SEC Form DEF 14A filed by Taylor Devices Inc.

Class 1 Director Whose Term Will Expire in 2027

John Burgess, 79, has served as a director since 2007 and is currently the Chairman of the Board of Directors.

Mr. Burgess gained his international strategy, manufacturing operations and organizational development expertise from his more than 40 years of experience with middle market public and privately-owned companies. Mr. Burgess served as President and CEO of Reichert, Inc. a leading provider of ophthalmic instruments, and spearheaded the acquisition of the company from Leica Microsystems in 2002, leading the company until its sale in January 2007.  Prior to the acquisition, Mr. Burgess served as President of Leica’s Ophthalmic and Educational Divisions before leading the buyout of the Ophthalmic Division and formation of Reichert, Inc.

From 1996 to 1999, Mr. Burgess was COO of International Motion Controls, a $200 million diversified manufacturing firm. During his tenure there, he led a significant acquisition strategy that resulted in seven completed acquisitions and sixteen worldwide businesses in the motion control market. Previously, Mr. Burgess operated a number of companies for Moog, Inc., and Carleton Technologies, including six years as President of Moog’s Japanese subsidiary, Nihon Moog K.K. located in Hiratsuka, Japan. Moog, Inc. is the global leader in electro-hydraulic servo control technology with focus on the aerospace and defense sectors. Mr. Burgess is also a former Operating Partner of Summer Street Capital Partners.

Mr. Burgess earned a Bachelor of Science in Engineering from Bath University in England, and a Master of Business Administration from Canisius College. Currently Mr. Burgess is a Director of Bird Technologies Corporation of Solon, Ohio.  

As a result of the positions and experience described above, Mr. Burgess demonstrates leadership skills with his strong background in financial and accounting matters.  He serves as Chairman of the Audit Committee as well as the Audit Committee financial expert.  The Company believes that Mr. Burgess' academic background, and his experience in executive positions at a range of companies in industries related to that of the Company, qualify him to serve as a member of the Board of Directors.

MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEE.

PROPOSAL 2

ELECTION OF DIRECTOR

Class 1 Director Whose Term Will Expire in 2027

F. Eric Armenat, 65, has served as a director since 2018.  

Mr. Armenat has 40 years of business experience across a myriad of industries both private and public. He most recently served as the President and Chief Executive Officer of Multisorb Filtration Group which he successfully spearheaded the sale of in early 2018 from a private equity owner.  Multisorb is the world leader in the active packaging industry solving complex technical challenges in the pharmaceutical, food, and industrial markets.

From 2012 to 2016, Mr. Armenat served as President and Chief Executive Officer for several companies owned by private equity.  These companies included healthcare delivery, medical waste collection and disposal as well as active packaging. He was responsible for the successful business improvement and eventual divestiture of the companies.

From 2009 to 2012, Mr. Armenat served as Chief Operating Officer of Avox Systems (Zodiac Aerospace), a leading supplier of aircraft oxygen systems. From 1994 to 2009, he served as Vice President of Operations and then President and General Manager of Carleton Technologies (Cobham Mission Systems), a global leader of technology for the military and commercial aviation markets.  Mr. Armenat also worked as an Operations Management Consultant with Ernst and Young beginning in 1984.

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Mr. Armenat earned his Bachelor of Science Degree in Industrial Engineering from Southern Illinois University and his MBA in Finance and Accounting from St. Bonaventure University. He also proudly served in the United States Air Force.

Mr. Armenat’s management and industry experience enable him to provide the Board with a perspective on the Company’s business, operations, and strategic issues. The Company believes that Mr. Armenat's education, positions and experience described above qualify him to serve as a member of the Board of Directors.

MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEE.

Class 3 Director Whose Term Will Expire in 2025

Robert M. Carey, 79, has served as a director since 2020.  

Mr. Carey brings over forty-five years of experience ranging from General Management to consultative work to the Company.  He was the General Manager of the Reichert Analytical Instruments group from 2001 to 2009. The company manufactures and internationally sells a variety of analytical measurement instruments for use in medicine, food processing, and biotechnology research.

