SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Competitive Technologies, Inc.
(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.
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transaction applies:
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transaction applies:
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transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is
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[ ] 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
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Notes:
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06430
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on January 19, 2001
To the Stockholders of
COMPETITIVE TECHNOLOGIES, INC.
Notice is hereby given that 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 19, 2001 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 upon a proposal to amend the
1997 Employees' Stock Option Plan by increasing the
number of shares of Common Stock available for option
grants under the Plan by 300,000 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
December 12, 2000 as the record date for determination of the
stockholders entitled to notice of and to vote at said meeting
and/or adjournments thereof.
If you do not expect to be present personally at the
meeting, please complete, date, sign and return the accompanying
proxy without delay.
By Order of the Board of Directors
s/Jeanne Wendschuh
Jeanne Wendschuh
Secretary
December 15, 2000
PROXY STATEMENT
COMPETITIVE TECHNOLOGIES, INC.
1960 Bronson Road
Fairfield, Connecticut 06430
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 19,
2001. 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 1997
Employees' Stock Option Plan to increase the number of shares of
Common Stock available for option grants under the Plan by
300,000 shares. Any proxy may be revoked at any time prior to
the voting thereof by notifying the Company, there being no
formal procedure required. 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 December 19, 2000.
Only the holders of record of the Company's 6,110,985
outstanding shares of Common Stock and 2,427 outstanding shares
of Preferred Stock at the close of business on December 12, 2000,
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 seven directors is to be elected
by plurality vote. The seven 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:
Name, Age and Principal Occupation Director of Company
Positions Currently During Past Five Since
Held with Company Years; Other Public
Directorships
George C.J. Bigar, Professional December 1996
43, Director Investor.
Richard E. Carver, President and Chief January 2000
63, Director Executive Officer,
MST America (an
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;
President and Chief
Executive Officer,
Zeppelin of North
America (a
manufacturer of spun
metal parts for
space applications -
shuttles,
satellites, launch
vehicles) from June
1994 to December
1995; President and
Chief Executive
Officer, ZF
Industries
(manufacturer of
driveline, steering
and suspension
components for
automobile and
machinery makers)
from May 1988 to
December 1994;
Chairman and Chief
Executive Officer,
Carver Lumber
Company (provider of
building materials
for new home
construction and
prefabrication) from
May 1988 to December
1999.
George W. Dunbar, Chief Executive November 1999
Jr., 54, Director Officer, EPIC
Therapeutics, Inc.
(a drug delivery
technology company)
since September
2000; Acting
President and Chief
Executive Officer of
StemCells, Inc.
(previously known as
Cyto-Therapeutics,
Inc.) since February
2000; Acting
President of
StemCells
California, Inc. (a
wholly-owned
subsidiary of
StemCells, Inc.)
since November 1999
(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 Quidel
Corporation and
Sonus
Pharmaceuticals,
Inc.
Samuel M. Fodale, President, Central October 1998
57, Director Maintenance
Services, Inc. (a
service and
warehousing
corporation serving
the automobile
industry).
Frank R. McPike, Chief Executive February 1999
Jr., 51, President, Officer of the
Chief Executive Company since
Officer, Treasurer, November 2000;
Chief Financial President of the
Officer and Director Company since
October 1998; Chief
Operating Officer of
the Company from
October 1998 to
November 2000;
Interim Chief
Executive Officer of
the Company from
August to October
1998; Secretary of
the Company from
August 1989 to
February 1999;
Treasurer of the
Company since July
1988; Vice
President, Finance
and Chief Financial
Officer of the
Company since
December 1983;
Director of the
Company from July
1988 to March 1998
and since February
1999.
Charles J. Chief Executive June 1999
Philippin, 50, Officer, On-Line
Director 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
Jostens, Inc.
John M. Sabin, 46, Chief Financial December 1996
Director and Officer and General
Chairman of the Counsel of
Board of Directors NovaScreen
Biosciences
Corporation
(previously known as
Oceanix 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; Vice
President, Finance,
Choice Hotels
International, Inc.,
October 1996 to
February 1997; Vice
President-Mergers
and Acquisitions,
Choice Hotels
International, Inc.,
June 1995 to October
1996; Vice President-
Finance and
Assistant Treasurer,
Manor Care, Inc. and
Choice Hotels
International, Inc.,
December 1993 to
October 1996; Vice
President-Corporate
Mergers and
Acquisitions,
Marriott
Corporation, 1988 to
December 1993. Director
of Cysive, Inc.
