TECH/OPS SEVCON, INC.
155 NORTHBORO ROAD, SOUTHBOROUGH, MASSACHUSETTS 01772
TELEPHONE (508) 281-5510
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of the stockholders of
Tech/Ops Sevcon, Inc., a Delaware corporation, will be held at the offices of
Palmer & Dodge LLP, 20th Floor, 111 Huntington Avenue at Prudential Center,
Boston, Massachusetts, at 5:00 p.m. on Monday, January 24, 2005 for the
following purposes:
1. To elect two directors to hold office for a term of three years.
2. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on December 14, 2004
are entitled to notice of the meeting or to vote thereat.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR
PROXY WILL NOT BE USED.
By order of the Board of Directors,
MATTHEW C. DALLETT
Secretary
Dated December 27, 2004
PROXY STATEMENT
APPROXIMATE DATE OF MAILING: DECEMBER 27, 2004
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Tech/Ops Sevcon, Inc. (the "Company") for use at the annual
meeting of stockholders of the Company to be held on January 24, 2005 at 5:00
p.m. at the offices of Palmer & Dodge LLP, 20th Floor, 111 Huntington Avenue
at Prudential Center, Boston, Massachusetts, or any adjournments or
postponements thereof. It is subject to revocation at any time prior to the
exercise thereof by giving written notice to the Company, by submission of a
later dated proxy or by voting in person at the meeting. The costs of
solicitation, including the preparation, assembly and mailing of proxy
statements, notices and proxies, will be paid by the Company. Such
solicitation will be made by mail and in addition may be made by the officers
and employees of the Company personally or by telephone or email. Forms of
proxies and proxy material will also be distributed, at the expense of the
Company, through brokers, custodians and other similar parties to beneficial
owners.
On December 14, 2004, the Company had outstanding 3,160,051 shares of
Common Stock, $.10 par value, which is its only class of stock outstanding
and entitled to vote at the meeting. Stockholders of record at the close of
business on December 14, 2004 will be entitled to vote at the meeting. With
respect to all matters which will come before the meeting, each stockholder
may cast one vote for each share registered in his name on the record date.
The shares represented by every proxy received will be voted, and where a
choice has been specified, the shares will be voted in accordance with the
specification so made. If no choice has been specified on the proxy, the
shares will be voted FOR the election of the nominees as directors.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table provides information as to the ownership of the
Company's Common Stock as of December 1, 2004 by (i) persons known to the
Company to be the beneficial owners of more than 5% of the Company's
outstanding Common Stock, (ii) the executive officers named in the Summary
Compensation Table below, and (iii) all current executive officers and
directors of the Company as a group. Beneficial ownership by individual
directors and nominee for director is shown in the table on pages 4 and 5
below.
Name and Address Amount Beneficially Percent
of Beneficial Owner Owned (1) of Class
------------------- ------------------- --------
Paul D. Sonkin /
Hummingbird Management LLC (2) 398,665 (3) 12.6%
153 East 53rd Street 55th Floor
New York, New York 10022
Dr. Marvin G. Schorr 357,778 (4) 11.3%
330 Beacon Street
Boston, MA 02116
Bernard F. Start 235,977 (4) 7.5%
Dotland Grange
Hexham, NE46 2JY, United Kingdom
Paul A. McPartlin 82,546 (5) 2.5%
Tech/Ops Sevcon, Inc.
155 Northboro Road
Southborough, MA 01772
Matthew Boyle 56,400 (6) 1.8%
Tech/Ops Sevcon, Inc.
155 Northboro Road
Southborough, MA 01772
All current executive officers and
directors as a group (8 persons) 839,331 (7) 26.0%
(1) Unless otherwise indicated, each owner has sole voting and
investment power with respect to the shares listed.
(2) As reported on Schedule 13D filed with the Securities and
Exchange Commission on April 15, 2003, and subsequent Forms 4,
Mr. Sonkin is the managing member and control person of
Hummingbird Management, LLC and of Hummingbird Capital LLC,
which are the investment manager and general partner,
respectively, of two investment funds, and these parties act
together as a group with respect to their shareholdings in
the Company.
(3) According to the SEC filings, Hummingbird Management, LLC has
sole dispositive power over 397,175 of these shares, which are
held by the investment funds, and Mr. Sonkin has sole
dispositive power over 1,490 shares. Mr. Sonkin and
Hummingbird Management LLC share voting power over all
398,665 shares.