Mr. Carey was the Principal at CMA, Ltd from 1990 to 2001. CMA, Ltd provides consulting services to the manufacturing sector in the area of organization, operational change, and strategic planning. Mr. Carey was also a Partner in Decision Processes International (DPI) from 1999 to 2001. DPI is an international strategic planning consultancy working with companies of all sizes.

In 1979 Mr. Carey joined Wilson Greatbatch Ltd. (now Integer Holdings) as North American Sales Manager. Mr. Greatbatch held the patents for the implantable pacemaker. The eponymously named company is the world’s leader in implantable power sources.  In 1981 Mr. Carey was named Vice President of Wilson Greatbatch and General Manager of the Electrochem Division. Electrochem manufactures and internationally sells high energy batteries used in rugged or remote environments such as space, oil and gas drilling, the military and the ocean.

He earned a Bachelor of Science in Microbiology from the State University of California, Long Beach, and a Master of Business Administration from the State University of New York at Buffalo. Mr. Carey served in the U.S. Army achieving the rank of Captain.

The Company believes that Mr. Carey’s experience in strategic planning for technical manufacturing companies and his knowledge of lean manufacturing, related statistical techniques, and team-based organization structures qualify him to serve as a member of the Board of Directors.

Alan R. Klembczyk, 58, is the Company’s President and has served as a director since 2018.

Since graduating from the University of Buffalo in 1987 with a degree in Mechanical Engineering, Mr. Klembczyk has held key positions in Sales, Engineering and Executive Management at Taylor Devices. Over the last 34 years, he has held titles such as Design Engineer, Assistant Chief Engineer, Chief Engineer, Vice President of Sales & Engineering and was appointed President of the Company and member of the Board of Directors in 2018.  

Mr. Klembczyk has been responsible for establishing new Sales & Marketing policies and has been directly involved with defining internal Company policy and strategic direction in cooperation with all levels of Taylor Devices’ Management.  He has been an integral part of the team that managed upgrades to the Quality System and obtaining third party certification to International Standards ISO 9001, ISO 14000 and Aerospace Standard AS9100.

Mr. Klembczyk has served for many years on the Technical Advisory Group for the US Shock and Vibration Information & Analysis Center (SAVIAC) and the Shock and Vibration Exchange (SAVE).  In 2019, he received the Distinguished Service Award from SAVE.  Additionally, he has been a tutorial and course instructor for various organizations internationally and has participated in technical conferences and symposia.  He is a founding member and first co-chair of the Industry Partner Committee of the US Resiliency Council.

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Mr. Klembczyk has participated in many research projects for products for military & aerospace, industrial, and structural applications.  He has served as Program Manager for many of these projects and has worked with academia including the University at Buffalo’s MCEER: Earthquake Engineering to Extreme Events, among others.

He has published several papers describing unique applications for structural dampers, tuned mass dampers, vibration isolators, shock absorbers, and shock isolators and holds US Patents for some of these components.  These papers have been published by SAVE, SAVIAC, the Society for Experimental Mechanics (SEM) and the Applied Technology Council (ATC).

The Company believes that his wide-ranging roles throughout his career at the Company provide him with significant leadership, industry, marketing, and international experience, which qualify him to serve as a member of the Board of Directors.

Class 2 Director Whose Term Will Expire in 2026

Timothy J. Sopko, 58, is the Company’s Chief Executive Officer and has served as a director since 2020.

Mr. Sopko’s business experience spans more than thirty years in aerospace (military and civil), industrial as well as commercial markets with a primary focus in the areas of engineering, product development, program management, operations, and business management.

Prior to joining Taylor Devices as CEO in April 2019, Mr. Sopko was Vice President and General Manager of Carleton Technologies Inc. (d.b.a. Cobham Mission Systems) in Orchard Park, New York, a Department of Defense contractor.  While there, he also held the positions of General Manager, Director of Engineering and Programs, Director of Engineering and Director of Business Development. Under Mr. Sopko’s leadership as VP and GM, Carleton successfully grew annual sales from $110m to over $200m.

