UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
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Competitive Technologies, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06824
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on January 16, 2004
To the Stockholders of
COMPETITIVE TECHNOLOGIES, INC.
The Annual Meeting of Stockholders of COMPETITIVE
TECHNOLOGIES, INC. (the "Company") will be held at the American
Stock Exchange, 86 Trinity Place, New York, New York 10006 on
Friday, January 16, 2004, at 10:00 a.m. local time for the
following purposes:
1. Electing a Board of Directors to serve until the
next annual meeting of stockholders and until their
respective successors have been elected and qualified;
2. Considering and acting on a proposal to amend the 1996
Directors' Stock Participation Plan by increasing the number of
shares of Common Stock available for issuance under the Plan by
25,000 shares; and
3. Transacting such other business as may properly
come before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
November 14, 2003, as the record date for determining the
stockholders entitled to notice of and to vote at said meeting
and/or adjournments thereof.
If you do not expect to attend the meeting in person,
please complete, date, sign and return the accompanying proxy
without delay.
By Order of the Board of Directors
s/Jeanne Wendschuh
Jeanne Wendschuh
Secretary
November 14, 2003
PROXY STATEMENT
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06824
___________________
This Proxy Statement is being furnished to stockholders in
connection with the solicitation by the Board of Directors of
Competitive Technologies, Inc., a Delaware corporation (the
"Company"), of proxies in the form enclosed herewith for the
Company's annual meeting of stockholders to be held January 16,
2004.
Each proxy received will be voted as directed. If no
direction is indicated, the proxy will be voted FOR election of
the nominees named below as directors and FOR amending the 1996
Directors' Stock Participation Plan as described below. Any
proxy may be revoked at any time prior to the voting thereof by
notifying the Company; no formal procedure is required.
If you complete and properly sign the accompanying proxy and
return it to us, it will be voted as you direct. If you are a
stockholder of record (that is, if you hold your shares in
certificate form registered in your name on the books of the
Company's transfer agent, American Stock Transfer & Trust
Company) and attend the meeting, you may deliver your completed
proxy card in person.
However, if you hold your shares in "street name" (that is,
not in certificate form), a) you must return your voting
instructions to your broker or nominee (that is, the holder of
record), or, b) if you wish to attend the meeting and vote in
person, you must obtain and bring to the meeting a proxy signed
by the record holder giving you the right to vote the shares in
order to be able to vote at the meeting. (You may not use the
voting instruction form provided by your broker or nominee to
vote in person at the meeting).
The approximate date on which this Proxy Statement and the
form of proxy enclosed herewith are first to be sent or given to
the Company's stockholders is intended to be November 24, 2003.
Only the holders of record of the Company's 6,201,345
outstanding shares of Common Stock and 2,427 outstanding shares
of Preferred Stock at the close of business on November 14, 2003,
will be entitled to vote at the meeting. Each share of Common
Stock and each share of Preferred Stock is entitled to one vote
on each matter to be voted upon. Abstentions will be treated as
shares present and entitled to vote for purposes of determining
the presence of a quorum but as not voted for purposes of
determining the approval of any matters submitted to the
stockholders for a vote. Abstentions will have the same effect
as negative votes. If a broker indicates on the proxy that it
does not have discretionary authority as to certain shares to
vote on a particular matter (broker non-votes), those shares will
not be considered as present and entitled to vote with respect to
that matter.
ELECTION OF DIRECTORS
At the meeting a Board of six directors is to be elected by
plurality vote. The six nominees proposed by the Board of
Directors are named below.
All of the nominees named below are currently directors of
the Company. There is no family relationship between any
director or executive officer of the Company or any person
nominated by the Company to become a director or executive
officer. In the event that any of the nominees for director
should be unable to serve, discretionary authority is solicited
to vote for the election of other persons unless the size of the
full Board is reduced. Each director will hold office until the
next annual meeting of stockholders and until his successor has
been elected and qualified or until his earlier resignation or
removal. The Company has no reason to believe that any of the
nominees named will not be available for election as directors
for their prescribed terms.
The following table sets forth information with respect to
each nominee for director according to the information furnished
the Company by him:
Principal Occupation
Name, Age and During Past Five
Positions Currently Years; Other Public Director of Company
Held with Company Directorships Since
Richard E. Carver, President and Chief January 2000
66, Director and Executive Officer,
Chairman of the MST America (an
Board of Directors international
business strategies
consultancy) since
January 1995;
President and Chief
Executive Officer,
RPP America (a
company that sells
solid waste wrapping
systems) from
November 1998 to
April 2000; Chairman
and Chief Executive
Officer, Carver
Lumber Company
(provider of
building materials
for new home
construction and
prefabrications)
from May 1988 to
December 1999.
George W. Dunbar, President, Chief November 1999
Jr., 57, Director Executive Officer
and Director,
Targesome, Inc. (a
developer of
targeted
nanoparticle drug
delivery technology)
since February 2003;
Chief Executive
Officer, EPIC
Therapeutics, Inc.
(a drug delivery
technology company)
from September 2000
to November 2002;
Acting President and
Chief Executive
Officer of
StemCells, Inc.
(previously known as
Cyto-Therapeutics,
Inc.) from February
2000 to January
2001; Acting
President of
StemCells
California, Inc. (a
wholly-owned
subsidiary of
StemCells, Inc.)
from November 1999
to January 2001
(companies
developing organ-
specific, human
platform stem cell
technologies to
treat diseases);
President and Chief
Executive Officer,
Metra BioSystems,
Inc. (a developer of
products to detect
and manage bone and
joint diseases) from
1991 to August 1999.
