<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
REFAC TECHNOLOGY DEVELOPMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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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 Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]Refac
REFAC
The Hudson River Pier
115 River Road, Edgewater, New Jersey, 07020
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 12, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Refac, a
Delaware corporation (the "Corporation"), will be held at the Board of
Governors' Room of the American Stock Exchange, 86 Trinity Place, New York, New
York, on Friday, May 12, 2000, at 10:00 A.M., New York City time, for the
following purposes:
1. To elect directors of the Corporation; and
2. To transact such other business as may properly come before the
meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 23, 2000 as
the record date for the determination of stockholders who are entitled to notice
of and to vote at the meeting.
A copy of the Corporation's Annual Report for the year ended December 31,
1999 is sent to you herewith.
To assure your representation at the meeting, please sign, date and return
your proxy in the enclosed envelope, which requires no postage if mailed in the
United States.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT L. TUCHMAN
Chairman of the Board
<PAGE>
REFAC
The Hudson River Pier
115 River Road, Edgewater, New Jersey 07020
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS - MAY 12, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Refac, a Delaware corporation ("Refac" or
the "Corporation"), to be used at the Annual Meeting of Stockholders of the
Corporation to be held at the Board of Governors' Room of the American Stock
Exchange, 86 Trinity Place, New York, New York, on May 12, 2000, at 10:00 A.M.,
New York City time.
You are requested to complete, date and sign the accompanying proxy and
return it to the Corporation in the enclosed envelope. The proxy may be revoked
at any time before it is exercised by written notice to the Corporation bearing
a later date than the date on the proxy and any stockholder attending the
meeting may vote in person whether or not he has previously submitted a proxy.
Where instructions are indicated, proxies will be voted in accordance therewith.
Where no instructions are indicated, proxies will be voted for the nominees for
directors set forth below.
The Board of Directors has fixed the close of business on March 23, 2000 as
the record date (the "Record Date") for the determination of stockholders who
are entitled to notice of and to vote at the meeting. The transfer books of the
Corporation will not be closed. As of the Record Date, there were 3,795,261
outstanding shares of common stock, par value $.10 per share, of the Corporation
("Common Stock") entitled to vote at the meeting, the holders of which are
entitled to one vote per share.
The presence, in person or by proxy, at the meeting of the holders of a
majority of the shares of Common Stock issued and outstanding and entitled to
vote will constitute a quorum. A plurality of the votes of the shares of Common
Stock present at the meeting will be necessary for the election of directors of
the Corporation. Under applicable Delaware law, in tabulating the vote,
abstentions (including broker non-votes) will be disregarded and will have no
effect on the outcome of the vote.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders and proxy are being mailed to the Corporation's stockholders on or
about April 10, 2000. A copy of the Corporation's Annual Report for the year
ended December 31, 1999 is also enclosed.
EACH STOCKHOLDER OF RECORD OR BENEFICIAL OWNER OF STOCK AS OF THE RECORD
DATE FOR SECURITY HOLDERS ENTITLED TO VOTE AT THE MEETING WILL BE ENTITLED, UPON
WRITTEN REQUEST, TO RECEIVE FROM THE CORPORATION, WITHOUT CHARGE, A COPY OF THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH REQUESTS SHOULD BE MADE TO STOCKHOLDER RELATIONS AT THE
ADDRESS OF THE CORPORATION SET FORTH ABOVE.
-1-
<PAGE>
PRINCIPAL STOCKHOLDERS
On the Record Date, to the knowledge of the Corporation, the persons listed
below were the only beneficial owners of more than five percent of the
outstanding shares of Common Stock. The Corporation has no other class of
voting securities outstanding. Information regarding the institutions set forth
below is based upon information contained in filings made with the Securities
and Exchange Commission by such persons or entities on or about February 7,
2000.
Name and Address of Amount and Nature Percentage of
Beneficial Owner of Beneficial Ownership Outstanding Shares
- -----------------------------------------------------------------------------
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11/th/ Floor
Santa Monica, CA 90401 322,642 (1) 8.50%
ZPR Investment Management, Inc.
1642 N. Volusia Avenue
Orange City, FL 32763 303,200 7.99%
Robert L. Tuchman
115 River Road
Edgewater, NJ 07020-1099 283,000 (2) 7.16%
______
(1) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts.
(These investment companies and investment vehicles are the "Portfolios").
