Unassociated Document
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by
the Registrant x
Filed
by
a party other than the Registrant o
Check
the
appropriate box:
¨
Confidential, for Use of the Commission
Only
(as
permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material Pursuant to § 240.14a-12
Command
Security 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):
x
No fee
required.
¨
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)
Title
of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
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):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total
fee paid:
¨
Fee paid
previously with preliminary materials.
¨
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 Schedule and the date of its
filing.
(1)
Amount Previously Paid:
(2)
Form,
Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date
Filed:
COMMAND
SECURITY CORPORATION
P.O.
Box 340, 1133 Route 55, Suite D,
Lagrangeville,
New York 12540
July
27,
2006
Dear
Shareholder:
On
behalf
of the Board of Directors, I cordially invite you to attend the 2006 Annual
Meeting of Shareholders of Command Security Corporation which will be held
on
September 20, 2006 at 12:00 p.m., local time, at the offices of LeBoeuf, Lamb,
Greene & MacRae LLP, 125 West 55th
Street,
New York, New York 10019.
The
matters to be acted upon at the meeting are described in the attached Notice
of
Annual Meeting of Shareholders and proxy statement.
Your
vote
is important. After reading the proxy statement, please mark, date, sign and
return the enclosed proxy card in the prepaid envelope to ensure that your
shares will be represented at the meeting in case you are unable to attend
in
person. If you attend the meeting, you may vote your shares in person, even
if
you have signed and returned the proxy card.
We
have
enclosed a copy of the Company’s Annual Report on Form 10-K for the fiscal year
ended March 31, 2006.
We
look
forward to seeing you at the Annual Meeting.
Sincerely
yours,
Barry
I.
Regenstein
President
and Chief Financial Officer
COMMAND
SECURITY CORPORATION
P.O.
Box 340, 1133 Route 55, Suite D
Lagrangeville,
New York 12540
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON SEPTEMBER 20, 2006
TO
THE
SHAREHOLDERS OF COMMAND SECURITY CORPORATION:
NOTICE
IS
HEREBY GIVEN that the annual meeting of shareholders (the “Annual Meeting”) of
Command Security Corporation, a New York corporation (the “Company”), will be
held on September 20, 2006 at 12:00 p.m., local time, at the offices of
LeBoeuf, Lamb, Greene & MacRae LLP, 125 West 55th
Street,
New York, New York 10019, for the following purposes:
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1.
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To
elect three (3) Class II directors to serve on the Company’s Board of
Directors;
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2.
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To
ratify the selection of D’Arcangelo & Co., LLP as the Company’s
independent accountants for the fiscal year ending March 31, 2007;
and
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To
transact such other business as may properly come before the Annual
Meeting and any adjournment thereof. The Board of Directors is not
presently aware of any other matter that may be raised for consideration
at the Annual Meeting.
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All
of
the foregoing is more fully set forth in the proxy statement accompanying this
notice.
The
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006 is
being mailed to shareholders along with the attached proxy
statement.
The
Board
of Directors has fixed the close of business on August 14, 2006 as the record
date for determining the shareholders entitled to notice of and to vote at
the
Annual Meeting and any adjournment of the Annual Meeting. All holders of record
of shares of the Company’s common stock as of the record date will be entitled
to attend and vote at the Annual Meeting.
A
complete list of shareholders entitled to vote will be available for examination
by any shareholder of the Company for any purpose germane to the Annual Meeting
during normal business hours at the offices of the Company at
1133
Route 55, Suite D,
Lagrangeville, New York for the 10-day period prior to the Annual
Meeting.
Shareholders
are cordially invited to attend the Annual Meeting in person. Whether or not
you
plan to attend the Annual Meeting, please mark, date, sign and return the
enclosed proxy card to ensure that your shares are represented at the Annual
Meeting. Shareholders who attend the Annual Meeting may vote their shares
personally, even though they have sent in a proxy.
July
27,
2006
Lagrangeville,
New York
By
Order
of the Board of Directors
Barry
I.
Regenstein
President
and Chief Financial Officer
IMPORTANT:
Please mark, date, sign and return the enclosed proxy card as soon as possible.
The proxy is revocable and it will not be used if you (i) give written notice
of
revocation to the Secretary of the Company,
P.O. Box 340, 1133 Route 55, Suite D,
Lagrangeville, New York 12540, prior to the vote to be taken at the Annual
Meeting, (ii) submit a later-dated proxy or (iii) attend and vote at the Annual
Meeting.
COMMAND
SECURITY CORPORATION
P.O.
Box 340, 1133 Route 55, Suite D
Lagrangeville,
New York 12540
PROXY
STATEMENT
FOR
2006 ANNUAL MEETING OF SHAREHOLDERS
GENERAL
QUESTIONS AND ANSWERS
When
is the Proxy Statement being mailed?
A:
|
This
Proxy Statement of Command Security Corporation (the “Company,” “we,” “us”
or “our”) will first
be
mailed on or about August 17, 2006 to shareholders of the Company
by the
Board of Directors (the “Board”) to solicit proxies for use at the Annual
Meeting.
|
When
is the Annual Meeting and where will it be held?
A:
|
The
Annual Meeting will be held on September 20, 2006 at 12:00 p.m.
New York
time at the offices of our counsel, LeBoeuf, Lamb, Greene & MacRae
LLP, 125 W. 55th
Street, New York, NY 10019
|
Who
is asking for my vote at the meeting?
A:
|
The
Board asks that you vote on the proposals listed in the Notice
of the
Annual Meeting of Shareholders. The votes will be taken at the
Annual
Meeting on September 20, 2006, or, if the Annual Meeting is adjourned,
at
any later meeting. The Board recommends that you vote “FOR”
each
of the proposals.
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Who
may attend the Annual Meeting?
A:
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All
shareholders of the Company may attend the Annual Meeting. Shareholders
entitled to attend and vote at the above meeting are entitled to
appoint
one or more proxies to attend and vote in their place. A proxy
need not be
a shareholder of the Company.
|
Who
is entitled to vote?
A:
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Shareholders
as of the close of business on August 14, 2006 (the “Record Date”) are
entitled to vote at the Annual Meeting. Each common share is entitled
to
one vote.
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What
am I being asked to vote on?
A:
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You
will be voting on:
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1
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The
election of three (3) Class II directors to the Board for terms
expiring
in 2008;
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2
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The
ratification of the appointment of D'Arcangelo & Co., LLP as the
independent public accounting firm for the Company for the fiscal
year
ending March 31, 2007; and
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3
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Such
other business as may properly come before the Annual Meeting or
any
adjournments thereof.
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How
do I vote?
A:
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You
may vote by either attending the Annual Meeting or by appointing
a proxy
by signing and dating each proxy card you receive and returning
it in the
enclosed prepaid envelope. We encourage you to complete and send
in your
proxy card. If you then decide to attend the Annual Meeting, you
may
revoke your proxy by voting in person.
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All
shares represented by valid proxies, unless the shareholder otherwise specifies,
will be voted:
· |
“FOR”
the election of each of the three (3) persons identified in “Proposals for
Election of Directors” as nominees for election as Class II directors of
the Company for terms expiring in 2008;
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· |
“FOR”
the ratification of D'Arcangelo & Co., LLP as the independent public
accounting firm for the Company for the fiscal year ending March
31, 2007;
and
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· |
At
the discretion of the proxy holders with regard to any other matter
that
may properly come before the Annual
Meeting.
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Where
a
shareholder has properly specified how a proxy is to be voted, it will be
voted
by the proxy accordingly.
Can
I change my vote after I have returned my proxy card?