Director of Sonus
Pharmaceuticals,
Inc.
Samuel M. Fodale, President, Central October 1998
60, Director Maintenance
Services, Inc. (a
service and
warehousing
corporation serving
the automobile
industry).
John B. Nano, 59, President and Chief June 2002
President and Chief Executive Officer of
Executive and the Company since
Financial Officer, June 2002; Chief
Director Financial Officer of
the Company since
August 2003;
Principal reporting
to the Chairman of
Stonehenge Networks
Holdings, N.V. (a
global virtual
private network
(VPN) provider) with
respect to certain
operating, strategic
planning and finance
functions from 2000
to 2001; Executive
Vice President and
Chief Financial
Officer of ConAgra
Trade Group, Inc. (a
subsidiary of
ConAgra, Inc., an
international food
company) from 1998
to 1999; Executive
Vice President and
Chief Financial
Officer and
President of
Internet Startup
Division of Sunkyong
America (a
subsidiary of
Sunkyong Group, a
Korean conglomerate)
from 1993 to 1998.
Charles J. Partner, Garmark June 1999
Philippin, 53, Advisors (a
Director mezzanine investment
fund) since May
2002; Chief
Executive Officer,
Accordia, Inc.
(formerly On-Line
Retail Partners) (a
provider of
management and
technology resources
for branded e-
commerce businesses)
since June 2000; a
member of the
management committee
of Investcorp
International, Inc.
(a global investment
group that acts as a
principal and
intermediary in
international
investment
transactions) from
July 1994 to May
2000. Director of
Samsonite Corp.
John M. Sabin, 48, Chief Financial December 1996
Director Officer and General
Counsel of
NovaScreen
Biosciences
Corporation (a
developer of
biotechnology-based
tools to accelerate
drug discovery and
development) since
January 2000;
business consultant
from September 1999
to January 2000;
Executive Vice
President and Chief
Financial Officer,
Hudson Hotels
Corporation (a
limited service
hotel development
and management
company) May 1998 to
September 1999;
Senior Vice
President and
Treasurer, Vistana,
Inc. (a developer of
vacation timeshares)
February 1997 to May
1998. Trustee of
Hersha Hospitality
Trust.
Messrs. Sabin (Chairman), Carver, Dunbar and Philippin are
members of the audit committee. Messrs. Fodale (Chairman),
Carver and Philippin are members of the nominating committee.
Messrs. Philippin (Chairman), Carver and Dunbar are members of
the compensation and stock option committee.
BENEFICIAL OWNERSHIP OF SHARES
The following information indicates the beneficial ownership of
the Company's Common Stock by each director and nominee, by the
sole executive officer of the Company, and by each person known
to the Company to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock. The indicated owners
furnished such information to the Company as of October 15, 2003
except as otherwise indicated in the footnotes.
Name (and Address) Amount
if more than 5%) Beneficially
of Beneficial Owners Owned (A) Percent (B)
Directors, nominees and executive officers
Richard E. Carver 45,720 (C) --
George W. Dunbar, Jr. 47,525 (D) --
Samuel M. Fodale 184,708 (E) 3.0%
John B. Nano 80,000 (F) 1.3%
Charles J. Philippin 74,269 (G) 1.2%
John M. Sabin 49,726 (H) --
All directors, nominees and
executive officers as a group 481,948 (I) 7.5%
Additional 5% Owner
Richard D. Corley 399,800 (J) 6.5%
416 St. Mark Court
Peoria, IL 61603
___________________
(A) Except as indicated in the notes which follow, the
designated person or group has sole voting and investment
power.
(B) Percentages of less than 1% are not shown.
(C) Consists of 11,720 shares of Common Stock plus 34,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Carver.
(D) Consists of 7,525 shares of Common Stock and 40,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Dunbar.
(E) Consists of 144,708 shares of Common Stock plus 40,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Fodale. Includes 99,100 shares of
Common Stock held by Central Maintenance Services, Inc.,
9,000 shares of Common Stock held by Missouri Recycling -
St. Louis, Inc., 3,200 shares of Common Stock held by his
children and 2,000 shares of Common Stock held by his
spouse.
(F) Consists of 5,000 shares of Common Stock and 75,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Nano. Includes 5,000 shares of
Common Stock held by his spouse in Uniform Gifts to Minors
account for his son.
(G) Consists of 34,269 shares of Common Stock plus 40,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Philippin.
(H) Consists of 9,726 shares of Common Stock plus 40,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Sabin. Includes 200 shares of
Common Stock held by his spouse.
(I) Consists of 212,948 shares of Common Stock plus 269,000
stock options to purchase shares of Common Stock deemed
exercised solely for purposes of showing total shares owned
by such group.
(J) Information from Schedule 13D/A dated December 18, 2002 and
filed by Mr. Corley January 6, 2003.
At November 14, 2003, the stock transfer records maintained
by the Company with respect to its Preferred Stock showed that
the largest holder of Preferred Stock owned 500 shares.
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the total compensation
awarded to, earned by or paid by the Company for services
rendered during each of the fiscal years ended July 31, 2003,
2002 and 2001 to the two individuals who served as executive
officers of the Company during the fiscal year ended July 31,
2003 (the Specified Executives).