Messrs. Carver (Chairman), Dunbar and Fodale are members of
the audit committee. Messrs. Fodale (Chairman), Philippin and
Sabin are members of the nominating committee. Messrs. Dunbar,
Fodale (Chairman) and Philippin are members of the compensation
and stock option committee. Messrs. Bigar (Chairman), McPike,
Philippin and Sabin are members of the executive committee.
Messrs. Fodale (Chairman), Carver, Dunbar and Sabin are members
of the investment 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 December 1, 2000
except as otherwise indicated in the footnotes.
Name (and Address if
more than 5% of Amount Beneficially
Beneficial Owners Owned (A) Percent (B)
Directors, nominees and
executive officer
George C.J. Bigar 15,708 (C) --
Richard E. Carver 6,000 (D) --
George W. Dunbar, Jr. 10,000 (E) --
Samuel M. Fodale 174,200 (F) 2.8%
Frank R. McPike, Jr. 208,807 (G) 3.3%
Charles J. Philippin 15,000 (H) --
John M. Sabin 17,418 (I) --
All directors and executive
officers as a group 447,133 (J) 7.0%
Additional 5% Owners
Richard D. Corley, M.D. 312,110 (K) 5.1%
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 5,708 shares of Common Stock plus 10,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Bigar.
(D) Consists of 2,000 shares of Common Stock plus 4,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Carver.
(E) Consists of 10,000 stock options deemed exercised solely for
purposes of showing total shares owned by Mr. Dunbar.
(F) Consists of 164,200 shares of Common Stock plus 10,000 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
children and 2,000 shares of Common Stock held by spouse.
(G) Consists of 29,240 shares of Common Stock plus 179,567 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. McPike. Includes 1,500 shares of
Common Stock held by daughter as to which Mr. McPike
disclaims beneficial ownership. Includes 8,506 shares of
Common Stock held by Webster Trust as Trustee under the
Company's Employee Common Stock Retirement Plan, as to which
Mr. McPike has shared investment power. Does not include
8,641 shares of Common Stock allocated to Mr. McPike under
said Retirement Plan; Trustee has sole voting and investment
power with regard thereto.
(H) Consists of 5,000 shares of Common Stock plus 10,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Philippin.
(I) Consists of 7,418 shares of Common Stock plus 10,000 stock
options deemed exercised solely for purposes of showing
total shares owned by Mr. Sabin. Includes 200 shares of
Common Stock held by spouse.
(J) Consists of 213,566 shares of Common Stock plus 233,567
stock options to purchase shares of Common Stock deemed
exercised solely for purposes of showing total shares owned
by such group.
(K) Information provided to the Company by Dr. Corley as of
December 13, 2000.
At December 1, 2000, 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.
The following table sets forth information with respect to
the common stock, $.001 par value per share, of University
Optical Products Co. (UOP), a subsidiary of the Company,
beneficially owned by each director, nominee for director or
executive officer of the Company at December 1, 2000.
Shares of
Common Percent of
Name Stock of UOP (A) Class (B)
George C.J. Bigar None --
Richard E. Carver None --
George W. Dunbar, Jr. None --
Samuel M. Fodale None --
Frank R. McPike, Jr. 14,000 --
Charles J. Philippin None --
John M. Sabin None --
All directors and executive
officers of the Company
as a group 14,000 --
___________________
(A) Does not include 1,333,333 shares of UOP class A stock
(which have four votes per share and are convertible into an
equal number of shares of UOP common stock) and 2,757,735
shares of UOP common stock owned by the Company and 1,927
shares of UOP common stock owned by Genetic Technology
Management, Inc., a wholly-owned subsidiary of the Company.
(B) Percentages of less than 1% are not shown.
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the total compensation
accrued, earned or paid by the Company for services rendered
during each of the fiscal years ended July 31, 2000, 1999 and
1998 to the sole person who served as an executive officer of the
Company during the fiscal year ended July 31, 2000 (the Specified
Executive).
SUMMARY COMPENSATION TABLE
Annual Compensation (A)
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
______
Name and Securities All Other
Principal Fiscal Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($)
<S> <C> <C> <C> <C> <C>
Frank R. McPike, Jr. 2000 184,039 25,000 100,000 17,174 (B)
President, Chief 1999 179,200 -- -- 16,422 (B)
Executive Officer, 1998 167,000 -- 20,000 17,460 (B)
Chief Operating
Officer and Chief
Financial Officer
</TABLE>
___________________
(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 principally of amounts contributed for Mr. McPike
to Competitive Technologies, Inc.'s Employees' Common Stock
Retirement Plan. The Company contributed shares of its
Common Stock valued at the mean between its high and low
prices on the American Stock Exchange on July 31 of each
year. Also includes premiums paid for term life insurance
policies (see below).
