Rand Capital Corporation DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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Rand Capital Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which
transaction applies:
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Aggregate number of securities to which
transaction applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Proxy Statement Rand Capital Corporation
Rand Capital Corporation
2200 Rand Building
Buffalo, New York 14203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS
The 2006 Annual Meeting of Shareholders of Rand Capital Corporation (the Corporation) will
be held on Thursday, April 27, 2006 at 10:30 a.m. in Room 931, Rand Building, 14 Lafayette Square,
Buffalo, New York, for the following purposes:
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To elect seven Directors to hold office until the next annual meeting of
shareholders and until their successors have been elected and qualified. |
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To consider and act upon such other business as may properly come
before the meeting. |
Shareholders of record at the close of business on March 17, 2006 are entitled to notice of,
and to vote at the meeting, and any adjournment thereof.
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April 6, 2006
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By order of the Board of Directors, |
Buffalo, New York
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Reginald B. Newman II |
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Chairman |
Proxy 1
TABLE OF CONTENTS
Proxy Statement Rand Capital Corporation
Rand Capital Corporation
2200 Rand Building
Buffalo, New York 14203
Proxy Statement
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board
of Directors of Rand Capital Corporation (the Corporation) for the Annual Meeting of Shareholders
to be held on April 27, 2006. Only shareholders of record at the close of business on March 17,
2006, are entitled to notice of and to vote at the meeting, and at any adjournment thereof. On
that date the Corporation had outstanding shares of 5,718,934 Common Shares, par value $.10 per
share (shares).
Each share entitles the holder to one vote. Shares cannot be voted at the meeting unless the
shareholder is present or represented by proxy. If the enclosed form of proxy is returned properly
executed, the shares represented thereby will be voted at the meeting in accordance with the
instructions contained in the proxy, unless the proxy is revoked prior to its exercise. Any
shareholder may revoke a proxy by executing a subsequently dated proxy or a notice of revocation,
provided that the subsequent proxy or notice is delivered to the Corporation prior to the taking of
a vote, or by voting in person at the meeting.
Under the New York Business Corporation Law (the BCL) and the Corporations by-laws, the
presence, in person or by proxy, of the holders of a majority of the outstanding common stock is
necessary to constitute a quorum of the shareholders to take action at the annual meeting. The
shares that are present at the meeting or represented by a proxy will be counted for quorum
purposes. Proxies submitted with abstentions and broker non-votes will be counted in determining
whether or not a quorum is present. Under the BCL and the Corporations by-laws, once a quorum is
established, Directors standing for election may be elected by a plurality of the votes cast.
This Proxy Statement and accompanying form of proxy are being mailed to shareholders on or
about April 6, 2006. A copy of the Corporations 2005 Annual Report, which contains financial
statements, accompanies this Proxy Statement.
The cost of soliciting proxies in the accompanying form will be borne by the Corporation. The
Corporation does not expect to pay any compensation for the solicitation of proxies, but may pay
brokers, nominees, fiduciaries and other custodians their reasonable fees and expenses for sending
proxy materials to beneficial owners and obtaining their instructions. In addition to solicitation
by mail, proxies may be solicited in person or by telephone by Directors, officers and regular
employees of the Corporation, who will receive no additional compensation therefore.
The Corporations office is located at 2200 Rand Building, Buffalo, New York 14203; telephone
number 716-853-0802.
Proxy 2
Proxy Statement Rand Capital Corporation
BENEFICIAL OWNERSHIP OF SHARES
Unless otherwise indicated, the following table sets forth beneficial ownership of the
Corporations shares on March 17, 2006, by (a) persons known to the Corporation to be
beneficial owners of more than 5% of the outstanding shares, (b) the Directors and nominees for
Director of the Corporation, and all the executive officers of the Corporation, (c) all Directors
and officers of the Corporation as a group. Unless otherwise stated, each person named in the
table has sole voting and investment power with respect to the shares indicated as beneficially
owned by that person.
