Jack Aubrey and his brother Charles are co-founders of Aubrey Yacht Manufacturers of Miami, Florida, The company speciali.zes in the production of yachts in the ＄200,000 to ＄800,000 price range, The Aubrey brothers took the company public in 1998 and its shares are now traded on NASDAQ under the symbol AYM.

Jack is the President and Charles is the CEO and Chairman of the Board, The demand for yachts in AYM's price range had been quite strong going into the recent recession, which began at the end of 2007, Unfortunately, production at AYM had been curtailed during that time because of a strike that had started in early June of that year, The company had been able to reduce its finished goods inventory substantially by the time the strike ended in January 2008, Throughout 2008, the company carried little inventory and reduced its debt from its long run average of 25% debt to equity, Finally in 2009, it repaid all of its outstanding debt, The result was that the company emerged from the recession much stronger than other yacht manufacturers.

Earnings and dividends had been growing strongly until the strike occurred. The company paid its first dividend in 2002 but discontinued it soon after the strike began. Exhibit l shows the history of the company's earnings per share (EPS) and dividends per share (DPS) since 2002.

In 2011, sales of yachts in the company's price range seemed to have recovered more than the super yacht category (priced from ＄2 to ＄40 million), Jack Aubrey's forecast is for earnings in 2012 to be ＄6.60 per share, and he is confident that a dividend of ＄3,42 per share could be reinstated at that time; however, he also wants to ensure that future dividends would not be cut as had been done in 2008, Commencing in 2013 he plans on establishing a stable dividend policy with a long-term target payout ratio of 35% with an adjustment factor of 0.20; i.e., the adjustment is to occur over a 5-year period, He estimates that earnings in 2013 would be ＄8.05 per share.

Steve Maturin is a director of AYM and has been a close friend of Charles since childhood, Maturin is the CEO of Standard Marine Containers, a manufacturer of plastic pallets and crates used in marine shipping, Jack Aubrey is a director of Standard Marine Containers.

Charles, Maturin and their families had just returned from a two-week cruise to Bermuda on the company's best yacht, Maturin informed lack that the weather on this year's trip was much better than last year, that he was well rested and ready to tackle some thorny issues in their first board meeting of the year, "In particular , " said Maturin, "alternatives to paying dividends, moving to a staggered board of directors, and the company's financing mix are items of great interest to me."

Maturin reminded Aubrey that the results of a survey that had been conducted last year on a large sample of the company's investors indicated that on average the investors' tax rate on capital gains was 23%, but their tax rates on dividends varied widely across the sample, Maturin also said that on reviewing the company's share price behavior during the 2002 t0 2007 period, he found that it normally fell on average by about 68% of the dividend amount when the shares went ex-dividend.

Maturin said: "I've been thinking that our current annual election of the board is not in the best interests of our shareholders, and we should be moving to a staggered board for the following reasons:

1.the company would be less likely to resist hostile takeover attempts with a staggered board.

2.it would ensure the continuity of the knowledge and experience in the company that is so essential for good corporate governance, and,

3.it would provide board members more time in getting to understand the needs of shareholders and be in a better position to align their interests with them."

Exhibit 2 shows selected information about the company's current Board of Directors taken from its website and regulatory filings.

Maturin concluded his remarks by saying, "I would like to see the company use debt again, It should issue debt and repurchase shares to return to its historical level 0.25 debt-to-equity. We should be able to issue debt at a cost of 5%, and this should not materially increase the costs of financial distress, agency costs, or asymmetric information. With our current cost of equity at 12% and a 30% tax rate, our weighted average cost of capital should drop, enhancing shareholder value."