After nine years of Design Engineering and Program Management in industry (1988-1997), Mr. Sopko co-founded Comprehensive Technical Solutions Inc., which provides product design engineering services to companies across the United States as well as produces and supports a portfolio of internally funded products.

Mr. Sopko is a Mechanical Engineering graduate of The State University of New York at Buffalo where he was also a member of the University’s Mechanical and Aerospace Dean’s Advisory Board for over ten years. Mr. Sopko is also an author and/or co-author on several US Patents.  The Company believes that Mr. Sopko’s knowledge and experience in various management positions within the industry make him qualified to serve on the Company’s Board of Directors.

Executive Officer

Paul M. Heary, 54, has served the Company as Chief Financial Officer since January 1, 2023.

Mr. Heary has over twenty years of experience serving in senior financial management positions for several public and privately owned middle market western New York manufacturers.  Prior to joining Taylor Devices, Mr. Heary was Chief Financial Officer of Multisorb Filtration Group, a leader in sorbent technology serving pharmaceutical, food and industrial markets, from 2016 to 2022.  At Multisorb, Mr. Heary played a key role in guiding the company through its 2018 sale from a private equity owner.  From 2006 to 2016, he was the Senior Finance Director at Carleton Technologies (d.b.a Cobham Missions Systems), a global leader in technology for the aerospace and defense market.  

Mr. Heary, who joined Taylor Devices in September 2022, has BS (Accounting) and MBA degrees from The State University of New York at Buffalo and previously held certifications for public and management accounting (CPA and CMA).  

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CORPORATE GOVERNANCE

Board Committees and Meetings

During the fiscal year ended May 31, 2024, the Board of Directors met five times with all the directors in attendance.  All Board members traditionally attend the annual meeting of shareholders, notwithstanding that the Company does not have a policy with regard to attendance.  All five Board members attended the Company's Annual Meeting of Shareholders held on October 20, 2023.

The Executive Committee, between meetings of the Board of Directors and to the extent permitted by law, exercises all the powers and authority of the Board in the management of the business of the Company.  The Executive Committee is comprised of Messrs. Carey, Burgess and Armenat and chaired by Mr. Burgess.

The Audit Committee assists the Board of Directors with its oversight of the integrity of the Company's financial statements and internal controls, the Company's compliance with legal and regulatory requirements, the independent auditor's qualifications and independence and the performance of the Company's internal audit function and independent auditor.  

The Audit Committee, comprised of Messrs. Carey, Burgess and Armenat and chaired by Mr. Burgess, is governed by an Audit Committee Charter which was adopted by the Board of Directors.  The Board of Directors has determined that Mr. Burgess is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.  The Audit Committee met five times during the fiscal year ended May 31, 2024, with all members in attendance.

The Compensation Committee, comprised of Messrs. Carey, Burgess and Armenat and chaired by Mr. Armenat, reviews the compensation of the Company's executive officers, and makes recommendations in that regard to the Board as a whole.  The Committee also administers the Company's stock option plans.  The Compensation Committee met three times during the fiscal year ended May 31, 2024, with all members in attendance.

The Nominating Committee, comprised of Messrs. Carey, Burgess and Armenat and chaired by Mr. Carey, is responsible for identifying and evaluating individuals qualified to become Board members and recommending to the Board candidates to stand for election or re-election as directors.  The Nominating Committee met twice during the fiscal year ended May 31, 2024, with all members in attendance.

The charters for the Company’s Audit, Compensation and Nominating Committees are available online at www.taylordevices.com/investors.  Shareholders may also request a printed copy upon written request to: Mark V. McDonough, Corporate Secretary, Taylor Devices, Inc., 90 Taylor Drive, North Tonawanda, New York 14120.

Independence.  Messrs. Carey, Burgess and Armenat are independent directors within the meaning of Rule 5605 of the applicable NASDAQ Capital Market listing standards.  

Process for Identifying and Adding New Directors

The Nominating Committee is governed by the terms of its charter with respect to the consideration and selection of nominees proposed for election to the Board of Directors, including those recommended by shareholders.  

The Criteria and Procedures.

