| Item 10. | Directors, Executive Officers and Corporate Governance |
Director Qualifications and
Biographical Information
The biography of each director
below contains information regarding that person’s principal occupation, positions held with the Company, service as a director,
business experience, other director positions currently held or held at any time during the past five years, involvement in certain legal
or administrative proceeding, if applicable, and the experiences, qualifications, attributes or skills that caused our Nominating and
Corporate Governance Committee to conclude that the person should serve as a member of our Board of Directors.
Edward C. Cosgrove, Esq.,
age 87—Mr. Cosgrove has served as Director since 2012. He is an attorney with The Cosgrove Firm, a Buffalo-based law firm where
his practice includes civil litigation, management of legal crises, representation of families, schools, advice to corporations, businesses
and professionals. He earned a Bachelor of Arts Degree from the University of Notre Dame and a Doctor of Laws Degree from Georgetown University
Law School. He previously served as a Special Agent with the Federal Bureau of Investigation and as District Attorney of Erie County,
NY. Mr. Cosgrove enjoys the highest possible Peer Review Rating a lawyer can receive from Martindale-Hubbell for the years 1980 through
2022 and is considered annually as one of the top lawyers in Western New York. His broad-based legal experience is important to the Board
of Directors.
William F. Farrell, Jr., age
55—Mr. Farrell was appointed to the Board of Directors in April 2022 when he also was appointed Chief Executive Officer of the Company.
He joined the Company following a more than 30-year career with Western New York-based Moog Inc. (NYSE: MOG.A and MOG.B), where he served
in various roles of increasing responsibility including, most recently, Site General Manager for Moog's Aircraft Group, which supports
military and commercial aerospace applications. Prior to that, he served five years as Site General Manager for its Industrial Group,
supporting markets including flight simulation, oil and gas exploration, power generation and industrials automation. Earlier in his tenure
at Moog, he worked in a variety of other executive and engineering roles for the worldwide designer, manufacturer, and integrator of precision
control components and systems, including in its Industrials Group, Space Products Division and Engine Controls Division. Mr. Farrell
holds a B.S. degree in mechanical engineering from the University of Notre Dame and an M.B.A in manufacturing operations management from
the State University of New York at Buffalo. His leadership experience and industry knowledge provide valuable insight to the Board of
Directors in formulating and executing the Company’s strategy.
Lucion P. Gygax, age 51—Mr.
Gygax has served as a Director since 2015 and serves as Chair of the Compensation Committee and a member of the Audit Committee and Nominating
and Corporate Governance Committee. He is the principal owner and executive of an event management company, a consultant and author. Mr.
Gygax retired this year from the Army as a Lieutenant Colonel after 33 years of service as a logistics officer and brings a diverse skill
set to the board with experience in synchronizing multi-functional teams, budget management, human resources and talent management. Mr.
Gygax graduated from Beloit College where he received a B.A. in History and Psychology. His experience leading complex logistics organizations
across a diverse range of operating environments gives him valuable perspectives and insights. His leadership experience and achievements
highly qualify him to serve as a Company Director.
Karen L. Howard, age 59—Ms.
Howard was appointed to the Board of Directors in April 2022 and serves as a member of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee. She has more than 30 years of professional experience as an advisor to and finance executive
with public companies, as well as a proven record of board leadership. She retired in 2020 after serving for seven years as Executive
Vice President of Kei Advisors LLC, an investor relations and business advisory firm serving micro-, small- and mid-cap public company
executives and boards across the United States. Previously, she served for 17 years with Columbus McKinnon Corporation (Nasdaq: CMCO),
including as Vice President of Strategic Initiatives, Vice President and Chief Financial Officer, and earlier roles as Treasurer and Controller
of the publicly traded global manufacturer of material handling products and solutions. Prior to that, she was a certified public accountant
with Ernst & Young LLP. Ms. Howard serves as a member of the Board of Directors of Highmark Western and Northeastern New York Inc.
(formerly HealthNow New York Inc.), a regional health care company. She also chairs its audit committee. Ms. Howard earned her bachelor’s
degree in accounting from Niagara University. Her accounting and business expertise, including an in-depth understanding of the preparation
and analysis of financial statements, makes her highly qualified to serve as a Company Director.
Christopher M. Marks, age
57—Mr. Marks was appointed to the Board of Directors in July 2016 and serves as Chair of the Audit Committee and member of the Compensation
Committee and Nominating and Corporate Governance Committee. Mr. Marks is a member of the financial planning firm Jensen, Marks, Langer
& Vance, LLC, where he provides financial planning advice and investment management services. Also, he is a member and the Chief Compliance
Officer of Sterling Investment Counsel, LLC, a registered investment advisor. He brings over 25 years of financial planning and analysis
experience to the Company as well as a background in accounting, corporate law and governance. He holds a Bachelor of Science Degree in
Accountancy from Villanova University, a Master of Business Administration from St. Bonaventure University, and a Juris Doctorate with
honors from the State University of New York at Buffalo School of Law. He previously practiced commercial and corporate law at Phillips
Lytle, LLP in Buffalo, NY and began his career with Price Waterhouse in New York City. His business, accounting and legal experience make
him highly qualified to serve as a Company Director.
