UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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£Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)). | |
£Definitive Additional Materials. | |
£Soliciting Material under §240.14a-12. |
TECHPRECISION CORPORATION
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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TECHPRECISION CORPORATION
November 19, 201214, 2016
Dear Stockholder:
It is my pleasure to invite you to attend the Annual Meeting of Stockholders of TechPrecision Corporation. The meeting will be held on December 5, 20128, 2016 at 10:00 a.m., Eastern Time, at the offices of Pepper Hamilton LLP, located at the New York Times Building, 37th Floor, 620 Eighth Avenue, New York, New York 10018-1405. The Notice of Annual Meeting and Proxy Statement accompanying this letter describe the business to be conducted at the meeting.
It is important that your shares be represented at the meeting, regardless of the number you may hold. Whether or not you plan to attend, if you hold your shares in registered form, please sign, date and return your proxy card as soon as possible. If, on the other hand, you hold your shares through a bank, brokerage firm or other nominee, please sign, date and return to your bank, brokerage firm or other nominee the enclosed voting instruction form, or, if you prefer, you can vote by telephone or through the Internet in accordance with instructions set forth in the enclosed voting instruction form.
I look forward to seeing you on December 5th.
8th.Sincerely, | |
 | |
| Chief Executive Officer |
| NOTICE OF ANNUAL MEETING OF STOCKHOLDERS |
December 5, 20128, 2016
10:00 a.m. Eastern Time
The offices of Pepper Hamilton LLP,
The New York Times Building, 37th Floor,
620 Eighth Avenue, New York, New York 10018-1405
November 19, 201214, 2016
Dear Stockholder:
You are invited to the Annual Meeting of Stockholders of TechPrecision Corporation. We will hold the meeting at the time and place noted above. At the meeting, we will ask you to:
| 1. | Elect |
| 2. | Consider and ratify the selection of |
| 3. | Approve |
| 4. | Approve our Named Executive Officers' compensation, in an advisory vote; | |
| 5. | Approve the frequency of holding an advisory vote on our Named Executive Officers' compensation, in an advisory vote; and | |
| 6. | Transact any other business properly brought before the meeting. |
Your vote is important. To be sure your vote counts and assure a quorum, please vote, sign, date and return the enclosed proxy card or voting instruction form as soon as possible, regardless of whether or not you plan to attend the meeting; or if you prefer and if you hold your shares through a bank, brokerage firm or other nominee, please follow the instructions on the enclosed voting instruction form for voting by Internet or by telephone, regardless of whether or not you plan to attend the meeting in person.
By order of our board of directors, Alexander Shen, Chief | ||
You will not be admitted to the Annual Meeting of Stockholders without proper identification (such as a driver’sdriver's license or passport) and either proof of your ownership of our common stock or proof that you hold a valid proxy from a stockholder who held our common stock, in each case as of the record date of the Annual Meeting of Stockholders.
Registration will begin at 9:15 a.m. Eastern Time. Please allow ample time for check-in. Please bring proper identification and evidence of either your stock ownership or the grant of any valid proxy you hold with you in order to be admitted to the Annual Meeting of Stockholders. If your shares (or the shares of the stockholder who granted you the proxy) are held in the name of a bank, broker, or other nominee holder and you plan to attend the Annual Meeting of Stockholders in person, please bring a copy of your broker statement, the proxy card mailed to you by your bank or broker or other proof of ownership of our common stock (or the equivalent proof of ownership as of the close of business on the record date of the stockholder who granted you the proxy).
Cameras, cell phones, recording equipment, and other electronic devices will not be permitted at the meeting.
PROXY STATEMENT
This Proxy Statement, the accompanying proxy card and our Annual Report to Stockholders for our fiscal year ending March 31, 2012 (“2016 ("fiscal 20122016”") are being mailed, beginning on or about November 19, 2012,16, 2016, to owners of shares of common stock, $0.0001 par value $0.0001 per share (“("Common Stock”"), of TechPrecision Corporation (referred to as “"we,” “" "us,” “" "our,”" "TechPrecision," or the “"Company”") in connection with the solicitation of proxies by our board of directors for our Annual Meeting of Stockholders (the “"Annual Meeting”"). This proxy procedure is necessary to permit all stockholders, many of whom are unable to attend the Annual Meeting in person, to vote. Our board of directors encourages you to read this document thoroughly and to take this opportunity to vote on the matters to be decided at the Annual Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON DECEMBER 58, 2016, 2012.
The proxy statement and the annual report to stockholders are available at
http://www.techprecision.com/reports_and_proxy.html
Table of Contents
| Pg. | ||
| Information About Voting | ||
| Solicitation of Proxies | ||
| Agenda Items | ||
| Who Can Vote | ||
| How to Vote | ||
| Use of Proxies | ||
| Broker Non-Votes | ||
| Revoking a Proxy or Changing Your Vote | ||
| Quorum Requirement | ||
| Vote Required for Action | ||
| Recommendation of our Board of Directors | ||
| Proposal One – Election of Directors | ||
| Corporate Governance | ||
| Directors/Nominees | ||
| Executive Officers | ||
| Information About | ||
| Meetings | ||
| Independence | ||
| Board Structure and Role in Risk Oversight | ||
| Director Nomination Process | ||
| Stockholder Communications | ||
| Committees | ||
| Board of Directors Compensation | ||
| Security Ownership of TechPrecision | ||
| Security Ownership of Certain Beneficial Owners and Management | ||
| Executive Compensation | ||
| Summary Compensation Table | ||
| Outstanding Equity Awards at Fiscal Year-End Table | ||
| Employment | ||
| 2006 Long-Term Incentive Plan | ||
| Compensation Policies and Practices and Risk Management | ||
| Related Party Transactions | ||
| Certain Relationships and Related Transactions | ||
Proposal Two - Ratification of the Selection of Public Accounting Firm for the Fiscal year Ending March 31, 2017 | ||
| Audit Committee Report | ||
| Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services | ||
| Proposal Three – | ||
| Proposal Four – Advisory Vote to Approve the Compensation of our Named Executive Officers | ||
| Proposal Five – Advisory Vote on Whether the |
| Other Matters | ||
| Other Business to be Conducted at the Annual Meeting | ||
| Section 16(a) Beneficial Ownership Reporting Compliance | ||
| Stockholder Proposals for the | ||
| Expenses Relating to this Proxy Solicitation | ||
| Householding | ||
| Where You Can Find More Information | ||
| Appendix A |
Our board of directors is soliciting proxies for use at the Annual Meeting on December 5, 20128, 2016 at 10:00 a.m., Eastern Time, at the offices of Pepper Hamilton LLP, located at the New York Times Building, 37th Floor, 620 Eighth Avenue, New York, New York 10018-1405, and any adjournments of that meeting.
The agenda for the Annual Meeting is to:
| 1. | Elect |
| 2. | Consider and ratify the selection of 2017; |
| 3. | Approve |
| 4. | ||
| 5. | Approve the frequency of holding an advisory vote on our Named Executive Officers' compensation, in an advisory vote; and | |
| 6. | Transact any other business properly brought before the meeting. |
You can vote at the Annual Meeting if you are a holder of Common Stock on the record date. The record date is the close of business on November 16, 2012.11, 2016. You will have one vote for each share of Common Stock. As of November 16, 2012,11, 2016, there were 18,904,57028,824,593 shares of Common Stock outstanding and entitled to vote.
For Shares Held Directly in the Name of the Stockholder
If you hold your shares in registered form and not through a bank, brokerage firm or other nominee, you may vote your shares in one of two ways:
In Person. If you choose to vote in person, you can come to the Annual Meeting and cast your vote in person; or
Voting By Mail. If you choose to vote by mail, complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. If you sign your proxy card and return it without marking any voting instructions, your shares will be voted at the Annual Meeting for all of the director nominees, in favor of each of proposals 2, 3, and 4 listed above under "Agenda Items," and in favor of "one year" with respect to the proposals presented atvote on the Annual Meeting.
frequency of an advisory vote on our Named Executive Officers.For Shares Held Through a Bank, Brokerage Firm or Other Nominee
If you hold your shares through a bank, brokerage firm or other nominee, you may vote your shares in any one of three ways:
In Person. If you choose to vote in person at the Annual Meeting, you must obtain a legal proxy from your bank, brokerage firm or other nominee authorizing you to vote at the Annual Meeting. You can then come to the Annual Meeting and cast your vote in person;
Voting By Mail. If you choose to vote by mail, complete and return to your bank, brokerage firm or other nominee the voting instruction form provided to you by your bank, brokerage firm or other nominee; or
Voting By Telephone or Internet. If you choose to vote by telephone or Internet, vote in accordance with instructions set forth on the voting instruction form provided to you by your bank, brokerage firm or other nominee.