In its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over 322,642 shares of Refac
Common Stock as of December 30, 1999. The Portfolios own all such shares
and Dimensional disclaims beneficial ownership of such shares.
(2) Includes 180,000 shares of Common Stock which would be acquired upon the
exercise of stock options which are exercisable immediately or within sixty
days.
SECURITY OWNERSHIP OF MANAGEMENT
On the Record Date, the directors listed below and all officers and
directors as a group beneficially owned the following equity securities of the
Corporation, including options to purchase shares of Common Stock of the
Corporation:
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<PAGE>
Common Stock of the Corporation
--------------------------------------
Amount and Nature of
Name of Beneficial Percent of Percent of
Beneficial Owner Ownership (1) Class (2) Options
- ---------------------------------------------------------------------------
Neil R. Austrian................ 10,579 (3) .3% 10,000
Raymond A. Cardonne, Jr......... 13,000 (4) .3% 42,500
Robin L. Farkas................. 25,798 (3) .7% 10,000
Mark N. Kaplan.................. 24,828 (3) .7% 10,000
Herbert W. Leonard.............. 80,163 (3) 2.1% 10,000
Robert L. Tuchman............... 283,000 (5) 7.1% 200,000
Ira T. Wender................... 11,000 (3) .3% 10,000
Officers and Directors
as a Group (7 persons)......... 448,368 (6) 10.55% 292,500 (7)
- ----------
(1) Except as otherwise described in these Notes, for the purposes of the above
table and the following Notes, the securities shown as "beneficially owned"
include all securities which, pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), may be deemed to be
"beneficially owned," including, without limitation, all securities which
the "beneficial owner" has the right to acquire within sixty days, as, for
example, through the exercise of any option. Unless otherwise noted, all
officers and directors have sole voting and investment power with respect
to securities beneficially owned by them.
(2) If the percentage of ownership of the Common Stock set forth in the above
table has been calculated by dividing (i) the aggregate number of shares of
Common Stock which may be deemed to be "beneficially owned" as explained in
Note (1) above, by (ii) the number of shares of Common Stock actually
outstanding plus the additional number of shares of Common Stock which such
"beneficial owner" would be deemed to "beneficially own" assuming the
exercise of all options which are exercisable immediately or within sixty
days by such "beneficial owner" and assuming no other acquisitions of
shares of Common Stock through the exercise of any option, warrant, right
or conversion of any security convertible into such shares by any other
person.
(3) Includes 10,000 shares of Common Stock which would be acquired upon the
exercise of options which are exercisable immediately or within sixty days.
(4) Includes 13,000 shares of Common Stock which would be acquired upon the
exercise of options which are exercisable immediately or within sixty days.
(5) Includes 180,000 shares of Common Stock which would be acquired upon the
exercise of options which are exercisable immediately or within sixty days.
(6) Includes an aggregate of 243,000 shares of Common Stock which such persons
would acquire upon the exercise of options which are exercisable
immediately or within sixty days.
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<PAGE>
(7) Consists of 243,000 options which are exercisable immediately or within
sixty days, and 49,500 options which are not exercisable immediately or
within sixty days.
PROPOSAL
ELECTION OF DIRECTORS
Eight directors of the Corporation are to be elected at the meeting. The
directors will serve, subject to the By-Laws of the Corporation, until the
Annual Meeting of Stockholders to be held in 2001 and until their respective
successors shall have been elected and qualified.
It is the intention of the individuals named in the enclosed proxy to vote
such proxy for the election to the office of director of each person named in
the table below entitled "Identification of Directors." With the exception of
Bert D. Heinzelman and Clark A. Johnson, each of the persons named below was
elected to such position at the Corporation's Annual Meeting of Stockholders in
1999. The term of office of each such director of the Corporation will expire
on the date of the Corporation's Annual Meeting of Stockholders in 2001and upon
the election and qualification of each such director's successor. The Board of
Directors of the Corporation has no reason to believe that any of the nominees
for the office of director will be unavailable for election as a director.
However, should any of them become unwilling or unable to accept nomination for
election, it is intended that the individuals named in the enclosed proxy may
vote for the election of such other persons as the Board of Directors of the
Corporation may recommend.