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
______
Name and Securities All Other
Principal Fiscal Annual Compensation Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($) (A)
John B. Nano, 2003 250,000 -- -- 5,942 (B)
President and 2002 28,846 -- 300,000 --
Chief Executive
Officer since
June 17, 2002
Frank R. McPike, Jr. 2003 242,308 10,000 -- 7,067 (C)
Executive Vice 2002 233,654 -- 12,500 19,240 (C)
President and 2001 217,500 25,000 25,000 23,773 (C)
Chief
Financial Officer;
formerly President,
Chief Executive
Officer, and Chief
Operating Officer
______________________
(A) The aggregate amount of any perquisites or other personal
benefits was less than 10% of the total of annual salary
and bonus and is not included in the above table.
(B) Consists of personal use of Company auto.
(C) Consists principally of amounts contributed for Mr. McPike
to Competitive Technologies, Inc.'s 401(k) Plan in 2002
and Employees' Common Stock Retirement Plan in 2001. The
Company contributed shares of its Common Stock valued at
the means between its high and low prices on the American
Stock Exchange on December 18, 2002 and July 31, 2001,
respectively. Also includes premiums of $1,065 in 2003
and 2002 and $460 in 2001 paid for $250,000 term life
insurance policy and personal use of Company auto.
Option Grants
The Company granted no stock options during the fiscal year
ended July 31, 2003 to the Specified Executives.
Option Exercises and Year End Value
For the Specified Executives, the following table summarizes
stock options held at July 31, 2003. The Specified Executives
exercised no stock options during the fiscal year ended July 31,
2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Options Options at
On Value at FY-End (#) FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
John B. Nano 0 $0 75,000/225,000 $ 0/$ 0
Frank R. McPike, Jr. 0 $0 164,315/0 $ 0/$ 0
Employment Agreements
The Company has entered into an employment agreement with
Mr. Nano which provides for his employment as the Company's
President and Chief Executive Officer at a base compensation of
$250,000 per year, subject to reviews and increases in the sole
discretion of the Company's Board of Directors. The employment
is at will and can be terminated by either party at any time and
for any reason. The agreement also provides, among other things:
-- From his date of employment through July 31, 2003, and
in each following fiscal year, Mr. Nano will be
eligible to receive a bonus of up to $100,000, based on
the Company's performance and Mr. Nano's performance of
objectives to be established by the Board. (No bonus
was awarded Mr. Nano in fiscal 2003.) After fiscal
2003, the Company may adopt an executive bonus plan in
lieu of the bonus.
-- Mr. Nano was granted ten-year options under the
Company's 1997 Employees' Stock Option Plan for the
purchase of 300,000 shares of the Company's Common
Stock at an exercise price of $2.15 per share, vesting
25% on each of the first four anniversaries of his
employment date.
-- If Mr. Nano's employment terminates as a result of his
death or disability, any unvested options granted under
the agreement will immediately become fully vested.
-- If Mr. Nano terminates his employment for good reason
or the Company terminates it without cause, Mr. Nano
will be entitled to receive a severance benefit
continuing his base compensation and certain other
benefits for a period of six months and continued
vesting of stock options for the longer of a period of
six months or until the next anniversary of his
employment date.
-- If his employment is terminated without cause in
conjunction with a change in control of the Company,
Mr. Nano will be entitled to receive his base
compensation and certain other benefits for one year,
and any unvested options granted under the agreement
will immediately become fully vested.
-- The agreement provides for a one-year period of non-
competition with the Company in certain circumstances.
Mr. McPike's employment with the Company is at will and can
be terminated by either party at any time with or without cause.
The Company's December 7, 1999, employment agreement with Mr.
McPike expired on December 7, 2002. Effective July 1, 2003, the
Company placed Mr. McPike on unpaid leave of absence and he
ceased to act as an executive officer of the Company. The
Company is negotiating with Mr. McPike with respect to possible
future payments to Mr. McPike.
Other Arrangements
401(k) Plan
Effective January 1, 1997, the Company established the
Competitive Technologies, Inc. 401(k) Plan (the 401(k) plan), a
defined contribution plan for all employees meeting certain
service requirements. All employees of the Company who have
attained the age of 21 are eligible to participate in the 401(k)
plan.
Under the 401(k) plan, an eligible employee may elect a
salary reduction of his or her compensation as defined in the
401(k) plan to be contributed by the Company to the 401(k) plan.
Employee contributions for any calendar year are limited to a
specific dollar amount determined by the Internal Revenue Service
($12,000, plus an additional $2,000 for participants over age 50
for 2003, $11,000, plus an additional $1,000 for participants
over age 50 for 2002 and the lesser of 15% of compensation or
$10,500 for 2001). Employee contributions are fully vested when
made.
The Company may also make discretionary contributions
subject to limitations set forth in the Internal Revenue Code.
Before an employee has completed four years of service, Company
contributions generally vest over time based on an employee's
years of service. After an employee has completed four years of
service, Company contributions are fully vested when they are
made. The 401(k) plan defines a year of service as twelve (12)
consecutive months during which an employee has at least 1,000
hours of service. Discretionary contributions may be allocated
based on compensation, based on a per capita allocation or on a
combination of per capita and compensation bases.
For the fiscal years ended July 31, 2003 and 2002, the
Company's directors authorized discretionary contributions of
$100,000 and $80,000, respectively, payable in the Company's
common stock. The Company charged these amounts to expense in
fiscal 2003 and 2002, respectively. The Company contributed
shares of Company common stock valued at $80,000 to the 401(k)
plan in December 2002. The Company expects to contribute shares
of Company common stock valued at $100,000 to the 401(k) plan
during the second quarter of fiscal 2004 but the allocation has
not yet been determined. Mr. McPike's portion of the fiscal 2002
allocation was $12,094. Mr. Nano was not eligible to participate
in the fiscal 2002 allocation.