A:
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Yes.
You may revoke your proxy by:
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· |
sending
a written notice of revocation or another signed proxy with a later
date
to the offices of the Company, P.O. Box 340, 1133 Route 55, Suite
D.
Lagrangeville, New York 12540; or
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· |
attending
the Annual Meeting and voting in person.
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What
does it mean if I receive more than one proxy card?
A:
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If
you receive more than one proxy card, it is because your shares
are held
in more than one account. You will need to sign and return all
proxy cards
to insure that all your shares are
voted.
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My
common shares are held in “street name.” Will my broker vote my shares at the
meeting?
A:
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If
your shares are held in the name of a broker, then only your broker
can
execute a proxy and vote your shares and only after receiving your
specific instructions. Remember that your shares cannot be voted
unless
you return a signed and executed proxy card to your broker. However,
please be advised that broker non-votes with respect to any matter
to be
voted on at the Annual Meeting will not be voted but will be counted
as
present to determine whether there is a quorum for voting purposes
on such
matters at the Annual Meeting. Broker non-votes occur when a broker,
bank
or other nominee holding shares for a beneficial owner does not
vote on a
particular proposal because the broker, bank or other nominee does
not
have discretionary voting power for that particular proposal and
has not
received instructions from the beneficial owner of the shares.
Please
sign, date and promptly mail the enclosed proxy card in the envelope
provided by your broker.
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Who
will count the vote?
A:
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Jeffrey
S. Edmiston, our Vice President-Security Services, will tabulate
the votes
and act as inspector of election.
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What
constitutes a quorum for the Annual Meeting?
A:
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As
of the Record Date, 10,137,970 common shares of the Company were
issued,
outstanding and entitled to vote at the Annual Meeting. The presence,
in
person or by proxy, of members holding at least fifty percent (50%)
of the
issued and outstanding common shares entitled to vote at the Annual
Meeting will constitute a quorum for purposes of approval of the
election
of directors and the ratification of appointment of our independent
public
accounting firm. If you submit a properly executed proxy card,
then you
will be considered part of the quorum. Votes that are withheld
and broker
non-votes will be counted towards a
quorum.
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What
is the required vote for election of each director?
A:
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Members
of our Board will be elected by a plurality of the affirmative
votes cast
by those shares present in person or represented by proxy and entitled
to
vote at the Annual Meeting. Accordingly, the three (3) nominees
for Class
II director receiving the highest number of affirmative votes for
such
class will be elected. A shareholder may, with respect to the election
of
directors, (i) vote for the election of all of the nominees, (ii)
withhold
authority to vote for any one or more of the nominees or (iii)
withhold
authority to vote for all of the nominees by so indicating in the
appropriate spaces on the enclosed proxy card. Because the nominees
will
be elected by a plurality vote, neither broker non-votes nor shares
abstaining from the vote on the proposal to elect the slate of
nominees
will have an effect on the outcome of the vote on Proposal One.
If you are
in favor of the slate of nominees, you are urged to vote “for” each
nominee identified in proposal one.
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What
is the required vote for ratification of the independent registered public
accounting firm?
A:
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The
required vote for the ratification of the independent public accounting
firm requires the affirmative vote of a majority of the votes of
the
holders of our common shares entitled to be cast in person or by
proxy at
the Annual Meeting. With respect to the approval of the ratification
of
the appointment of the independent accountants, abstentions are
considered
to be shares present and entitled to be cast and will have the
effect of a
negative vote on the matter, and broker “non-votes” are not counted as
shares eligible to vote and will have no effect on the outcome
of the
matter. If you are in favor of the ratification of the appointment
of our
independent accountants, you are urged to vote “for” Proposal
Two.
Shareholder ratification of the selection of D’Arcangelo & Co., LLP as
our independent public accountants is not required by our By-laws
or other
applicable legal requirement. However, the Board is submitting
the
selection of D’Arcangelo & Co., LLP to the shareholders for
ratification as a matter of good corporate governance. If the shareholders
fail to ratify the selection, the audit committee of the Board
of
Directors (the “Audit Committee”) will reconsider whether or not to retain
that firm. Even if the selection is ratified, the Audit Committee
at its
discretion may direct the appointment of a different independent
accounting firm at any time during the year if it determines that
such a
change would be in our and our shareholders’ best interests.
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Are
there other matters to be acted upon at the Annual
Meeting?
A:
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We
do not know of any other matters to be presented or acted upon
at the
Annual Meeting.
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If
any
other matter is presented at the Annual Meeting on which a vote may properly
be
taken,
the shares represented by proxies will be voted in accordance with the judgment
of the proxy
holders.
How
are proxies being solicited?
A: Proxies
may be solicited by mail, advertisement, telephone, via the Internet or in
person. Solicitations may be made by directors, officers, investor relations
personnel and other employees of the Company, none of whom will receive
additional compensation for such solicitations. Banks, brokerage houses and
other custodians, nominees and fiduciaries will be requested to forward the
Company’s solicitation material to their customers for whom they hold shares.
The Company will reimburse brokerage firms and others for their reasonable
expenses in forwarding proxy materials to the beneficial owners of our common
shares and obtaining voting instructions from beneficial owners of the Common
Stock.
When
are shareholder proposals for inclusion in the proxy statement for the 2007
Annual Meeting due?
A:
|
Pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the
"Exchange Act"), shareholders may present proper proposals for
inclusion
in a company’s proxy statement and for consideration at the next annual
meeting of its shareholders by submitting their proposals to us
in a
timely manner.
|
Although
we have not yet determined the date in order to be included in the Company’s
proxy statement for our annual meeting of shareholders in 2007, shareholder
proposals or other business to be brought before an annual meeting by a
shareholder must be received by us at least 120 days prior to the anniversary
date of the mailing of this proxy statement for the Annual Meeting and must
otherwise comply with the requirements of Rule 14a-8. All shareholder proposals
should be marked for the attention of the Secretary, Command Security
Corporation,
P.O.
Box 340, 1133 Route 55, Suite D,
Lagrangeville, New York, 12540.
As
to
shareholder proposals intended to be presented without inclusion in our proxy
statement for our next annual meeting, the people named next year as proxies
will be entitled to vote as they think best on such proposals unless we have
received notice of that matter at least 120 days before the date on which
we
mailed our proxy materials for the prior year's annual meeting of shareholders.
However, even if such notice is timely received, the people named next year
as
proxies may nevertheless be entitled to vote as they think best on such
proposals to the extent permitted by the SEC.
Who
can help answer my questions?
A:
|
If
you have any questions about the Annual Meeting you should contact
our
President, Barry I. Regenstein at (845)
454-3703.
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As
of
July 27, 2006, executive officers and directors of the Company beneficially
own,
in the aggregate, approximately
59.7%
of our outstanding common shares. They have indicated that they intend to
vote
in the manner recommended by the Board of Directors.
The
entire expense of printing, preparing, assembling and mailing proxy materials
and the cost of soliciting proxies will be borne by the
Company.
IMPORTANT:
Whether or not you intend to attend the Annual Meeting, Please mark, date and
sign the enclosed proxy card and return it at your earliest convenience in
the
enclosed postage-prepaid return envelope so that your common shares will be
voted. This will not limit your right to revoke your proxy or to attend or
vote
at the Annual Meeting.
Proposal
One
Election
of Directors
Our
Board
is currently comprised of six (6) members divided into two classes of directors
serving staggered two-year terms. Class I currently consists of three directors:
Peter T. Kikis, Martin R. Wade, III and Martin C. Blake, Jr. Class II currently
consists of three directors: Bruce R. Galloway, Robert S. Ellin and Thomas
R.