(4) Includes 3,500 shares subject to stock options exercisable
within sixty days.
(5) Includes 9,000 shares subject to stock options exercisable
within sixty days.
(6) Includes 40,000 shares subject to stock options exercisable
within sixty days.
(7) Includes 65,000 shares subject to stock options exercisable
within sixty days.
ELECTION OF DIRECTORS
The Company's Board of Directors has fixed the number of directors at
seven. Members of the Board of Directors are divided into three classes
serving staggered three-year terms. The term of two of the Company's current
directors, Matthew Boyle and C. Vincent Vappi, expires at the annual meeting.
Mr. Vappi will not stand for re-election. Based on the recommendation of its
Nominating and Governance Committee, the Board has nominated Mr. Boyle for re-
election to a new three-year term and has nominated Paul O. Stump for election
to a three-year term. Each nominee has consented to serve if elected, and the
Company is not presently aware of any reason that would prevent any nominee
from serving as a director. If a nominee should become unavailable for
election, the proxies will be voted for another nominee selected by the Board.
Pursuant to the Company's by-laws, directors will be elected by a
plurality of the votes properly cast at the annual meeting. Abstentions, votes
withheld and broker non-votes will not be treated as votes cast and will not
affect the outcome of the election. A "broker non-vote" occurs when a broker
holding a customer's shares indicates on the proxy that the broker has not
received voting instructions on a matter from the customer and is barred by
applicable rules from exercising discretionary authority to vote on the
matter.
The following table contains information on the three nominees for
election at the annual meeting and each other person whose term of office as
a director will continue after the meeting. The nominees for election at the
meeting are indicated by an asterisk.
Has Been No. of
a Director Common
of the Shares
Company of the Company
or its Owned
Business Experience Predeces- Beneficially on
During Past sor December 14,
Term Five Years and Tech/Ops, 2004
Name Expires Other Directorships Inc. and Percent
Since of Class (+)
---- ------- ------------------- ----- ------------
* Matthew Boyle 2005 President and Chief 1997 56,400
(3) Executive Officer of (1.8%)
Age - 42 the Company since (1)
November 1997. Vice
President and Chief
Operating Officer of
the Company from
November 1996 to
November 1997.
Maarten D. Hemsley 2007 Chief Financial 2003 500
(4)(5) Officer and a director (#)
Age - 55 since 1988 (and until
July 2001, President)
of Sterling Construction
Company, Inc., a company
principally involved in
civil construction in
Texas. Fund manager at
North Atlantic Value LLP,
part of the J. O. Hambro
Capital Management Group,
London, England, since
March 2001, with responsi-
bility for Leisure & Media
Venture Capital Trust,
Plc. President of
Bryanston Management Ltd.,
a specialized financial
services company, since
1993. Director of Nu Nu
Nurseries, plc, an
operator of children's
nurseries in the United
Kingdom, XN Checkout
Holdings Plc and director
of a number of UK
privately-held companies.
Paul B. Rosenberg 2006 Former Treasurer of the 1988 87,980
(3)(4)(6) Company. (2.8%)
Age - 72 (2)
Dr. Marvin G. Schorr 2007 Chairman of the Company's 1951 357,778
(3)(5)(6) Board of Directors since (11.3%)
Age - 79 January 1988. Previously (2)
Chairman of the Board of
Directors and President
of Tech/Ops, Inc., the
Company's predecessor.
Also Chairman of Helix
Technology Corporation, a
manufacturer of cryogenic
equipment.
Bernard F. Start 2006 Vice-Chairman of the 1988 235,977
Age - 66 Board since November (7.5%)
1997. President and Chief (2)
Executive Officer of the
Company from January 1988
to November 1997.
David R. A. Steadman 2007 President of Atlantic 1997 6,500
(4)(5)(6) Management Associates, ( # )
Age - 67 Inc., a management (2)
services firm, since
1988. Chairman of
Brookwood Companies
Incorporated, a director
of Aavid Thermal
Technologies, Inc., a
manufacturer of thermal
management products and a
director of several
privately held companies.
* Paul O. Stump - President and Chief - -
Age - 52 Executive Officer of (#)
Telequip Corporation, a
manufacturer of coin
dispensing equipment,
since 1997.
(+) Unless otherwise indicated, each person has sole voting and
investment power with respect to the shares listed.