Employees' Common Stock Retirement Plan
Effective August 1, 1990, the Company adopted the
Competitive Technologies, Inc. Employees' Common Stock Retirement
Plan. For the fiscal year ended July 31, 2001, the Board of
Directors authorized a contribution of 14,814 shares valued at
approximately $80,000, based on the fiscal 2001 year-end closing
price. The Company charged this amount to expense in 2001. The
Competitive Technologies, Inc. Employees' Common Stock Retirement
Plan was merged into the Company's 401(k) Plan effective January
31, 2003.
Annual Incentive Compensation Plan
On March 28, 2003, the Company's Board of Directors approved
the Competitive Technologies, Inc. Annual Incentive Compensation
Plan and terminated its previous incentive compensation plan.
The Compensation Committee, composed of not less than two
independent directors of the Company, administers the Annual
Incentive Compensation Plan. The Board of Directors may suspend,
amend or terminate this plan at any time or from time to time.
This plan provides that the greater of annual bonus incentive or
commission awards be paid in cash.
Annual bonus incentive awards are tied up to 70% to the
Company's financial performance and up to 30% to individual
performance. If the Company's financial performance is less than
80% of its goal, there may be no award for the 70% portion. If
the Company's financial performance is more than 115% of its
goal, the award may increase to 150% of the 70% portion of the
award. If a participant meets his or her individual goals, the
30% portion may be paid regardless of whether the Company
achieves its financial performance goal. The targeted incentive
award is a percentage of the participant's salary as of December
31 of each plan year, 10% for administrative staff, 30% for
professional staff and 50% for the President and CEO. Special
awards may also be made in the discretion of the Compensation
Committee. For the fiscal year ended July 31, 2003, the Company
charged $50,000 to expense for annual bonus incentive awards to
administrative and professional staff.
This plan includes the Company's Commission Plan for
professional and support staff and consultants, which sets aside
up to 10% of new business revenue (less direct costs other than
personnel costs). The commission from each new business revenue
source shall be paid for a maximum of five years and be allocated
among those who participated in generating that revenue. No
commissions were paid or accrued under this plan in fiscal 2003.
1997 Employees' Stock Option Plan
The Company has in effect a 1997 Employees' Stock Option
Plan (the Option Plan) with respect to its Common Stock, $.01 par
value, which provides for granting either incentive stock options
under Section 422 of the Internal Revenue Code or nonqualified
options. Incentive options and non-qualified options granted
under the Option Plan must be granted at not less than 100% of
fair market value on the grant date. In certain instances stock
options, which are vested or become vested upon the happening of
an event or events specified by the Company's Stock Option
Committee, may continue to be exercisable through up to 10 years
after the date granted, irrespective of the termination of the
optionee's employment with the Company.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information about the
Company's equity compensation plans as of July 31, 2003.
(a) (b) (c)
Number of
securities
remaining
Number of available for
securities to future issuance
be issued under equity
upon compensation
exercise of Weighted-average plans
outstanding exercise price of (excluding
options, outstanding securities
warrants and options, warrants reflected in
Plan category rights and rights column (a))
Equity compensation
plans approved by
security holders 943,267 $5.08 590,331
Equity compensation
plans not approved
by security holders None Not applicable None
DIRECTOR COMPENSATION
The Company pays each director who is not an employee of the
Company or a subsidiary $1,000 for each Board meeting attended.
The Company also pays each director $250 for attending each
committee meeting that coincides with a Board meeting and $500
for attending a committee meeting that does not coincide with a
Board meeting. The Company pays directors who participate in
telephonic board and/or committee meetings one half the fee for
attending such meetings. The Company reimburses directors for
out-of-pocket expenses incurred to attend Board and committee
meetings.
When a director of the Company represents the Company as a
director of an investee company, the Company pays the director
for attending investee board meetings the difference, if any,
between (a) the amount the investee company pays and (b) the
amount the Company pays for attendance at such meetings. During
fiscal 2003, the Company paid Mr. Sabin $6,000 for his attendance
at investee board meetings. No other director received any such
fees.
In addition to meeting fees, the Company pays outside
directors an annual cash retainer of $7,500 payable in quarterly
installments.
Under the Company's 1996 Directors' Stock Participation
Plan, on the first business day of January from January 1997
through January 2006, the Company issues to each non-employee
director who has been elected by the stockholders and has served
at least one full year a number of shares of the Company's Common
Stock equal to the lesser of (i) $15,000 divided by the per share
fair market value of such stock on the issuance date, or (ii)
2,500 shares. If a non-employee director were to leave the Board
after serving at least one full year but prior to the January
issuance date, the Company would pay the annual stock
compensation described above on a pro-rata basis up to the
termination date. In January 2003, the Company issued an
aggregate of 15,000 shares under this plan (2,500 each to Messrs.
George C. J. Bigar (who did not stand for re-election in January
2003), Carver, Dunbar, Fodale, Philippin and Sabin).
Effective January 27, 2000, the Company adopted the
Competitive Technologies, Inc. 2000 Directors Stock Option Plan
(the Directors Option Plan) with respect to its Common Stock,
$.01 par value. Directors who are not employees of the Company
or a subsidiary are eligible for options granted pursuant to this
plan. This plan provides that the Company grant an option for
10,000 shares to each new director elected during the term of
this plan on the date he or she is first elected to office,
whether by the stockholders or by the Board. This plan also
provides that the Company grant an additional option for 10,000
shares to each director holding office on the first business day
in each subsequent January. Options under this plan will be non-
statutory options, have an exercise price not less than 100% of
the fair market value at the grant date, have a term of ten years
from the grant date, and fully vest on the grant date. If a
person's directorship is terminated because of death or permanent
disability, options may be exercised within one year after
termination. If the termination is for any other reason, options
may be exercised within 180 days after termination. However, the
Board has discretion to amend options previously granted to
provide that such options may continue to be exercisable for
specified additional periods following termination. In no event
may an option be exercised after expiration of its ten-year term.