Option Grants
The following table summarizes the stock options granted by
the Company during the fiscal year ended July 31, 2000 to the
Specified Executive.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Percent Potential
Number of of Total Realizable
Securities Options Value at
Underlying Granted to Assumed Annual
Options Employees Exercise Rates of Stock
Granted in Fiscal Price Expiration Appreciation
Name (#)(1) Year ($/Sh) Date for Option Term
<S> <C> <C> <C> <C> <C> <C>
5% ($) 10% ($)
Frank R. McPike, Jr. 100,000 56% $5.5625 12/7/2009 $349,823 $886,519
</TABLE>
(1) Options vest according to the terms stated in Employment
Agreement described below.
Option Exercises and Year End Value
For the Specified Executive, the following table summarizes
stock options exercised during the fiscal year ended July 31,
2000 and stock options held at July 31, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Options Options at
On Value at FY-End (#) FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
Frank R. McPike, Jr. 17,975 $166,191 154,567/25,000 $748,547/$139,063
Employment Agreement
Effective December 7, 1999, the Company entered into an
employment agreement with Mr. McPike providing for his employment
as President and Chief Operating Officer for a three-year term
and for base compensation at a minimum rate of $185,000 per year,
subject to annual reviews and increases in the sole discretion of
the Board of Directors. The employment is at will and can be
terminated by either party at any time with or without cause.
The agreement also provides, among other things:
-- a procedure for annual renewals of the employment term
with continuation of pay for six months after non-
renewal unless non-renewal is for cause
-- severance payments of up to one year's base
compensation in certain circumstances
-- a period of non-competition covering the remainder of
the employment term plus six months in certain
circumstances.
The employment agreement also confirms ten-year stock options for
the purchase of 100,000 shares of the Company's Common Stock
granted to Mr. McPike on December 7, 1999 at a price of $5.5625
per share and vesting as follows:
-- 25,000 options on grant date
-- 12,500 options one year from grant date
-- 12,500 options two years from grant date
-- 25,000 options nine years from grant date, subject to
acceleration of vesting if during the one-year period
following the grant date the average closing price of
the Company's Common Stock for 20 consecutive trading
days is $8.00 or higher (vested February 10, 2000)
-- 25,000 options nine years from grant date, subject to
acceleration of vesting if during the two-year period
following the grant date the average closing price of
the Company's Common Stock for 20 consecutive trading
days is $10.00 or higher (vested March 1, 2000).
Other Arrangements
The Company provides term life insurance for certain of its
officers. The policy amount in the event of death is $250,000
for Mr. McPike. The Company paid premiums of $460 for Mr.
McPike's policy in each of 2000, 1999 and 1998.
Effective January 1, 1997, the Company established a 401-K
plan. Under the 401-K plan, an eligible employee may elect a
salary reduction up to 15% of his or her compensation as defined
in the plan to be contributed by the Company to the plan.
Employee contributions for any calendar year are limited to a
specific dollar amount determined by the Internal Revenue Service
($10,500 for 2000 and $10,000 for 1999 and 1998). For fiscal
2000, the Company made no matching contributions.
Effective August 1, 1990, the Company adopted the
Competitive Technologies, Inc. Employees' Common Stock Retirement
Plan (the Retirement Plan). The Retirement Plan is a qualified
stock bonus plan under the Internal Revenue Code. All employees
of the Company are eligible to participate in the Retirement
Plan. Annually, a committee of independent directors determines
the number of shares of the Company's Common Stock, if any, to be
contributed to the Retirement Plan. These shares are allocated
among participants employed on the last day of the year and who
performed at least 1,000 hours of service during the year in
proportion to their relative compensation in a manner that is
integrated with the Company's Social Security contribution on
behalf of employees; that is, the contribution made with respect
to compensation in excess of the Social Security wage base
generally will be twice as large in proportionate terms as the
contribution made with respect to compensation below that wage
base. The Company's contributions are held in trust with a
separate account established for each participant.
The maximum amount of Company Common Stock that may be
contributed to the Retirement Plan in any year is the number of
shares with a fair market value equal to 15% of that year's
compensation reduced by the 401-K plan contributions made for
Retirement Plan participants, but in no event more than 1% of the
Company's outstanding shares at the end of the previous year.