(#) Less than 1%
(1) Includes 40,000 shares subject to stock options exercisable within
sixty days.
(2) Includes 3,500 shares subject to stock options exercisable within
sixty days.
(3) Member of the Executive Committee.
(4) Member of the Audit Committee.
(5) Member of the Compensation Committee.
(6) Member of the Nominating and Governance Committee.
Board of Directors Independence and Meetings
The Board has determined that all directors, other than Mr. Boyle, are
independent under the American Stock Exchange rules, based on information
known to the Company and on the annual questionnaire completed by each
director. The Board regularly schedules meetings at which only independent
directors are present.
During the fiscal year ended September 30, 2004, the Board of Directors
held a total of eight meetings. Each director attended at least 75% of the
total number of meetings of the Board of Directors and all committees of the
Board on which the director served. All Board members are expected to attend
the annual meeting of stockholders, subject to special circumstances. All of
the Board members attended the annual meeting of stockholders in 2004.
Communications to the Board
Stockholders may communicate with the Board of Directors by mailing a
communication to the entire Board or to one or more individual directors, in
care of the Corporate Secretary, Tech/Ops Sevcon, Inc., 155 Northboro Road,
Southborough, Massachusetts 01772. All communications from stockholders to
Board members (other than communications soliciting the purchase of products
and services) will be promptly relayed to the Board members to whom the
communications are addressed.
Committees of the Board
The Board of Directors has an Audit Committee, a Compensation Committee
and a Nominating and Governance Committee, all the members of which are
independent, as defined by Securities and Exchange Commission rules and
American Stock Exchange listing standards, as applicable. In addition to the
meetings described below, the members of each committee communicate regularly
amongst themselves and with management on Company matters.
Audit Committee. The Audit Committee is composed of four directors. The
Board has determined that at least one of the members of the Committee, Mr.
Rosenberg, is an "audit committee financial expert," as defined by the
Securities and Exchange Commission. The Committee selects, evaluates and
oversees the Company's independent auditors, approves any engagement of the
independent auditors to perform non-audit services, reviews the audited
financial statements and discusses the adequacy and quality of the Company's
financial reporting principles and procedures and its internal controls with
management and the auditors. The Committee, which met five times during the
fiscal year ended September 30, 2004, operates under a written charter which
was last revised by the Board in November 2003. The Audit Committee's report
appears on page 12.
Compensation Committee. The Compensation Committee reviews and approves
generally all compensation and fringe benefit programs of the Company, and
also reviews and determines the base salary and incentive compensation of the
executive officers, as well as grants of equity compensation to all employees.
All compensation actions taken by the Committee are reported to the full Board
of Directors, which, excluding employee directors, approves the actions of the
Committee. The Committee also reviews and makes recommendations to the Board
on director compensation and on policies and programs for the development of
management personnel, as well as management structure and organization. The
Compensation Committee met once during the fiscal year ended September 30,
2004. Its report appears on page 10.
Nominating and Governance Committee. The Nominating and Governance
Committee approves nominations to the Board and recommends to the Board of
Directors' action related to Board composition, size and effectiveness and
management succession plans for the positions of Chairman of the Board and
Chief Executive Officer. The committee operates under a written charter,
copies of which are available on the Company's web site at
www.techopssevcon.com. The Nominating and Governance Committee met once
during the fiscal year ended September 30, 2004.
In identifying potential candidates and selecting nominees for directors,
the Nominating and Governance Committee does not foreclose any sources. The
Committee reviews candidates recommended by stockholders in the same manner
and using the same general criteria as candidates recruited by the Committee
or recommended by the Board.
The Nominating and Governance Committee does not rely on a fixed set of
qualifications for director nominees. The Committee's primary objective for
director nominees is to create a Board with a broad range of skills and
attributes that is aligned with the Company's strategic needs.
The minimum qualifications for director nominees are that they:
a) be able to dedicate time and resources sufficient for the diligent
performance of the duties required of a member of the Board,
b) not hold positions or interests that conflict with their
responsibilities to the Company,
c) comply with any other minimum qualifications for either individual
directors or the Board as a whole mandated by applicable laws or
regulations.
Additionally, at least a majority of members of the Board of Directors
must qualify as independent directors in accordance with American Stock
Exchange independence rules.