The Company strives to have a Board of Directors that will work diligently to promote the long-term interests of the Company and its shareholders.  To that end, the Nominating Committee charter sets forth certain director qualification criteria (the "Criteria") that the Nominating Committee and the Board believe are necessary for a director of the Company to possess and provides a description of the procedures to be followed when making a recommendation as to any nominee.  So long as any director nominee proposed by shareholders meets the Criteria, the Nominating Committee will consider that nominee on the same basis as other candidates. The Criteria include integrity, reputation, judgment, knowledge, independence, experience and accomplishments, board interaction, commitment, skills, and long-term commitment to service on our Board. The Committee is required to apply the Criteria to candidates recommended by a Nominating Committee member, other directors, and management, as well as to any candidate meeting the Criteria recommended by shareholders.  

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During the selection process, the Nominating Committee seeks inclusion and diversity within the Board and adheres to the Company's policy of maintaining an environment free from discrimination based upon race, color, religion, national origin, sex, age, disability, sexual preference or orientation, marital status, or any other unlawful factor.  The Board strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company's business.

In addition, the Board assesses annually its overall effectiveness by means of a self-evaluation process.  This evaluation includes, among other things, an assessment of the overall composition of the Board, including a discussion as to whether the Board has adequately considered diversity, among other factors, in identifying and discussing director candidates.

The Evaluation Process.

The Nominating Committee charter also describes the process for identifying and evaluating nominees for director, including those nominated by shareholders. In each instance, the Nominating Committee assesses the Board's present composition based upon the Company's current and future needs. The selection of candidates is intended to provide the Board with an appropriate balance of expertise or experience in accounting and finance, technology, management, international business, compensation, corporate governance, strategy, industry knowledge and general business matters.

Director Nominees.

The Board of Directors recommended Mr. John Burgess as the proposed Class 1 Director nominee and Mr. F. Eric Armenat as the proposed Class 1 Director nominee to stand for election by shareholders at this Annual Meeting.  

Nominees by Shareholders.

Shareholders of the Company may make their suggestions for a director nominee to the entire Board of Directors or to any individual director, by a submission directed to the Company's Corporate Secretary's Office.  The Corporate Secretary's Office will then forward the recommendation, together with all supporting documentation, to Mr. Carey, as Chairman of the Nominating Committee.  Supporting documentation must include a detailed background of the proposed candidate and demonstrate how the candidate meets the Criteria. The Nominating Committee applies the same standards in considering nominees submitted by shareholders as it does in evaluating all other candidates. For details regarding the shareholder director nominee process, including applicable requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and our by-laws, see “Shareholder Proposals and Director Nominations for the 2025 Annual Meeting.”

Communicating with the Board of Directors

Although the Board of Directors does not have a formal procedure for shareholders to send communications to the Board of Directors, a shareholder may communicate with the Company at its website at www.taylordevices.com/about-us/investors. The Company will relay communications to directors if an express request to do so is included in the shareholder communication.

Code of Ethics

On August 23, 2003, the Company adopted a Code of Ethics (the "Code") which is a compilation of written standards reasonably designed to deter wrongdoing and promote honest and ethical conduct.  Code requirements include, among others, the preparation of full, fair, timely and understandable disclosure in documents that the Company files with and submits to the SEC; compliance with governmental laws, rules and regulations; prompt internal reporting of violations to the Code; and accountability for adherence to the Code.  There have been no amendments to the Code since its adoption and it was re-adopted by the Board of Directors on March 12, 2020.

Board Leadership Structure

Subsequent to the retirement of Douglas P. Taylor on May 31, 2018, the Board of Directors appointed long-time independent director John Burgess as Chairman of the Board.  The Board also appointed Timothy J. Sopko as Chief Executive Officer in April 2019.  In doing so, the Board believes that this is the most effective leadership structure for the Company and is in the best interests of its shareholders. The Board believes that Messrs. Burgess and Sopko are best suited to serve in their respective roles because their collective knowledge and experience within the industry will allow them to identify strategic priorities and opportunities, and thus, more effectively execute the Company's strategy and achieve long-term success.

