation's indemnification of its directors and officers under
the provisions of the New York Business Corporation Law and the Corporation's
Bylaws, and (2) the Corporation's directors and officers as permitted under the
New York Business Corporation Law and the Corporation's Bylaws. The policy
covers all directors and officers of the Corporation for the 12 months ending
December 2000 for a total premium of $28,490. No sums have been paid to the
Corporation or its officers or directors under the insurance contract.
2. Ratification of Selection of Independent Auditors
The Board of Directors has selected the firm of Deloitte & Touche LLP,
Buffalo, New York, as the independent auditors to examine the accounts of the
Corporation for the 2000 fiscal year, subject to ratification by the
shareholders at the Annual Meeting. The directors approving such selection
included a majority of the Corporation's directors who are not "interested
persons" of the Corporation as defined in the Investment Company Act of 1940.
Deloitte & Touche LLP audited the accounts of the Corporation for the 1999
fiscal year.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting of Shareholders and will be available to respond to appropriate
questions and will be given an opportunity to make a statement if desired.
The board of directors recommends a vote for the ratification of the
appointment of Deloitte & Touche LLP as the Independent Auditors of the
corporation for the 2000 fiscal year.
<PAGE>
3. Other Business
The Corporation does not know of any other matters to come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons designated as proxies to vote in accordance with
their best judgment on such matters.
Shareholder Proposals for the 2001 Annual Meeting
Shareholder proposals intended to be presented at the 2001 Annual Meeting
of Shareholders must be received at the Corporation's offices not later than
December 15, 2000, to be considered for the Corporation's proxy statement and
form of proxy for that meeting.
By Order of the Board of Directors,
Reginald B. Newman II
Chairman of the Board
March 15, 2000
It is important that proxies be promptly returned. Shareholders are urged
to sign, date and return the proxy in the enclosed envelope, to which no postage
need be affixed if mailed in the United States. If you attend the meeting you
may, if you wish, withdraw your proxy and vote in person.
<PAGE>
How to Apply for Funds
To help applicants for investment funds, we are pleased to reprint in full
the eight subjects we would prefer to be included in investment applications.
Please send this information to us so that we may study it before arranging a
personal meeting to discuss the investment:
1. History of company, nature of business or service and main
products; Standard Industrial Classification (SIC) number of the industry;
number of employees.
2. Biographical sketches of all executives, key personnel, directors and major
stockholders; signed personal statement of net worth for each principal.
3. Personal, business and technical references.
4. Projected and historical financial statement for five years including
balance sheets, income statements and cash flows, preferably audited.
5. Amount requested, and proposed use of funds; growth projections.
6. Names of principal suppliers and customers.
7. Analysis of the market and industry, method of distribution, and
competition.
8. Samples of promotional or descriptive literature on products or services
offered.
The above information should be forwarded to:
Mr. Allen F. Grum
c/o New Investment Proposals
2200 Rand Building
Buffalo, New York 14203
<PAGE>
Rand Capital Corporation believes in the future of Western New York and is
actively seeking out investment opportunities. If you are currently seeking
financing for your business, or are aware of a business that is, please contact
us. Together, we can continue to make Western New York prosper.
2200 Rand Building / Buffalo, New York 14203 / 716-853-0802
Traded on NASDAQ - Symbol: "RAND"