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Amount and Nature of |
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Beneficial Owner |
Beneficial Ownership (1) |
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Percent of Class(4) |
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More than 5% Owners: |
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Willis S. McLeese |
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800,000 |
(2) |
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13.9% |
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c/o 2200 Rand Building, Buffalo, NY |
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Reginald B. Newman, II |
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485,579 |
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8.5% |
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350 Essjay Road, Williamsville, NY |
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(b) |
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Nominees for Director and Executive Officers: |
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Allen F. Grum |
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73,628 |
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1.3% |
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Erland E. Kailbourne |
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10,000 |
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* |
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Ross B. Kenzie |
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135,000 |
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2.4% |
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Willis S. McLeese |
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800,000 |
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13.9% |
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Reginald B. Newman II |
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485,579 |
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8.5% |
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Jayne K. Rand |
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149,016 |
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2.6% |
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Robert M. Zak |
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10,000 |
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* |
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Daniel P. Penberthy |
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50,000 |
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* |
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All Directors and Officers as a group: |
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1,713,223 |
(3) |
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29.9% |
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*Less than 1% |
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The beneficial ownership information presented is based upon information furnished by
each person or contained in filings made with the Securities and Exchange Commission. |
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These shares are owned by Colmac Holdings, Ltd., a corporation of which Mr. McLeese
is the Chairman and principal owner. |
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Except as indicated above, members of the group have sole voting and investment
power over these shares. |
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Percent of Class calculated based on 5,718,934 shares outstanding at Record Date. |
Proxy 3
Proxy Statement Rand Capital Corporation
1. ELECTION OF DIRECTORS
Seven Directors are to be elected at the meeting, each to serve until the next annual meeting
of shareholders and until his or her successor has been elected and qualified. Unless marked to
the contrary, the proxies received will be voted FOR the election of the seven nominees below.
Each of the nominees is presently a member of the Board of Directors and was recommended for
election by the Governance and Nominating Committee, which is comprised of non-management,
independent Directors. Each of the nominees has consented to serve as a Director, if elected. If
at the time of the meeting any nominee should be unable to serve, it is the intention of the
persons designated as proxies to vote, in their discretion, for such other person as may be
designated as a nominee by the Board of Directors. Each of the nominees was elected at the
Corporations last Annual Meeting of Shareholders except Mr. Robert M. Zak, who was appointed to
the Board of Directors on December 15, 2005 to fill the remaining term of Mr. Luiz F. Kahl, who
passed away November 4, 2005.
Director Independence
The Board of Directors affirmatively determined that four of the six non-management Directors,
Erland E. Kailbourne, Ross B. Kenzie, Jayne K. Rand and Robert M. Zak are independent Directors
under the rules and guidelines of the NASDAQ and the Securities and Exchange Commission (SEC) and,
therefore, that a majority of a corporations seven-person Board of Directors is currently
independent as so defined. Two of the non-management Directors, Willis S. McLeese and Reginald B.
Newman, II, are not deemed to be independent under the rules of the NASDAQ because they each
beneficially own more than 5% of the Corporations outstanding securities and, therefore, are
deemed to be Interested Persons under Section 2(a)(19) of the Investment Company Act of 1940.
The Board of Directors has determined that there are no relationships between the Corporation and
the Directors classified as independent other than service on its Board of Directors and
compensation paid to Directors.
The foregoing independence determination of the Board of Directors also included conclusions
of the Board of Directors that:
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each of the members of the Audit Committee and Governance and Nominating Committee
and a majority of the Compensation Committee is independent under the standards
described above for purposes of membership on each of those committees; and |
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the 2006 compensation of the senior executive officers were determined by a majority
of the independent Directors of the Board. |
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each of the members of the Audit Committee also meets the additional independence
requirements under SEC Rule 10A-3(b) and NASDAQ Rule 4350(d). |
Proxy 4
Proxy Statement Rand Capital Corporation
Mr. Kailbourne is currently serving as the lead independent Director for purposes of
scheduling and setting the agenda for the executive sessions of the independent Directors. It is
presently contemplated that these executive sessions will occur at least twice during the fiscal
year ending December 31, 2006, in conjunction with regularly scheduled Board meetings, in addition
to the separate meetings of the standing committees of the Board of Directors.
Shareholder Communications
Communications to an individual Director, to non-management Directors as a group, or to the
entire Board, should be addressed as follows: Reginald B. Newman, II, Security Holder Board
Communications, 2200 Rand Building, Buffalo, New York, 14203, with an indication of the individual
or subgroup (if any) to whose attention the communication is directed. All security holder
communications addressed in that manner will be delivered directly to Mr. Newman, who will receive
communications for the Board and non-management Directors, and who will deliver the communication
unopened to any individual indicated Director.