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Board Risk Oversight

Risk management is primarily the responsibility of the Company's management; however, the Board has responsibility for overseeing management's identification and management of those risks. The Board considers risks in making significant business decisions and as part of the Company's overall business strategy. The Board and its committees, as appropriate, discuss and receive periodic updates from senior management regarding significant risks, if any, to the Company in connection with the annual review of the Company's business plan and its review of budgets, strategy, and major transactions.

Each Board committee assists the Board in overseeing management of the Company's risks within the areas delegated to that committee, and is tasked with reporting to the full Board, as appropriate. The Audit Committee is responsible for risks relating to its review of the Company's financial statements and financial reporting processes, the evaluation of the effectiveness of internal control over financial reporting, and compliance with legal and regulatory requirements. The Compensation Committee is responsible for monitoring risks associated with the design and administration of the Company's compensation programs. The Nominating Committee oversees risk as it relates to the Company's director selection processes. Each committee has full access to management.  In addition, the Audit Committee meets regularly with the Company's independent auditors.

Report of the Audit Committee for the Fiscal Year Ended May 31, 2024

The information contained in this Audit Committee Report shall not be deemed to be soliciting material or deemed to be filed with or incorporated by reference in filings with the U.S. Securities and Exchange Commission ("SEC"), or subject to the liabilities of Section 18 of the Exchange Act.

As required by the terms of the Audit Committee Charter, the undersigned members of the Audit Committee have:

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Director Compensation – Fiscal Year Ended May 31, 2024

The Chairman of the Board of Directors receives an $11,000 quarterly retainer fee and the other two non-employee members of the Board of Directors receive a $7,000 quarterly retainer fee.  

The Audit Committee meets independently of the Board of Directors not less than five times each year.  Each committee member receives a fee of $2,000 per committee meeting.  

The Nominating Committee meets independently of the Board of Directors not less than twice a year.  Each committee member receives a fee of $1,000 per committee meeting.

The Compensation Committee meets independently of the Board of Directors not less than twice a year.  Each committee member receives a fee of $1,000 per committee meeting.  

Pursuant to the formula set forth in the 2022 Taylor Devices, Inc. Stock Option Plan, on April 18, 2024, the fixed date of the grant, each director and the Company's Chief Financial Officer were granted options to purchase 7,000 shares of the Company's common stock.  The exercise price was $46.99, which was the fair market value for a share of common stock on the date of grant under the 2022 Plan.

Director Compensation Table

The following table provides the compensation of the Company’s non-employee directors for the fiscal year ended May 31, 2024:

(1) Assumptions made in the valuation of option awards are described in Note 13, “Stock Option Plans,” to the Company's Consolidated Financial Statements included in the Company's Annual Report to Shareholders accompanying this Proxy Statement. Mr. Burgess, Mr. Armenat and Mr. Carey had an aggregate of 54,000, 34,000 and 24,000 option awards outstanding as of May 31, 2024, respectively.

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EXECUTIVE COMPENSATION

Overview of Compensation Program

The primary purpose of the Compensation Committee is to annually review and approve the Company's overall compensation philosophy and establish corporate goals and objectives consistent with that philosophy.

Duties and Responsibilities

In keeping with its primary purpose, the Compensation Committee annually evaluates the performance of the Company's executive officers, determines and approves the compensation of the CEO, including individual elements of salary, bonus, supplemental retirement, incentive and equity compensation, and determines and approves executive officer (non-CEO) compensation, incentive compensation plans and equity-based plans.  In its deliberations, the Compensation Committee considers Company performance, compensation at comparable companies, past years' compensation to the Company's executive officers and other relevant factors.

Summary Compensation Table

The following table sets forth compensation paid to or earned by the Company's Chief Executive Officer, President and Chief Financial Officer for fiscal years 2024 and 2023.

(1) Pursuant to its Management Bonus Policy, for the fiscal year ended May 31, 2024, the Company paid bonuses to the executive officers named in the Summary Compensation Table above.  Under the policy, the Compensation Committee may approve payment for performance based on an amount, calculated in the aggregate for all participants, and of no more than 15% of net income of the Company for the fiscal year then ended.