Kikis.
The
Class
I directors of the Company will continue in office for their existing terms,
which expire at the 2007 annual meeting of shareholders and when their
respective successors are elected and have qualified. The Class II directors
of
the Company to be elected at the Annual Meeting will serve for a term of two
years, expiring at the annual meeting of shareholders in 2008 and when their
respective successors are elected and have qualified.
Unless
authority to vote for directors is withheld, the Company intends that the shares
represented by the enclosed proxy will be voted for the election of the nominees
listed below. In the event the nominees become unable or unwilling to accept
nomination or election, the shares represented by the enclosed proxy will be
voted for the election of such persons as the Board of Directors may select.
The
Board of Directors has no reason to believe that the nominees will be unable
or
unwilling to serve.
Directors
are elected by a plurality vote of the aggregate voting power of the shares
of
outstanding Common Stock, present in person or represented by proxy, voting
together as a single class. Accordingly, the three (3) nominees for Class II
director receiving the highest number of affirmative votes for such class will
be elected.
Directors
Set
forth
below is certain information regarding the Company’s directors, including
information furnished by them as to their principal occupations and business
experience for the past five years, membership on committees of the board and
directorships held by them in other publicly-held companies, their respective
ages as of July 27, 2006 and the year in which each became a director of the
Company. Each director has served continuously with the Company since his first
election as indicated below.
Name
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Age
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Position
with the Company
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Director
Since
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Class
II nominees for terms ending in 2008:
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Bruce
R. Galloway
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48
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Director
and Chairman of the Board
|
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2004
|
Robert
S. Ellin
|
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41
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|
Director
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2004
|
Thomas
P. Kikis
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45
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Director
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2004
|
Continuing
Class I Directors:
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Martin
R. Wade, III
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57
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|
Director
|
|
2004
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Peter
T. Kikis
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83
|
|
Director
|
|
2004
|
Martin
C. Blake, Jr...
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52
|
|
Director
|
|
2004
|
Nominees
for Class II Directors
Bruce
R. Galloway
has
served as one of our directors and as Chairman of the Board since August 2004.
Mr. Galloway is currently a Managing Director in Galloway Capital, an investment
bank based in New York City. From 1993 until 2005, Mr. Galloway served as a
Managing Director of the Galloway Division at Burnham Securities, Inc., an
investment bank based in New York City. Prior to joining Burnham, from 1991
to
1993, Mr. Galloway was a Senior Vice President at Oppenheimer & Company, a
New York - based investment bank, a broker-dealer. Mr. Galloway has a B.A.
in
Economics from Hobart College and a M.B.A. in Finance from the New York
University Stern Graduate School of Business. Mr. Galloway is also a member
of
each of the Board of Directors of International Microcomputer Software, Inc.,
DataMetrics Corporation, Forward Industries, Inc. and Waiter.Com, Inc.
Robert
S. Ellin has
served as one of our directors since August 2004. Mr. Ellin is a Managing Member
of Trinad Capital L.P., a hedge fund dedicated to investing in micro-cap public
companies. Prior to joining Trinad Capital, Mr. Ellin was the founder and
President of Atlantis Equities, Inc. (“Atlantis”), a personal investment
company. Founded in 1990, Atlantis has actively managed an investment portfolio
of small capitalization public companies as well as select private company
investments. Mr. Ellin frequently played an active role in Atlantis investee
companies including board representation, management selection, corporate
finance and other advisory services. Through Atlantis and related companies
Mr.
Ellin spearheaded investments into ThQ, Inc., Grand Toys, Forward Industries,
Inc. and completed a leveraged buyout of S&S Industries, Inc., where he also
served as President from 1996 to 1998. Prior to founding Atlantis, Mr. Ellin
worked in Institutional Sales at LF Rothschild, and prior to that he was Manager
of Retail Operations at Lombard Securities. Mr. Ellin has a B.A. from Pace
University. Mr.
Ellin
is also a member of each of the Board of Directors of ProLink Holdings
Corporation, U.S. Wireless Data, Inc. and Mediavest, Inc.
Thomas
P. Kikis
has
served as one of our directors since August 2004. Mr. Kikis is the managing
member of Arcadia Securities, LLC, a New York based registered broker-dealer
which he organized in 1998. He is also the President of Kikis Asset Management,
a New York - based money management firm he started in 1991. Prior to that,
he
was Vice President in charge of trading and a Portfolio Manager at Deltec
Securities, the New York subsidiary of an international investment bank.
Previously he was an investor and a director of the Company from
October
1997 to
September
2000. Mr. Kikis has a B.A. from Princeton University and an Executive M.B.A.
in
Finance from New York University Stern School of Business.
Incumbent
Class I Directors
Peter
T. Kikis
has
served as one of our directors since August 2004. Since 1950, Mr. Kikis
has been the President and a principal in Spencer Management Company, a real
estate development and management company in New York. Previously he was an
investor and a director of the Company from February 1995 to September 2000.
He
is a director of Deltec International S.A. and Atlas Capital Group Holdings,
S.A.
Martin
C. Blake, Jr. has
served as one of our directors since October 2004. Mr. Blake has served as
our
Chief Operating Officer since January 2006. Mr. Blake has been employed by
the
Company since 1995, and served as Vice President and head of our Aviation
Division from 1995 to December 2005. Mr. Blake has
over
twenty-eight years of experience in aviation security services. Prior to joining
the Company in 1995, Mr. Blake retired as a Major in the United States Air
Force, where he served in a variety of senior management positions. Mr. Blake's
last assignment was as the Program Manager for Electronic Security Systems,
Electronic Systems Division. In this capacity he managed a $20 million annual
program responsible for global marketing, procurement, and deployment of
electronic security systems. He was responsible for integrating security systems
and programs at international airports in Germany, Turkey, and the United
Kingdom. Previously, Mr. Blake was the Director of Security at the Department
of
Defense's largest classified air flight facility, incorporating over 1,200
square miles of restricted air space. Establishing aviation security programs
for major aircraft defense contractors was an integral responsibility of his
position. Mr. Blake also served as the Security Program Manager for Air Force
space programs, including security for the Space Shuttle and expendable space
launch vehicles. He also led the effort to integrate a shared automated entry
control system for use at Cape Canaveral, Kennedy Space Center, and the Johnson
Space Center.
Martin
R. Wade, III
has
served as one of our directors since August 2004. Mr. Wade has been the Chief
Executive Officer of Broadcaster, Inc. (formerly named International
Microcomputer Software, Inc.) since 2001. Prior to
joining Broadcaster, Mr. Wade served from 1998 to 2000 as a merger and
acquisition banker at Prudential Securities, and from 1996 to 1998 as a managing
director in mergers and acquisitions at Salomon Brothers Inc. From 1991 to
1996,
Mr. Wade was National Head of Investment Banking at C.J. Lawrence, Morgan
Grenfell, where he was member of the Board of Directors. Prior to
that, Mr. Wade was the National Head of investment banking for Price
Waterhouse. Mr. Wade also spent six years in the mergers and acquisitions
department at Bankers Trust and eight years at Lehman Brothers Kuhn Loeb. Mr.
Wade is credited with participating in over 200 merger and acquisition
transactions involving various clients such as, Nike, Cornerstone National
Gas
Company, Handmark Graphics and Redken Laboratories, Inc. Mr. Wade has a
B.S. in Business Administration from West Virginia University, and an M.B.A.
in
Finance from the University of Wyoming. Mr. Wade is a member of the Board of
Directors of DiMon, NexMed, Inc., Energy Transfer Group.