1
Unless you tell us on the proxy card to vote differently, we will vote shares represented by signed and returned proxies proxies: (i)FORall of the nominees for director; director listed in this proxy statement; (ii)FOR the ratification of KPMGMarcum LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2013; and2017; (iii) FOR the approval of the adoption of the 2016 Plan; (iv) FOR the approval of an amendment to our Certificate of Incorporation to effect a reverse stock splitthe compensation of our outstanding common stock atNamed Executive Officers, in an exchange ratio no greater than 1-for-2, such ratio to be determined by our boardadvisory vote; and (v) FOR a frequency of directors, at any time prior toan advisory vote on the one year anniversary of the Annual Meeting, the implementation and timing of which shall be subject to the discretioncompensation of our board of directors.Named Executive Officers every year, in an advisory vote. We do not now know of any other matters to come before the Annual Meeting. If they do, proxy holders will vote shares represented by proxies according to their best judgment.
A broker non-vote occurs when banks, brokerage firms or other nominees holding shares on behalf of a stockholder do not receive voting instructions from the stockholder by a specified date before the Annual Meeting and do not have discretionary authority to vote those undirected shares on specified matters under applicable rules. Banks or brokerage firms have this discretionary authority with respect to the ratification of the independent registered public accountants (proposal no.(Proposal No. 2), but do not have such discretionary authority with respect to the election of directors (proposal no.(Proposal No. 1) or the, approval of the reverse stock split (proposal no.2016 Plan (Proposal No. 3), approval of the compensation of our Named Executive Officers (Proposal No. 4), and selection of the frequency of an advisory vote on the compensation of our Named Executive Officers (Proposal No. 5). If you are the beneficial owner of shares of our Common Stock that are held of record by a bank, brokerage firm or other nominee and do not provide such holder with voting instructions on matters with respect to which it does not have discretionary authority, there will be a broker non-vote with respect to your shares on each such matter.
For Shares Held Directly in the Name of the Stockholder
If you hold your shares in registered form and not through a bank, brokerage firm or other nominee, you may revoke your proxy at any time before it is exercised. You can revoke a proxy by:
| • | Submitting a later-dated proxy by mail; | |
| • | Sending a written notice to our corporate secretary. You must send any written notice of a revocation of a proxy so as to be delivered before the taking of the vote at the Annual Meeting to: |
TechPrecision Corporation
Attention: Corporate Secretary
Attending the Annual Meeting and voting in person. Your attendance at the Annual Meeting will not in and of itself revoke your proxy. You also must vote your shares at the Annual Meeting in order to effectively revoke your previously delivered proxy.
For Shares Held Through a Bank, Brokerage Firm or Other Nominee
If you hold your shares through a bank, brokerage firm or other nominee, you may change your vote at any time by:
Submitting a later-dated voting instruction form by mail to your bank, brokerage firm or other nominee;
Submitting a later-dated telephone or Internet vote in accordance with instructions set forth on the voting instruction form provided to you by your bank, brokerage firm or other nominee; or
Attending the Annual Meeting and voting in person. Your attendance at the Annual Meeting will not in and of itself revoke your voting instructions to your bank, brokerage firm or other nominee. You also must vote your shares at the Annual Meeting in order to effectively revoke your previously delivered voting instructions. In order, however, to vote your shares at the Annual Meeting, you must obtain a legal proxy, executed in your favor, from your bank, brokerage firm or other nominee to be able to vote at the Annual Meeting.
2
We need a quorum of stockholders to hold a valid Annual Meeting. A quorum will be present if the holders of at least a majority of the outstanding Common Stock entitled to vote at the Annual Meeting either attend the Annual Meeting in person or are represented by proxy. Votes withheld and broker non-votes will be considered to be represented for purposes of determining a quorum.
A plurality of the votes cast is required for the election of the directors to serve until the next annual meeting of stockholders, or until their successors are duly elected and qualified. This means that the sixeight director nominees with the most votes will be elected. Only votes “for”"for" or “withheld”"withheld" affect the outcome.
Approval of the ratification of the appointment of KPMGMarcum LLP as our independent registered public accounting firm for the fiscal year ending March 31, 20132017 will require the affirmative vote of a majority of the votes cast at the annual meeting,Annual Meeting, either in person or by proxy, assuming a quorum is present. Abstentions and broker non-votes will not be counted as votes for or against this proposal and will have no effect on the outcome of the vote.
Approval of the adoption of the 2016 Plan will require the affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, assuming a quorum in present. Abstentions and broker non-votes will not be counted as votes for or against this proposal and will have no effect on the outcome of the vote.
Approval the compensation of our Named Executive Officers will require the affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, assuming a quorum is present. The vote to approve the compensation of our Named Executive Officers is advisory, and therefore not binding on us or our board of directors. Our board of directors values the opinions of our stockholders and to the extent there is any significant vote against the compensation of our Named Executive Officers as disclosed in this Proxy Statement, we will consider our stockholders' concerns and evaluate whether any actions are necessary to address those concerns.
Approval of the frequency of an advisory vote on the compensation of our Named Executive Officers will require the affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, assuming a quorum is present. In the event that none of the options of every one year, every two years or every three years for the frequency of the vote on the compensation of our Named Executive Officers receives the required vote for approval, the frequency that receives the highest number of votes will be considered by our board of directors to be the stockholders' preference, as expressed on an advisory basis.
As to the proposals to be voted on at the Annual Meeting, our board of directors unanimously recommends that you vote:
| · | FOR Proposal No. 1, for the election of the nominees to our board of directors; |
| · | FOR Proposal No. 2, for the ratification of the selection of Marcum LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2017; |
| · | FOR Proposal No. 3, for the approval of the 2016 Plan; |
| · | FOR Proposal No. 4, for the advisory approval of the compensation of our Named Executive Officers; and |
| · | FOR, with respect to Proposal No. 5, a frequency of once every year for the frequency of stockholder advisory votes on the compensation of our Named Executive Officers. |
3
Our board of directors currently consists of sixfive directors, each of whose terms will expire at this Annual Meeting. In advance of the Annual Meeting, our board of directors unanimously approved an increase in the size of our board of directors from five members to eight members. Our sixeight nominees for director this year are Leonard M. Anthony, Robert A. Crisafulli, Philip A. Dur, Michael R. Holly, James S. Molinaro, Robert G. Isaman, Andrew A. Levy, Richard S. McGowan, and LeonardWalter M. Anthony. All of our nominees, except for Robert G.Schenker. Messrs. Anthony, Dur, Holly, Isaman, and Levy are incumbents who were previously elected by our stockholders at our 20112012 Annual Meeting of Stockholders. Information about the nominees is provided below.
We expect each nominee be able to vote allserve if elected. If any nominee is unable to serve, proxies received by themwill be voted in favor of the remainder of those nominees and for such additional persons. We do not expect that anysubstitute nominee willas may be unable or will decline to serve as a director.selected by our board of directors. The term of office of each person elected as a director will continue for one year, until the next annual meeting of stockholders and such time as his or her successor is duly elected and qualified, or until his or her earlier resignation, removal or death. The eight nominees receiving the highest number of FOR votes shall be elected as directors.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF LEONARD M. ANTHONY, ROBERT A. CRISAFULLI, PHILIP A. DUR, MICHAEL R. HOLLY, ROBERT G. ISAMAN, ANDREW A. LEVY, RICHARD S. MCGOWAN, AND WALTER M. SCHENKER TO OUR BOARD OF DIRECTORS. |
Directors/Nominees
Information about the nominees five of whomis provided below. Messrs. Anthony, Dur, Holly, Isaman, and Levy currently serve on our board of directors, is provided below:directors:
Leonard M. Anthony, 58,62, has been a member of our board of directors since September 2010 and2010. Mr. Anthony currently serves as chair of the compensation committeenon-executive Chairman of our board of directors (the “Compensation Committeeand has served as the Chairman of our board of directors since January 1 2013. ”).From May 13, 2013 through November 17, 2014, Mr. Anthony’sAnthony served as TechPrecision's Executive Chairman. Mr. Anthony's primary professional activity, since September 2008, has been serving on the board of directors for MRC Global Inc. f/k/a McJunkin Red Man Corporation where he chairs the audit committee. Previously, Mr. Anthony served as the President and Chief Executive Officer of WCI Steel, Inc., an integrated producer of custom steel products, from December 2007 to October 2008. He was also a member of the board of directors of WCI Steel from December 2007 to October 2008. Mr. Anthony has more than 25 years of financial and operational management experience. From April 2005 to August 2007, Mr. Anthony was the Executive Vice President and Chief Financial Officer of Dresser-Rand Group Inc., a global supplier of rotating equipment solutions to the oil, gas, petrochemical and processing industries. Mr. Anthony has more than 25 years of financial and operational management experience. Mr. Anthony earned a B.S. in Accounting from Pennsylvania State University, an M.B.A. from the Wharton School of the University of Pennsylvania and an A.M.P. from Harvard Business School.