There is no minimum or required contribution. The maximum number
of shares that can be allocated to any individual participant's
account in any year is the number of shares with a fair market
value equal to the lesser of $30,000 or 25% of his or her
compensation for that year reduced by his or her 401-K plan
contributions.
Participants become entitled to distributions of the vested
shares allocated to their accounts upon disability, death or
other termination of employment. Participants obtain a 100%
vested interest in the shares allocated to their accounts upon
completing 5 years of service with the Company. If the
Retirement Plan becomes top heavy as defined by the Internal
Revenue Code, participants become 20% vested after 2 years of
service, 40% vested after 3 years of service, 60% vested after 4
years of service, and 100% vested after 5 years of service.
Company stock contributed to the Retirement Plan is held in
the custody of the Retirement Plan's trustee, Webster Trust in
New Britain, Connecticut. The trustee has the power to vote
Company shares owned by the Retirement Plan. For the fiscal
years ended July 31, 2000 and 1999, the Board authorized a
contribution of 4,274 and 13,384 shares, respectively, to the
Retirement Plan. Shares allocated to Mr. McPike, the Company's
sole executive officer at July 31, 2000, under the Retirement
Plan for the year ended July 31, 2000 were 1,268. See also
Summary Compensation Table - "All Other Compensation" for dollar
values ascribed to contributions for Mr. McPike.
The Company has an incentive compensation plan pursuant to
which an amount equal to 10% of operating income of the Company
(defined and adjusted as provided in said plan) shall be credited
each year to an incentive fund. A committee, none of whose
members is eligible to receive awards, makes cash awards to key
employees of the Company from the incentive fund. Amounts may be
credited to the incentive fund when the Company earns operating
income (as defined in said plan) for a fiscal year. In fiscal
2000 and 1999, the Company credited $86,004 and $46,837,
respectively, to this incentive fund. No amounts were credited
to this fund prior to fiscal 1999. In October 1999, the Company
paid $46,750 in incentive bonuses to employees other than Mr.
McPike. In November 2000, the Company paid $86,000 from this
fund to employees of the Company including $25,000 paid to Mr.
McPike.
The Company has in effect a Key Employees' Stock Option Plan
and a 1997 Employees' Stock Option Plan (the Option Plans) with
respect to its Common Stock, $.01 par value, which provide for
granting either incentive stock options under Section 422 of the
Internal Revenue Code or nonqualified options. (Incentive
options under both Option Plans and non-qualified options granted
under the 1997 Employees' Stock Option Plan must be granted at
not less than 100% of fair market value on the grant date.
Nonqualified options under the Key Employees' Stock Option Plan
may be granted at not less than 85% of fair market value on the
grant date.) Stock appreciation rights may also be granted under
the Key Employees' Stock Option Plan. 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.
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.
In addition to meeting fees, the Company pays outside
directors an annual cash retainer of $7,500 payable in quarterly
installments.
In August 1999, the Board formed an executive committee with
Mr. Bigar as chairman and provided that the Company compensate
him at the rate of $8,000 per month due to the substantial
commitment of time to be required of Mr. Bigar as chairman.
During fiscal 2000, the Company paid Mr. Bigar $96,000 plus out-
of-pocket expenses as chairman of the executive committee.
During the five months from March through July 2000, the
Company paid Mr. Sabin a total of $20,000 ($4,000 per month) plus
out-of-pocket expenses for his assistance with three projects
over and above his normal duties as a director.
The Company has a 1996 Director's Stock Participation Plan.
Under this 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 2000, the Company issued an
aggregate of 7,500 shares under this plan (2,500 each to Messrs.
Bigar, Fodale and Sabin). In September 1999, the Company issued
1,875 shares under this plan to Michael G. Bolton, who resigned
as a director effective September 30, 1999.
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 director elected at its annual meeting of
stockholders on January 27, 2000 and 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
of 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 only within 180 days after 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 27, 2000, the Company granted 60,000 options
under this plan (10,000 each to Messrs. Bigar, Carver, Dunbar,
Fodale, Philippin and Sabin).
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 has a compensation program that consists of
salary and performance bonus (which are generally reviewed
annually) and stock options. The overall executive compensation
philosophy is based upon the premise 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 which provides overall
compensation competitive with that paid executives with
comparable qualifications and experience. This is critical to
attract and retain competent executives.