Peter
T.
Kikis is the father of Thomas P. Kikis. There are no other family relationships
among any of our directors or executive officers.
The
Board of Directors unanimously recommends a vote FOR the election of each of
the
Class II nominees for director listed above.
Proposal
two
Ratification
of the Appointment of D’Arcangelo & Co., LLP
as
Independent Accountants
The
Audit
Committee has selected D’Arcangelo & Co., LLP as the independent accountants
to audit the books, records and accounts of the Company for the current fiscal
year ending March 31, 2007, subject to ratification by the shareholders at
the
Annual Meeting. D’Arcangelo & Co., LLP has audited the Company’s financial
statements since 1996. Although shareholder ratification is not required by
our
By-laws or any other applicable legal requirement, the Board is submitting
the
selection of D’Arcangelo & Co., LLP to the shareholders for ratification as
a matter of good corporate governance. Our Board recommends that shareholders
vote for ratification of such appointment. In the event of a negative vote
on
ratification, our Board may reconsider its selection. A representative of
D’Arcangelo & Co., LLP is expected to be present at the Annual Meeting, will
have the opportunity to make a statement and will be available to answer
questions from shareholders.
The
Audit
Committee has responsibility for the appointment, compensation and oversight
of
the work of the independent accountant. As part of this responsibility, the
Audit Committee must pre-approve all permissible services to be performed by
the
independent accountant.
Pursuant
to the Audit Committee charter, the Audit Committee is required to pre-approve
all auditing services and the terms thereof (which may include providing comfort
letters in connection with securities underwritings) and non-audit services
(other than non-audit services prohibited under Section 10A(g) of the Exchange
Act, or
the
applicable rules of the Securities and Exchange Commission (“SEC”) or the Public
Company Accounting Oversight Board) to be provided to the Company by the
independent auditor; provided, however, the pre-approval requirement is waived
with respect to the provision of non-audit services for the Company if the
“de
minimus” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied.
This authority to pre-approve non-audit services may be delegated to one or
more
members of the Audit Committee, who shall present all decisions to pre-approve
an activity to the full Audit Committee at its first meeting following such
decision.
During
the fiscal years ended March 31, 2006 and 2005 and the interim period between
April 1, 2006 and July 27, 2006, neither the Company nor anyone acting on its
behalf consulted D’Arcangelo & Co., LLP with respect to the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's financial
statements, or any other matters or reportable events listed in Item
304(a)(2)(i) or (ii) of Regulation S-K.
Approval
of Proposal Two will require the affirmative vote of a majority of the common
shares present or represented by proxy at the Annual Meeting and entitled to
vote.
The
following table sets forth the aggregate fees billed by D’Arcangelo & Co.,
LLP for audit and non-audit services rendered to the Company in our fiscal
years
ended March 31, 2005 and 2006. These fees are categorized as audit fees, audit
related fees, tax fees and all other fees. The nature of the services provided
in each category is described following the table.
Fee
Category
|
|
|
|
|
|
Audit
Fees
|
|
$
|
131,174
|
|
$
|
135,000
|
|
Audit-Related
Fees
|
|
|
-
|
|
|
-
|
|
Tax
Fees
|
|
|
13,325
|
|
|
36,282
|
|
All
Other Fees
|
|
|
3,357
|
|
|
15,126
|
|
|
|
$
|
147,856
|
|
$
|
186,408
|
|
Audit
fees.
These
fees generally consist of professional services rendered for the audits of
the
financial statements of the Company and its internal control over financial
reporting, quarterly reviews, consents, income tax provision procedures and
assistance with and review of documents filed with the SEC.
Audit-related
fees.
These
fees generally consist of assurance and other services related to the
performance of the audit or review of the Company’s financial statements or that
are traditionally performed by the independent registered public accounting
firm, issuance of consents, due diligence related to acquisitions, internal
control reviews, attest services that are not required by statute or regulation
and consultations concerning financial accounting and reporting
standards.
Tax
fees.
These
fees generally relate primarily to tax compliance, including review and
preparation of corporate tax returns, assistance with tax audits, review of
the
tax treatment for certain expenses and tax due diligence relating to
acquisitions. They also include fees for state and local tax planning and
consultations with respect to various tax matters.
All
other fees.
These
fees generally consist of reviews for compliance with various government
regulations, risk management and treasury reviews and assessments and audits
of
various contractual arrangements.
The
Board
of Directors has determined that the services rendered by D’Arcangelo & Co.,
LLP are compatible with maintaining their independence, as the Company’s
principal accountants and independent auditors.
The
Board of Directors unanimously recommends a vote “FOR” ratification of the
appointment of D’Arcangelo & Co., LLP as the Company’s independent
accountants.
Other
Information
Information
Concerning Executive Officers
The
executive officers of the Company, along with their respective ages and
positions with the Company, as of April 1, 2006, are set forth below. We refer
to these individuals as our “Named Executive Officers.”
Name
|
|
Age
|
|
Position
with the Company
|
|
|
|
|
|
|
|
|
|
Barry
I. Regenstein
|
|
|
49
|
|
President
and Chief Financial Officer |
|
Martin
C. Blake, Jr.
|
|
|
52
|
|
Chief
Operating Officer |
|
Jeffrey
S. Edmiston
|
|
|
41
|
|
Vice
President - Security
Services |
|
See
“Proposal 1-Election of Directors -
Directors” for information relating to Mr. Blake.
Barry
I. Regenstein
has
served as our President since January 2006 and as our Executive Vice President
and Chief Operating Officer from August 2004 until December 2005, and also
as
our Chief Financial Officer since October 2004. Mr. Regenstein has over 28
years
of experience including 23 years in operations and finance of contract services
companies. Most recently, Mr. Regenstein rendered consulting services for Trinad
Capital, L.P., a shareholder of the Company, and its affiliates, from February
2004 until August 2004. Prior to that period, Mr. Regenstein served as a Senior
Vice President and Chief Financial Officer of GlobeGround North America LLC
(formerly Hudson General Corporation), an airport services company from 2001
until 2003. Mr. Regenstein also served as Vice President and Chief Financial
Officer of GlobeGround North America LLC from 1997 to 2001 and was employed
in
various executive capacities with GlobeGround North America LLC since 1982.
Prior to joining Hudson General Corporation, he was with Coopers & Lybrand
in Washington, D.C. Mr. Regenstein is a Certified Public Accountant and received
a B.S. in Accounting from the University of Maryland and an M.S. in Taxation
from Long Island University.
Jeffrey
S. Edmiston
has
served as our Vice President - Security Services since June 2003. Prior to
that
Mr. Edmiston served as our Regional Vice President from February 2001 to May
2003. Prior to that period Mr. Edmiston worked for US Security
Associates/Atlantic Security from 1993 to 2000. Mr. Edmiston has nine years
of
professional law enforcement experience with 10 years of experience in
managerial positions in the security industry. He is a former law enforcement
officer with six years of experience in the narcotics and patrol divisions.
He
has also worked as a security manager with a jewelry company and specialized
in
employee theft investigation. In addition, Mr. Edmiston served three years
as a
military police officer in the U.S. Army in the Nuclear Security and Executive
Protection areas. Mr. Edmiston is a member of the American Society for
Industrial Security.
Security
Ownership of Certain Beneficial Owners and Management
The
following table presents information with respect to beneficial ownership of
our
common shares as of July 27, 2006 by:
· |
each
person known by us to beneficially own more than 5% of our outstanding
common shares;
|
· |
individuals
serving as our Named Executive Officers;
|
· |
each
of our directors and nominees for director;
and
|
· |
all
executive officers, directors and director nominees as a group.
|
Except
as
otherwise noted, the address of each person/entity listed in the table is c/o
Command Security Corporation,
P.O.