Mr. Anthony’sAnthony's significant executive and board experience within the steel manufacturing industry qualifies him to engage in our assessment of our business and growth opportunities, as well as to provide insight into corporate governance and management best practices among peer companies.
Robert A. Crisafulli, 62, is a nominee for director on our board of directors. Since December 2007, Mr. Crisafulli has served as Executive Vice President Tax of Aircastle Limited, a publicly traded international aircraft leasing company. From January 2007 to December 2007, Mr. Crisafulli served as Vice President of Finance, Tax and Treasurer of InfoNXX, Inc., a privately held international telecommunications company. From 2005 to 2006, Mr. Crisafulli served as Vice President of Tax of PanAmSat, a publically traded international telecommunications company. From 2001 to 2005, Mr. Crisafulli served as Managing Director of Bridge East Capital, an international private equity and financial advisory firm. From 1999 to 2000, Mr. Crisafulli served as Senior Vice President, Chief Financial Officer, Treasurer of Mosler Inc., a physical and electronic security firm. From 1998 to 1999, Mr. Crisafulli was Partner – Mergers and Acquisitions Practice at KPMG LLP. Mr. Crisafulli is a certified public accountant and holds a B.B.A. in accounting from Adelphi University and an M.B.A. in Taxation from St. John's University.
Mr. Crisafulli's significant background in the areas of tax and finance, including with public companies, and his experience as a certified public accountant will enable him to provide our board of directors with additional insight into finance and accounting matters.
4
Philip A. Dur, 72, has been a member of our board of directors since October 2009 and currently serves as Chairman of the compensation committee of our board of directors (the "Compensation Committee"). Since 2006, Mr. Dur has served on the board of directors at Kennametal, Inc. From October 2001 until his retirement in December 2005, Mr. Dur served as Corporate Vice President, Northrop Grumman Corporation, a global defense/aerospace company, and President, Northrop Grumman Ship Systems Sector. Earlier in his private sector career, Mr. Dur held executive leadership positions at Northrop Grumman Electronic Systems, Tenneco Inc. and Tenneco Automotive. Prior to entering the private sector, Mr. Dur served in the United States Navy, attaining the rank of Rear Admiral. Among his assignments were Commander of the SARATOGA Battle Group and Director of the Naval Strategy Division. Mr. Dur holds a Ph.D. in Political Economy and Government and a M.P.A. from Harvard University, as well as master's and undergraduate degrees from the University of Notre Dame.
Mr. Dur's significant management experience from his years of service in the military and private sectors, including his service on other boards of directors, enables him to contribute both to our strategic and industry-related decision-making, as well as to discussions of our management and corporate governance.
Michael R. Holly, 66,70, has been a directormember of our board of directors since March 2006 and currently serves as chairChairman of the audit committee of our board of directors (the “"Audit Committee”"). Since 2004, Mr. Holly has been a private investor and consultant. From 1996 until 2004, Mr. Holly was managing director of Safeguard International Fund, L.P., a private equity fund of which Mr. Holly iswas a founding partner. While at Safeguard International Fund, L.P., Mr. Holly worked extensively with industrial companies, including those engaged in precision manufacturing for aerospace and other industrial sectors. Mr. Holly is a certified public accountant and has a Bachelor of ScienceB.S. in Economics from Mount St. Mary’sMary's University.
Mr. Holly brings to our board of directors an extensive background in private investment, andincluding in industrial companies, as well as financial expertise, and provides advice and leadership with respect to our financial health and the execution of our growth strategies. As a certified public accountant, Mr. Holly chairs the Audit Committee and serves as a financial expert on the Audit Committee.
Robert G. IsamanAndrew A. Levy, 65, 55, has been a member of our board of directors since March 2009.December 2012. Since 1978,2012, Mr. LevyIsaman has served as CEO of Redstone Capital, a small investment banking firm. Mr. Levy received his bachelor’s degree in Engineering from Yale University, and received his Juris Doctor from Harvard Law School. Mr. Levy is also the manager of WM Realty.
Mr. Isaman brings to our board of directors substantial industry experience combined with a track record of growing businesses, both organically and through acquisitions and joint ventures. In addition to his strong international experience in business operations and growth, especially in the Asia Pacific region, our board of directors believes that Mr. Isaman would beis a valuable asset to our strategic planning and growth process.
Mr. Levy combines an engineering background that enables him to understand the operational aspects of our business with an investment banking background, which qualifies him to engage in assessments of our financial health and the execution of the our growth strategies.
Mr. McGowan's extensive investment experience, and in Engineering fromparticular his focus on growing the United States Military Academy at West Point. He servedbusiness of microcap companies, will be an asset as a Captain in the U.S. Army from 1980-1985.
we look to execute on our strategies to grow our business.
Walter M. Schenker, 69, is a nominee for director on our board of directors. Since 2010, Mr. Schenker has served as a Principal at MAZ Capital Advisors, a brokerage/investment banking firm. From 1999 to 2010, Mr. Schenker was a Principal at Titan Capital Management, LLC, a registered investment adviser and hedge fund. Mr. Schenker currently serves on the board of directors of Sevcon, Inc., a global supplier of control and power solutions for zero-emission, electric and hybrid vehicles, where he is chairman of the compensation committee and a member of the audit committee.
In 2007, TCMP3 Partners, L.P., its general partner TCMP3 Capital, LLC, its investment manager Titan Capital Management, LLC, and portfolio managers Steven E. Slawson and Mr. Schenker consented to the entry of a final judgment in an action brought by the Securities and Exchange Commission regarding their activities in connection with certain unregistered securities offerings. Without admitting or denying the allegations of the complaint, Mr. Schenker consented to the entry of a final judgment permanently enjoining him from future violations of Section 5 of the Securities Act of 1933 and requiring him to pay a civil penalty.
Mr. Schenker holds a B.S. from Cornell University and an M.B.A. in Finance from Columbia University.
Mr. Schenker's experience serving on the board of directors of a publicly traded company and his vast experience investing in both public and private companies will enable him to provide our board of directors with insight into how to best manage the Company and execute our growth strategy.
The following table sets forth the name, age and principal position of each of our executive officers as of the date of this Proxy Statement:
| Name | Age | Position |
| Alexander Shen | 54 | Chief Executive Officer |
| Thomas Sammons | 61 | Chief Financial Officer |
Alexander Shen was appointed Chief Executive Officer of TechPrecision on November 14, 2014. Mr. Shen also serves as President of our Ranor, Inc. and Wuxi Critical Mechanical Components Co., Ltd. subsidiaries. Mr. Shen has experience in a broad range of industries including metal fabrication, automotive, contract manufacturing, safety and security, and industrial distribution. Prior to joining us, Mr. Shen served in 2013 as President of SIB Development and Consulting, a firm specializing in fixed, monthly cost reduction. Mr. Shen served as President of Tydenbrooks Security Products Group, a security products company, from July 2011 to December 2012. Mr. Shen served as President and Chief Executive Officer of Burgon Tool Steel Company between January 2009 and June 2011, and served as Chief Executive Officer of Ryerson Mexico & Vice President – International for Ryerson, Inc., a multi-national distributor and processor of metals, from 2007 to 2009. Mr. Shen was Division General Manager & Chief Operating Officer at Sumitomo Electric Group from 1998 to 2007, focused on automotive electrical and electronic products. Mr. Shen holds a B.S. in Engineering from Michigan State University.
Thomas Sammons, became our Chief Financial Officer in October 2015. Mr. Sammons, has served as Vice President, Finance, of Ranor, Inc. since March 9, 2015. Prior to joining TechPrecision, Mr. Sammons served as the financial controller of Xchanging Services, Inc., an international provider of technology-enabled business processing, technology and procurement services, from February 2012 through February 2015 and as international controller and business unit controller at Ryerson, Inc., from May 2005 through January 2012. Mr. Sammons holds certifications as a Certified Management Accountant and a Certified Financial Manager and holds a B.S. in Business Administration from SUNY, Empire State College and an M.B.A. from Cornell University.