Meeting Attendance
Last year all Directors attended the Annual Meeting of Stockholders, and they are expected to
do so this year. A meeting of the Board of Directors will take place on the same day and at the
same place as the Annual Meeting of Stockholders, and Directors are expected to attend all Board
and Committee meetings of the Corporation. If a Director is unable to attend a Board meeting in
person, participation by telephone is permitted, and in that event that a Director will participate
in the Board meeting via telephone that is held on the day of the Annual Meeting of Stockholders
then the director will not attend the Annual Meeting of Stockholders.
Information Regarding the Nominees
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Name and Year |
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Became a Director |
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of the Company |
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Principal Occupation |
Allen F. Grum 1996
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48 |
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Mr. Grum has served as the President and Chief
Executive Officer of the Corporation since January
1996. Prior to becoming President, Mr. Grum served as
Senior Vice President of the Corporation commencing in
June 1995. From 1994 to 1995, Mr. Grum was Executive
Vice President of Hamilton Financial Corporation and
from 1991-1994 he served as Senior Vice President of
Marine Midland Mortgage Corporation. Mr. Grum serves
on a number of Boards of Directors of companies in
which the Corporation has an investment. |
Proxy 5
Proxy Statement Rand Capital Corporation
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Name and Year |
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Became a Director |
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of the Company |
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Principal Occupation |
Erland E. Kailbourne 1999
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64 |
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From May 2002 until March 2003, Mr. Kailbourne was
Chairman and Interim CEO of Adelphia Communications.
(Adelphia filed a petition under Chapter 11 of the
United States Bankruptcy Code in June 2002.) He
retired as Chairman and Chief Executive Officer (New
York Region) of Fleet National Bank, a banking
subsidiary of Fleet Financial Group, Inc., in 1998. He
was Chairman and Chief Executive Officer of Fleet Bank,
also a subsidiary of Fleet Financial Group, Inc., from
1993 until its merger into Fleet National Bank in 1997.
He is a current member of the New York State Banking
Board and a Director of the New York ISO, The John R.
Oishei Foundation, Albany International Corporation,
Allegany Co-op Insurance Company, USA Niagara
Development Corp., Financial Institutions Inc. and its
subsidiary Five Star Bank. |
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Ross B. Kenzie 1996
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74 |
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Mr. Kenzie has been retired since 1989. Prior thereto,
he was the Chairman of the Board and Chief Executive
Officer of Goldome Bank, Buffalo, NY, a savings bank,
since 1980. Prior thereto, Mr. Kenzie was Executive
Vice President and Director of Merrill Lynch Pierce
Fenner & Smith as well as Merrill Lynch & Co. Mr.
Kenzie also serves on the Board of Directors of Biophan
Technologies, Inc., a development company specializing
in highly marketable business device technologies and
is a former Director of Merchants Mutual Insurance
Company. |
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Willis S. McLeese 1986
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92 |
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Since 1976, Mr. McLeese has been the Chairman of
Colmac Holdings Limited, Toronto, Canada, which
develops, owns and operates cogeneration and
alternative energy electric power generating plants. |
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Reginald B. Newman II 1987
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68 |
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Mr. Newman has been Chairman of the Board since
1996. Mr. Newman is the Chairman of NOCO Energy,
Corp., Tonawanda, NY, a petroleum distributor. Mr.
Newman is also a Director of M&T Bank Corporation, a
financial institution headquartered in Buffalo, NY. |
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Jayne K. Rand 1989
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45 |
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Since 1993, Miss Rand has been a Vice President of
M&T Bank. |
Proxy 6
Proxy Statement Rand Capital Corporation
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Name and Year |
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Became a Director |
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of the Company |
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Principal Occupation |
Robert M. Zak 2005
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48 |
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Since 1995, Mr. Zak has been President and Chief
Executive Officer of Merchants Mutual Insurance Company
and of Merchants Insurance Company of New Hampshire,
Inc., which operate under the trade name Merchants
Insurance Group. Mr. Zak is also Senior Vice
President, Chief Operating Officer and a Director of
Merchants Group, Inc., the parent company of Merchants
Insurance Company of New Hampshire, Inc. Mr. Zak
joined Merchants in 1985. Prior to that, his career
was in public accounting. |
COMMITTEES AND MEETING DATA
The following Committees of the Board of Directors as of December 31, 2005 consisted of:
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Governance and |
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Compensation Committee |
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Nominating Committee |
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Audit Committee |
Ross B. Kenzie
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Erland E. Kailbourne
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Ross B. Kenzie |
Willis S. McLeese
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Jayne K. Rand
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Erland E. Kailbourne |
Robert M. Zak
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Robert M. Zak
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Jayne K. Rand |
In 2005 the full Board met on four occasions, the Audit Committee met six times, the
Governance and Nominating Committee met twice and the Compensation Committee did not meet. All
incumbent Directors attended 80% or more of the total number of meetings of the Board of Directors
and the total number of meetings of committees of the Board that the respective Director was
eligible to attend during 2005 with the exception of Miss Rand, who attended 73% of eligible
meetings.