The Company has an incentive compensation plan which is
intended to provide a pool of dollars and is based upon the
Company's achieving specific levels of profitability. In fiscal
2000, the Company credited $86,004 to this incentive fund;
$86,000 was paid from this fund in November 2000 to employees of
the Company including $25,000 paid to Mr. McPike. In addition,
the Committee from time to time may award individual executives
bonuses based upon specific events that enhance the value of the
Company.
The Committee determines options to be granted under Company
Option Plans. These plans provide additional incentive to
maximize stockholder value. The plans 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 to a number of additional key employees.
Compensation and Stock Option Committee:
George W. Dunbar, Jr.
Samuel M. Fodale
Charles J. Philippin
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, 2000 with management.
The Audit Committee discussed with the independent
accountants, PricewaterhouseCoopers LLP, the matters required to
be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as issued and amended by
the Auditing Standards Board of the American Institute of
Certified Public Accountants.
The Audit Committee received the written disclosures and the
letter from the independent accountants, PricewaterhouseCoopers
LLP, required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," as issued and
amended. The Audit Committee discussed with the independent
accountants, PricewaterhouseCoopers LLP, their independence from
management and from the Company.
Based on the reviews and discussions referred to in the
foregoing paragraphs of this report, the Audit Committee
recommended to the Board of Directors that the audited financial
statements as of and for the year ended July 31, 2000 be included
in the Company's annual report on Form 10-K for the year ended
July 31, 2000.
Audit Committee:
Richard E. Carver
George W. Dunbar, Jr.
Samuel M. Fodale
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, 1995 in the
Company's Common Stock, the American Stock Exchange Market Index
and a published SIC code index of public companies.
(I N S E R T G R A P H)
1995 1996 1997 1998 1999 2000
Competitive
Technologies,
Inc. $100.00 $169.07 $181.44 $140.21 $ 97.94 $150.52
Industry Index
6794 $100.00 $198.10 $214.00 $240.38 $134.65 $112.41
Broad Market
AMEX $100.00 $102.35 $121.64 $132.77 $136.53 $156.39
BOARD MEETINGS AND COMMITTEES
During the last full fiscal year, eleven (11) meetings of
the Board of Directors of the Company were held. During the same
period, the audit committee met three (3) times, the compensation
and stock option committee met four (4) times, and the nominating
committee met four (4) times. No incumbent director except Mr.
Philippin attended fewer than 75% of the aggregate number of
meetings of the Board and committees of which he was a member.
Mr. Philippin attended 67% of the aggregate number of meetings of
the Board and committees of which he was a member.
The function of the audit committee is 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 and is able to read and
understand financial statements, including a balance sheet,
income statement and cash flow statement. In addition, at least
one member of the audit committee has employment experience or
background that results in the member's financial sophistication
as required by current 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
this Proxy Statement.
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 of the incentive compensation committee,
to grant options under and administer the Company's Option Plans
and to determine the number of shares of the Company's Common
Stock to be contributed to the Company's Retirement Plan.
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.)
The function of the executive committee is to exercise,
subject to the limitations prescribed by Delaware law, the
authority of the Board of Directors between meetings of the
Board.
The function of the investment committee is to advise
management of the Company concerning the purchase, sale and
retention of investments in interest-bearing and equity
securities.
PROPOSED AMENDMENT TO THE 1997 EMPLOYEES' STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder
approval, a proposal to amend the 1997 Employees' Stock Option
Plan (the 1997 Option Plan) to increase the number of shares with
respect to which options may be granted by 300,000 shares.
The 1997 Option Plan provides that options may be granted
for an aggregate of 275,000 shares of Common Stock. As a result
of option grants and exercises, at December 1, 2000 only 143,752
shares were available for future option grants under the 1997
Option Plan. If stockholder approval of the proposed amendment
is obtained, the shares available for future option grants under
the 1997 Option Plan (taking into account the 143,752 shares now
available) will be 443,752 shares. In addition, at December 1,
2000, an aggregate of 82,025 shares were covered by outstanding
options under the 1997 Option Plan; to the extent that any of
these outstanding options should expire or be terminated, shares
covered by such options may be reoptioned under the 1997 Option
Plan.
On December 12, 2000, 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 $7.50 per share.
Description of 1997 Option Plan
The 1997 Option Plan provides for the grant of either
incentive stock options under Section 422 of the Internal Revenue
Code or nonstatutory options. All Company employees (currently
11 in number) are eligible to receive options under the 1997
Option Plan.