Box 340, 1133 Route 55, Suite D,
Lagrangeville, New York 12540. The table includes all common shares that may
be
issued within 60 days of July 27, 2006 upon the exercise of options and other
rights beneficially owned by the indicated shareholders on that date. Beneficial
ownership is determined in accordance with the rules of the SEC and includes
all
common shares as to which such persons have voting and investment power. To
our
knowledge, except under applicable community property laws or as otherwise
indicated, the persons named in the table have sole voting and sole investment
control with respect to all common shares stated as being beneficially owned.
The applicable percentage of ownership for each shareholder is based on
10,137,970 common shares outstanding as of June 30, 2006, together with
applicable options or warrants exercisable for common shares held by such
shareholder. Common shares that may be issued upon exercise of options and
other
rights beneficially owned (and that may be exercised within 60 days of July
27,
2006) are deemed outstanding for the purpose of computing the percentage
ownership of the person holding those options and other rights, but are not
deemed outstanding for computing the percentage ownership of any other person.
Name
|
|
Amount
and Nature of Beneficial
Ownership (1)
|
|
Percent
of Class (2)
|
|
|
|
|
|
|
|
Certain
Beneficial Owners
|
|
|
|
|
|
|
|
|
|
|
|
Trinad
Capital, L.P.(3)
2121
Avenue of the Stars
Suite
1650
Los
Angeles, California 90067
|
|
|
2,357,690
|
|
|
23.3
|
%
|
|
|
|
|
|
|
|
|
Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
I. Regenstein(4)
|
|
|
362,500
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
Martin
C. Blake, Jr.(5)
|
|
|
195,000
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
Jeffrey
S. Edmiston(11)
|
|
|
25,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Directors
and Nominees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
S. Ellin(6)
2121
Avenue of the Stars
Suite
1650
Los
Angeles, California 90067
|
|
|
2,367,690
|
|
|
23.3
|
%
|
|
|
|
|
|
|
|
|
Bruce
Galloway(7)
c/o
Galloway Capital Management, LLC
720
Fifth Avenue
10th
Floor
New
York, New York 10019
|
|
|
940,928
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
Thomas
P. Kikis(8)
Arcadia
Securities
720
Fifth Avenue
10th
Floor
New
York, New York 10019
|
|
|
878,293
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
Peter
T. Kikis(9)
Arcadia
Securities
720
Fifth Avenue
10th
Floor
New
York, New York 10019
|
|
|
1,625,555
|
|
|
16.0
|
%
|
|
|
|
|
|
|
|
|
Martin
R. Wade, III(10)
|
|
|
15,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
All
Executive Officers and Directors (including Nominees)
as
a Group (8 Persons)
|
|
|
6,409,966
|
|
|
59.7
|
%
|
__________________
* Less
than
1%.
(1) Except
as
otherwise indicated below, each named person has voting and investment powers
with respect to the securities owned by them.
(2) Based
on
10,137,970 common shares outstanding at July 27, 2006 calculated in accordance
with Rule 13d-3(d)(1)(I) as promulgated under the Exchange Act.
(3) Robert
S.
Ellin, one of our directors, is a managing member of Trinad Advisors GP, LLC,
the general partner of Trinad Capital, L.P. and a limited partner of Trinad
Capital, L.P. Mr. Ellin expressly disclaims any beneficial ownership of such
shares except to the extent of his pecuniary interest therein.
(4) Consists
of options exercisable within
60 days
of July 27, 2006 to purchase 362,500 common shares
at an
exercise price of $1.35 per share.
(5) Consists
of (i)
50,000 common shares owned directly by Mr. Blake, and (ii) options
exercisable
within
60 days
of July 27, 2006 to purchase 145,000 common shares at
an
exercise price of $1.35 per share.
(6) Consists
of (i) 2,357,690 common shares held by Trinad Capital, L.P., and (ii) 10,000
common shares that may be issued upon the exercise of options at an exercise
price of $2.05 per share held by Mr. Ellin. Mr. Ellin is a managing member
of
Trinad Advisors GP, LLC, the general partner of Trinad Capital, L.P. and a
limited partner of Trinad Capital, L.P. Mr. Ellin expressly disclaims any
beneficial ownership of such shares except to the extent of his pecuniary
interest therein.
(7) Consists
of (i) 439,828 common shares owned directly by Mr. Galloway, (ii) 366,100 common
shares owned by a trust under which Mr. Galloway serves as the sole trustee,
(iii) 25,000 common shares owned by GCM Security Partners LLC, a limited
liability company in which Mr. Galloway serves as the managing member, (iv)
100,000 common shares owned by Strategic Turnaround Equity Partners LLC, an
investment fund controlled by Mr. Galloway, and (v) 10,000 common shares that
may be issued upon the exercise of options at an exercise price of $2.05 per
share held by Mr. Galloway.
(8) Mr.
Thomas Kikis is the son of Mr. Peter Kikis. Mr. Thomas Kikis expressly disclaims
any beneficial ownership of securities of the Company held by Mr. Peter
Kikis.
(9) Mr.
Peter
Kikis is the father of Mr. Thomas Kikis. Mr. Peter Kikis expressly disclaims
any
beneficial ownership of securities of the Company held by Mr. Thomas
Kikis.
(10) Consists
of options exercisable within
60 days
of July 27, 2006 to purchase 15,000 common shares
at an
exercise price of $2.05 per share.
(11) Consists
of options exercisable within
60 days
of July 27, 2006 to purchase 25,000 common shares
at an
exercise price of $1.49 per share.
Board
Meetings and Committees
During
the fiscal year ended March 31, 2006, our Board held a total of four
meetings, and all incumbent directors attended at least 75% of the meetings
of
our Board or the meetings of committees, if any, upon which such directors
served. Our Board has determined that each of our directors other than Martin
C.
Blake, Jr., the Company’s Chief Operating Officer, qualifies as independent
under the listing standards of the Nasdaq National Market
(“Nasdaq”).
Our
Board
has three committees: the Audit Committee, the Nominating and Corporate
Governance Committee and the Compensation Committee. All committees are
comprised solely of independent directors.
Audit
Committee
The
Audit
Committee currently consists of Martin R. Wade, III (Chairman), Thomas P. Kikis
and Bruce R. Galloway. The Board has determined that each member is independent
under the NASD’s listing standards and the applicable rules of the SEC, that
each member is “financially literate” under the Nasdaq listing standards and
that Mr. Wade qualifies as an Audit Committee Financial Expert under the
applicable rules of the SEC.
The
Audit
Committee hires the Company’s independent accountants and is charged with the
responsibility of overseeing the financial reporting process of the Company.
In
the course of performing its functions, the Audit Committee reviews, with
management and the independent accountants, the Company’s internal accounting
controls, the annual financial statements, the report and recommendations of
the
independent accountants, the scope of the audit and the qualifications and
independence of the auditors. The report of the Audit Committee is set forth
later in this proxy statement. The Audit Committee held three
meetings
during the fiscal year ended March 31, 2006. A copy of the Audit Committee
charter as adopted by the Board on April 27, 2005 was included as Exhibit B
to
our proxy materials relating to our 2005 annual meeting of
shareholders.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee currently consists of Thomas
P.