<TABLE>
<CAPTION>
(a) Identification of Directors
--------------------------------
Served
Continuously
as Director
Name Age Principal Occupation or Employment (1) Since
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Neil R. Austrian (2) 59 Chairman, iWon, Inc. (www.iwon.com) 1980
(CBS backed destination Internet Portal)
Robin L. Farkas 66 Private investor 1976
Bert D. Heinzelman (3) 45 Chief Executive Officer of Refac's
Product Development Group Nominee
Clark A. Johnson (4) 68 Private investor Nominee
Mark N. Kaplan 70 Of Counsel, Skadden, Arps, Slate, 1967
Meagher & Flom LLP (Attorneys)
Herbert W. Leonard 74 President, Hamilton Associates 1967
(Consulting)
Robert L. Tuchman (5) 57 Chairman, President, Chief Executive Officer 1991
and General Counsel, Refac
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Served
Continuously
as Director
Name Age Principal Occupation or Employment (1) Since
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ira T. Wender 73 Of Counsel, Patterson, Belknap, Webb 1981
& Tyler (Attorneys)
</TABLE>
(1) Unless otherwise noted, the principal occupation or employment of each
individual set forth in this table has been such individual's principal
occupation or employment for the past five years and no such individual
holds another position or office with the Corporation.
(2) Neil R. Austrian was the President of the National Football League from
April 1991 to December 31, 1999. Since that date, he has been the Chairman
of iWon, Inc. (www.iwon.com.).
-------------
(3) Bert D. Heinzelman became a Vice President of Human Factors Industrial
Design, Inc. ("HFID") in 1985. HFID, which was acquired by the Corporation
in November 1997, was merged into the Corporation's wholly owned subsidiary,
Refac International, Inc., on December 31, 1998. In December 1998, Mr.
Heinzelman became the President of the Corporation's Product Development
Group which operates under the name of Refac HumanFactors-ID Division
("Human Factors") and its Chief Executive Officer in May 1999. In March
2000, Mr. Heinzelman also became a Senior Vice President of Refac.
(4) Clark A. Johnson served as Chairman and Chief Executive Officer of Pier 1
Imports, Inc., a specialty retailer of decorative home furnishings, from
August 1988 until his retirement in February 1999.
(5) Robert L. Tuchman succeeded Eugene M. Lang as the Chief Executive Officer of
the Corporation on January 6, 1997 and as Chairman of the Board of Directors
on June 30, 1997. From August 1, 1991 to January 6, 1997, he served as the
Corporation's President and Chief Operating Officer. He is also the
Corporation's General Counsel. From May 1994 to March 1997, he held the
position of Treasurer of the Corporation.
(b) Directorships
------------------
The following nominees for directors of the Corporation additionally serve
as directors for the following companies, which are either registered pursuant
to Section 12 or subject to Section 15 (d) of the Exchange Act or are registered
investment companies.
Name Directorships of Nominees
---------------------------------------------------
Neil R. Austrian Office Depot, Inc.
Robin L. Farkas Insignia Financial Group Inc.
Noodle Kidoodle, Inc.
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<PAGE>
Name Directorships of Nominees
-----------------------------------------------------
Clark A. Johnson Albertson's Inc.
InterTAN, Inc.
Metro Media International Group
Niagara Mohawk Power Corporation
PSS World Medical, Inc.
Mark N. Kaplan American Biltrite, Inc.
Autobytel.com, Inc.
Congoleum, Inc.
DRS Technologies, Inc.
Grey Advertising Inc.
Volt Information Sciences, Inc.
Ira T. Wender Deotexis, Inc.
Dime Bancorp, Inc.
(c) Certain Business Relationships
----------------------------------
See "Certain Relationships and Related Transactions," page 13.
(d) Committees
---------------
The Board of Directors has established and currently maintains as standing
committees an Audit Committee and a Compensation Committee. The Corporation
does not have a standing nominating committee.
Audit Committee - This committee was established at the November 1991 Board
---------------
meeting. The Audit Committee meets periodically with the Corporation's
independent auditors to review plans for the audit and the audit results. The
Audit Committee makes recommendations to the full Board as to the engagement or
discharge of the independent auditors and reviews financial statements,
accounting policies, tax and other matters for compliance with the requirements
of the Financial Accounting Standards Board and government regulatory agencies.
The Audit Committee consists of three directors: Mark N. Kaplan, Herbert W.
Leonard and Ira T. Wender. This Committee met once in 1999.
Compensation Committee - This committee administers the executive
----------------------
compensation and benefit plans and grants under such plans. The Compensation
Committee consists of three directors: Neil R. Austrian, Mark N. Kaplan and Ira
T. Wender. This Committee met twice in 1999. For further information regarding
executive compensation, see "Compensation Committee Report on Executive
Compensation," page 10.