Compensation Committee
The Compensation Committee shall advise the Board of Directors with respect to the
compensation of senior executive officers, reviewing the criteria that form the basis for
managements recommendations for officer and employee compensation and reviewing managements
recommendations in this regard.
The 2006 compensation levels of the President and Executive Vice President were submitted to
the Board of Directors, including a majority of independent members, for approval. During 2005 the
Chairman of the Board of Directors led a compensation discussion with the Board of Directors
regarding executive compensation due to the illness of the Compensation Committee Chairman.
Proxy 7
Proxy Statement Rand Capital Corporation
Governance and Nominating Committee
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The primary purposes of the Governance and Nominating Committee include: |
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developing, recommending to the Board and assessing corporate governance policies for
the Corporation; |
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overseeing the evaluation of the Board; |
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recommending to the Board of Directors the individuals qualified to serve on the
Corporations Board of Directors for election by shareholders at each annual meeting of
shareholders and to fill vacancies of the Board of Directors. |
The Governance and Nominating Committee has a Charter, a current copy of which can be accessed
at the Corporations website www.randcapital.com.
Nomination of Directors
The Corporations Governance and Nominating Committee, as part of its Charter, performs
nominating committee functions and oversees the search for qualified individuals to serve on the
Board.
The Corporation seeks Directors who have the appropriate skills and characteristics required
including; business experience and personal skills in finance, marketing, business, and other areas
that are expected to contribute to an effective board. The Corporation identifies new Director
candidates from prominent business persons and professionals in the communities it serves. The
Corporation considers nominees of shareholders in the same manner as other nominees.
Once a board vacancy occurs, the Committee may recommend a replacement candidate to the Board
of Directors. The Board may appoint the new Director to fill the unexpired term of the seat.
Annually, the Governance and Nominating Committee will recommend a slate of new and/or continuing
candidates to the Board of Directors. The Board will select a slate of nominees for Director from
recommendations of the Governance and Nominating Committee, and submit the slate of nominees to
shareholders for voting at the Corporations Annual Meeting.
The Corporations by-laws provide that an Annual Meeting of Shareholders shall be held on the
fourth Tuesday in April, or such other time within 30 days before or after such date as the
Chairman or Board of Directors shall determine. The number of Directors is determined by the Board
of Directors, but in no event shall it be less than three.
Proxy 8
Proxy Statement Rand Capital Corporation
Procedure for Shareholders to Nominate Directors
Any shareholder who intends to present a Director nomination proposal for
consideration at the 2007 Annual Meeting and intends to have that proposal included in
the proxy statement and related materials for the 2007 Annual Meeting must deliver a
written copy of the proposal to the Corporation no later than the deadline, and in
accordance with the procedures, specified under Shareholder Proposals in this proxy
statement, and in accordance with the requirements of SEC Rule 14a-8.
If a shareholder does not comply with the foregoing procedures, the shareholder
may use the procedures set forth in the Corporations by-laws, although the Corporation
would not in the latter case be required to include the nomination as a proposal in the
proxy statement and proxy card mailed to stockholders in connection with the next
annual meeting.
The shareholder nomination proposal referred to above must set forth (1) the name
and address of the shareholder who intends to make the nomination and of the person or
persons to be nominated; (2) a representation that the shareholder is a shareholder of
record of stock of the Corporation entitled to vote at the meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons specified
in the proposal; (3) a description of the arrangements or understandings between the
shareholder and each nominee or any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are being made by the
shareholder; (4) such other information regarding each nominee proposed by the
shareholder as would have been required to be included in a proxy statement filed under
the proxy rules of the SEC had each nominee been nominated or intended to be nominated
by the Board of Directors; and (5) the consent of each nominee to serve as a Director
of Corporation if elected. The Governance and Nominating Committee may refuse to
acknowledge a proposal for the nomination of any person not made in accordance with the
foregoing procedure. Recommendations for nominees should be sent to: Rand Capital
Corporation, Attention: Board Nominations, 2200 Rand Building, Buffalo, New York
14203.