Kikis (Chairman), Peter T. Kikis and Martin R. Wade. The Board has determined
that each member of this committee is independent under the Nasdaq listing
standards. The Nominating and Corporate Governance Committee is responsible
for
identifying individuals who are qualified to become directors, recommending
nominees for membership on the Board and committees of the Board, promulgating
minimum qualifications that it believes must be met by director nominees,
establishing policies for considering director candidates recommended by
shareholders, implementing procedures for shareholders in submitting
recommendations for director candidates and developing and recommending to
the
Board corporate governance guidelines.
The
Nominating and Corporate Governance Committee has established the following
minimum qualifications for prospective nominees: (1) high accomplishments in
his
or her respective field, with superior credentials and recognition, (2) if
applicable, a demonstrated history of actively contributing at board meetings,
(3) high personal and professional integrity, exceptional ability and judgment,
and effectiveness, in conjunction with the other nominees to the Board, in
serving the long-term interests of the shareholders and (4) sufficient time
and
availability to devote to the affairs of the Company, particularly in light
of
the number of boards on which the nominee may serve. In addition, the Nominating
and Corporate Governance Committee may consider a variety of other qualities
and
skills, including whether the nominee has direct experience in the industry
or
in the markets in which the Company operates and the definition of independence
within the meaning of the Nasdaq listing standards. Nominees must also meet
any
applicable requirements of the SEC’s regulations, state law and the Company's
Certificate of Incorporation and By-laws.
The
Nominating and Corporate Governance Committee has established a process for
identifying and evaluating nominees for director. The Nominating and Corporate
Governance Committee may solicit recommendations from any or all of the
following sources: non-management directors, executive officers, third-party
search firms or any other source it deems appropriate. The Nominating and
Corporate Governance Committee will then, without regard to the source of the
initial recommendation of such proposed director candidate, review and evaluate
the qualifications of any such proposed director candidate, and conduct
inquiries it deems appropriate. Upon identifying individuals qualified to become
members of the Board, consistent with the minimum qualifications and other
criteria approved by the Board from time to time, and provided that the Company
is not legally required to provide third parties with the ability to nominate
individuals for election as a member of the Board, the Nominating and Corporate
Governance Committee will then recommend that the Board select the director
nominees for election at each annual meeting of shareholders.
The
Nominating and Corporate Governance Committee will consider director candidates
recommended by the Company’s shareholders. A shareholder wishing to propose a
nominee should submit a recommendation in writing to the Company’s Secretary not
less than 120 days nor more than 150 days in advance of the date that the
Company’s proxy statement was mailed to shareholders in connection with the
previous year’s annual meeting of shareholders; provided that if the date of
this year’s annual meeting of shareholders has been changed by more than 30 days
from the date contemplated at the time of the previous year’s proxy statement,
such proposal must be received by the Company a reasonable time before the
Company solicits proxies for the election of directors. Proposing
shareholders are also required to provide information with regard to the
nominees, including their full names and residence and business addresses;
business experience for the most recent five years; including principal
occupations and employment, the number of shares of the Company’s stock owned by
the proposed nominees and a description of legal or administrative proceedings
or order or decree any nominee is or has been a party to or is or was subject
to
during the past five years, the name and residence and business address of
the
shareholder who makes the nomination, the number of shares of the Company’s
capital stock owned directly or indirectly by the shareholder who makes the
nomination and any other information regarding each of the nominees required
by
Schedule 14A of the Exchange Act.
A copy
of the full text of the By-laws provision and the procedures established by
the
Nominating and Corporate Governance Committee may be obtained by writing to
our
Secretary. All notices of proposals by shareholders, whether or not included
in
our proxy materials, should be sent to Command Security Corporation,
P.O.
Box
340, 1133 Route 55, Suite D,
Lagrangeville, New York 12540, Attention: Barry I. Regenstein,
President.
The
Nominating and Corporate Governance Committee was
formed in April 2005 and held
four
meetings
during the fiscal year ended March 31, 2006.
Prior to
the creation of the Nominating and Corporate Governance Committee, the Board
performed the functions of a nominating committee.
A copy
of the Nominating and Corporate Governance Committee charter as adopted by
the
Board on April 27, 2005 is not available on our website, but was included as
Exhibit C to our proxy materials relating to our 2005 annual meeting of
shareholders.
Compensation
Committee
The
Compensation Committee currently consists of Peter T. Kikis (Chairman) Bruce
R.
Galloway and Robert S. Ellin. The Board has determined that each member is
independent under the Nasdaq listing standards. The Compensation Committee
sets
the compensation of the other senior executives of the Company, administers
the
stock option plans and the executive compensation programs of the Company,
determines eligibility for, and awards under, such plans and programs, and
makes
recommendations to the Board with regard to the adoption of new employee benefit
plans, stock option plans and executive compensation plans. The report of the
Compensation Committee is set forth later in this proxy statement. The
Compensation Committee held
three meetings
during
the
fiscal year ended March 31,
2006. A
copy of the Compensation Committee charter as adopted by the Board on April
27,
2005 was included as Exhibit D to our proxy materials relating to our 2005
annual meeting of shareholders.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee is currently composed of independent, non-employee
directors. No interlocking relationships exist among our Board, Compensation
Committee or executive officers and the Board, Compensation Committee or
executive officers of any other company, nor has an interlocking relationship
existed in the past.
Code
of Business Conduct and Ethics
The
Company has adopted a Code of Business Conduct and Ethics which applies to
directors, officers, senior management and certain other employees of the
Company, including its principal executive officer, principal financial officer,
principal accounting officer or controller or persons performing similar
functions. The Company will provide a copy of its Code of Business Conduct
and
Ethics to any person without charge, upon request, and a copy of this code
is
available for viewing on our website at www.commandsecurity.com. Requests for
a
copy of the Code of Business Conduct and Ethics can be made in writing to the
following address: Command Security Corporation, P.O.
Box
340, 1133 Route 55, Suite D,
Lagrangeville, New York 12540, Attention: Barry I. Regenstein,
President.
Communications
with Directors
The
Board
has established a process to receive communications from shareholders.
Shareholders and other interested parties may contact any member (or all
members) of the Board, or the independent directors as a group, any Board
committee or any Chair of any such committee by mail or electronically. To
communicate with the Board of Directors, any individual directors or any group
or committee of directors, correspondence should be addressed to the Board
of
Directors or any such individual directors or group or committee of directors
by
either name or title. All such correspondence should be sent to Command Security
Corporation, P.O.
Box
340, 1133 Route 55, Suite D,
Lagrangeville, New York 12540, Attention: Gary Herman, Secretary. To communicate
with any of our directors electronically, a shareholder should send an email
to
the Company’s Secretary: gherman@gallowaycap.com.
All
communications received as set forth in the preceding paragraph will be opened
by the Corporate Secretary for the sole purpose of determining whether the
contents represent a message to our directors. Any contents that are not in
the
nature of advertising, promotions of a product or service, patently offensive
material or matters deemed inappropriate for the Board of Directors will be
forwarded promptly to the addressee. In the case of communications to the Board
or any group or committee of directors, the Company’s Secretary will make
sufficient copies (or forward such information in the case of e-mail) of the
contents to send to each director who is a member of the group or committee
to
which the envelope or e-mail is addressed.
It
is the
Company’s policy that its directors are invited and encouraged to attend the
Annual Meeting.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our executive officers and directors and
persons who beneficially own more than 10% of the outstanding common shares
to
file reports of ownership and changes in ownership with the SEC and to furnish
copies to us.
Based
upon a review of the reports furnished to us and representations made to us,
we
believe that, during the fiscal year ended March 31, 2006, all reports required
by Section 16(a) of the Exchange Act to be filed by our officers and directors
and 10% beneficial owners were filed on a timely basis.