The committee which administers the 1997 Option Plan (the
Committee) consists of not less than two directors, none of whom
is eligible to receive an option. Committee members are non-
employee directors as defined by applicable SEC rules and outside
directors as defined by Internal Revenue Code regulations.
Subject to any limitations imposed by the Board of Directors of
the Company and the terms of the 1997 Option Plan, the Committee
periodically determines which employees of the Company or its
subsidiaries should receive options under the 1997 Option Plan,
the type of option, the number of shares covered by the option,
the per share purchase price and the terms of the option, which
may include limited transferability of nonstatutory options to
certain family members. Options shall not otherwise be
transferable other than by will or the laws of descent and
distribution.
The 1997 Option Plan provides that payment in full for
shares purchased under an option shall be made in cash (including
check) at the time the option is exercised or, with the consent
of the Committee, (i) by tendering shares of the Company's Common
Stock owned at least six months and valued at the fair market
value of such shares on the date the option is exercised, or (ii)
by requesting the Company to withhold from issuance that number
of shares having a fair market value of such shares on the date
of exercise equal to the exercise price.
The number of shares with respect to which options may be
granted under the 1997 Option Plan is currently 275,000 shares,
subject to adjustment in certain events. (If the proposed
amendment is approved by stockholders, this number will be
increased to 575,000 shares). Any shares covered by options
which, for any reason, expire or are terminated may be re-
optioned under the 1997 Option Plan.
The 1997 Option Plan provides that the option price of
incentive and nonstatutory stock options shall be not less than
100% of the fair market value of the stock at the time of grant.
The maximum term of any option under the 1997 Option Plan is ten
years from date of grant, and the 1997 Option Plan contains
provisions with respect to earlier termination upon termination
of employment. In certain instances, stock options which are
vested or become vested upon the happening of an event or events
specified by the Committee may continue to be exercisable through
up to ten years after the date of grant, irrespective of the
termination of the optionee's employment with the Company.
In the case of specified executive officers of the Company,
the number of option shares granted in a fiscal year to any such
officer shall not exceed 100,000 shares. In the case of
incentive options, the aggregate fair market value (determined at
the time the option is granted) of the stock with respect to
which incentive options are exercisable for the first time by any
optionee during any calendar year shall not exceed $100,000.
Members of the Committee are appointed by the Company's
Board of Directors and serve at the pleasure of the Board. The
Board may at any time amend or discontinue the 1997 Option Plan,
provided that no Board action may increase the number of shares
available for option (except to adjust for stock splits, etc.),
reduce the option price below 100% of fair market value at date
of grant, or change the requirements for eligibility to
participate in the 1997 Option Plan. No options may be granted
under the 1997 Option Plan after September 30, 2007.
If stockholders approve the proposed increase in the number
of shares of Common Stock available for option grants under the
1997 Option Plan, the Company expects to register the 300,000
additional shares under the Securities Act of 1933.
Under the 1997 Option Plan, as of December 1, 2000, options
had been granted as shown in the following table:
Number of
Options
Grantee Granted
Frank R. McPike, Jr (A)
President, Chief Executive Officer,
Chief Operating Officer
and Chief Financial Officer 100,000
All current directors who are not
executive officers as a group None
Each other person who received 5 percent
of such options:
Peter D. Holden (B) 50,000
All employees who are not executive
officers as a group None
(A) Mr. McPike, is currently the Company's sole executive
officer.
(B) Mr. Holden is no longer an employee of the Company; 18,752
of his options expired unexercised.
It should be noted that the table above does not take into
account options granted under the Company's Key Employees' Stock
Option Plan which will terminate in accordance with its terms on
December 31, 2000. Under that plan all employees who are not
executive officers as a group were granted 124,000 options in
fiscal 1999 and 79,500 options in fiscal 2000.
Federal Income Tax Consequences
On exercise of nonstatutory options, the difference between
the option price and the fair market value of the stock on the
measuring date (normally the date on which the option is
exercised), will be taxable as ordinary income to the optionee
and will be deductible by the Company as compensation on such
date. Gain or loss on the subsequent sale of such stock will be
eligible for capital gain or loss treatment by the optionee and
will have no federal income tax consequences to the Company.
An exchange of Common Stock in payment of the option price
in the case of nonqualified options is considered a tax-free
exchange by the optionee to the extent of a like number of new
shares, with the new shares retaining the basis and holding
period of the old shares. The fair market value of any
additional shares transferred to the optionee (representing the
excess of the fair market value of all of the new shares over the
fair market value of all of the old shares) will constitute
ordinary income to the optionee and be deductible by the Company.