The Corporation did not receive any nominations from shareholders for the 2006 Board of
Director elections.
Code of Business Conduct and Ethics
Rand has adopted a Code of Ethics which applies to Rands chief executive officer, chief
financial officer, and controller, and a Business Ethics Policy applicable to the Corporations
Directors, officers and employees. The Code of Ethics and the Business Ethics Policy are available
in the Governance section of the Corporations website located at www.randcapital.com. They are
also available in print to any shareholder who requests it. Rand will disclose any substantive
amendments to or waiver from provisions of the Code of Ethics made with respect to the chief
executive officer, chief financial officer or controller via its website.
Proxy 9
Proxy Statement Rand Capital Corporation
Audit Committee
The Audit Committee of the Board of Directors of Rand Capital Corporation is composed of three
Directors, each of whom are independent, as defined by Rule 4200(a)(15) of the National Association
of Securities Dealers (NASD) listing standards. In 2004, the Corporations Board of Directors
designated Ross B. Kenzie as the Audit Committee financial expert (as defined by SEC regulations).
Mr. Kenzie is an independent member of the Corporations Board of Directors (as defined by SEC and
NASD regulations).
The Audit Committee operates under a written charter adopted by the Audit Committee and Board
of Directors. The Charter was included as an appendix to the 2004 proxy statement, and will be
included with future proxy filings every three fiscal years or more currently as required by SEC
regulations. The Charter can also be accessed on the
Corporations website at www.randcapital.com. The Committee reviews the scope and results of the annual audit, receives
reports from the Corporations independent public accountants, and reports the Committees findings
and recommendations to the Board of Directors.
The Audit Committee has adopted necessary reporting procedures for the confidential
submission, receipt, retention and treatment of accounting and auditing complaints.
Proxy 10
Proxy Statement Rand Capital Corporation
Independent Auditor Appointment
Independent Auditors Appointment
Rand Capital Corporations Audit Committee has appointed the Corporations current independent
auditors, Freed Maxick & Battaglia, CPAs, PC, Freed, to examine the accounts of the Corporation
for the 2006 fiscal year. The Committee members approving such selection are not interested
persons of the Corporation as defined in the 1940 Act. Freed audited the accounts of the
Corporation for the 2005, 2004 and 2003 fiscal years.
A representative of Freed Maxick & Battaglia, CPAs, PC is expected to be present at the
Annual Meeting of Shareholders, will have the opportunity to make a statement if desired, and will
be available to respond to appropriate questions.
Proxy 11
Proxy Statement Rand Capital Corporation
Independent Accountant Fees
The aggregate fees for each of the last two fiscal years for services rendered by Freed Maxick
& Battaglia, CPAs, PC (Freed) are as follows:
Audit Fees
This category consists of fees for the audit of annual financial statements, review of
financial statements included in quarterly reports on Form 10-Q and services that are normally
provided by the independent auditor in connection with statutory and regulatory filings or audit
engagements for those fiscal years.
Freed provided professional services for the audit of the Corporations annual financial
statements for the fiscal years ended December 31, 2005 and 2004. Freeds audit fees were $43,000
and $37,500, respectively, for these services.
Audit Related Fees
This category consists of assurance and related services by the independent accountant that
are reasonably related to the performance of the audit and review of financial statements and are
not reported under audit fees.
For the fiscal years ended December 31, 2005 and 2004, the Corporation did not incur any fees
for assurance and related services.
Tax Fees
This category consists of professional services rendered by the independent accountant for tax
compliance and tax planning. The services for the fees disclosed under this category include tax
preparation and technical advice.
During the fiscal year ended December 31, 2005, the Corporation was billed $16,215 in tax fees
by Freed and for the fiscal ended December 31, 2004, the Corporation was billed $18,500.
All Other Fees
This category consists of fees not covered by Audit Fees, Audit Related Fees and Tax Fees.