Executive
Compensation
The
following table provides information as to compensation paid by the Company
to
our Named Executive Officers for the fiscal year ended March 31, 2006 for
services rendered for the periods indicated below.
|
|
Annual
Compensation
|
|
Long
Term Compensation
Awards
|
|
Name
and Principal
Position
|
|
Fiscal
Year ended March 31,
|
|
Salary($)
|
|
Bonus($)
|
|
Restricted
Stock
Awards($)
|
|
Number
of Options(#)
|
|
Barry
I. Regenstein
President
and Chief
Financial
Officer*
|
|
|
2006
2005
|
|
|
250,000
250,000
|
|
|
25,000
|
|
|
—
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin
C. Blake, Jr.
Chief
Operating Officer
|
|
|
2006
2005
2004
|
|
|
250,000
175,000
150,000
|
|
|
25,000
63,534
94,200
|
|
|
—
—
—
|
|
|
200,000
—
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
S. Edmiston
Vice
President - Security
Services
|
|
|
2006
2005
2004
|
|
|
132,500
132,500
115,000
|
|
|
5,000
—
41,500
|
|
|
—
—
—
|
|
|
25,000
—
—
|
|
________________
*Mr.
Regenstein commenced employment with the Company on August 30,
2004.
Option
Grants in the Fiscal Year ended March 31, 2006
The
following table contains information concerning the grant of stock options
under
our stock option plan and otherwise to the Named Executive Officers during
the
fiscal year ended March 31, 2006. No stock appreciation rights were granted
during the fiscal year ended March 31, 2006.
Option/SAR
Grants in the Fiscal Year ended March 31, 2006
Individual
Grants
|
|
|
|
|
|
|
|
|
|
Potential
Realizable Value at Assumed Annual Rates of Stock Price Appreciation
for
Option Term
|
|
Name
|
|
Number
of Securities Underlying Options Granted(#)
|
|
%
of Underlying Options Granted to Employees in Fiscal
Year
|
|
Exercise
Price
($/Share)
|
|
Expiration
Date
|
|
5%($)
|
|
10%($)
|
|
Barry
I. Regenstein
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Martin
C. Blake, Jr.
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Jeffrey
S. Edmiston
|
|
|
25,000
|
|
|
62.5
|
|
$
|
1.49
|
|
|
5/23/15
|
|
$
|
23,426
|
|
$
|
59,367
|
|
Aggregate
Option Exercises in the Fiscal Year ended March 31, 2006 and Fiscal Year End
+Option Values
The
following table contains information concerning the exercise of stock options
during the fiscal year ended March 31, 2006 and the year-end value of
unexercised options for the Named Executive Officers.
Name |
|
Shares
Acquired
on
Exercise
|
|
Value
Realized
|
|
No.
of Securities
Underlying
Unexercised
Options
at FY-End
(#)
|
|
Value
of Unexercised
In-
the-Money
Options/SARs
at
FY-End (Market price
of
shares at FY-End less
exercise
price) ($)(1)
|
|
|
|
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
Barry
I. Regenstein
|
|
|
—
|
|
|
—
|
|
|
287,500
|
|
|
212,500
|
|
$
|
431,250
|
|
$
|
318,750
|
|
Martin
C. Blake, Jr.
|
|
|
50,000
|
|
|
127,500
|
|
|
115,000
|
|
|
85,000
|
|
$
|
172,500
|
|
$
|
127,500
|
|
Jeffrey
S. Edmiston
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
—
|
|
$
|
34,000
|
|
|
—
|
|
|
(1)
|
Based
on the fair market value of one share of Common Stock on March 31,
2006 of
$2.85
per share, the closing sales price per share on that date on the
Over-the-Counter Bulletin Board.
|
Employment
Agreements
The
Company is a party to an employment agreement with Mr. Regenstein which provides
for his services as President and Chief Financial Officer until September 7,
2007. In January 2006, Mr. Regenstein was promoted to President of the Company,
and he also currently serves as our Chief Financial Officer. The term of the
employment agreement will be automatically extended for successive one-year
periods unless either party provides to the other party notice 60 days prior
to
such date, or any anniversary thereof, that the notifying party does not wish
to
renew the employment agreement. During the term of the employment agreement,
Mr.
Regenstein will receive a
base
annual
salary of $250,000,
which may be from time to time increased by the Company’s Compensation
Committee
and an
annual bonus as determined in accordance with the terms of any incentive plan
the Compensation
Committee
may have
in effect from time to time, based on the attainment of performance targets
established by the Compensation
Committee.
Mr.
Regenstein is also entitled to participate in other benefit plans that
the
Company
may have
in effect from time to time.
On
the
effective date of the employment agreement, which is August 30, 2004, Mr.
Regenstein was granted 500,000 options exercisable at $1.35 per share, 200,000
of which vested immediately upon grant. After August 30, 2005, the remaining
options will vest at a rate of 12,500 per month, during the term of the
employment agreement.
The
Company is also a party to an employment agreement with Mr. Blake which provides
for his services as Vice President - Aviation.
This
agreement expires on July 31, 2006; however, the Company and Mr. Blake are
currently negotiating a new employment agreement. In January 2006, Mr. Blake
was
promoted to Chief Operating Officer of the Company. Under his employment
agreement, Mr. Blake receives a
base
annual
salary of $250,000
and an
annual bonus as determined in accordance with the terms of any incentive plan
the Compensation
Committee
may have
in effect from time to time, based on the attainment of performance targets
established by the Compensation
Committee. Mr.
Blake
is also entitled to participate in other benefit plans that the
Company
may have
in effect from time to time.
In
the
employment agreement between the Company and Mr. Regenstein if, within two
years
following a Change in Control (as defined in the agreement, (i) such executive's
employment is terminated by the Company (other than for cause, death or
disability) or (ii) such executive terminates his employment for "good reason"
(as defined in the agreement), the Executive shall be entitled to (A) all
accrued payments and benefits through the termination date; (B) his base salary
for a period of the lesser of (x) one year following the date of termination
or
(y) the remainder of the term of his employment agreement; and (C) reimbursement
of expenses through the termination date. Also, immediately upon a termination
referred to in subparagraphs (i) or (ii) above within two years following a
Change in Control, all then outstanding options, restricted stock and other
equity-based awards granted to such executive but which have not vested as
of
the date of termination, shall become fully vested and all options not yet
exercisable shall become exercisable.
Each
of
Messrs. Regenstein and Blake is eligible to
participate in any employee
benefit plan and fringe benefit programs, if any, as the Company may from time
to time provide to its senior employees generally. The Company offers basic
health, major medical, dental and travel insurance to its Named Executive
Officers.
Director
Compensation
Each
of
our non-employee directors receives from the Company an annual cash fee of
$10,000, paid quarterly in arrears. Non-employee directors are also paid $1,000
per meeting of the Board attended during their term of service. In addition
non-employee directors are granted a fully vested option to purchase 10,000
common shares on each anniversary of becoming a director during their term
of
service; the Chairmen of our Audit and Compensation Committees are granted
a
fully vested option to purchase an additional 5,000 common shares on each
anniversary of their term of service as such; the Chairman of our Audit
Committee receives an additional cash payment of $2,500 per annum and the
Chairman of our Compensation Committee receives an additional cash payment
of
$1,500 per annum.
Report
of the Compensation Committee of the Board of Directors on Executive
Compensation
The
Compensation
Committee
is
responsible for discharging the Board of Directors' responsibilities relating
to
the compensation of the executive officers and directors as well as oversight
of
the Company's overall compensation programs.