The Company may not grant options under the Directors Option Plan
after the first business day of January 2010. On January 2,
2003, the Company granted 60,000 options under this plan (10,000
each to Messrs. Bigar, Carver, Dunbar, Fodale, Philippin and
Sabin) at an exercise price of $2.14 per share, the market price
on the grant date. On January 24, 2003, the Board extended the
exercisability of 40,000 options previously granted to Mr. Bigar
to January 24, 2006 (3 years after termination of his services as
a director).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
(Exchange Act) requires the Company's directors and officers and
persons who own more than ten percent of the Company's Common
Stock to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and the American Stock
Exchange. SEC regulations require reporting persons to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such reports
received or written representations from certain reporting
persons with respect to fiscal 2003, the Company believes that
all reporting persons complied with all applicable reporting
requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Securities and Exchange Commission's
private investigation captioned "In the Matter of Trading in the
Securities of Competitive Technologies, Inc." as of July 31,
2003, the Company has advanced $58,000 and accrued an additional
$40,000 in legal fees for Mr. Fodale. As of July 31, 2003, the
Company has also paid or accrued additional sums for the
Company's current (excluding Mr. Fodale and Mr. Nano) and four
former directors' related legal fees in the matter. Cumulative
fees for no current or former director (except Mr. Fodale)
individually exceeded $60,000 at July 31, 2003. See Note 16 to
the Company's Consolidated Financial Statements in its Annual
Report to Shareholders or its Annual Report on Form 10-K for the
year ended July 31, 2003.
The Company may receive reimbursement of certain of these
fees in excess of the deductible from its directors' and
officers' liability insurance policy.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
This report of the Compensation and Stock Option Committee
(the "Committee") shall not be deemed incorporated by reference
by any general statement incorporating the Proxy Statement by
reference into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (the "Acts"), except to the
extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed
under such Acts.
The Committee is responsible for making recommendations to
the Company's Board of Directors concerning the compensation of
the Company's Chief Executive Officer and, based upon
recommendations received from the Company's Chief Executive
Officer, the compensation of the Company's other officers,
consistent with employment contracts where appropriate.
The Company's compensation program consists of salary,
performance bonus and stock options, which are generally reviewed
annually. The overall executive compensation philosophy is that
compensation should be aligned with and support the Company's
business strategy and long-term goals. The Company believes it
is essential to maintain an executive compensation program that
provides overall compensation competitive with that paid
executives with comparable qualifications and experience. This
is critical to attract and retain competent executives.
In fiscal 2003, the Committee awarded Mr. McPike a $10,000
discretionary bonus.
The Company intends that its annual incentive compensation
plan reward employees for achieving specific levels of
profitability. It provides that the greater of annual bonus
incentive or commission awards be paid in cash. Annual bonus
incentive awards are tied to the Company's financial performance
and the individual's performance in achieving their goals. The
targeted annual bonus incentive award is a percentage of the
participant's salary. The Compensation Committee may also make
special awards. The Company designed its commission plan to
encourage staff and consultants to generate ongoing new business
revenues. Awards are at the discretion of the Compensation
Committee. In fiscal 2003, the Company accrued $50,000 for
annual bonus incentive awards for employees other than the
Specified Executives.
The Committee determines options to be granted under the
Company's 1997 Option Plan. This plan provides additional
incentive to maximize stockholder value. The plan may also
utilize vesting periods to encourage option recipients to
continue in the employ of the Company. The Company grants stock
options to its executive officers and additional key employees.
No stock options were granted under this plan during fiscal 2003.
Compensation and Stock Option Committee:
Charles J. Philippin (Chairman)
Richard E. Carver
George W. Dunbar, Jr.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviewed and discussed the Company's
audited financial statements as of and for the year ended July
31, 2003 with management.
The Audit Committee discussed with the independent
accountants, BDO Seidman, LLP, (see also "Independent Public
Accountants" below) the matters required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit
Committees," as issued, modified or supplemented.
The Audit Committee received the written disclosures and the
letter from the independent accountants, BDO Seidman, LLP,
required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," as issued,
modified or supplemented. The Audit Committee discussed with the
independent accountants, BDO Seidman, LLP, their independence from
management and from the Company.
Based on the reviews and discussions referred to in the
foregoing paragraphs, the Audit Committee recommended to the
Board of Directors that the audited financial statements as of
and for the year ended July 31, 2003 be included in the Company's
annual report on Form 10-K for the year ended July 31, 2003.
Audit Committee:
John M. Sabin (Chairman)
Richard E. Carver
George W. Dunbar, Jr.
Charles J. Philippin
PERFORMANCE GRAPH
The performance graph below shall not be deemed incorporated
by reference by any general statement incorporating this Proxy
Statement by reference into any filing under the Acts, except to
the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed
under such Acts.
The graph below compares cumulative total return (assuming
reinvestment of dividends, if any) on the Company's Common Stock
for the five-year period shown, compared with the American Stock
Exchange Market Index and a SIC code index made up of all public
companies whose four-digit standard industrial code number (6794)
includes patent owners and lessors and who have been public for
the period covered by the graph, all for the fiscal years ended
July 31, assuming $100 invested on August 1, 1998 in the
Company's Common Stock, the American Stock Exchange Market Index
and the published SIC code index of public companies.