For the fiscal years ended December 31, 2005 and 2004, the Corporation did not receive any
products or services in this category from Freed.
For fiscal years 2005 and 2004, 100% of the services described in each of the above were
pre-approved by the Audit Committee. There were no non-audit services performed during 2005.
The Corporations annual audit, quarterly review and tax related fees which are estimated to
be paid during the year are submitted annually to the Audit Committee for their review and
pre-approval and then budgeted for by the Corporation. All other non-audit services must be
pre-approved by the Audit Committee prior to engagement, as required by the Committees Charter.
Proxy 12
Proxy Statement Rand Capital Corporation
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of Rand Capital Corporation is composed of three
Directors who are independent, as defined by Rule 4200(a)(15) of the National Association of
Securities Dealers listing standards. The Audit Committee operates under a written charter
adopted by the Audit Committee and Board of Directors, that is reviewed annually by the Audit
Committee. A copy of the charter was included as an appendix to the 2004 proxy statement. The
Corporations management is responsible for its internal accounting controls and the financial
reporting process. The Corporations independent auditors, Freed Maxick & Battaglia, CPAs, PC,
are responsible for performing an independent audit of the Corporations consolidated financial
statements in accordance with auditing standards generally accepted in the United States and to
issue a response thereon. The Audit Committees responsibility is to monitor and oversee these
processes. In keeping with its responsibility, the Audit Committee met six times in 2005.
The Audit Committee has reviewed and discussed the Corporations audited consolidated
financial statements with management. In addition, the Audit Committee has discussed with the
Corporations independent auditors the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (Communications with Audit Committees).
The Audit Committee has received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, and has discussed with the independent auditors their independence. The Audit
Committee also has considered whether the independent auditors provision of non-audit services to
the Corporation is compatible with Freed Maxicks independence.
Based on the Audit Committees discussions with management and the independent auditors, the
Audit Committees review of the representations of management, and the report of the independent
auditors, the Audit Committee recommended to the Board of Directors that the audited financial
statements be included in Rand Capital Corporations Annual Report on Form 10-K for the year ended
December 31, 2005 for filing with the Securities and Exchange Commission.
This report is respectfully submitted by the Audit Committee of the Board of Directors.
Ross B. Kenzie (Chairman)
Erland E. Kailbourne
Jayne K. Rand
The information provided in the preceding Audit Committee Report will not be deemed to be
soliciting material or filed with the Securities and Exchange Commission or subject to
Regulation 14A or 14C, or to the liabilities of section 18 of the Securities Exchange Act, unless
in the future the Company specifically requests that the information be treated as soliciting
material or specifically incorporates it by reference into any filing under the Securities Act or
the Securities Exchange Act.
Proxy 13
Proxy Statement Rand Capital Corporation
EXECUTIVE OFFICERS
In addition to Mr. Grum, the executive officers of the Corporation include:
Daniel P. Penberthy, 43, has served as Treasurer of the Corporation since August 1997. Since
January 2002, Mr. Penberthy has served as Senior Vice President, and he has continued to serve as
the Chief Financial Officer since 1997. From 1993 to 1997, Mr. Penberthy served as Chief Financial
Officer for both the Greater Buffalo Partnership (formerly the Chamber of Commerce) and the Greater
Buffalo Convention and Visitors Bureau. Prior thereto, from 1990 to 1993, Mr. Penberthy served as
a Senior Associate with the Greater Buffalo Development Foundation, a regional business development
organization. Prior to 1990, Mr. Penberthy was employed by KPMG, a public accounting firm.
COMPENSATION
The following table sets forth information with respect to the compensation paid or accrued by
the Corporation in the 2005 fiscal year to each Director, and to each officer of the Corporation
with aggregate compensation from the Corporation in excess of $60,000. The Corporation is not part
of a fund complex.