(e) Meetings of the Board of Directors and its Committees
----------------------------------------------------------
During the last fiscal year, four meetings of the Board of Directors of the
Corporation were held. During such period, except for Neil R. Austrian, none of
the directors attended fewer than 75% of an
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<PAGE>
aggregate of the meetings of the Board and Board Committees of which he was a
member. Mr. Austrian attended the Compensation Committee meetings and 50% of the
Board meetings.
(f) 1999 Annual Meeting of Stockholders
----------------------------------------
At the 1999 Annual Meeting of Stockholders of the Corporation,
approximately 89% of the outstanding shares of Common Stock was present at the
meeting in person or by proxy. Each director received votes for his election in
excess of 87% of such shares.
(g) Directors' fees
--------------------
Each director who is not also an employee of or consultant to the
Corporation was paid the sum of $1,000 for each meeting of the Board of
Directors attended in 1999. No additional payments were made with respect to
service on or attendance at the meetings of any committee established by the
Board.
(h) Vote Required
------------------
Election of the directors of the Corporation will require the affirmative
vote of a plurality of the stockholders present in person or represented by
proxy at the meeting and entitled to vote thereon.
REMUNERATION OF EXECUTIVE OFFICERS
----------------------------------
The following table presents the aggregate compensation for services in all
capacities paid by the Corporation and its subsidiaries in respect of the years
ended December 31, 1999, 1998 and 1997 to the Chief Executive Officer and each
of the executive officers of the Corporation whose aggregate compensation
exceeded $100,000 in any of those years (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Securities
Annual Compensation Underlying
------------------------------ Options/SARs All Other
Name and Position Year Salary Bonus (#) Compensation (5)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert L. Tuchman, Chairman, 1999 $270,000 $72,102
President, Chief Executive Officer, 1998 $260,000 $69,196 50,000 (1) -
Treasurer and General Counsel 1997 $250,000 $50,000 - $1,000
Douglas M. Spranger 1999 $189,033 - - -
Senior Vice President (2) 1998 $226,840 - - -
Raymond A. Cardonne, Jr. 1999 $143,500 $14,500 7,500
Vice President and Secretary (3) 1998 $121,115 $ 7,500 10,000 -
Elliott S. Greller 1999 $208,000 - - -
Vice President, Treasurer 1998 $142,666 $ 5,000 35,000 (4) -
and Chief Financial Officer (4)
</TABLE>
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<PAGE>
__________
(1) Mr. Tuchman contributed these options back to the Corporation in December
1999.
(2) Mr. Spranger was the Chief Executive Officer of HFID from its formation in
1974. HFID, which was acquired by the Corporation in November 1997, was
merged into the Corporation's wholly owned subsidiary, Refac International,
Ltd. ("RIL"), on December 31, 1998. Mr. Spranger became a Senior Vice
President of the Corporation and RIL in December 1998. His employment and
stock options were terminated by mutual agreement as of December 31, 1999
and Mr. Spranger resigned as an officer and director of RIL and Refac. See
"Certain Relationships and Related Transactions," page 13.
(3) Raymond A. Cardonne, Jr. joined the Corporation as Vice President in
December 1997. He was elected to the position of Secretary in November
1998.
(4) Elliott S. Greller joined the Corporation as President of Refac Services
Corporation on a part-time basis in March 1998 and became the Corporation's
Vice President, Chief Financial Officer and Treasurer on a full-time basis
in September 1998. As of March 3, 2000, Mr. Greller's employment was
terminated by mutual agreement. Mr. Greller has ninety days from such date
to exercise stock options previously granted to him to purchase 9,000 shares
of common stock.
(5) The Corporation offers a 401(k) Savings Plan to all classes of employees.
Prior to calendar year 1998, the Corporation matched employee contributions
to the extent of $1,000. The amount shown represents the Corporation's
matching contribution to this plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
During 1999, the following Named Executive was issued a stock option
pursuant to the 1998 Stock Option and Incentive Plan as described below.