This amount then becomes the optionee's basis in such shares.
With respect to incentive stock options, if the optionee
does not make a disqualifying disposition of stock acquired on
exercise of such option, no income for federal income tax
purposes will result to the optionee upon the granting or
exercise of the option (except that the amount by which the fair
market value of the stock at time of exercise exceeds the option
price may be subject to alternative minimum tax), and in the
event of any sale thereafter any amount realized in excess of his
cost will be taxed as long-term capital gain and any loss
sustained will be long-term capital loss. In such case, the
Company will not be entitled to a deduction for federal income
purposes in connection with the issuance or exercise of the
option. A disqualifying disposition will occur if the optionee
disposes of such shares within two years from the date of the
granting of the option or within one year after the transfer of
such shares to him. If the optionee makes a disqualifying
disposition, the difference between the option price and the
lesser of (i) the fair market value of the stock at the time the
option is exercised or (ii) the amount realized upon disposition
of the stock will be treated as ordinary income to the optionee
at the time of disposition and will be allowed as a deduction to
the Company.
In the case of an incentive stock option, if the exchange is
not a disqualifying disposition of the stock exchanged, an
exchange of Common Stock in payment of the option price is
considered to be tax-free. Under proposed regulations, a number
of shares received upon exercise equal to the number of shares
exchanged will have a basis equal to the basis of the shares
exchanged and the remaining shares received will have a zero
basis.
An exchange of statutory option stock to acquire other stock
on exercise of an incentive stock option is a taxable recognition
transaction with respect to the stock disposed of if the minimum
statutory holding period for such statutory option stock has not
been met. Statutory option stock includes stock acquired through
exercise of a qualified stock option, an incentive stock option,
a restricted stock option or an option granted under an employee
stock purchase plan. If there is such a premature disposition,
ordinary income is attributed to the optionee (and will be
deductible by the Company) to the extent of his "bargain"
purchase on acquisition of the surrendered stock; and the post-
acquisition appreciation in value of such stock is taxed to him
as a short-term capital gain if held for less than the applicable
holding period for long-term capital gain, or long-term capital
gain if held for such applicable holding period, and will not be
deductible by the Company.
A portion of the excess of the amount deductible by the
Company over the value of options when issued may be subject to
the alternative minimum tax imposed on corporations.
If an optionee transfers a transferable option in accordance
with the provisions of the 1997 Option Plan, the transfer will
not cause the optionee to recognize any income at the time of
transfer. At the time the transferee exercises the option, the
optionee or his estate (and not the transferee) will have
ordinary income as described above. If the transferee exercises
the option, the transferee's basis in the stock will be the fair
market value of the stock on the date of exercise. For gift tax
purposes, the transfer of the option will constitute a completed
gift on the date of the transfer for those options which are
fully vested on the date of transfer. For options which are not
yet vested, the date on which the gift is completed for gift tax
purposes will be the date on which such options vest.
The described tax consequences are based on current laws,
regulations and interpretations thereof, all of which are subject
to change and assume that the optionee has not purchased any
shares of the Company within six months prior to the exercise in
question at a purchase price less than the market price of shares
on the date of exercise. In addition, the discussion is limited
to federal income taxes and does not attempt to describe state
and local tax consequences to optionees or the Company.
Vote Required for Approval; Board Recommendation:
The Board of Directors urges stockholders to approve the
amendment to the 1997 Option Plan to maintain and improve the
Company's ability to attract and retain key personnel and to
serve as an incentive to such personnel to make extra efforts to
contribute to the success of the Company's operations.
The vote required to approve the amendment to the 1997
Option Plan is a majority of the shares of holders 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE 1997 EMPLOYEES' STOCK OPTION
PLAN.
INFORMATION REGARDING INDEPENDENT PUBLIC
ACCOUNTANTS
PricewaterhouseCoopers LLP served as independent public
accountants for the fiscal year ended July 31, 2000, and the
Board of Directors has selected PricewaterhouseCoopers to serve
for the current year. A representative of PricewaterhouseCoopers
is expected to be present at the annual meeting to make a
statement if he or she desires to do so and to be available to
respond to appropriate questions.
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 August 17,
2001.
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 December 19, 2000 is met, notice not received by November 4,
2001 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, 2000, 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 06430.