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Aggregate |
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Pension or Retirement Benefits Accrued |
Name and Position |
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Compensation |
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as Part of Company Expenses |
Allen F. Grum, President, Director |
|
$ |
185,771 |
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$ |
10,483 |
(1) |
Erland E. Kailbourne, Director |
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$ |
11,650 |
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0 |
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Ross B. Kenzie, Director |
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$ |
11,650 |
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0 |
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Willis S. McLeese, Director |
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$ |
7,500 |
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0 |
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Reginald B. Newman, II, Director |
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$ |
6,500 |
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0 |
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Jayne K. Rand, Director |
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$ |
7,750 |
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0 |
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Robert M. Zak, Director |
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0 |
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0 |
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Daniel P. Penberthy, Treasurer |
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$ |
130,778 |
|
|
$ |
7,368 |
(1) |
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(1) |
|
Included within the indicated compensation payment are Corporation contributions to the
Corporations 401(k) Profit Sharing Plan. To date an aggregate of $149,610 has been
deferred for payment to Mr. Grum and Mr. Penberthy. Under the plan, participants may elect
to contribute up to 20% of their compensation on a pretax basis by salary reduction up to a
maximum of $15,000 for 2006. For eligible employees, the Corporation makes a flat
contribution of 1% of compensation and matches employee contributions of up to a maximum of
five percent (5%). In addition, the Corporation may contribute an annual discretionary
amount as determined by the Board of Directors. In 2005, the Corporation did not make a
discretionary contribution to the 401(k) Plan. |
Proxy 14
Proxy Statement Rand Capital Corporation
DIRECTOR COMPENSATION
During 2005, under the Corporations standard compensation arrangements with Directors, each
non-employee Director received an annual fee of $2,500 plus $1,000 for attendance at each meeting
of the Board of Directors. The Audit Committee members received $750 for each meeting attended and
the Compensation and Governance and Nominating Committee members received $500 for each meeting
attended.
PROFIT SHARING AND STOCK OPTION PLANS
In July 2001, the shareholders of the Corporation authorized the establishment of an Employee
Stock Option Plan (the Plan). The Plan provides for an award of options to purchase up to 200,000
common shares to eligible employees. In 2002, the Corporation placed the Plan on inactive status
as it developed a new profit sharing plan for the Corporations employees in connection with the
establishment of its SBIC subsidiary. As of December 31, 2005, no stock options had been awarded
under the Plan. Because Section 57(n) of the 1940 Act prohibits maintenance of a profit sharing
plan for the officers and employees of a Business Development Company (BDC) where any option,
warrant or right is outstanding under an executive compensation plan, no options will be granted
under the Plan while any profit sharing plan is in effect with respect to the Corporation.
The Corporation established a Profit Sharing Plan for its executive officers in accordance
with Section 57(n) of the Investment Company Act of 1940 (the 1940 Act). There were no
contributions to the profit sharing plan for 2005 and 2004. The Plan provides for an annual
accrual amount based on the net realized capital gains and unrealized depreciation of Rand Capital
SBIC, L.P. for the period. Participants in the Plan vest in the annual accrual amounts over a four
year period, beginning February 1, 2002 (commencement date). As long as the Profit Sharing Plan is
in effect, no options will be issued under the Plan.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporations Directors and
executive officers, and persons who own more than ten percent of the Corporations stock, to file
with the Securities and Exchange Commission initial reports of stock ownership and reports of
changes to stock ownership. Reporting persons are required by SEC regulations to furnish the
Corporation with all Section 16(a) reports they file.
To the Corporations knowledge, based solely on review of the copies of such reports furnished
to the Corporation and written representations that no other reports were required, all Section
16(a) filing requirements applicable to its officers, Directors and greater than ten percent
beneficial owners were complied with during the fiscal year ended December 31, 2005.
Directors and Officers Liability Insurance
The Corporation has an insurance policy from American International Specialty Lines Insurance
Company that indemnifies (1) the Corporation for any obligation incurred as a result of the
Corporations indemnification of its Directors and officers under the provisions of the New York
Business Corporation Law and the Corporations by-laws, and (2) the Corporations Directors and
Proxy 15
Proxy Statement Rand Capital Corporation
officers as permitted under the New York State Business Corporation Law and the Corporations
by-laws. The policy covers all Directors and officers of the Corporation for the 12 months
ending December 2006 for a total premium of $43,673.85. No sums have been paid to the
Corporation or its officers under the insurance contract.
2. OTHER BUSINESS
The Corporation does not know of any other matters to come before the meeting. However, if
any other matters properly come before the meeting, it is the intention of the persons designated
as proxies to vote in accordance with their best judgment on such matters.
Shareholder Proposals for the 2007 Annual Meeting
Shareholder proposals intended to be presented at the 2007 Annual Meeting of Shareholders must
be received at the Corporations offices not later than December 6, 2006, to be considered for
inclusion in the Corporations proxy statement and form of proxy for that meeting.