<TABLE>
<CAPTION>
Percent
Number of Potential Realizable
of Total Value At Assumed
Securities Options Annual Rates of Stock
Underlying Granted Price Appreciation for
Options to Exercise Option Term
Granted Employees Price Expiration ________ ________
Name (1) in 1999 Per Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Raymond A. Cardonne, Jr. 7,500 5.2% $3.81 12/14/09 $20,617 $48,888
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) The options were granted under the 1998 Stock Option and Incentive Plan and
have an exercise price equal to the fair market value of the Common Stock at
the date of grant. The options have a term of ten years and become
exercisable at the rate of 25% per year commencing with the first
anniversary of their grant. The exercise price may be paid in cash or shares
of Common Stock.
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<PAGE>
No options were exercised by the Named Executives during 1999. The following
table reflects the value of all stock options held by the Named Executives as of
December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR &
FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
At Fiscal Year-End At Fiscal Year-End
---------------------------------------------------
Not Not
Name Exercisable Exercisable Exercisable Exercisable
- ------------------------------------------------------------------------------
Robert L. Tuchman 180,000 20,000 $_ _
Raymond A. Cardonne, Jr. 9,000 33,500 _ $1,410
Elliott S. Greller (1) 9,000 26,000 _ _
_______________
(1) As of March 3, 2000, Mr. Greller's employment was terminated by
mutual agreement. Mr. Greller has ninety days from such date to
exercise his stock options covering 9,000 exercisable shares or
they expire.
EMPLOYMENT CONTRACTS
Robert L. Tuchman
The Corporation has entered into an employment contract with Mr. Tuchman
(the "Tuchman Employment Agreement"), which, as amended in January 1999, has a
term ending on December 31, 2003. Such term will extend for an additional year
as of January 1 of each subsequent year, unless, at least 90 days prior to the
end of December 31, 2002 or any subsequent December 31 during the term, either
Mr. Tuchman or the Corporation shall have given notice of non-renewal. In
addition to salary payments, the Tuchman Employment Agreement provides for the
payment of an annual bonus to be determined by the Board in its sole discretion.
Under the Tuchman Employment Agreement, the Corporation accepted from Mr.
Tuchman in payment for certain stock options a promissory note in an amount
equal to $375,000, bearing interest at the Long-Term Applicable Federal Rate.
The Tuchman Employment Agreement further provides that Mr. Tuchman will not (a)
engage in any "Competitive Activity" (as defined in the Tuchman Employment
Agreement) during the term of such Employment Agreement and for a period of
eighteen months thereafter, or (b) for a period of two years following his
termination of employment, solicit the business of any client or prospective
client of the Corporation or the employment of any present or future employee of
the Corporation.
In the event that the Corporation terminates Mr. Tuchman's employment for
any reason other than because of a "permanent disability" or for "cause" (as
each such term is defined in the Tuchman Employment Agreement), Mr. Tuchman is
entitled to receive a lump sum equal to his full salary through
-9-
<PAGE>
the expiration date of the Tuchman Employment Agreement at the rate in effect at
the time notice of termination is given, plus an additional amount equal to the
bonus Mr. Tuchman received in respect of the calendar year prior to such
termination. In addition, Mr. Tuchman is entitled to receive, except to the
extent that he receives similar benefits from a subsequent employer, life,
health and similar benefits (other than incentives such as stock options) to
which he would otherwise have been entitled through the expiration of the
Tuchman Employment Agreement. If, during the two-year period following a "Change
in Control" (as defined in the Tuchman Employment Agreement), Mr. Tuchman's
employment with the Corporation is terminated by the Corporation (or any
successor thereto) other than because of a permanent disability or for cause, or
if Mr. Tuchman terminates his employment for "good reason" (as defined in the
Tuchman Employment Agreement), Mr. Tuchman is entitled to receive a lump sum
payment equal to the sum of (i) his full salary through the expiration date of
the Tuchman Employment Agreement at the rate in effect at the time notice of
termination is given or for a full year, whichever is greater, plus (ii) a bonus
payment equal to two times the amount of the bonus paid or payable to Mr.
Tuchman in respect of the calendar year preceding the year in which the change
in control occurs. In addition, Mr. Tuchman will not be bound by the non-compete
provisions otherwise applicable in the event of his termination of employment.
The Tuchman Employment Agreement provides that, in the event that any payments
made to Mr. Tuchman in connection with a Change in Control (including severance
payments and any other benefits to be paid or provided pursuant to the Tuchman
Employment Agreement or any other benefit or incentive plan of the Corporation)
would not be deductible by the Corporation by operation of section 280G of the
U.S. Internal Revenue Code (the "Code"), cash payments will be reduced (if
necessary, to zero) to the extent necessary to make such payments deductible;
provided, that Mr. Tuchman may elect to have noncash payments reduced (or
eliminated) prior to the reduction of the cash severance payments.