Evan H. Wax, age 40—Mr.
Wax was appointed to the Board of Directors in April 2022 and serves as member of the Audit Committee, Compensation Committee and Nominating
and Corporate Governance Committee. He is Managing Member of Wax Asset Management LLC in Madison, CT, an investment advisory firm that
employs a long-term value based investment strategy. Prior to founding Wax Asset Management in 2011, Mr. Wax was Managing Director and
Head Trader at Hayground Cove Asset Management where he was also a member of the investment committee and risk committee. Prior to that,
he worked as a Financial Analyst at Goldman Sachs. Mr. Wax graduated from Yale University where he received a B.A. in Economics. His operational,
financial and investment experience, and knowledge of capital markets gives him strong insight into the issues facing the Company’s
businesses and markets.
Executive Officers
The following provides certain
information regarding our executive officers. Each individual’s name and position with the Company is indicated. In addition, the
principal occupation and business experience for the past five years is provided for each executive officer. There are no family relationships
between any of our directors or executive officers.
William F. Farrell, Jr., age
55—Mr. Farrell was appointed Chief Executive Officer of the Company in April 2022. He joined the Company following a more than 30
year career with Moog Inc., where he served in various roles of increasing responsibility including, most recently, Site General Manager
for Moog's Aircraft Group, which supports military and commercial aerospace applications. Prior to that, he served five years as Site
General Manager for its Industrial Group, supporting markets including flight simulation, oil and gas exploration, power generation and
industrials automation.
Lisa F. Bencel, age 65—Ms.
Bencel was named Chief Financial Officer of the Company in January 2017. Prior to joining Servotronics, Ms. Bencel served as Global Controller
and Treasurer with kgb, a privately held information services company. Previously, she was with global manufacturing and services companies
in the aerospace, telecommunications and chemical industries, including GE, Honeywell (formerly AlliedSignal), Ericsson, L3Harris Technologies
and Raytheon Technologies.
James C. Takacs, age 56—Mr.
Takacs has served as Senior Vice President of the Company since September 2016 and was named Chief Operating Officer of the Company in
May 2018. Prior to that he served as Vice President of the Company, a position he held since May 2010. Mr. Takacs first joined Servotronics
in 1987 and he has served in various roles of increasing responsibility including Project Engineer, Quality Assurance Manager, and Director
of Operations during his tenure with the Company.
Delinquent Section 16(a)
Reports
Section 16(a) of the Securities
Exchange Act of 1934 requires directors and executive officers and persons who own more than ten percent of the Company’s Common
Stock to report their ownership and any changes in that ownership to the Securities and Exchange Commission. The Company believes that
all Section 16(a) filing requirements applicable to its directors, executive officers and greater than ten percent beneficial owners were
met for 2021.
Code of Ethics
The Company has adopted a
Code of Ethics and Business Conduct (the Code) that applies to all directors, officers and employees of the Company as required by the
listing standards of the NYSE American. The Code is available on the Company’s website at www.servotronics.com and the Company intends
to disclose on this website any amendment to the Code. Waivers under the Code, if any, will be disclosed under the rules of the SEC
and the NYSE American.
Shareholder Nominations of
Director Candidates
Under our By-laws, a shareholder
of record may nominate a person for election as a director at next year’s annual meeting if the shareholder has delivered timely
notice to our Corporate Secretary setting forth:
| • | the name, age, business address and residence address of each proposed nominee; |
| • | the principal occupation or employment of each nominee; |
| • | the number of shares of Servotronics capital stock which are owned of record and beneficially by each
such nominee; |
| • | a written questionnaire with respect to the background and qualification of such proposed nominee and
a written statement and agreement executed by each such nominee acknowledging that such person: (A) consents to being named in the Company’s
proxy statement as a nominee and to serving as a director if elected, (B) intends to serve as a director for the full term for which such
person is standing for election, and (C) makes certain other representations as set forth in the By-laws; |
| • | certain information regarding the proposing shareholder; and |
| • | any other information concerning each nominee that would be required under the rules of the SEC in a proxy
statement soliciting proxies for the election of those nominees. |
Audit Committee
In
2021, the Audit Committee consisted of Messrs. Gygax and Marks with Mr. Marks chairing the Committee and being designated as the Company’s
“Audit Committee financial expert”. Ms. Howard and Mr. Wax were added to the Audit Committee in April 2022 in connection with
their appointment to the Board. Each member of each of the Audit Committee is “independent” as that term is defined in the
NYSE American listing standards. The Audit Committee meets with the Company’s Independent Auditors and reviews with them
matters relating to corporate financial reporting and accounting procedures and policies, the adequacy of financial, accounting and operating
controls, the scope of the audit and the results of the audit. The Audit Committee is also charged with the responsibility of submitting
to the Board of Directors any recommendations it may have from time to time with respect to financial reporting and accounting practices,
policies and financial accounting and operation controls and safeguards.
| Item 11. | Executive Compensation |
The Summary Compensation Table quantifies the amount
or value of the different forms of compensation earned by or awarded to the Company’s Chief Financial Officer and Chief Operating
Officer as well as the former Chief Executive Officer of the Company (the “Named Officers”) in fiscal 2021 and 2020 and provides
a dollar amount for total compensation.