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April 6, 2006
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By Order of the Board of Directors |
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Reginald B. Newman II |
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Chairman of the Board |
It is important that proxies be promptly returned. Shareholders are urged to sign, date and
return the proxy in the enclosed envelope, to which no postage need be affixed if mailed in the
United States. If you attend the meeting you may, if you wish, withdraw your proxy and vote in
person.
Proxy 16
Proxy Statement Rand Capital Corporation
Multiple Copies of our Annual Report and Proxy Statement (Householding)
When more than one holder of Rand common stock shares the same address, we may deliver only
one annual report and one proxy statement to that address unless we have received contrary
instructions from one or more of those shareholders. Similarly, brokers and other intermediaries
holding shares of Rand common stock in street name for more than one beneficial owner with the
same address may deliver only one annual report and one proxy statement to that address if they
have received consent from the beneficial owners of the stock.
Rand will deliver promptly upon written or oral request a separate copy of the annual report
and proxy statement to any shareholder, including a beneficial owner of stock held in street
name, at a shared address to which a single copy of either of those documents was delivered. To
receive additional copies of our annual report and proxy statement, you may call or write Elspeth
A. Donaldson, Office Manager, Rand Capital Corporation, 2200 Rand Building, Buffalo, New York
14203, telephone (716) 853-0802 or email her at edonaldson@randcapital.com. You may also access a
copy of Rands annual report and proxy statement on our website, www.randcapital.com, or at the
SECs home page, www.sec.gov.
You may also contact Ms. Donaldson at the address or telephone number above if you are a
shareholder of record of Rand and you wish to receive a separate annual report and proxy statement
in the future, or if you are currently receiving multiple copies of our annual report and proxy
statement and want to request delivery of a single copy in the future. If your shares are held in
street name and you want to increase or decrease the number of copies of our annual report and
proxy statement delivered to your household in the future, you should contact the broker or other
intermediary who holds the shares on your behalf.
Proxy 17
Proxy Statement Rand Capital Corporation
FINANCIAL STATEMENTS AVAILABLE
A copy of the Corporations 2005 Annual Report containing audited financial statements
accompanies this Proxy Statement
The Corporation will provide without charge to each stockholder upon written request a copy
(without exhibits, unless otherwise requested) of the Corporations Annual Report on Form 10-K
required to be filed with the Securities and Exchange Commission (SEC) for the year ended
December 31, 2005. Requests for copies should be addressed to Investor Relations, Rand Capital
Corporation, 2200 Rand Building, Buffalo, New York, 14203. Requests may also be directed to (716)
853-0802 or to edonaldson@randcapital.com via email. Copies may also be accessed electronically by
means of the SECs home page on the internet at
http://www.sec.gov.
FINAL PAGE OF PROXY
Proxy 18
RAND CAPITAL CORPORATION
2200 Rand Building
Buffalo, New York 14203
2006 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
The undersigned hereby
appoints Jayne K. Rand and Allen F. Grum as proxies, each with
the power to appoint a substitute, and hereby authorizes them to
represent and to vote as designated below all the shares of
Common Stock of Rand Capital Corporation (the
Company) held of record by the undersigned at the
annual meeting of shareholders to be held on April 27, 2006
or any adjournment hereof.
1. ELECTION OF
DIRECTORS:
Election
of A.F. Grum; E.E. Kailbourne; R.B. Kenzie; W.S. McLeese; R.B.
Newman II; J.K. Rand; and R.M. Zak
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o FOR
all nominees
(except as marked to the contrary below)
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o WITHHOLD
AUTHORITY
for all nominees
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INSTRUCTIONS: To withhold authority to vote for an
individual nominee, write that nominees name in the space
provided below. |
2. In their discretion, the
Proxies are authorized to vote upon such other business as may
properly come before the meeting.
(Continued from other side)
THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE
PROXY WILL BE VOTED FOR PROPOSAL 1.
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Signature
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Signature (if held jointly)
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Please sign exactly as names appears to the
left. When signing as a Trustee, Executor or Administrator, or
Guardian, give title as such. All joint owners should sign. If a
corporation, please sign in full corporate name by authorized
officer, giving title. If a partnership, please sign in
partnership name by authorized persons. |
Please Date, Sign and Promptly Return in the
Enclosed Envelope.