Douglas M. Spranger
In connection with the acquisition by the Corporation of HFID, HFID entered
into an employment contract with Mr. Spranger effective November 25, 1997 (the
"Spranger Employment Agreement"), which, as amended in January 1999, had a term
ending on December 31, 2000. This contract was terminated by mutual agreement as
of December 31, 1999. See "Certain Relationships and Related Transactions,"
page 13.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of Neil R. Austrian, Mark N. Kaplan and Ira T. Wender. While the
Committee administers, and makes recommendations to the Board of Directors with
respect to, the executive compensation, stock option and benefit plans and
grants under such plans, the Corporation's overall compensation strategy,
including a determination of compensation paid to the Chief Executive Officer of
the Corporation, Robert L. Tuchman, is determined by the entire Board of
Directors.
Objectives
- ----------
The Committee's primary objective is to attract and retain the most highly
qualified executive officers and to insure that their compensation structure
aligns their interests with those of the stockholders of the Corporation. Since
Mr. Tuchman was the only key executive for which the Committee was
-10-
<PAGE>
responsible for administering compensation in 1999 and because of the specific
circumstances surrounding the compensation paid to him, a policy which relates
the compensation of executive officers to the overall performance of the
Corporation has not been formulated. However, the Committee contemplates that,
to the extent appropriate in the future, it may develop guidelines which could
be utilized in relating executive compensation to the Corporation's overall
growth and success.
Employment Agreements
- ---------------------
The Corporation has an employment agreement with Robert L. Tuchman, its
Chief Executive Officer. An employment agreement with Douglas M. Spranger, who
served as the Corporation's Senior Vice President during 1999, was terminated
as of December 31, 1999. See "Employment Contracts," page 9. The Committee has
considered the advisability of using employment agreements and has determined
that their use is in the best interest of the Corporation because it facilitates
the Corporation's ability to attract and retain the services of highly qualified
executive officers. The Committee has observed that the use of employment
agreements by the Corporation has provided stability with respect to the
leadership of the Corporation's team of executive officers, and the Committee
has determined that the practice of using employment agreements to retain the
services of its senior executive officers should continue in the future. Each
employment agreement separately reflects the terms that the Committee felt were
necessary and appropriate to retain the services of such executive officer.
Components of Executive Compensation
- ------------------------------------
The Corporation's executive compensation program consists of cash and
equity compensation components.
Cash Compensation
-----------------
Cash compensation is comprised of base salary and annual cash incentive
bonuses. The Chief Executive Officer's cash compensation levels are subject to
the provisions of his employment agreement with the Corporation. The Committee
has determined that it will continue the Corporation's policy of subjectively
arriving at appropriate cash compensation levels in the process of negotiating
such agreements. The terms and conditions of the Corporation's employment
agreement with Mr. Tuchman are discussed in detail above. See "Employment
Contracts," page 9.
The Corporation offers the Chief Executive Officer an opportunity to earn
additional cash compensation in the form of an annual bonus based on a number of
subjective factors, including the earnings of the Corporation, acquisition of
enterprises and intellectual property and the efforts of the Chief Executive
Officer.
Bonuses that were paid to the Chief Executive Officer are disclosed above
in the bonus column of the Summary Compensation Table. See "Remuneration of
Executive Officers," page 7.
Equity Compensation
-------------------
Equity compensation is comprised of stock options. Stock option grants
reflect the Committee's desire to provide a meaningful equity incentive for the
executive to have the Corporation prosper over the long term.
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<PAGE>
Chief Executive Officer Compensation
- ------------------------------------
Mr. Tuchman has served as Chief Executive Officer of the Corporation since
January 6, 1997. Mr. Tuchman's compensation is governed by the terms of an
employment contract between Mr. Tuchman and the Corporation, entered into at the
time he joined the Corporation in 1991 and amended and extended in 1994, 1996
and again in January 1999. In addition to salary payments, Mr. Tuchman's
employment agreement provides for the payment of an annual bonus to be
determined by the Board of Directors in its sole discretion. In its
recommendation to the Board of Directors regarding Mr. Tuchman's bonus for
fiscal 1999, the Committee considered Mr. Tuchman's active role in connection
with the Corporation's formation of Refac Consumer Products, Inc. and the launch
of the Corporation's line of consumer products, the acquisition of David Morris
Creative, Inc., the Corporation's relocation and his overall contribution to the
future growth of the Corporation.