The Nominating and Governance Committee's process for evaluating
nominees for director, including nominees recommended by stockholders, is to
consider their skills, character and professional ethics, judgment, leadership
experience, business experience and acumen, familiarity with relevant industry
issues, national and international experience, and other relevant criteria as
they may contribute to the Company's success. This evaluation is performed in
light of the Committee's views as to what skill set and other characteristics
would most complement those of the current directors, including the diversity,
age, skills and experience of the Board as a whole.
In order to recommend a candidate for consideration by the Nominating and
Governance Committee, a stockholder must provide the Committee with the
candidate's name, background and relationship with the proposing stockholder,
a brief statement outlining the reasons the candidate would be an effective
director of the Company and information relevant to the considerations
described above. Such information should be sent to the Nominating and
Governance Committee of Tech/Ops Sevcon, Inc., 155 Northboro Road,
Southborough, Massachusetts 01772, Attention: Corporate Secretary. The
Committee may seek further information from or about the candidate, or the
stockholder making the recommendation, including information about all
business and other relationships between the candidate and the stockholder.
Director Compensation; Stock Ownership Policy
Directors of the Company (except Mr. Boyle) are each paid $14,500 a year
for their services. The Chairmen of the Audit Committee (Mr. Rosenberg in
2004) and Compensation Committee (Mr. Steadman in 2004), each receive an
additional $1,000 a year.
Each director (except Mr. Boyle) currently in office has previously
received an option under the 1998 Director Stock Option Plan to purchase
5,000 shares of Common Stock at the fair market value of the Common Stock on
the date of grant. All of these options become exercisable in equal 500 share
amounts on each of the first ten anniversaries of the date of grant or, if
earlier, in the event of a change in control of the Company and will expire
90 days after the tenth anniversary of the date of grant. In January 2004 the
stockholders approved the discontinuance of any future grants under the 1998
Director Stock Option Plan and that any future grants of options or other
equity to non-employee directors would be under the 1996 Equity Incentive
Plan, as revised in January 2004.
The Compensation Committee has voted to grant 2,000 shares of restricted
stock to each non-employee director who is elected at the 2005 annual meeting
of stockholders or whose term in office will continue after the annual
meeting. Restricted shares may not be sold, assigned, transferred, pledged or
otherwise disposed of by the recipient until they vest. Such restricted shares
will fully vest the day before the 2006 annual meeting of stockholders or, if
earlier, upon the recipient's death or disability or upon a change in control
of the Company. If the recipient's service as a director of the Company is
terminated for any reason other than the recipient's death or disability, any
unvested shares will be forfeited and returned to the Company, unless the
Committee determines otherwise in its discretion.
In 2004, the Board adopted Equity Compensation Guidelines in which it
established a target level of stock ownership for directors of twice the
level of annual cash compensation. Grants of restricted stock will be
intended in part to assist in reaching these levels of ownership over time.
Shares held by members of a person's immediate family or a trust for his or
their sole benefit may be counted towards the ownership requirement. Each
director will be required to refrain from selling Company stock acquired as
restricted stock (other than to make required tax payments related to a
grant) if the value, based on current market price, of his Company stock
after the sale would be below his designated ownership level. The Committee
has discretion to make exceptions in extraordinary circumstances where not
contrary to Company goals, such as cases of significant personal hardship.
EXECUTIVE COMPENSATION
The following tables provide information for the last three fiscal years
concerning the compensation of each of the executive officers of the Company
whose total compensation exceeded $100,000 in the most recent fiscal year, and
the value of unexercised stock options held by him at the end of such years.
Mr. Boyle and Mr. McPartlin are residents of the United Kingdom and
receive their compensation in British Pounds. The table below sets out their
compensation in both British Pounds (BPS) and in US Dollars ($) translated at
the average exchange rates in force during the relevant period.
Summary Compensation Table
Long-Term
Fiscal Annual Compensation Compensation
Name and Principal Year Awards
Position Other Annual Securities
Salary Bonus Compensation Underlying
(1) Options
In British Pounds:
Matthew Boyle 2004 BPS 122,730 BPS 7,500 - -
President and Chief 2003 BPS 118,858 BPS - - 20,000
Executive Officer 2002 BPS 125,843 BPS - - 10,000
Paul A. McPartlin 2004 BPS 78,475 BPS 4,000 - -
Vice President, 2003 BPS 70,667 BPS - BPS 8,176 10,000
Chief Financial 2002 BPS 67,788 BPS - BPS 6,731 -
Officer and Treasurer
In US Dollars:
Matthew Boyle 2004 $220,754 $13.500 - -
President and Chief 2003 $189,213 $ - - 20,000
Executive Officer 2002 $186,388 $ - - 10,000
Paul A .McPartlin 2004 $141,100 $ 7,200 - -
Vice President, 2003 $113,420 $ - $13,122 10,000
Chief Financial 2002 $100,190 $ - $ 9,948 -
Officer and Treasurer
(1) Value of use of Company owned automobile
Option Grants in Last Fiscal Year
No stock options or other equity-based awards were granted to the named
executive officers of the Company during the fiscal year ended September 30,
2004.