(2) Option awards include 7,000 options awarded to Mr. Sopko in 2024 and 2023; 7,000 options awarded to Mr. Klembczyk in 2024 and 2023; and 7,000 options awarded to Mr. Heary in 2024 and 2023.  See also the information under the heading “Security Ownership of Certain Beneficial Owners and Management.” Assumptions made in the valuation of option awards are described in Note 13, “Stock Option Plans,” to the Company's Consolidated Financial Statements included in the Company's Annual Report to Shareholders accompanying this Proxy Statement.

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Outstanding Equity Awards at Fiscal 2024 Year-End

The following table sets forth information regarding unexercised stock options held by the Company’s executive officers named in the Summary Compensation Table.

Pay vs. Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial and operational performance of the Company.

The Compensation Committee did not consider the pay versus performance disclosure when making its compensation decisions for the 2024 fiscal year.  As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial and operational performance of the Company for each of the last three completed fiscal years.

The table below summarizes compensation values reported in our Summary Compensation Table, as well as the adjusted values required in this section for the fiscal years ended May 31, 2024, 2023 and 2022.

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Pay versus Performance Tables

(1) Mr. Sopko was our principal executive officer (“PEO”) for the fiscal years ended May 31, 2024, 2023 and 2022.

(2) The non-PEO named executive officers for whom the average compensation is presented in these tables are Alan R. Klembczyk, Paul M. Heary and Mark V. McDonough.

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Charts of Compensation Actually Paid (“CAP”) Versus Performance Metrics

The chart below illustrates the relationship between the PEO and average non-PEO NEO CAP amounts and the Company’s total shareholder return (“TSR”) during fiscal years 2022, 2023 and 2024.

The chart below illustrates the relationship between the PEO and Non-PEO NEO CAP amounts and the Company’s net income during fiscal years 2022, 2023 and 2024.

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Employment and Change in Control Agreements

As of August 9, 2021, Mr. Sopko, as of June 1, 2018, Mr. Klembczyk, and, as of September 11, 2023, Mr. Heary (each, an "Executive") entered into Employment Agreements with the Company (together, the "Employment Agreements").  By their terms, the Employment Agreements will automatically renew each year after the date of this agreement (the “Initial Term”) provided however, that either party may elect not to renew the Employment Agreement for any Renewal Period by providing 90 days written notice of such election prior to the end of the Initial Term or any Renewal Period.  The Company may terminate the employment of an Executive in its absolute discretion, without Cause (as defined in the applicable Agreement), and for any reason.  The Executive may terminate their respective Employment Agreement and his employment at any time and for Good Reason (as defined in the applicable Employment Agreement).

Each Agreement provides for the payment of a severance package of (i) the continuation of the Executive’s base salary for a period of 12 months and (ii) if, the Executive makes a valid election pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA) for continuation of health insurance under the applicable Company plan, reimbursement of premiums for such coverage for a period of up to 12 months.  If the Agreement is not renewed by the Executive, no severance package shall be paid.  If the Agreement is not renewed by the Company, the Executive is entitled to the severance package.  Each Executive has agreed to a non-competition clause for 12 months after termination of employment with the Company, in any location where the Company has made sales within the five years preceding termination.

Under the Employment Agreements, the Company agrees to pay Messrs. Sopko, Klembczyk and Heary base salaries of $320,000, $242,050 and $238,000 per year, respectively, subject to increase at the discretion of the Board, and the Executives are eligible for an incentive bonus based on Company performance as approved by the Board of Directors.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding the beneficial ownership of the Company's common stock as of August 26, 2024, with respect to (i) each of the Company's directors and nominees for director, (ii) each executive officer named in the Summary Compensation Table and (iii) all the directors and executive officers as a group. As of August 26, 2024, there were no individuals that beneficially owned more than 5% of the Company’s common stock. All information is based solely upon ownership filings made by such persons with the Securities and Exchange Commission, or upon information provided by such persons to the Company. The business address of each of the executive officers and directors is 90 Taylor Drive, North Tonawanda, New York 14120.