The
Compensation
Committee
has
established a compensation philosophy around the principle of having
compensation reflect and reinforce our strategic and operational goals and
enhance long-term shareholder value. The
Compensation
Committee’s
philosophy is to:
· |
Set
compensation levels to attract, retain, reward and motivate executive
officers and employees;
|
· |
Align
compensation with business objectives and performance and with the
interests of the shareholders;
|
· |
Position
compensation to reflect the individual's performance as well as the
level
of responsibility, skill and strategic value of the employee; and
|
· |
Recognize
the evolving organizational structure of the Company and directly
motivate
executives to accomplish results as well as foster a company-wide
team
spirit.
|
The
Compensation
Committee
attempts
to target its compensation programs to provide compensation opportunities that
are perceived by its officers and employees to justify continued service to
the
Company. Compensation decisions for the fiscal year ended March 31, 2006 were
determined as follows:
Base
Salary. The annual base salary for Barry I. Regenstein, the Company’s
President
and Chief Financial
Officer,
and for Martin C. Blake, Jr., the Company's Chief Operating Officer, was
reviewed and approved by the Board of Directors and was paid in accordance
with
an employment agreement between each of such executives and the Company. When
determining their respective base salaries under their employment agreements,
the Board considered, among other things, the level of responsibility, breadth
of knowledge and prior experience as well as publicly available compensation
information and informal survey information obtained with respect to other
small-capitalization, publicly traded companies. No specific weight is given
to
any of these factors in the evaluation of an executive officer's base salary.
Bonuses.
In fiscal 2006, the Compensation
Committee
did not
establish bonus targets for the executive officers and only one bonus payout
was
made in fiscal 2006 pursuant to the terms of an employee’s employment agreement.
In prior years, the Company’s executive officers were eligible to receive a cash
bonus of up to a specified percentage of their base salary based on the extent
to which business and individual performance objectives, approved by the Board
of Directors for each such person, were achieved. These objectives consisted
of
operating, strategic and/or financial goals that are considered to be important
to the Company’s fundamental long-term goal of building shareholder value.
Stock
Options. In addition to salary and bonus, the Compensation Committee, from
time
to time, grants options to executive officers. The Compensation
Committee
views
option grants as an important component of its long-term, performance-based
compensation philosophy. Since the value of an option bears a direct
relationship to our stock price, the Compensation Committee believes that
options motivate executive officers to manage us in a manner that will also
benefit shareholders. As such, the specific number of stock options granted
to
an executive officer is determined on an individual basis by the Compensation
Committee's
perception of relative contributions or anticipated contributions to overall
corporate performance. The Compensation
Committee
also
reviews the total number of options already held by individual executive
officers at the time of grant. In fiscal 2006, we did not grant options to
purchase common shares to either Barry I. Regenstein or Martin C. Blake, Jr.
COMPENSATION
COMMITTEE
Peter
T.
Kikis (Chairman)
Bruce
R.
Galloway
Robert
S.
Ellin
THE
FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE “SOLICITING
MATERIAL” OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE
INCORPORATED BY REFERENCE INTO ANY PAST OR FUTURE FILING UNDER THE SECURITIES
ACT OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE IT
BY
REFERENCE INTO SUCH FILING.
Performance
Graph
The
graph
below compares the cumulative total shareholder return on common shares with
the
cumulative total return of (1) the Nasdaq Stock Market Index (U.S.) (the “Nasdaq
Index”) and (2) an index of publicly traded companies with a Standard Industrial
Classification Code (“SIC Code”) of between 7380 and 7389 (the “SIC Code
Index”). The graph assumes that $100 was invested in each of common shares, the
Nasdaq Index and the SIC Code Index on March 31, 2001 and reflects the return
through March 31, 2006 and assumes the reinvestment of dividends, if any. The
comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, possible future performance of our
Common Stock.
THE
INFORMATION CONTAINED IN THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED TO
BE
“SOLICITING MATERIAL” OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE
INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE SECURITIES ACT OR
THE
EXCHANGE ACT, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE IT BY REFERENCE
INTO SUCH FILING.
Report
of the Audit Committee of the Board
The
following is a report of the Audit Committee of the Company’s Board of Directors
with respect to the Company’s audited financial statements for the fiscal year
ended March 31, 2006.
In
connection with its function of overseeing and monitoring the financial
reporting process, the Audit Committee has, among other things, done the
following:
· |
reviewed
and discussed the Company’s audited financial statements for the year
ended March 31, 2006 with the Company’s management and the Company’s
independent auditors;
|
· |
discussed
with the Company’s independent auditors those matters required to be
discussed by Statement on Auditing Standards No. 61, “Communications with
Audit Committees”, as amended by the Statement on Auditing Standards No.
90 “Audit Committee Communications”;
and
|
· |
received
and reviewed the written disclosures and the letter from the Company’s
independent auditors required by Independence Standard No. 1,
“Independence Discussions with Audit Committees,” and discussed with the
Company’s independent auditors their independence from the Company.
|
Based
upon the foregoing, the Audit Committee recommended to the Board of Directors
that the audited financial statements referred to above be included in the
Company’s Annual Report on Form 10-K for the year ended March 31, 2006 for
filing with the SEC.
AUDIT
COMMITTEE
Martin
R.
Wade, III (Chairman)
Thomas
P.
Kikis
Bruce
R.
Galloway
THE
FOREGOING AUDIT COMMITTEE REPORT SHALL NOT BE DEEMED TO BE “SOLICITING MATERIAL”
OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE INCORPORATED BY
REFERENCE INTO ANY PAST OR FUTURE FILING UNDER THE SECURITIES ACT OR THE
EXCHANGE ACT, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE IT BY REFERENCE
INTO SUCH FILING.
Certain
Relationships and
Related
Transactions
Peter
T.
Kikis is the father of Thomas P. Kikis. There are no other family relationships
among any of our directors or executive officers.
Deadline
for Receipt of Shareholder Proposals
Pursuant
to Rule 14a-8 under the Exchange Act, shareholders may present proper proposals
for inclusion in a company’s proxy statement and for consideration at the next
annual meeting of its shareholders by submitting their proposals to us in a
timely manner.
Although
we have not yet determined the date in order to be included in the Company’s
proxy statement for our annual meeting of shareholders in 2007, shareholder
proposals or other business to be brought before an annual meeting by a
shareholder must be received by us at least 120 days prior to the anniversary
date of the mailing of this proxy statement for the Annual Meeting and must
otherwise comply with the requirements of Rule 14a-8. All shareholder proposals
should be marked for the attention of the Secretary, Command Security
Corporation,
P.O.
Box 340, 1133 Route 55, Suite D,
Lagrangeville, New York, 12540.
As
to
shareholder proposals intended to be presented without inclusion in our proxy
statement for our next annual meeting, the people named next year as proxies
will be entitled to vote as they think best on such proposals unless we have
received notice of that matter at least 120 days before the date on which we
mailed our proxy materials for the prior year's annual meeting of shareholders.
However, even if such notice is timely received, the people named next year
as
proxies may nevertheless be entitled to vote as they think best on such
proposals to the extent permitted by the SEC.
Other
Matters
There
is
no reason to believe that any other business will be presented at the 2006
Annual Meeting; however, if any other business should properly and lawfully
come
before the 2006 Annual Meeting, the proxies will vote in accordance with the
best judgment of the Board of Directors.
BY
ORDER
OF THE BOARD OF DIRECTORS
Barry
I.
Regenstein
President
and Chief Financial Officer
July
27,
2006
Lagrangeville,
New York