The Board of Directors is not aware of any matter which 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
Jeanne Wendschuh
Secretary
Dated: December 15, 2000
APPENDIX A
COMPETITIVE TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
1. The Audit Committee shall consist of at least three members
and shall be composed of directors who meet the independence and
experience requirements of the American Stock Exchange.
2. The purposes of the Audit Committee are:
(a) to oversee the accounting and financial reporting
policies and practices and the internal controls of the
Company;
(b) to oversee the quality and objectivity of financial
statements and the independent audit thereof; and
(c) to act as a liaison between the independent auditors
and the full Board of Directors.
The function of the Audit Committee is oversight.
Management's responsibility is to maintain appropriate systems
for accounting and internal control; and the auditors'
responsibility is to plan and carry out a proper audit.
3. Although the auditors are ultimately accountable to the
Audit Committee and the Board of Directors, the Audit Committee
is vested with the following powers:
(a) to recommend the selection, retention, or termination
of auditors;
(b) to ensure that the auditors submit a formal written
statement delineating all relationships between the
auditors and the Company, such written statement to be
submitted to the Audit Committee on a periodic basis;
(c) to evaluate the independence of the auditors, and
receive the auditors' specific representation as to
their independence and make recommendations to the
Board of Directors based on such evaluations;
(d) to meet with the independent auditors, including
private meetings, as necessary:
(i) to review the arrangements for and scope of the
annual audit and any special audits;
(ii) to discuss any matters of concern relating to
the financial statements, including any
adjustments to such statements recommended by the
auditors;
(iii) to consider the auditors' comments with
respect to the financial policies, procedures and
internal accounting controls of the Company and
management's responses thereto;
(iv) to discuss with the auditors the matters
required to be discussed by Statement on
Accounting Standards No. 61 as modified or
supplemented; and
(v) to review the form of opinion the auditors propose
to render to the Board of Directors and
stockholders;
(e) to review with management and the independent auditors
the annual audited financial statements of the Company
in the Form 10-K and (as a Committee or through the
Committee chair) the Company's quarterly financial
statements in the Form 10-Q, in each case prior to its
filing;
(f) to consider the effect upon the Company of any changes
in accounting principles or practices proposed by
management or the auditors;
(g) to review the fees charged by the auditors for audit
and non-audit services; and
(h) to report its activities to the full Board of Directors
on a regular basis and to make such recommendations
with respect to the above matters and other matters as
the Audit Committee may deem necessary or appropriate,
including the preparation of the report required by the
rules of the Securities and Exchange Commission to be
included in the Company's annual proxy statement.
4. The Audit Committee shall meet on a regular basis and is
empowered to hold special meetings as circumstances require.
5. The Audit Committee shall meet at least annually on a
private basis with the internal accountants of the Company. The
Audit Committee shall also establish a procedure which will
enable any employee of the Company to communicate privately with
the Audit Committee or the Committee chair on any matter which
the employee believes should be discussed privately. The
Committee shall provide a written description of this procedure
to each employee at least annually.
6. The Audit Committee shall have the resources and authority
appropriate to discharge its responsibilities, including the
authority to retain special counsel and other experts or
consultants at the expense of the Company.
7. The Audit Committee shall review this Charter at least
annually and recommend any changes to the full Board of
Directors.
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee
to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This
is the responsibility of management and the independent auditors.
Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between
management and the independent auditors or to assure compliance
with laws and regulations and the Company's Corporate Standards
of Conduct.
PROXY
COMPETITIVE TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders, January 19, 2001
The undersigned stockholder of COMPETITIVE TECHNOLOGIES, INC.
hereby appoints FRANK R. McPIKE, JR. and GEORGE M. YAHWAK, 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 19, 2001, 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 such other business as may
properly come before said meeting or any adjournment thereof, all
as set forth in the December 15, 2000 Proxy Statement for said meeting:
1. Election of Directors:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees
contrary below) listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through nominee's name in the list below.
George C.J. Bigar, Richard E. Carver, George W. Dunbar, Jr., Samuel
M. Fodale, Frank R. McPike, Jr, Charles J. Philippin, John M. Sabin
2. Approval of amendment to 1997 Employees' Stock Option Plan
increasing the number of shares of Common Stock available for
option grants under the Plan by 300,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued and to be signed on reverse side)
(continued from other side)
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:
Note: Please sign exactly as your name or names appear above.
If the stock is registered in the name of more than one person,
the proxy should be signed by all named holders. When signing
as attorney, executor, administrator, trustee or guardian, please
give full title. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