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Indemnification Insurance for Directors and Officers

On August 23, 2024, the Company purchased a director and officer indemnification insurance policy written by the Cincinnati Insurance Company.  The renewal was for a one-year period at an annual premium of $60,622.  The policy provides indemnification benefits and the payment of expenses in actions instituted against any director or officer of the Company for claimed liability arising out of his conduct in such capacities.  No payments or claims for indemnification or expenses have been made under any directors' and officers' insurance policies purchased by the Company.

The Company has entered into Indemnity Agreements with its directors and certain officers.  Although the Company's by-laws and the New York Business Corporation Law (the "BCL") authorize the Company to indemnify directors and officers, neither require the directors and officers to be indemnified during the pendency of litigation or specify the times at which the Company is obligated to reimburse an indemnified person for expenses.  The Indemnity Agreements provide that the Company will advance litigation expenses to the person indemnified while the action is pending, upon the indemnified person's assurance (as required by the BCL) that the advance will be returned if the indemnified person is ultimately found not to be entitled to it.

Equity Compensation Plan Information

The following table sets forth information regarding equity compensation plans of the Company as of May 31, 2024.

TRANSACTIONS WITH RELATED PERSONS

None.  

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BOARD DIVERSITY MATRIX

Under Nasdaq’s board diversity rule, the Company is required to publicly disclose certain diversity statistics regarding our Board of Directors. Those statistics are shown below. We have omitted categories that were not selected by any director.

The Board of Directors believes that the present size of the Board, consisting of five directors, is appropriate given the size and operations of the Company.  The Board believes that its present members possess skills and experience that are valuable to the Company. The Board believes that the increased costs of adding additional directors outweighs any benefits.  Consequently, the Board considers its present make-up to be appropriate for the Company at this time and in the best interests of shareholders.

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PROPOSAL 3

RATIFICATION OF THE APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee engaged Lumsden & McCormick, LLP to serve as the Company's independent registered public accounting firm for the fiscal year ending May 31, 2025.  Although the Audit Committee is not required to do so, it is submitting its expected selection for ratification to the Annual Meeting in order to ascertain the views of the shareholders.  The Audit Committee will not be bound by the vote of the shareholders; however, if the proposed selection is not ratified, the Audit Committee will revisit its selection.

A representative of Lumsden & McCormick, LLP will be present at the meeting, will be available to respond to appropriate questions and will have the opportunity to make a statement if he or she desires to do so.

The Audit Committee approves all professional services, including tax related services, provided to the Company by Lumsden & McCormick, LLP.  Regarding "Audit and Audit-Related" services, the Committee reviews the annual audit plan and approves the estimated audit budget in advance.  The aggregate fees billed by Lumsden & McCormick, LLP for professional services to the Company were $136,000 and $123,000 for the fiscal years ended May 31, 2024 and 2023.

Audit Fees

The aggregate fees billed by Lumsden & McCormick, LLP for professional services rendered in connection with the audit of the Company's annual financial statements, the review of the Company's quarterly financial statements and services that are normally provided in connection with statutory and regulatory filings or engagements were $113,000 and $101,000 for the fiscal years ended May 31, 2024 and 2023.

Audit-Related Fees

There were no aggregate fees billed by Lumsden & McCormick, LLP for professional assurance and related services reasonably related to the performance of the audit of the Company's financial statements, but not included under Audit Fees, for the fiscal years ended May 31, 2024 and 2023.

Tax Fees

The aggregate fees billed by Lumsden & McCormick, LLP for professional services for tax compliance, tax advice and tax planning were $15,000 and $13,000 for the fiscal years ended May 31, 2024 and 2023.

All Other Fees

The aggregate fees billed by Lumsden & McCormick, LLP for the professional services rendered in connection with the audit of the Company’s 401(k) Plan were $9,000 and $8,000 for the fiscal years ended 2024 and 2023.

Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services and other services performed by the independent auditor.  The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services.  Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE APPOINTMENT OF LUMSDEN & MCCORMICK, LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MAY 31, 2025, BE RATIFIED AND URGES YOU TO VOTE "FOR" THIS PROPOSAL.