Aggregated Options Exercises During Fiscal 2004 and Fiscal Year-End Option
Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Number of Options Options
Shares At 9/30/2004 at 9/30/2004(a)
acquired on Value Exercisable/ Exercisable/
Name exercise realized Unexercisable Unexercisable
---- ----------- -------- --------------- ----------------
Matthew Boyle - - 34,000 / 46,000 $8,060 / $ 72,540
Paul A. McPartlin - - 6,000 / 9,000 $8,060 / $ 32,240
(a) Based on the difference between the option exercise price and the closing
price of the underlying Common Stock on September 30, 2004, which closing
price was $5.94 per share.
Retirement Plan
Mr. Boyle and Mr. McPartlin participate in the Company's U.K. Retirement
Plan, a defined benefit plan, under which benefits at age 65 are based upon
1/60th of final U.K. - base salary (as defined in the Plan) for each year of
service, subject to a maximum of 2/3rds of final U.K. - base salary. The
employee contributes 5% of base salary, with the balance of the cost being met
by the Company. The following table sets forth information concerning the
annual benefits payable to the employee pursuant to the U.K. Retirement Plan
upon retirement at age 65 for specified compensation levels and years of
service classifications.
U.K. Retirement Plan Table
Average Annual
Earnings on Estimated Annual Pension Based on
which Retire- Years of Service Indicated
ment Benefits
are based 15 years 20 years 25 years 30 years 35 years
-------------- -------- -------- -------- -------- --------
$ 100,000 $ 25,000 $ 33,300 $ 41,700 $ 50,000 $ 58,300
125,000 31,300 41,700 52,100 62,500 72,900
150,000 37,500 50,000 62,500 75,000 87,500
175,000 43,800 58,300 72,900 87,500 102,100
200,000 50,000 66,700 83,300 100,000 116,700
225,000 56,300 75,000 93,800 112,500 131,300
250,000 62,500 83,300 104,200 125,000 145,800
275,000 68,800 91,700 114,600 137,500 160,400
300,000 75,000 100,000 125,000 150,000 175,000
Credited years of service at September 30, 2004 were 8 for Mr. Boyle and
28 for Mr. McPartlin. Benefits under the U.K. Retirement Plan are computed
solely on the U.K. base salary of participants, exclusive of bonuses,
incentive and other compensation, and are not reduced on account of U.K.
Social Security entitlement. The compensation of Mr. Boyle and Mr. McPartlin
is entirely U.K. based. A spouse's pension of 50% of the employee's pension is
payable beginning at the death of the employee either before or during
retirement. Pension payments escalate by at least 3% per year, compounded, and
at a higher rate in certain circumstances.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate and retain
employees by encouraging and rewarding performance. The program is
administered by the Compensation Committee of the Board of Directors (the
"Committee").
The Committee believes that the combination of salary and incentive
compensation is the best method for compensating its executive officers and
senior managers to promote uniform excellence, long-term commitment and team
performance. Management salaries are determined based upon individual
performance, level of responsibility and experience. The Committee reviews
these salaries annually and may measure them against compensation data
obtained from published compensation surveys and surveys of peer companies.
The Committee believes that the salaries of the Company's executive officers
are within the range of these surveys. The peer companies are generally of
about the same size as the Company and are in technical, rather than consumer
or distribution fields. The Company believes that its competitors for
executive talent are not necessarily companies which engage in the same
business as the Company and, therefore, the companies used for comparative
compensation purposes differ from the companies included in the Industrial
Controls Industry Index. Cash bonuses are also granted at year-end in the
discretion of the Committee to reward particular performance.