Deductibility of Compensation
- -----------------------------
Section 162(m) of the Code generally limits to $1,000,000 the Corporation's
federal income tax deduction for compensation paid in any year to each of its
Chief Executive Officer and the four other most highest paid executive officers,
to the extent such compensation is not "performance-based" within the meaning of
Section 162(m). The Committee will, in general, seek to qualify compensation
paid to its executive officers for deductibility under Section 162(m), although
the Committee believes it is appropriate to retain the flexibility to authorize
payments of compensation that may not qualify for deductibility if, in the
Committee's judgment, it is in the Corporation's best interest to do so.
The Compensation Committee of the Board of Directors
Neil R. Austrian
Mark N. Kaplan
Ira T. Wender
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Committee is comprised of the following three directors: Neil R.
Austrian, Mark N. Kaplan and Ira T. Wender. Mark N. Kaplan, a director of the
Corporation, is of counsel to Skadden, Arps, Slate, Meagher & Flom LLP which has
been retained since February 1982 to render legal services to the Corporation.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph provides information on the cumulative total return,
assuming reinvestment of dividends, for the period commencing December 31, 1994
and ending December 31, 1999, of the Corporation's Common Stock as compared to
the American Stock Exchange Index and a published industry index, referred to
below as the "Industry Index," which includes companies in Standard Industrial
Classification Code 6794 (Patent Owners and Lessors), which is the Corporation's
primary SIC reporting code.
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<PAGE>
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
Refac $100.00 $116.48 $111.24 $203.55 $136.09 $ 75.74
- --------------------------------------------------------------------------------------
Industry Index (SIC Code 6794) $100.00 $211.99 $272.34 $318.33 $370.75 $223.08
- --------------------------------------------------------------------------------------
American Stock Exchange Index $100.00 $128.90 $136.01 $163.66 $161.44 $201.27
- --------------------------------------------------------------------------------------
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(1) Mark N. Kaplan is of counsel to Skadden, Arps, Slate, Meagher & Flom LLP
which has been retained since February 1982 to render legal services to the
Corporation.
(2) See "Employment Contracts", page 9.
(3) In connection with the acquisition of HFID in November 1997, HFID entered
into a five-year employment agreement with Douglas M. Spranger to serve as
its President and Chief Executive Officer. On December 31, 1998, HFID was
merged into RIL and thereafter operated as Refac HumanFactors-ID, a
division of RIL. On January 14, 1999, Mr. Spranger's contract was amended
to provide that he serve as Senior Vice President of the Corporation and
RIL. Pursuant to an
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<PAGE>
agreement entered into as of December 31, 1999, Mr. Spranger's employment
agreement and stock options were terminated, Mr. Spranger resigned as an
officer and director of RIL and Refac and the Corporation purchased, for
$125,000, any right he may have to the contingent portion of the purchase
price relating to the HFID acquisition. The Corporation also agreed to
retain Mr. Spranger as an independent sales representative for HFID, which
retention is terminable at any time by the Corporation, and pay him, in
general, a commission of 7 1/2% of the first $100,000 and 5% of the amount
in excess of $100,000 of collected project fees from new clients brought to
HFID by him.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP served as the independent public accountants for the
Corporation and its subsidiaries for the fiscal year ended December 31, 1999 and
the Board of Directors has retained such firm to serve as the Corporation's
independent public accountants for the fiscal year commencing January 1, 2000.
Grant Thornton LLP does not have any direct or indirect financial interest in
the Corporation or any of its subsidiaries in any capacity other than that of
independent public accountants. A representative of the firm will be present at
the meeting to answer questions by stockholders concerning the accounts of the
Corporation and will have the opportunity to make a statement, if such
representative desires to do so.
OTHER MATTERS
The Board of Directors of the Corporation does not know of any other
matters which are likely to be brought before the meeting. However, in the
event that any other matters properly come before the meeting, the persons named
in the enclosed proxy will vote such proxy in accordance with their judgment on
such matters.
PROPOSALS BY STOCKHOLDERS
Proposals of stockholders intended to be presented, pursuant to Rule 14a-8
under the Exchange Act, at the 2001 Annual Meeting of Stockholders of the
Corporation, which is currently scheduled to be held on May 11, 2001, must be
received by the Corporation at the Corporation's principal executive offices by
December 6, 2000 if they are to be included in the Corporation's proxy statement
and proxy relating to such meeting. In order for stockholder proposals made
outside of Rule 14a-8 under the Exchange Act to be considered "timely" within
the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be
received by the Corporation at the Corporation's principal executive offices by
February 19, 2001. The Corporation's By-Laws require that proposals of
stockholders made outside of Rule 14a-8 under the Exchange Act must be
submitted, in accordance with the requirements of the By-Laws, not later than
March 13, 2001 and not earlier than February 11, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's officers and
directors and persons who own more than 10% of a registered class of the
Company's equity securities to file certain reports regarding ownership of, and
transactions in, the Company's securities with the Securities and Exchange
Commission (the "SEC"). Officers, directors and more than 10% shareholders are
also required by SEC rules to furnish the Company with copies of all Section
16(a) forms that they file.
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<PAGE>
Based solely on its review of forms received by it, or written
representations from certain reporting persons, the Company believes that during
fiscal 1999 all Section 16(a) filing requirements applicable to its officers,
directors and more than 10% shareholders were complied with, except for a late
filing of a Form 4 and a Form 5 by Mr. Leonard to report a gift of 1,800 shares
of Common Stock.
SOLICITATION OF PROXIES
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy will be borne by
the Corporation. In addition to the solicitation of proxies by use of the
mails, the Corporation may utilize the services of some of its officers and
regular employees (who will receive no compensation therefor in addition to
their regular salaries) to solicit proxies personally and by telephone and
telegraph.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT L. TUCHMAN
Chairman of the Board
April 10, 2000
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<PAGE>
[LOGO] Refac
Refac
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING MAY 12, 2000
The undersigned, revoking all proxies heretofore given, hereby appoints ROBERT
L. TUCHMAN, MARK N. KAPLAN and IRA T. WENDER, or any of them, with the power of
substitution, proxies for the undersigned to vote at the Annual Meeting of
Stockholders of Refac (the "Corporation") to be held at 10:00 A.M. (New York
City time) on Friday, May 12, 2000 at the Board of Governors' Room of the
American Stock Exchange, 86 Trinity Place, New York, NY, and at any adjournments
thereof, according to the votes the undersigned might cast with all the powers
the undersigned would possess if personally present, for the following proposal
proposed by management of the Corporation.
(Please date and sign reverse side)
[FOLD AND DETACH HERE]
<PAGE>
<TABLE>
<S> <C> <C>
THE PROXIES WILL VOTE IN THE MANNER DIRECTED HEREBY BY THE UNDERSIGNED SHAREHOLDER AND Please mark
IN THEIR DISCRETION WITH RESPECT TO ANY MATTERS REFERRED TO IN ITEM (2). IF NO DIRECTION your vote as [X]
IS MADE, THE PROXIES WILL VOTE "FOR" PROPOSAL 1. indicated in
this example
1. For the election of directors. Neil R. Austrian, Robin L. Farkas, Bert D. Heinzelman, Clark A. Johnson,
Mark N. Kaplan, Herbert W. Leonard, Robert L. Tuchman and Ira T. Wender.
For all nominees WITHHOLD INSTRUCTIONS (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
listed to the right AUTHORITY NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED ABOVE.)
(except as marked to vote for all nominees
to the contrary) listed to the right
[ ] [ ]
2. For the transaction of such other business as may properly come Receipt of the Notice of the Annual Meeting and Proxy
before the meeting and at any adjournment or adjournments thereof. Statement and the Annual Report of the Corporation for
the year ended December 31, 1999 is hereby acknowl-
edged. NOTE: If stock is registered in the names of two
or more joint owners or trustees, each joint owner or
trustee should sign this proxy. When signing as execu-
tor, administrator, trustee, guardian, agent or attorney,
please give your full title as such.
Date ___________________________________________ , 2000
_______________________________________________________
Signature
_______________________________________________________
Signature if held jointly
Please fill out, date, sign and mail this proxy card in
the accompanying envelope. No postage required.
[FOLD AND DETACH HERE]
[LOGO] Refac
Annual Meeting
of
Refac
Friday, May 12, 2000
10:00 AM
Board of Governors' Room
of American Stock Exchange,
86 Trinity Place
New York, NY
</TABLE>