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GENERAL INFORMATION

Voting

Under the Business Corporation Law of New York ("BCL") and the Company's by-laws, the presence, in person or by proxy, of a majority of the outstanding common shares is necessary to constitute a quorum of the shareholders to take action at the Annual Meeting.  The shares which are present or represented by a proxy will be counted for quorum purposes regardless of whether or not a broker with discretionary authority fails to exercise discretionary voting authority (a "broker non-vote") with respect to any particular matter.  

A nominee standing for election must be elected by a plurality of votes cast at the Annual Meeting, and if elected, serve in the class of directors to which he is elected.  Withheld votes and broker non-votes will have no effect on the vote for a nominee.

Any other actions properly brought before the meeting, including Proposal 3, ratification of Lumsden & McCormick, LLP as the Company’s independent registered public accounting firm for the fiscal year ending May 31, 2025, requires a majority of the votes cast at the meeting by shareholders entitled to vote.  Abstentions will have the same effect as a vote against the action.  Broker non-votes will have no effect on the vote upon the action.

For voting purposes, all proxies marked "for," "against," "abstain," or "withhold authority" will be counted in accordance with such instruction as to each item.  

Expenses

The expenses of this solicitation, including the costs of preparing and mailing this Proxy Statement and accompanying material, will be borne by the Company.  The Company has retained the services of Regan & Associates, Inc. if needed to assist in the solicitation of proxies under a contract providing for the payment of $7,500, plus out-of-pocket expenses.  In addition to solicitation by mail, Regan & Associates, Inc. and regular employees of the Company may solicit proxies in person, by mail or by telephone, but no employee of the Company will receive any compensation for solicitation activities in addition to his or her regular compensation.  Expenses may also include the charges and expenses of brokerage houses, nominees, custodians and fiduciaries for forwarding proxies and proxy materials to beneficial owners of shares.

Shareholder Proposals and Director Nominations for the 2025 Annual Meeting

Proposals of shareholders intended to be included in our proxy materials for presentation at our 2025 annual meeting of shareholders (the “2025 Annual Meeting”) in accordance with Rule 14a-8 under the Exchange Act must be received by the Corporate Secretary of the Company at our principal executive offices no later than May 15, 2025, which is 120 days prior to September 12, 2025, the one-year anniversary of the mailing of our 2024 proxy statement.  

Shareholders wishing to propose a matter for consideration at the 2025 Annual Meeting, but not to include the matter in our proxy materials, must follow the advance notice procedures set forth in Section 11 and Section 12 of the Company’s by-laws, a copy of which is available upon written request to: Mark V. McDonough, Corporate Secretary, Taylor Devices, Inc., 90 Taylor Drive, North Tonawanda, New York 14120. Under our by-laws, the Company must receive notice of the business that is not submitted for inclusion in our proxy materials pursuant to Rule 14a-8 not less than thirty (30) days before the date of the 2025 Annual Meeting, among other requirements. These specified procedures also apply to shareholder nominations for directors.

To comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must comply with and provide the information required by Rule 14a-19 under the Exchange Act to the Company’s Corporate Secretary at the forementioned address no later than August 26, 2025, assuming that the 2024 Annual Meeting is held on schedule.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company's executive officers, directors, and beneficial owners of more than 10 percent of the Company’s common stock to file initial reports of ownership and reports of changes of ownership of the Company's common stock with the SEC and the Company.  Based solely on a review of Forms 3, 4, and 5 and amendments

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thereto furnished to us pursuant to Rule 16a-3(e) under the Exchange Act, we believe that all filing requirements under Section 16(a) of the Exchange Act were satisfied during the fiscal year ended May 31, 2024.

Director and Officer Derivative Trading and Hedging Policy

The Company has adopted a Policy Against Insider Trading that prohibits those subject to the policy, including our directors, officers and employees, from hedging transactions and derivative trading involving the Company's securities.

Financial and Other Information

The financial statements of the Company for the fiscal year ended May 31, 2024, are contained in the Company's 2024 Annual Report which accompanies this Proxy Statement.

OTHER MATTERS

The Board of Directors knows of no other matters to be voted upon at the Annual Meeting.  If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed form of proxy to vote on such matters in accordance with their judgment.

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