In prior years, the Company has used stock options as an important
incentive to motivate executive officers and other key employees for improved
long-term performance of the Company and to align their interests with those
of the stockholders. In 2004, the Company modified its approach to providing
equity incentives in response to changing business needs and financial
accounting requirements, and obtained stockholder approval to amend the 1996
Equity Incentive Plan to provide for awards of restricted stock and other
forms of equity compensation. No equity incentive awards were made during
fiscal 2004.
In 2004, the Board also adopted Equity Compensation Guidelines that
articulate the goals and considerations the Committee takes into account in
determining equity compensation awards. The Guidelines recognize that equity
awards may play a purely compensatory role and they may also provide an
incentive for future individual achievement. The incentive function may be
implemented through performance vesting or, more simply, through making grants
of equity in recognition for the achievement of desired performance. The
Guidelines provide that, in general, the incentive component of compensation
for senior executives should have a high proportion of equity in order to
promote longer-term thinking and to align the benefits gained by the
executives to those attained by stockholders in both good and bad times. One
aim of the Guidelines, over the long term, is to target the equity holdings of
the chief executive and chief financial officers at greater than twice their
annual cash compensation. In adopting the Equity Compensation Guidelines, the
Board also established a target level of stock ownership for other senior
managers equal to level of annual cash compensation. Grants of restricted
stock will be intended in part to assist in reaching these levels of ownership
over time. Shares held by members of a person's immediate family or a trust
for his or their sole benefit may be counted towards the ownership
requirement.
The recommended base salary and incentive compensation award for the
President is determined each year by the Committee based upon its subjective
assessment of the overall financial performance of the Company and the
performance of the President relative to corporate objectives and other
factors. In the light of the Company's financial performance during the prior
year, Mr. Boyle's base salary during fiscal 2004 was increased by 3% from
2003. Mr. Boyle is a resident of the United Kingdom and receives his base
salary in British Pounds. Measured in United States Dollars, Mr. Boyle's 2004
base salary was 18% higher than in 2003. The Committee has awarded bonuses
for performance in fiscal 2004 of 6% of base salary for Mr. Boyle and an
average of 5.5% of base salary for the other senior managers.
On November 22, 2004, the Compensation Committee granted 15,000 shares
of restricted stock to Mr. Boyle, and 5,000 shares of restricted stock to
Mr. McPartlin, pursuant to the Company's 1996 Equity Incentive Plan. The
restricted shares will vest in five equal annual installments, provided that
they will fully vest upon the recipient's Death or Disability or upon a
Change of Control (as each is defined in the Plan). If the recipient's
employment with the Company is terminated for any reason other than the
recipient's Death or Disability, any unvested shares will be forfeited and
returned to the Company, unless the Committee determines otherwise in its
discretion.
Members of the Compensation Committee
Marvin G. Schorr
David R. A. Steadman, Chairman
C. Vincent Vappi
Maarten D. Hemsley
PERFORMANCE GRAPH
The following graph compares the cumulative total return (change in stock
price plus reinvested dividends) assuming $100 invested in the Common Stock of
the Company, in the American Stock Exchange ("AMEX") Market Value Index, and
in the Media General Industrial Controls Sector Index during the period from
September 30, 1999 through September 30, 2004.
Value of Investment at September 30,
---------------------------------------
1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
Tech/Ops Sevcon, Inc. 100 119 98 55 76 77
AMEX Market Value Index 100 119 90 97 120 139
Media General Industrial
Controls Sector Index 100 112 150 204 198 270
Assumes $100 invested on September 30, 1999 in each of the Company's Stock,
the AMEX Market Value Index, and the Media General Industrial Controls Sector
Index.
AUDIT COMMITTEE REPORT
In the course of its oversight of the Company's financial reporting
process, the Audit Committee of the Board of Directors has (i) reviewed and
discussed with management the Company's audited financial statements for the
fiscal year ended September 30, 2004, (ii) discussed with Grant Thornton LLP,
the Company's independent auditors, the matters required to be discussed by
Statement on Accounting Standard No. 61, Communication with Audit Committees,
and (iii) received the written disclosures and the letter from Grant Thornton
LLP required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and discussed with Grant Thornton LLP its
independence.
Based on the foregoing review and discussions, the Committee recommended
to the Board of Directors that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the year ended September 30, 2004
for filing with the Securities and Exchange Commission.
Members of the Audit Committee
Paul B. Rosenberg, Chairman
Maarten D. Hemsley
David R. A. Steadman
C. Vincent Vappi
AUDITORS
Upon a recommendation of the Audit Committee, the Board of Directors has
appointed Grant Thornton LLP as independent auditors to conduct the audit of
the Company's financial statements for fiscal 2005.
Representatives of Grant Thornton LLP are expected to be present at the
meeting with an opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
The fees billed by Grant Thornton LLP, the Company's principal
accountant, for each of the last two fiscal years are set out below:
--------------------------------------------------------------------------
(in thousands of dollars)
--------------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------------
Audit fees $ 172 $ 125
Audit-Related fees 13 4
Tax fees 39 29
All other fees - -
--------------------------------------------------------------------------
Total $ 224 $ 158
--------------------------------------------------------------------------
The audit-related fees in fiscal 2004 relate primarily to the audit of
the pension plan for the Company's UK subsidiary, fees related to the
Company's S-8 registration statement and other meetings with the auditors. In
2003 the audit-related fees related to the UK pension plan. The tax fees are
for the filing of the Company's tax returns in both the United States and the
United Kingdom and in 2004 also include fees for tax advice on employee
benefits.
All of the above fees were approved by the Audit Committee before the
respective engagements were undertaken. The Company has not adopted pre-
approval policies and procedures relating to non-audit services.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
In order for a stockholder proposal to be considered for inclusion in
the Company's proxy materials for the annual meeting in 2006, it must be
received by the Company at 155 Northboro Road, Southborough, Massachusetts
01772, Attention: Treasurer, no later than August 29, 2005.
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The by-laws of the Company provide that in order for a stockholder to
bring business before or propose director nominations at an annual meeting,
the stockholder must give written notice to the Secretary or other specified
officer of the Company not less than 50 days nor more than 75 days prior to
the meeting, except that if notice thereof is mailed to stockholders or
publicly disclosed less than 65 days in advance, the notice given by the
stockholder must be received not later than the 15th day following the day on
which the notice of such annual meeting date was mailed or public disclosure
made, whichever occurs first. The notice must contain specified information
about the proposed business or each nominee and the stockholder making the
proposal or nomination.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons owning more than 10% of our
registered equity securities to file with the Securities and Exchange
Commission reports of their initial ownership and of changes in their
ownership of our common stock and to provide us with copies of all Section
16(a) reports they file.
Based on a review of the reports filed by such persons with respect to
our last fiscal year, the Company believes that all its executive officers
and directors have complied with the Section 16(a) filing requirements. The
shareholder group comprised of Paul D. Sonkin, Hummingbird Management LLC and
related entities filed late a report covering two purchases of shares.
OTHER BUSINESS
The Board of Directors does not know of any business which will come
before the meeting except the matters described in the notice. If other
business is properly presented for consideration at the meeting, the enclosed
proxy authorizes the persons named therein to vote the shares in their
discretion.
Dated December 27, 2004
(FORM OF PROXY CARD) APPENDIX I
TECH/OPS SEVCON, INC.
Proxy Solicited by the Board of Directors for Annual Meeting
of Stockholders to be held January 24, 2005.
The undersigned appoints Marvin G. Schorr, Paul A. McPartlin
and Matthew C Dallett and each of them, the attorneys and
proxies of the undersigned, with power of substitution, to vote
all the shares of Tech/Ops Sevcon, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held
January 24, 2005 at the offices of Palmer & Dodge, 20th Floor,
111 Huntington Avenue at Prudential Center, Boston, Massachusetts
at 5:00 p. m. and at any adjournments thereof.
Please complete, sign and date on reverse side
and mail in enclosed envelope.
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_____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE \ \
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE \ X \
\____\
1. Election of Directors for three-year terms
Nominees:
Boyle O
Stump O
\__\ FOR ALL
NOMINEES
\__\ WITHOLD AUTHORITY
FOR ALL NOMINEES
\__\ FOR ALL EXCEPT (See instructions below)
INSTRUCTION: To withhold authority for any individual nominee(s) mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish
to withhold, as shown here: ?
This proxy will be voted FOR all nominees for Director if no contrary
instructions are given. The proxies are authorized to vote in their discretion
upon other business that may properly come before the meeting.
To change the address on your account, please check the \___\
box at right and indicate your new address in the address
space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
Signature of Stockholder...................... Date.................
Signature of Stockholder...................... Date.................
Note: Please sign exactly as your name or names appear on this
Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
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