(I N S E R T G R A P H)
1998 1999 2000 2001 2002 2003
Competitive
Technologies,
Inc. $100.00 $ 69.85 $107.35 $ 63.53 $ 32.82 $ 18.35
Industry Index
6794 $100.00 $ 56.02 $ 46.76 $ 39.85 $ 38.60 $ 61.95
Broad Market
AMEX Index $100.00 $102.83 $117.79 $112.28 $102.10 $117.31
BOARD MEETINGS AND COMMITTEES
During the last full fiscal year, the Board of Directors of
the Company held seven (7) meetings. During the same period, the
audit committee met seven (7) times, the compensation and stock
option committee met two (2) times, and the nominating committee
met once. Mr. Fodale attended 69% of the aggregate number of
meetings of the Board and committees of which he was a member.
No other incumbent director attended fewer than 75% of the
aggregate number of meetings of the Board and committees of which
he was a member.
Audit Committee
The function of the audit committee is to recommend the
selection of auditors, to review with the Company's auditors the
scope and adequacy of the audit and the Company's accounting
practices, procedures and policies, and to oversee the quality
and objectivity of the Company's financial reporting. Each
member of the audit committee qualifies as an independent
director as defined in current American Stock Exchange (AMEX)
listing standards. The audit committee acts pursuant to the
Audit Committee Charter adopted by the Board of Directors on May
1, 2000, attached as Appendix A to the Proxy Statement for the
Company's annual meeting of stockholders held January 19, 2001.
Compensation and Stock Option Committee
The function of the compensation and stock option committee
is to make recommendations to the Board of Directors with respect
to compensation of officers and other employees of the Company,
to exercise all powers provided in the Annual Incentive
Compensation Plan, to grant options under and administer the
Company's 1997 Option Plan, and to determine the dollar amount of
the Company's Common Stock to be contributed to the Company's
401(k) Plan.
Nominating Committee
The function of the nominating committee is to recommend
candidates for director of the Company to the Board. (The
nominating committee will consider nominees recommended by
stockholders; no special procedures need to be followed in
submitting such recommendations.)
PROPOSED AMENDMENT TO THE
1996 DIRECTORS' STOCK PARTICIPATION PLAN
The Board of Directors has adopted, subject to stockholder
approval, a proposal to amend the 1996 Directors' Stock
Participation Plan (the "1996 Directors' Plan") to increase the
number of shares that may be issued by 25,000 shares.
The 1996 Directors' Plan provides for issuance of shares of
the Company's Common Stock to non-employee directors of the
Company (currently five in number). An aggregate of 100,000
shares were reserved for issuance under the 1996 Directors' Plan.
As a result of shares issued under the 1996 Directors' Plan, at
November 14, 2003, 23,579 shares were reserved for issuance.
Assuming no director resigns and the Company issues 2,500 shares
to each non-employee director on January 2, 2004, 11,079 reserved
shares would remain.
If stockholders approve the proposed amendment, the shares
reserved for issuance under the 1996 Directors' Plan (taking into
account the 23,579 shares reserved for issuance now and the
12,500 shares expected to be issued on January 2, 2004) will be
36,079. This should provide sufficient shares for issuance of
the maximum 2,500 shares per non-employee director to five
directors on January 2, 2005 and 2006 and additional shares for
future years.
Description of the 1996 Directors' Plan
Under the 1996 Directors' Plan, on the first business day of
January of each year for ten years commencing in 1997, the
Company will issue to each non-employee director who has been
elected by the stockholders and has served continuously as such a
director for at least one full year prior to the date of
issuance, a number of shares of the Company's Common Stock
(rounded to the nearest whole share) equal to the lesser of (i)
$15,000 divided by the per share fair market value of such stock
on the date of issuance or (ii) 2,500 shares. The 1996
Directors' Plan will terminate following the close of business on
the first business day of January 2006.
If a non-employee director were to leave the Board after
serving at least one full year but prior to the January issuance
date, the annual stock compensation described above would be
payable in shares on a pro-rata basis up to the time of
termination.
The 1996 Directors' Plan provides for adjustments for such
matters as stock dividends and stock splits to prevent dilution
or enlargement of rights. Any amendment to the 1996 Directors'
Plan which would increase the number of shares reserved for
issuance, change the eligibility provisions or the formula for
determining the number of shares to be issued, or extend the term
of the 1996 Directors' Plan requires stockholder approval.
On November 14, 2003, the last reported sale price of the
Company's Common Stock on the American Stock Exchange, on which
the Company's Common Stock is listed, was $3.06 per share. The
Company expects to register under the Securities Act of 1933 the
additional 25,000 shares reserved for issuance under this
proposed amendment.
Under the 1996 Directors' Plan, as of November 14, 2003, shares
had been issued under the 1996 Directors' Plan as shown in the
following table:
Number
Name and Position Dollar Value ($) of Shares
Specified Executives -- --
All current executive officers
as a group -- --
All current directors who are not
executive officers as a group $ 174,220 43,550
Employees, including all current
officers who are not executive
officers, as a group -- --
Vote Required for Approval; Board Recommendation
The Board of Directors urges stockholders to approve the
amendment to the 1996 Directors' Plan to provide sufficient
shares for issuances during the remaining term of the 1996
Directors' Plan. Shares issued under the 1996 Directors' Plan
further align the interests of current and future directors with
those of stockholders and increase their stake in the Company and
any benefits directors realize will mirror increases in value
actually available to every stockholder.