During fiscal 2012,2016, our board of directors held 6 regularsix meetings, the Audit Committee held five meetings and special meetings.the Compensation Committee held one meeting. All incumbent directors attended at least 90% of the total number of meetings of our board of directors and all committees of our board of directors on which they served. While we encourage all members of our board of directors to attend annual meetings of stockholders, there is no formal policy as to their attendance. The Company did not hold an annual meeting of stockholders in 2015.
We evaluate the independence of our directors in accordance with the listing standards of the Nasdaq Stock Market, LLC (“("Nasdaq”"), and the regulations promulgated by the Securities and Exchange Commission (“("SEC”"). These rules and regulations require that a majority of the members of a company’scompany's board of directors must qualify as “independent,”"independent," as affirmatively determined by our board of directors.
After review of all relevant transactions and relationships between each director, or any of his or her family members, and us, our senior management and our independent registered public accounting firm, our board of directors affirmatively has determined that the following directors are independent directors within the meaning of the Nasdaq listing standards: Philip A. Dur, Michael R. Holly, Robert G. Isaman and Leonard M. Anthony.Andrew A. Levy. Mr. Anthony is a member of both the Audit and Compensation Committees but is not considered to be an independent director within the meaning of the Nasdaq listing standards. Despite Mr. Anthony not being independent, we feel that, in light of his familiarity with the Company and the energy he puts forth in fulfilling his duties as a director of the Company and a member of the Audit Committee and the Compensation Committee, Mr. Anthony's membership on the Audit Committee and the Compensation Committee is required by the best interest of the Company and its stockholders. Our board of directors has also determined that if elected, Robert G. Isamaneach of Messrs. Crisafulli, McGowan, and Schenker would qualify as an independent director within the meaning of the Nasdaq listing standards.
6
The Audit Committee takes an active risk oversight role by meeting with our senior management team on a regular basis and reviewing and approving key risk policies and risk tolerances. The Audit Committee is responsible for ensuring that we have in place a process for identifying, prioritizing, managing, and monitoring itsour critical risks. Furthermore, our board of directors, with input from the Audit Committee, regularly evaluates our management infrastructure, including personnel competencies and technologies and communications, to ensure that key risks are being properly evaluated and managed. The Compensation Committee reviews any risks associated with our compensation practices.
Our board of directors does not have a nominating committee, but rather the entire board of directors participates in the process of identifying and evaluating candidates for our board of directors. Until the Annual Meeting, our board of directors consists of five directors. The board of directors believes that given the small size of the board of directors, a separate nominating committee was not necessary. In light of the expansion of the board of directors to eight members as of the Annual Meeting, the board of directors will consider the need for a nominating committee.
The process followed by our board of directors to identify and evaluate candidates includes requests to members of our existing directors and others (including, where appropriate, professional search firms) for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates, and interviews of selected candidates. In considering whether to recommend any candidate for inclusion in our board of directors’directors' slate of recommended director nominees, including candidates recommended by stockholders, our board of directors considers many factors.
Our board of directors does not have a diversity policy; however, its goal is to nominate candidates from a broad range of experiences and backgrounds who can contribute to our board of directors’directors' deliberations by reflecting a range of perspectives, thereby increasing its overall effectiveness. In identifying and recommending nominees for positions on our board of directors, our board of directors places primary emphasis on the candidate’scandidate's personal and professional integrity, experience in corporate management, knowledge of our business and industry, experience as a board member of another publicly held company, diversity of experience in substantive matters pertaining to our business, and practical and mature business judgment. Our board of directors does not assign specific weights to particular factors and no particular factor is a prerequisite for each nominee. We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow our board of directors to fulfill its responsibilities. In the case of an incumbent director whose term of office is set to expire, our board of directors reviews such director’sdirector's overall service to us during the director’sdirector's term. In the case of a new director candidate, our board of directors reviews whether the nominee is “independent,”"independent," based on applicable listing standards of Nasdaq and applicable SEC rules and regulations, if necessary.
Stockholders may recommend individuals to our board of directors for consideration as potential director candidates by timely submitting their name, along with the additional information and materials required by our by-laws, to TechPrecision Corporation, 3477 Corporate Parkway, Suite 140, Center Valley, PA 18034,1 Bella Drive, Westminster, MA 01473, Attention: Corporate Secretary. Our by-laws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary. Please see the section of this Proxy Statement “Stockholdertitled "Stockholder Proposals for the 20132017 Annual Meeting”Meeting" for more information regarding the submission of stockholder nominations and other proposals.
Assuming that appropriate biographical and background material is provided for candidates recommended by stockholders, our board of directors will evaluate those candidates by following the same process, and applying the same criteria, discussed above.
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We have a process by which stockholders may communicate with our board of directors. Stockholders who wish to communicate with our board of directors may do so by sending written communications addressed to the board of directors of TechPrecision Corporation, c/o Corporate Secretary, 3477 Corporate Parkway, Suite 140, Center Valley, PA 18034.1 Bella Drive, Westminster, MA 01473. Our corporate secretary will forward all mail received at our corporate office that is addressed to our board of directors or any particular director.
Our board of directors has two standing committees: the Audit Committee and the Compensation Committee.
Our board of directors has determined that Messrs. Holly and Isaman each satisfy the independence standards for the Audit Committee established by the applicable rules and regulations of the SEC and Nasdaq. As Mr. Anthony served as our Executive Chairman from May 13, 2013 through November 17, 2014, he does not adoptedsatisfy the independence standards for our Audit Committee established by the applicable rules and regulations of the SEC and Nasdaq because he was employed by the Company during the past three years. Despite Mr. Anthony not being independent, we feel that, in light of his familiarity with the Company and the energy he puts forth in fulfilling his duties as a writtendirector of the Company and a member of the Audit Committee, Mr. Anthony's membership on the Audit Committee is required by the best interest of the Company and its stockholders.
The primary purpose of the Audit Committee is to oversee the quality and integrity of our accounting and financial reporting processes and the audit of our financial statements. The Audit Committee is responsible for selecting, compensating, overseeing and terminating our independent registered public accounting firm.
The Audit Committee charter that outlinesis posted and can be viewed in the duties"Investor Relations" section of our website at www.techprecision.com.
Compensation Committee
The members of the Compensation Committee but intends to develop such a charter. The principal duties of the Compensation Committee, among other things, are to:
The Compensation Committee is responsible for, among other things, reviewing and recommending to Mr. Dur’s appointment, Mr. Anthony served as chairmanour board of directors the annual salary, bonus, stock compensation and other benefits of our executive officers, including our Chief Executive Officer and Chief Financial Officer; reviewing and providing recommendations regarding compensation and bonus levels of other members of senior management; reviewing and making recommendations to our board of directors on all new executive compensation programs; reviewing the compensation of our board of directors; and administering our equity incentive plans.
The Compensation Committee may delegate any or all of its duties or responsibilities to a subcommittee of the Compensation Committee, to the extent consistent with the Company's organizational documents and was chairmanall applicable laws, regulations and rules of markets in which the committee throughout the fiscal year ended March 31, 2012. All three members ofCompany's securities trade, as applicable.
In connection with the Compensation Committee are “independent” as defined byCommittee's consideration of director compensation for past and future service, Mr. Shen and Mr. Sammons provided the rulesCompensation Committees with certain compensation data and regulations of Nasdaq and the SEC as of the end of the fiscal year ended March 31, 2012.
other information.
The Compensation Committee has three members: Mr. Dur, Mr. Anthonycharter is posted and Mr. Holly. Tocan be viewed in the "Investor Relations" section of our knowledge, there are no interlocking relationships among members of the Compensation Committee and our executive officers.website at www.techprecision.com.
The current fee structure for non-employee directors is as follows:
| Fee Category | Fees | |||
| Quarterly Retainer | $ | 6,000 | ||
| In-person Meeting Fee (Quarterly) | $ | 2,500 | ||
| Telephonic Meeting Fee | $ | 500 | ||
| Audit & Compensation Committee Chairs - Annual Retainer | $ | 8,000 | ||
| Non-executive Chairman – Annual Retainer | $ | 12,000 | ||
| Fee Category | Fees | |||
| Quarterly Retainer | $ | 6,000 | ||
| In-person Meeting Fee (Quarterly) | $ | 2,500 | ||
| Telephonic Meeting Fee | $ | 500 | ||
| Audit & Compensation Committee Chairs - Annual Retainer | $ | 8,000 | ||
| Non-executive Chairman – Annual Retainer | $ | 12,000 | ||
Each of our directors has waived any compensation he was entitled to receive as a director, effective as of January 1, 2014. Our board of directors expects to implement a new compensation structure for directors at the first meeting of our board of directors held following the Annual Meeting.
In addition, our 2006 Long-Term Incentive Plan, as amended (the “"2006 Plan”"), providesprovided for the grant of non-qualified options to purchase 50,000 shares, exercisable in installments, to each newly elected non-employee director and annual grants of 10,000 options to purchase shares of Common Stock commencing with the third year of service as a director, as described under the heading “Executive"Executive Compensation -– 2006 Long-Term Incentive Plan.”" The 2006 Plan expired under its own terms on February 23, 2016.
The following table sets forth compensation paid to each non-employee director who served during the year ended March 31, 2012.2016. Mr. Molinaro received no compensation for his serviceAnthony currently serves as a director. Mr. Durthe non-executive Chairman of our board of directors and has served as ourthe Chairman of our board of directors since October 2010 whileJanuary 1, 2013. From May 13, 2013 through November 17, 2014, Mr. Anthony served as our Executive Chairman. Messrs. Holly and AnthonyDur chair the Audit Committee and Compensation Committees,Committee, respectively. Mr. Molinaro’s compensation for his service as our chief executive officer are set forth under the heading “Summary Compensation Table.”
| Name | Fees Earned | Option Awards (1) | Total ($) | Fees Earned (1) | Option Awards (2) | All Other Compensation | Totals | |||||||||||||||||||||
| Leonard M. Anthony | $ | 41,500 | $ | 5,480 | $ | 46,980 | ||||||||||||||||||||||
| Philip A. Dur | $ | 46,500 | $ | 6,147 | $ | 52,647 | $ | - | $ | 821 | $ | - | $ | 821 | ||||||||||||||
| Michael R. Holly | $ | 41,500 | $ | 8,397 | $ | 49,897 | $ | - | $ | 821 | $ | - | $ | 821 | ||||||||||||||
| Andrew A. Levy | $ | 34,500 | -- | $ | 34,500 | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
| Louis A. Winoski | $ | 32,000 | $ | 8,397 | $ | 40,397 | ||||||||||||||||||||||
| Robert G. Isaman | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||
| Leonard M. Anthony | $ | - | $ | 821 | $ | - | $ | 821 | ||||||||||||||||||||
| (1) | Our board of directors waived all fees that would have been received for serving on the board of directors during fiscal 2016. |
| (2) | Represents the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. |
Grants to Directors for Prior Service to the Company
In December 2014, each non-employee director waived any compensation owed to them for their service to the Company. Accordingly, members of our board of directors have not received any compensation for their service on our board of directors since January 1, 2014. On November 10, 2016, our board of directors determined that it would grant shares of Common Stock to each of our directors as compensation for their service to the Company during the period from January 1, 2014 to November 10, 2016. Accordingly, our board of directors granted 600,000 shares of Common Stock to Mr. Anthony, 250,000 shares of Common Stock to each of Mr. Dur and Mr. Holly, and 200,000 shares of Common Stock to Mr. Isaman and Mr. Levy. The grant of shares of Common Stock to Mr. Anthony also recognizes his uncompensated service as Executive Chairman of the Company during the period from January 1, 2014 to November 17, 2014. These shares of Common Stock granted to our directors collectively had a value of $780,000 on the date of grant.
Listed below are the only individuals and entities known by TechPrecision (through their Section 13 filings), excluding directors and Named Executive Officers, to own more than 5% of the outstanding Common Stock as of November 11, 2016.
| Name | Shares | Percentage(1) | ||||||
Somerset Capital Advisors, LLC(2) 1120 Avenue of the Americas, Suite 1506 New York, NY 10036 | 1,743,129 | 6.05 | % | |||||
| (1) | The percentages are calculated on the basis of 28,824,593 shares of Common Stock outstanding as of November 11, 2016. |
| (2) | This information is based solely on the Schedule 13G amendment filed with the SEC on February 16, 2016 by Somerset Capital Advisors, LLC ("Somerset"), which provides beneficial ownership as of December 31, 2015. Somerset reports shared voting power with respect to all of its shares of Common Stock. Somerset disclaims beneficial ownership of these shares. |
The following table provides information as to shares of common stockCommon Stock beneficially owned, as of November 16, 2012,11, 2016, by:
| · | each director and nominee for director; | ||
| · | each Named Executive Officer (as defined | ||
| · |
| all directors and |
Except as otherwise indicated, each person has the sole power to vote and dispose of all shares of common stockCommon Stock listed opposite his name. Each person is deemed to own beneficially shares of common stockCommon Stock which are issuable upon exercise of warrants or options or upon conversion of convertible securities if they are exercisable or convertible within 60 days of November 16, 2012.
| Name and Address | Shares | Percentage | |||
Andrew A. Levy 46 Baldwin Farms North Greenwich, CT 06831 | 1,572,100 | 8.32 | % | ||
Howard Weingrow 805 Third Avenue New York, NY 10022 (1) | 1,250,000 | 6.61 | % | ||
Robert Lifton 805 Third Avenue New York, NY 10022 (2) | 1,250,000 | 6.61 | % | ||
James G. Reindl 347 E. Hillendale Road Kennett Square, Pennsylvania 19348 | 1,006,500 | 5.32 | % | ||
Stanoff Corporation 805 Third Avenue New York, NY 10022 | 1,100,000 | 5.82 | % | ||
Barron Partners, LP 730 Fifth Avenue New York, NY 10019 (4) | 926,324 | 4.85 | % | ||
| James S. Molinaro (5) | 765,000 | 3.89 | % | ||
| Richard F. Fitzgerald (6) | 283,334 | 1.48 | % | ||
| Michael Holly (7) | 162,500 | * | % | ||
| Louis A. Winoski (8) | 227,500 | 1.19 | % | ||
| Stanley A. Youtt (3) | — | * | % | ||
| Philip A. Dur (9) | 50,000 | * | % | ||
| Leonard M. Anthony (10) | 60,000 | * | % | ||
| Robert Francis | — | * | % | ||
| Robert G. Isaman | — | * | % | ||
| All officers and directors as a group (seven individuals) (11) | 3,120,434 | 15.41 | % | ||
| Name | Shares | Percentage(1) | ||||||
| Andrew A. Levy (2) | 1,822,100 | 6.31 | % | |||||
| Walter M. Schenker (3) | 1,388,073 | 4.82 | % | |||||
| Leonard M. Anthony (4) | 785,000 | 2.71 | % | |||||
| Alexander Shen (5) | 666,667 | 2.26 | % | |||||
| Michael Holly (6) | 497,500 | 1.72 | % | |||||
| Richard S. McGowan (7) | 480,314 | 1.67 | % | |||||
| Robert G. Isaman (8) | 400,000 | 1.38 | % | |||||
| Philip A. Dur (9) | 395,000 | 1.37 | % | |||||
| Thomas Sammons (10) | 166,667 | * | ||||||
| Richard F. Fitzgerald | 67,500 | * | ||||||
| Robert A. Crisafulli | 0 | 0 | % | |||||
| All officers and directors as a group (eight individuals) (11) | 4,800,434 | 15.90 | % | |||||
| (1) | The percentages are calculated for each person or group separately because shares of our common stock |
Includes |
This information is based solely on the notice of intent to nominate directors provided to the Company on October 5, 2016 by MAZ Partners LP ("MAZ Partners"), which provides beneficial ownership as of that date. Includes | |
| (4) | Includes 165,000 shares of Common Stock issuable upon the exercise of stock options granted to Mr. |
Includes | |
| (6) | Includes 112,500 shares of |
This information is based solely on the notice of intent to nominate directors provided to the Company on October 5, 2016 by MAZ Partners, which provides beneficial ownership as of that date.
| (8) | Includes |
| (9) | Includes |
| (10) | Includes |
| (11) | Includes |
Set forth below is information for the fiscal years indicated relating to the compensation of (i) each person who served as our principal executive officer or principal financial officer during fiscal 2012,2016, (ii) theour most highly compensated executive officer other than the principal executive officer and principal financial officer who was serving in such position as an executive officer at the end of March 31, 2012fiscal 2016 and (iii) an individual who would have been included in the tables below as one of our most highly compensated executive officers but for the fact that he was not an executive officer at March 31, 2012 (collectively,2016. Collectively, such individuals are referred to as our “"Named Executive Officers”)."
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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These amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. Key assumptions in calculating these amounts are outlined in Note |
On June 23, 2014, Mr. | |
| (3) | On October 23, 2015, Mr. Sammons was appointed to the position of Chief Financial Officer of the |
| (4) | Mr. |
| (5) | Other compensation paid to Mr. Shen in fiscal 2016 includes reimbursement of temporary living expenses of $1,716. Other compensation paid to Mr. Shen in fiscal 2015 includes a primary residence relocation allowance of $35,000 plus reimbursement of temporary living expenses of $23,996. |
| (6) | Other compensation paid to Mr. Sammons in fiscal 2016 includes a primary residence relocation allowance of $35,000, plus reimbursement of temporary living expenses of $12,149. |
| (7) | Mr. Fitzgerald received an automobile allowance of $400 per |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price | Option Expiration Date | |||||||||
| James Molinaro (1) | 333,333 | 666,667 | $ | 0.70 | Aug. 4, 2020 | ||||||||
| -- | 250,000 | $ | 1.96 | April 18, 2021 | |||||||||
| Richard Fitzgerald(1)(2) | 150,000 | -- | $ | 0.49 | Mar. 22, 2019 | ||||||||
| 50,000 | 100,000 | $ | 0.70 | Aug. 4, 2020 | |||||||||
| -- | 100,000 | $ | 1.96 | April 18, 2021 | |||||||||
| Robert Francis | -- | -- | -- | ||||||||||
| Stanley Youtt | -- | -- | -- | ||||||||||
| Option Awards | |||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price | Option Expiration Date | |||||||||
| Alexander Shen (1) | 333,333 | 666,667 | $ | 0.08 | August 11, 2025 | ||||||||
Thomas Sammons (2) | 166,667 | 333,333 | $ | 0.17 | January 20, 2026 | ||||||||
| (1) | Options granted to Mr. |
| (2) | Options granted to Mr. |
In accordance with the 2006 Plan, all options previously granted to Mr. Fitzgerald expired in accordance with their terms on January 23, 2016.
At March 31, 2012,2016, we had employment and other compensation-related agreements with each of our Named Executive Officers.
We executed an employment agreement with Mr. Molinaro’s serviceShen on November 17, 2014 (the "CEO Employment Agreement") to engage Mr. Shen for the position of Chief Executive Officer. The terms of the CEO Employment Agreement provide that Mr. Shen will report directly to our board of directors and others at the direction of the board at such time and in such detail as the board shall reasonably require and his duties and responsibilities shall consist of such powers, duties and responsibilities as are customary for the office of Chief Executive Officer of a company similar in size and stature to the Company.
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Pursuant to the CEO Employment Agreement, Mr. Shen receives an annual base salary of $275,000 and was awarded a one-time grant of options to purchase 1,000,000 shares of Common Stock, which vest in three equal amounts on the date of grant and each of the subsequent two anniversaries of the date of grant. The exercise price of the options is equal to the market price as of the grant date. Mr. Shen is also eligible for an annual cash performance bonus based upon our financial performance as determined by our board of directors and targeted at up to 60% of Mr. Shen's annual base salary. The CEO Employment Agreement provided that the Company was required to pay no less than one-half of the targeted bonus amount for fiscal 2015. Mr. Shen is entitled to participate fully in our employee benefit plans and programs. Mr. Shen will also be reimbursed for reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties and responsibilities as Chief Executive Officer. Under the terms of the CEO Employment Agreement, Mr. Shen is also entitled to temporary living expenses and a relocation allowance of $35,000 at the time of his relocation to the Westminster, Massachusetts area.
Pursuant to the terms of the CEO Employment Agreement and subject to Mr. Shen's execution of a release of claims in favor of the Company, in the event we terminate Mr. Shen's employment without "cause" (as defined in the CEO Employment Agreement) or Mr. Shen resigns his employment for "good reason" (as defined in the CEO Employment Agreement) at any time during the six month period following a change in control, we will be required to pay Mr. Shen an amount equal to one year of his base salary paid in equal installments in accordance with our payroll policies. We may terminate the CEO Employment Agreement for cause at any time upon seven days written notice, during which period Mr. Shen may contest his termination before our board of directors.
Mr. Shen will have the obligation not to disclose our confidential information or trade secrets to anyone following termination of the CEO Employment Agreement. Mr. Shen is also subject to a covenant not to compete with us for a period of 12 months following termination of the CEO Employment Agreement.
Thomas Sammons Employment Agreement
On March 31, 2016, we entered into an Employment Agreement with Thomas Sammons (the "Sammons Employment Agreement"), which is effective as of January 20, 2016 and governs Mr. Sammons's employment as our Chief Executive Officer began on July 21, 2010 and is governed by the terms of an offer letter executed by Mr. Molinaro and us dated July 15, 2010 (the “Offer Letter”).Financial Officer. Pursuant to the Offer Letter,Sammons Employment Agreement, Mr. Molinaro willSammons will: (i) receive an annual base salary of $300,000 (subject$200,000; (ii) receive an award of stock options to adjustment by our boardpurchase 500,000 shares of directors from timeCommon Stock pursuant to time)2006 Plan with an exercise price equal to the fair market value of the Common Stock on the grant date and willwhich shall vest in substantially equal amounts on the date of initial grant and each of the subsequent two anniversaries of the date of grant; and (iii) be eligible to receivefor an annual cash performance bonus of up to 50% of his then-current base salary. In addition, on August 4, 2010, we grantedsalary, subject to goals and objectives set by the Chief Executive Officer and our board of directors. Under the Sammons Employment Agreement, Mr. Molinaro an optionSammons also will be eligible to purchase 1,000,000 shares of Common Stock underparticipate in Company benefits provided to other senior executives as well as benefits available to Company employees generally. Under the 2006 Plan (the “Option Grant”), with an exercise price of $0.70, the closing price per share of Common Stock on the date of grant. The Option Grant will vest in substantially equal annual installments on eachterms of the first three anniversariesSammons Employment Agreement, Mr. Sammons is also entitled to temporary living expenses and a relocation allowance of $35,000 at the datetime of grant, and will expire on August 4, 2020.his relocation to the Westminster, Massachusetts area.
The Offer LetterSammons Employment Agreement also provides for certain severance payments to Mr. MolinaroSammons in the event of his termination. IfSubject to Mr. MolinaroSammons execution of a release of claims in favor of the Company, if Mr. Sammons is terminated other thanwithout "cause" (as defined in the Sammons Employment Agreement) or Mr. Sammons terminates his employment for “cause”, or because of his death or disability (or if Mr. Molinaro resigns for “good reason”),"good reason" (as defined in the Sammons Employment Agreement) at any time during the six month period following a change in control, he will be entitled to receive 12 months of continued paymentcontinuation of his then-current annual base salary as well as reimbursement for payments for continued health benefits under our health plans for twelve months. If Mr. Molinaro’s employment is terminated under such circumstances, and such termination occurs between the date we enter into a letter of intent pursuant to which it would consummate a change of control and the date that is 31 days after the consummation of such change of control, Mr. Molinaro will be entitled to the same severance payments but for an 18 month periodmonths following termination and all unvested shares underlying the Option Grant at the time of termination will become immediately vested upon such termination. Under the Offer Letter, “cause” is defined to include, without limitation, (i) Mr. Molinaro’s insubordination or failure to apply best efforts to his employment duties; (ii) his conviction of, or plea of nolo contendere to, any felony or crime involving dishonesty, fraud or moral turpitude; (iii) neglect of his employment duties or failure to perform those duties to the satisfaction of our board of directors that is not cured within 30 days of notice thereof; and (iv) his negligent (or worse) misconduct in connection with his duties that violates our code of conduct, code of ethics or other policies. Mr. Molinaro’s resignation within 60 days of the occurrence of any of the following, without his consent, constitutes “good reason” under the Offer Letter: (i) a material reduction in Mr. Molinaro’s then-current base salary; (ii) a breach of the Offer Letter by us that is not cured within 30 days of notice thereof; or (iii) a material and adverse change in his duties, authority or responsibilities that is not cured within 30 days.
employment.
In addition to the compensation and severance arrangements described above, the Offer LetterSammons Employment Agreement contains customary provisions relating to confidentiality and non-competition, and provides for the execution of an At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement (the “Confidentiality Agreement”), which was executed by us and(i) prohibiting Mr. Molinaro on July 21, 2010. The Confidentiality Agreement (i) prohibits Mr. MolinaroSammons from divulging to third parties or using our confidential information whether developed by him or not, without our prior consent;trade secrets of the Company; (ii) confirmsconfirming that all intellectual work products generated by Mr. MolinaroSammons during the term of his employment with us, including, without limitation, writings, processes, drawings and diagrams,the Company are the sole property of us;the Company; and (iii) prohibitsprohibiting Mr. MolinaroSammons from competing against us,the Company, including by soliciting ourthe Company's employees or its current or prospective clients, until the one year anniversary of the later of the termination of his employment and the receipt of his last severance payment.
Richard F. Fitzgerald Employment Agreementand Separation Agreements
We executed an employment agreement (the “CFO Employment Agreement”)with Mr. Fitzgerald on March 23, 2009 (the "Fitzgerald Employment Agreement") to engage Mr. Fitzgerald for the position of chief financial officer.Chief Financial Officer. The terms of the CFOFitzgerald Employment Agreement provideprovided that Mr. Fitzgerald shall report directly to our board of directors and our chief executive officerChief Executive Officer and his duties include, but are not limited to,included directing the preparation of budgets, financial forecasts and strategic planning, as well as establishing major economic objectives and policies for us and ensuring compliance with SEC reporting obligations.
Upon his execution of the CFOFitzgerald Employment Agreement, Mr. Fitzgerald received a signing bonus of $25,000. Pursuant to the CFOFitzgerald Employment Agreement, Mr. Fitzgerald receivesreceived an annual base salary of $195,000 and was awarded a one-time grant of options to purchase 150,000 shares of Common Stock, which vestvested in three equal parts over three years. The exercise price of the options was equal to the market price as of the grant date.date or $0.49 per share. Mr. Fitzgerald iswas also eligible for an annual cash performance bonus based upon our financial performance as determined by our board of directors. Mr. Fitzgerald iswas entitled to participate fully in our employee benefit plans and programs. Mr. Fitzgerald willwas also be reimbursed for reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties and responsibilities as chief financial officer.
13
On March 19, 2014, our board of directors approved an award of 90,000 shares of restricted Common Stock to Mr. Fitzgerald under the 2006 Plan. On August 12, 2015, our board of directors approved the vesting of all 90,000 shares of restricted Common Stock. In connection with the vesting of the restricted common stock, Mr. Fitzgerald surrendered 22,500 shares of the vested Common Stock to the Company to satisfy tax withholding obligations in connection with the vesting.
In addition to the compensation arrangements described above, the Separation Agreement contains customary provisions relating to non-disparagement and includes provisions for a general release of claims.
Under our 2006 Long-Term Incentive Plan, as amended (the “the 2006 Plan,”), each newly elected independent director receivesreceived at the time of his election, stock options with a five-year optionterm of five years to purchase 50,000 shares of Common Stock at an exercise price equal to the fair market value of the Common Stock on the date of his or her election. The option vestsThese options vested as to 30,000 shares of Common Stock on the date of grant and 10,000 shares of Common Stock on each of the first and second anniversaries of the grant date. The 2006 Plan also provideprovided for an annual option grant of 10,000 shares of Common Stock to directors beginning on July 1 after the third anniversary of a director’sdirector's election to our board of directors.
| Plan Category | Number of securities to be issued upon exercise of outstanding options and warrants | Weighted-average exercise price of outstanding options and warrants | Number of securities remaining available for future issuance under equity compensation plans | |||
| Equity compensation plans approved by security holders | 2,415,666 | $ | 1.040 | 403,840 | ||
| Equity compensation plan not approved by security holders | 100,000 | $ | 1.65 | N/A | ||
One of the responsibilities of the Compensation Committee is to ensure that our compensation programs are structured so as to discourage inappropriate risk-taking. We believe that our existing compensation practices and policies for all employees, including executive officers, mitigate against this risk by, among other things, providing a meaningful portion of total compensation in the form of equity incentives. These equity incentives are awarded with either staggered or cliff vesting over several years, so as to promote long-term rather than short-term financial performance and to encourage employees to focus on sustained stock price appreciation. In addition, our existing compensation policies attempt to discourage employees from taking excessive risks to achieve individual performance objectives such as annual cash incentive compensation and long termlong-term incentive compensation which are based upon balanced company-wide, business unit and individual performance and base salaries structured so as to be consistent with an employee’semployee's responsibilities and general market practices. The Compensation Committee is responsible for monitoring our existing compensation practices and policies and investigating applicable enhancements to align our existing practices and policies with avoidance or elimination of risk and the enhancement of long-term stockholder value.
Related Party Transaction Policy
All transactions with related parties are subject to approval by the Audit Committee. As part of its review of related party transactions, the Audit Committee generally seeks to obtain evidence regarding whether the terms of the related party transaction are market-based. The Audit Committee relies on such information, in addition to other transaction-specific factors, in its review and approval of related party transactions.
Related Party Transactions
We are not aware of any transactions, since the beginning of the last fiscal year, or any proposed transactions, in which the Company was a party, where the amount involved exceeded $120,000 and in which a director, executive officer, holder of more than 5% of our Common Stock, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
FOR THE FISCAL YEAR ENDING MARCH 31, 20132017
The Audit Committee has selected KPMGMarcum LLP (“("KPMGMarcum”") as our independent registered public accounting firm for the fiscal year ending March 31, 2013.2017.
The Audit Committee has recommended that the stockholders vote for ratification of the appointment of KPMGMarcum as our independent registered public accounting firm. A representative of KPMGMarcum is expected to attend the Annual Meeting and withwill have the opportunity to make a statement and/or respond to appropriate questions from shareholdersstockholders present at the Annual Meeting.
Neither our bylawsby-laws nor other governing documents or laws require stockholder ratification of the appointment of KPMGMarcum as our independent registered public accounting firm. However, the Audit Committee is submitting the appointment of KPMGMarcum to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain that firm.Marcum. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of our stockholders.
The affirmative vote of the majority of the votes represented by the holders of shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the appointment of KPMG.Marcum.
The Audit Committee Report that follows shall not be deemed to "soliciting material" or "filed" with the SEC and shall not be deemed to be incorporated by reference into any filing made by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filing incorporating this Reviewed and discussed the audited financial statements with management and Marcum;
In reliance upon the review and discussions referred to above, the Audit Committee recommended to our board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended March 31, The Audit Committee Michael R. Holly, Chairman Leonard M. Anthony The following is a summary of fees for professional services rendered by
Audit fees. Audit fees represent fees for professional services performed by Audit-related fees. Audit-related fees represent fees for assurance and related services performed by Tax fees. All other fees. There were no other fees paid to The Audit APPROVAL OF THE TECHPRECISION 2016 EQUITY INCENTIVE PLAN Our board of directors, The defense and aerospace contract manufacturing business is industry. Our board of directors believes that the
Equity compensation is fundamental to our compensation philosophy and core objectives of pay for performance, sustaining and strengthening the business, and aligning employees with stockholders. The purposes of the 2016 Plan are to: (a) enable the Company and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. In the event that this Proposal No. 3 is not approved, we do not anticipate that we can grant options to any potential new employees. Without a stockholder-approved equity plan, we would rely on cash-settled awards as our sole method of incentive-based compensation. We believe this would not be in our stockholders' best interests as it would remove incentives aligning our employees and our senior leaders with stockholders to drive firm-wide performance and create long-term stockholder value. At the time of its expiration on February 23, 2016, there were 764,006 shares available for grant under the 2006 Plan. During the year ended March 31, 2016, we granted approximately 1,530,000 shares from the 2006 Plan as part of our regular grant program to our senior executives and non-employee directors, and we believe the shares proposed to be reserved under the 2016 Plan will be sufficient for the next five years. The 5,000,000 shares for which we are seeking approval are necessary in order to allow us to continue our equity compensation program as we have with recent annual grants. We recognize that some stockholders focus on the potential dilutive effect of a company's equity plan. Aggregate potential dilution is intended to be a measure of the total potential stockholder dilution posed by an equity plan, which we calculate on a "fully-diluted" basis by dividing (a) outstanding equity grants plus shares available for future grant, by (b) the total common shares outstanding plus outstanding equity grants plus shares available for future equity grants. Based on the total number of outstanding equity awards and the number of shares of Common Stock Below is
17 Upon the approval of the 2016 Plan by the stockholders of the Company and the filing of a registration statement with the SEC covering the offering of securities under the 2016 Plan, the Company intends to grant to Alexander Shen, the Company's Chief Executive Officer, a combination of shares of Common Stock and options such that, assuming the exercise of all options, Mr. Shen's grant will represent 1,000,000 shares of Common Stock. These shares of Common Stock and options are being granted to Mr. Shen in satisfaction of a grant of 1,000,000 stock options that our board of directors authorized to be made to Mr. Shen in January 2016. Since the time that our board of directors authorized this grant, the Company has not had sufficient shares available under the 2006 Plan to effectuate the grant and therefore deferred the making of such grant. To account for the appreciation in the value of the Common Stock underlying this grant in the time since the authorization of the grant, our board of directors determined that Mr. Shen would be granted a combination of shares of Common Stock and options, rather than only options. The specific mix of shares of Common Stock and options to be granted to Mr. Shen will be determined based on the closing price of our Common Stock Other than with respect to the grant to Mr. Shen described above, because our Compensation Committee has discretion to grant future awards of a design and amount determined in its discretion, (i) it is not possible at present to specify the persons to whom awards will be granted under the 2016 Plan in the future or the amounts and types of individual grants and (ii) data regarding awards to be granted under the 2016 Plan may be of limited relevance to stockholders' consideration and voting on this proposal. However, it is anticipated that, among others, all of our current executive officers and non-employee directors, including our Named Executive Officers, will receive awards under the 2016 Plan. Accordingly, a new plan benefits table is not required or provided as part of this proposal. Stockholders should understand that our executive officers and non-employee directors may be considered to have an interest in the approval of the 2016 Plan because they may in the future receive awards under it. Nevertheless, our board of directors believes that it is important to provide incentives and rewards for superior performance and the retention of experienced executive officers and directors by implementing the 2016 Plan. A summary of the principal provisions of the 2016 Plan is set forth below. The summary is qualified Purpose. The purposes of the 2016 Plan are to: (a) enable the Company and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. Shares Subject to the Plan. Subject to adjustment as provided in the 2016 Plan, the maximum number of shares of Common Stock that may be issued in respect of Awards under the 2016 Plan is 5,000,000 shares (inclusive of Awards issued under the 2006 Plan that remain outstanding as of the effective date of the 2016 Plan), all of which shares may be issued in respect of Incentive Stock Options. Any shares of Common Stock issued under the 2016 Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares. Any shares of Common Stock issued by the Company through the assumption or substitution of outstanding grants in connection with the acquisition of another entity shall not reduce the maximum number of shares available for delivery under the 2016 Plan. In the event of any stock dividend, recapitalization, forward stock split or reverse stock split, reorganization, division, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event that affects our Common Stock, the Compensation Committee shall make appropriate adjustment in the number and kind of shares authorized by the 2016 Plan and covered under outstanding awards as it determines appropriate and equitable. Shares of our Common Stock subject to awards that expire unexercised or are otherwise forfeited shall again be available for awards under the 2016 Plan. Annual Limits. In accordance with the requirements under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the maximum number of shares of Common Stock underlying awards (including options, restricted stock, restricted stock units and performance awards) that may be granted during a calendar year to any individual participant shall be 20% of the Plan Limit. 18 Eligibility. Employees, directors, consultants, and other individuals who provide services to the Company or its affiliates are eligible to be granted awards under the 2016 Plan (any such person who is granted an award under the 2016 Plan, a "Participant"); provided, however, that only employees of the Company or any parent company or subsidiary of the Company are eligible to be granted Incentive Stock Options. As of November 10, 2016, approximately 100 employees and five non-employee directors will be eligible to participate in the 2016 Plan. As of November 10, 2016, the closing price of our Common Stock was $0.52 per share. Plan Administration. The 2016 Plan shall be administered by the Compensation Committee. Any action of the Compensation Committee in administering the 2016 Plan shall be final, conclusive and binding on all persons, including the Company, its subsidiaries, affiliates, their respective employees, directors, consultants, and other individuals who provide services to the Company or its affiliates, persons claiming rights from or through Participants, and stockholders of the Company. The Compensation Committee will have full authority to grant awards under the 2016 Plan and determine the terms of such awards. Awards. The 2016 Plan authorizes the award of stock options, restricted stock awards, restricted stock units, and performance awards. The terms of an award will be set forth by the Compensation Committee in an individual award agreement. Options. An option entitles the holder to purchase from us a stated number of shares of Common Stock. The award agreement shall state whether such grant is an Incentive Stock Option ("ISO") or a Non-Qualified Stock Option ("NQO"). An ISO may only be granted to an employee of ours or our affiliates (provided applicable law so permits). The Compensation Committee will specify the number of shares of Common Stock subject to each option and the exercise price for such option, provided that the exercise price may not be less than the fair market value (as such term is defined in the 2016 Plan) of a share of Common Stock on the date the option is granted. Notwithstanding the foregoing, if ISOs are granted to any 10% stockholder, the exercise price shall not be less than 110% of the fair market value of a share of Common Stock on the date the ISO is granted. All options shall be exercisable in accordance with the terms of the applicable award agreement. The maximum term of an option shall be determined by the Compensation Committee on the date of grant but shall not exceed 10 years (or 5 years in the case of ISOs granted to any 10% stockholder). In the case of ISOs, the aggregate fair market value (determined as of the date of grant) of the Common Stock with respect to which such ISOs become exercisable for the first time during any calendar year cannot exceed $100,000. ISOs granted in excess of this limitation will be treated as NQOs. If a Participant terminates employment with us (or our affiliates) due to death or disability, the Participant's unexercised options may be exercised, to the extent they were exercisable on the termination date, for a period of twelve (12) months from the termination date or until the expiration of the original term of the option, if shorter. If the Participant terminates employment with us (or our affiliates) for cause (as such term is defined in the 2016 Plan), all unexercised options (whether vested or unvested) shall terminate and be forfeited on the termination date. If the Participant's employment terminates for any other reason, any vested but unexercised options may be exercised by the Participant, to the extent exercisable at the time of termination, for a period of three months from the termination date (or such time as specified by the Compensation Committee at the time of grant) or until the expiration of the original term of the option, whichever period is shorter. Unless otherwise provided by the Compensation Committee, any options that are not exercisable at the time of termination of employment shall terminate and be forfeited on the termination date. Restricted Stock. A restricted stock award is a grant of shares of Common Stock, which may or may not be subject to forfeiture restrictions during a restriction period. The Compensation Committee will determine the price, if any, to be paid by the Participant for each share subject to a restricted stock award. The Compensation Committee may condition the expiration of the restriction period, if any, upon: (i) the Participant's continued service over a period of time with us or our affiliates; (ii) the achievement by the Participant, us or our affiliates of any other performance goals set by the Compensation Committee; or (iii) any combination of the above conditions as specified in the award agreement. If the specified conditions are not attained, the Participant will forfeit the portion of the restricted stock award with respect to which those conditions are not attained, and the underlying Common Stock will be forfeited to us. At the end of the restriction period, if the conditions, if any, have been satisfied, the restrictions imposed will lapse with respect to the applicable number of shares of Common Stock. During the restriction period, a Participant will have the right to vote the shares of Common Stock underlying the restricted stock, however, unless otherwise provided by the Compensation Committee, all dividends will remain subject to restriction until the shares of Common Stock with respect to which the dividend was issued lapses. Our board of directors may, in its discretion, Restricted Stock Units ("RSUs"). RSUs are granted in reference to Performance Awards. The Company may grant options, restricted stock or RSUs with vesting conditioned based upon the achievement of specified performance goals. Performance goals may be linked to a variety of factors including the Participant's completion of a specified period of employment or service with us or an affiliated company. Additionally, performance goals can include objectives stated with respect to us, an affiliated company or a business unit and are limited to one or more of the following:
This vote is advisory, and therefore not binding on the Company, the Compensation Committee or our board of directors. Our board of directors and the Compensation Committee value the opinions of the stockholders and to the We believe that the policies and procedures articulated in the "Executive Compensation" section of this Proxy Statement are effective in achieving the
PROPOSAL FIVE – ADVISORY VOTE ON WHETHER THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS SHOULD OCCUR EVERY ONE, TWO OR THREE YEARS After careful consideration of You may cast your advisory vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstaining from voting. Approval of the frequency of an advisory vote on the compensation of our Named Executive Officers will require the affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, assuming a quorum is present. In the event that none of the options of every one year, every two years or every three years for the frequency of the vote on the compensation of our Named Executive Officers receives the required vote for approval, the frequency that receives the highest number of votes will be considered by our board of directors to be the Stockholders are not voting to approve or disapprove of
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