The Compensation Process Overview
The Compensation Committee determines the compensation
of the Company’s Executive Officers in accordance with the NYSE American listing standards. The most significant aspects of management’s
role are evaluating employee performance, recommending business performance targets and objectives, and recommending salary levels and
other compensation awards, however final compensation determinations for all Executive Officers are approved by the Compensation Committee
and ratified by the Board.
Base Salary
The Compensation Committee seeks to provide the
Company’s Executive Officers with a level of assured cash compensation in the form of base salary that is commensurate with their
professional status, accomplishments and geographic location. The base salaries are reviewed annually by the Compensation Committee and
are adjusted from time to time to recognize competitive market data, the officer’s level of responsibility, outstanding individual
performance, promotions and internal equity considerations. For the year ended December 31, 2021, base salary paid to each Named Officer
is as set forth in the Summary Compensation Table.
Annual Bonus
The Company also makes cash awards to the Executive
Officers and other employees that are not part of any pre-established, performance-based criteria. Awards of this type are completely
discretionary and subjectively determined by the Compensation Committee at the time they are awarded. In the event this type of cash award
is made, it is reflected in the “Summary Compensation Table” under a separate column entitled “Bonus”.
Equity Awards
Pursuant to the 2012 Long-Term Incentive Plan,
as approved by the Company’s shareholders, the Compensation Committee may grant equity awards, the vesting of which may be based
on the passage of time, achievement of performance conditions or vesting conditions otherwise determined by the Compensation Committee.
No equity awards were granted in 2021.
Other Benefits
The Company generally provides employees with medical,
life and disability insurance benefits. All employees are eligible to participate in the Company’s 401(k) Plan to which
employees are able to contribute up to the limit prescribed by the Internal Revenue Service. The Company generally matches 75% of
the first 4% of eligible compensation that is contributed to the Plan. All employee deferral contributions and Company matching
contributions are fully vested upon contribution. All employees are also participants in the Employee Stock Ownership Plan.
Summary Compensation Table
The following table presents information relating
to total compensation of the Named Executive Officers for the fiscal years ended December 31, 2021 and 2020.
| Name and Principal Position | |
Year | |
Salary | | |
Bonus | | |
All Other
Compensation(1) | | |
Total | |
| Lisa F. Bencel | |
2021 | |
$ | 245,960 | | |
| -- | | |
$ | 47,684 | | |
$ | 293,644 | |
| Chief Financial Officer | |
2020 | |
$ | 245,960 | | |
$ | 40,000 | | |
$ | 47,128 | | |
$ | 333,088 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| James C. Takacs | |
2021 | |
$ | 220,740 | | |
| -- | | |
$ | 38,313 | | |
$ | 259,053 | |
| Chief Operating Officer | |
2020 | |
$ | 220,740 | | |
$ | 25,000 | | |
$ | 65,688 | | |
$ | 311,428 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Kenneth D. Trbovich | |
2021 | |
$ | 632,289 | | |
| -- | | |
$ | 221,211 | | |
$ | 853,500 | |
| Former Chief Executive Officer | |
2020 | |
$ | 639,496 | | |
$ | 100,000 | | |
$ | 376,022 | | |
$ | 1,115,518 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| (1) | All Other Compensation for 2021 includes (i) $2,831 for Ms. Bencel, $2,824 for Mr. Takacs and $2,831 for Mr. Trbovich in connection
with the allocation of shares of Common Stock under the Servotronics Inc. Employee Stock Ownership Plan (“ESOP”) valued as
of the closing price on November 30, 2021 (the date of allocation); (ii) $2,526, $1,476 and $630 for Ms. Bencel, Mr. Takacs and Mr. Trbovich,
respectively, for life insurance; (iii) $34,596, $11,203 and $30,130 for Ms. Bencel, Mr. Takacs and Mr. Trbovich, respectively, for health,
dental and vision insurance premiums and the reimbursement of medical/ health related expenses not covered under the Company’s health
insurance plans; (iv) $7,731, $6,666, and $7,200 for Company 401k match and dividends paid on vested shares of restricted stock shares
for Ms. Bencel, Mr. Takacs and Mr. Trbovich, respectively; (v) $16,144 and $173,300 for Mr. Takacs and Mr. Trbovich, respectively for
vacation pay in lieu of time off pursuant to a policy that is generally applicable to all employees of the Company; and (vi) $7,120 for
personal use of a company car for Mr. Trbovich. |