The vote required for approval of the amendment to the 1996
Directors' Plan is a majority of the shares of Common and
Preferred Stock (voting as a single class) present or represented
and entitled to vote on the matter at a meeting at which a quorum
(the holders of a majority of the Company's outstanding shares of
Common and Preferred Stock) is present in person or by proxy.
Shares issued pursuant to the 1996 Directors' Plan are in
addition to the cash fees paid to non-employee directors and the
options granted to them under the 2000 Directors Stock Option
Plan described above under "Director Compensation."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE 1996 DIRECTORS' PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
BDO Seidman, LLP served as independent public accountants
for the fiscal year ended July 31, 2003 and the audit committee
expects to recommend and the Board of Directors expects to select
them to serve for the fiscal year ending July 31, 2004. A
representative of BDO Seidman, LLP is expected to attend the
annual meeting to make a statement if he or she desires to do so
and to be available to respond to appropriate questions.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
The Audit Committee of the Company recommended and its Board
of Directors approved selection of BDO Seidman, LLP and dismissal
of PricewaterhouseCoopers LLP as the Company's independent
accountant contingent upon BDO Seidman, LLP's acceptance of its
engagement and execution of a satisfactory engagement letter.
On September 2, 2003, PricewaterhouseCoopers LLP notified
the Company that it viewed its dismissal to have occurred.
Accordingly, as of September 2, 2003, PricewaterhouseCoopers LLP
was dismissed as the Company's auditor. It is the Company's
understanding that PricewaterhouseCoopers LLP views its dismissal
to have occurred on August 25, 2003. However, the Company
disagrees with PricewaterhouseCoopers LLP's opinion as to the
date of their dismissal, which was not intended to occur until
the retention of new auditors was completed. However, the
Company accepts that September 2, 2003 may be viewed as the
dismissal date of PricewaterhouseCoopers LLP.
The reports of PricewaterhouseCoopers LLP on the Company's
consolidated financial statements for the fiscal years ended July
31, 2002 and 2001 contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
During the fiscal years ended July 31, 2002 and 2001, and
through September 2, 2003, there was no disagreement with
PricewaterhouseCoopers LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or
procedures, which disagreement, if not resolved to the satisfaction
of PricewaterhouseCoopers LLP, would have caused them to make
reference thereto in their report on the consolidated financial
statements for such years.
During the fiscal years ended July 31, 2002 and 2001, and
through September 2, 2003, there was no reportable event as
defined in Item 304(a)(1)(v) of Regulation S-K.
On September 16, 2003, Competitive Technologies, Inc.
engaged BDO Seidman, LLP as its independent accountant to audit
the Company's consolidated financial statements for the fiscal
year ended July 31, 2003. The Company's Audit Committee
recommended and its Board of Directors approved BDO Seidman,
LLP's engagement.
During the fiscal years ended July 31, 2002 and 2001, and
through September 16, 2003, the Company has not consulted BDO
Seidman, LLP regarding the application of accounting principles
to any specific transaction (either completed or proposed), the
type of audit opinion that might be rendered on the Company's
financial statements, any other accounting, auditing or financial
reporting matter, or any reportable events described in Items
304(a)(2)(i) and 304(a)(2)(ii) of Regulation S-K.
Audit Fees
The aggregate fees billed for professional services rendered
by BDO Seidman, LLP for its audit of the Company's financial
statements for the year ended July 31, 2003 were $50,000.
PricewaterhouseCoopers LLP reviewed the financial statements
included in the Company's Forms 10-Q for October 31, 2002, January
31, 2003 and April 30, 2003, and PricewaterhouseCoopers LLP billed
$30,500 aggregate fees for those services.
Financial Information Systems Design and Implementation Fees
None.
All Other Fees
None.
Since only audit services have been provided, it was not
necessary for the audit committee to consider whether the
provision of non-audit services to the Company is compatible with
maintaining the independence of BDO Seidman, LLP as the Company's
public accountants.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the
next annual meeting under SEC Rule 14a-8 must be received by the
Company for inclusion in the Company's proxy statement and form
of proxy relating to that meeting not later than 120 days before
the date of mailing of the Company's proxy statement in
connection with the previous year's annual meeting. If this
year's expected mailing date of November 24, 2003 is met, such
proposals must be received not later than July 28, 2004.
Notice of stockholder matters intended to be submitted at
the next annual meeting outside the processes of Rule 14a-8 will
be considered untimely if not received by the Company at least 45
days before the date on which the Company mails its proxy
materials for this year's meeting. If the expected mailing date
of November 24, 2003 is met, notice not received by October 10,
2004 will be untimely. The discretionary authority described in
the last sentence of this proxy statement will be conferred with
respect to any such untimely matters.
GENERAL
The Company will bear the cost of solicitation of proxies.
In addition to being solicited by mail, proxies may be solicited
personally or by telephone or telegraph. The Company will
reimburse brokerage houses and other custodians, nominees and
fiduciaries for forwarding proxy materials to principals in
obtaining their proxies.
On written request, the Company will provide without charge
(except for exhibits) to any record or beneficial owner of its
securities a copy of the Company's annual report on Form 10-K
filed with the Securities and Exchange Commission for the fiscal
year ended July 31, 2003, including the financial statements and
schedules thereto. Exhibits to said report will be provided upon
payment of fees limited to the Company's reasonable expenses in
furnishing such exhibits. Written requests should be directed to
Jeanne Wendschuh, Secretary of the Company, at 1960 Bronson Road,
Fairfield, Connecticut 06824.
Copies of the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any
amendments to those reports and any other reports filed with or
furnished to the Securities and Exchange Commission (SEC) are
also available on or through our Company's website,
www.competitivetech.net, as soon as reasonably practicable after
they are filed with or furnished to the SEC.
The Board of Directors is not aware of any matter that is to
be presented for action at the meeting other than the matters set
forth herein. Should any other matters requiring a vote of the
stockholders arise, the proxies in the enclosed form confer upon
the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in respect
of any such other matters in accordance with their best judgment
in the interest of the Company.
By Order of the Board of Directors
s/Jeanne Wendschuh
Jeanne Wendschuh
Secretary
Dated: November 14, 2003
PROXY
COMPETITIVE TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, JANUARY 16, 2004
The undersigned stockholder of COMPETITIVE TECHNOLOGIES,
INC. hereby appoints JOHN B. NANO and PAUL A. LEVITSKY, each with
full power of substitution, as attorneys and proxies to vote all
the shares of stock of said Company which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of said
Company to be held on Friday, January 16, 2004, at 10:00 a.m.
local time at the American Stock Exchange, 86 Trinity Place, New
York, New York 10006, or at any adjournments thereof, with all
powers the undersigned would possess if personally present, as
indicated below, and for transacting of such other business as
may properly come before said meeting or any adjournment thereof,
all as set forth in the November 14, 2003, Proxy Statement for
said meeting:
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:
NOMINEES:
[ ] FOR ALL NOMINEES [ ] Richard E. Carver
[ ] George W. Dunbar, Jr.
[ ] WITHHOLD AUTHORITY [ ] Samuel M. Fodale
FOR ALL NOMINEES [ ] John B. Nano
[ ] Charles J. Philippin
[ ] FOR ALL EXCEPT [ ] John M. Sabin
(See instructions below)
INSTRUCTION: To withhold authority to vote 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: [x]
2. Approval of amendment to 1996 Directors' Stock Participation
Plan. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
A majority of the members of said Proxy Committee who shall be
present in person or by substitute at said meeting, or in case
but one shall be present, then that one, shall have and exercise
all of the powers of said Proxy Committee.
This Proxy will be voted as directed, but if no direction is
indicated, it will be voted FOR election of the nominees named in
proposal 1 and FOR proposal 2 as described herein. On other
matters that may come before said meeting, this Proxy will be
voted in the discretion of the above-named Proxy Committee.
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.
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. [ ]
EXHIBIT A
COMPETITIVE TECHNOLOGIES, INC.
1996 DIRECTORS' STOCK PARTICIPATION PLAN
1. Definitions.
(a) "Plan" means this 1996 Directors' Stock Participation
Plan.
(b) "Company" means Competitive Technologies, Inc.
(c) "Director" means a person who is a director of the
Company and is not an employee of the Company or any subsidiary
of the Company.
2. Purpose.
The purpose of the Plan is to attract and retain qualified
Directors and to promote the best interests of the Company by
giving them a proprietary interest in and closer identity with
the Company through increased stock ownership.
3. Stock Subject to Plan.
An aggregate of 100,000 shares of the Company's Common Stock
shall be reserved for issuance under the Plan. Adjustment in the
shares subject to the Plan shall be made as provided in Paragraph 6.
4. Issuance of Stock.
On the first business day in January of each year for a
period of ten years commencing in 1997 and ending in 2006, the
Company shall issue to each Director who has been elected by the
stockholders of the Company and who has served as a Director for
a period of at least one year in consideration of the services
rendered to the Company by such Director, an annual number of
shares of the Company's Common Stock (rounded to the nearest
whole share) equal to the lesser of (i) $15,000 divided by the
per share fair market value of such Common Stock on the date of
issuance, or (ii) 2,500 shares.
In situations where a Director leaves the Board after
completing a full year of service but before the January 1st
issuance date, the annual stock compensation as described above
shall be payable on a pro-rata basis up to the time of
termination.
Shares issued under the Plan may be either authorized but
unissued shares or treasury shares. The Company shall in every
case have a reasonable time to cause certificates for shares to
be prepared and delivered.
5. Agreement of Director.
As a condition to issuance and receipt of shares, if the
Company in its sole discretion determines that such agreement is
necessary in order to comply with Federal or State securities
laws or other applicable laws, such Director shall agree that he
takes the shares issued to him under the Plan for investment and
not with any present intention to resell or distribute the same,
and he shall sign and deliver to the Company a certificate to
such effect at the time of such issuance. In such event the
certificates evidencing such shares shall be appropriately
legended and stop transfer instructions shall be placed with the
Transfer Agent for the Company's Common Stock. The Company shall
have no liability for failure to issue shares pending the meeting
of any requirements which the Company is advised by counsel must
be met under Federal or State securities laws or other applicable
laws before such shares may be issued under the Plan.
6. Change in Shares.
If any change is made in the Company's outstanding shares of
Common Stock by reason of stock dividend in excess of 3% in the
aggregate during any fiscal year of the Company, change in par
value, stock split-up, recapitalization, reclassification or
combination of shares, appropriate adjustment, disregarding
fractional shares, shall be made to the kind and number of shares
issuable under the Plan.
7. Effective Date; Term of Plan.
The Plan shall become effective when approved by the
stockholders of the Company and shall terminate following the
close of business on the first business day of January, 2006.
8. Amendments.
No amendment to the Plan shall be made, except upon approval
of the stockholders of the Company, which will increase the
number of shares reserved for issuance under the Plan, change the
eligibility provisions or the formula for determining the number
of shares to be issued as provided in Paragraph 4, or extend the
term of the Plan; and no amendment to Plan provisions specifying
the eligibility provisions or the formula for determining the
amount, price and timing of shares to be issued shall be made
more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder.