UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o |
Preliminary
Proxy Statement
|
o
|
Confidential,
for Use of The Commission Only (as permitted by Rule
14a-6(e)(2))
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x |
Definitive
Proxy Statement
|
o |
Definitive
Additional Materials
|
o |
Soliciting
Material Pursuant to §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
o 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)
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Aggregate
number of securities to which transaction
applies:
|
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of
transaction:
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o |
Fee paid previously with preliminary
materials. |
o
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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.
|
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(1)
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Amount
Previously Paid:
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(2) |
Form, Schedule or Registration Statement
No.: |
COMPETITIVE
TECHNOLOGIES, INC.
777
Commerce Drive, Suite 100
Fairfield,
Connecticut 06825
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on January 16, 2007
To
the
Stockholders of
COMPETITIVE
TECHNOLOGIES, INC.
The
Annual Meeting of Stockholders of COMPETITIVE TECHNOLOGIES, INC. will be held
at
the American Stock Exchange, 86 Trinity Place, New York, New York 10006 on
Tuesday, January 16, 2007, at 10:00 a.m. local time. The purposes of the meeting
are:
|
1. |
to elect six Directors to serve until the next annual
meeting of stockholders and until their respective successors have
been
elected and qualified, and |
|
2.
|
to
transact such other business as may properly come before the meeting
and
any adjournments thereof.
|
The
Board
of Directors has fixed November 20, 2006, as the record date for the meeting.
Owners of shares of common stock and preferred stock of Competitive
Technologies, Inc. at the close of business on the record date are entitled
to
notice of the meeting and to vote at the meeting and any adjournments of the
meeting.
WE
URGE YOU TO VOTE YOUR SHARES PROMPTLY. TO VOTE YOUR SHARES, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ACCOMPANYING PROXY PROMPTLY. YOU MAY BE ABLE TO VOTE
YOUR SHARES VIA THE INTERNET OR BY TELEPHONE. PLEASE REFER TO THE ENCLOSED
PROXY
CARD FOR SPECIFIC VOTING INSTRUCTIONS.
By
Order
of the Board of Directors,
/s/
Kristin A. Kreuder
Kristin
A. Kreuder
Assistant
Secretary
Fairfield,
Connecticut
December
4, 2006
PROXY
STATEMENT
COMPETITIVE
TECHNOLOGIES, INC.
777
Commerce Drive, Suite 100
Fairfield,
Connecticut 06825
___________________
The
Board
of Directors is furnishing stockholders this Proxy Statement to solicit proxies
to be voted at the annual meeting of stockholders of Competitive Technologies,
Inc., a Delaware corporation (hereafter, “we”, “us”, or “CTT”). The meeting will
be held on Tuesday, January 16, 2007, at 10:00 a.m. local time at the American
Stock Exchange, 86 Trinity Place, New York, New York 10006.
Each
proxy received will be voted as you direct it to be voted. If you do not
indicate on your proxy how you want your vote counted, your proxy will be voted
FOR
electing
the nominees named below as directors. You may revoke your proxy at any time
before the voting by notifying us; no formal procedure is required. Votes are
tabulated by an independent agent and the results will be reported at the Annual
Meeting.
If
you
complete and properly sign the accompanying proxy and return it to us, or vote
via the internet or by telephone, it will be voted as you direct. If
you are a stockholder of record
(that
is, you hold a stock certificate registered in your name on the books of our
transfer agent, American Stock Transfer & Trust Company, as of the close of
business on November 20, 2006), and attend the meeting, you may deliver your
completed proxy in person, or vote in person at the meeting (proxies will be
available at the meeting for that purpose), or revoke a previously submitted
proxy and complete a new proxy.
However,
if
you hold your shares in “street name” as
a beneficial owner (that
is,
your broker holds the stock in your account and you do not have a stock
certificate), your broker may vote your shares on your behalf unless previously
you have informed your broker not to do so, otherwise,
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a)
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you
must return your voting instructions to your broker or nominee (that
is,
the holder of record), or
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b)
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you
must vote your shares through your broker or nominee via the internet
or
by phone, or
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c)
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if
you wish to vote in person at the meeting, you must obtain from the
record
holder and bring to the meeting a proxy signed
by the record holder
identifying you as the beneficial owner of the shares and giving
you the
right to vote the shares at the meeting. (You may not
use the voting instruction form provided by your broker or nominee
to vote
in person at the meeting.)
|
We
intend
to mail or give to our stockholders on or about December 4, 2006, this Proxy
Statement, including the Notice of Annual Meeting of Stockholders, and the
accompanying proxy, together with our Annual Report and our Annual Report on
Form 10-K.
Only
holders of record of our 8,009,380 outstanding shares of common stock, $0.01
par
value (“Common Stock”), and 2,427 outstanding shares of 5% preferred stock, $25
par value (“Preferred Stock”) at the close of business on November 20, 2006 (the
“Record Date”), will be entitled to vote at the meeting. Each holder of record
on the Record Date is entitled to one vote for each share of Common Stock or
Preferred Stock held. If you abstain from voting, your shares will be counted
as
shares present and entitled to vote in determining the presence of a quorum
for
the meeting, but your shares will not be voted in determining approval of any
matter submitted to stockholders for a vote. An abstention will have the same
effect as a negative vote on a matter submitted to stockholders for a vote.
If a
broker indicates on the proxy that it does not have discretionary authority
to
vote on a particular matter (broker non-votes), those shares will be counted
as
shares present in determining the presence of a quorum for the meeting but
they
will not be considered present or entitled to vote with respect to that
particular matter.
1.
ELECTION OF DIRECTORS
At
the
meeting, stockholders will elect a Board of six directors by a plurality of
the
votes cast. Our Board of Directors (the “Board”) proposes the six nominees named
below.
All
of
the nominees named below currently are directors of CTT. No director, executive
officer or nominee is related by family to any other director, executive officer
or nominee. If any nominee is unable to serve, we solicit discretionary
authority to vote to elect another person unless we reduce the size of the
Board. Each director will serve until the next annual meeting of stockholders,
and until his or her successor has been elected and qualified, or until his
or
her earlier resignation or removal. We have no reason to believe that any
nominee will not be available for election as a director for the prescribed
term.
The
following table sets forth information regarding each nominee for director
according to the information furnished to us by each such nominee:
Name
|
Age
|
Positions
currently held
with
CTT
|
Committee
memberships
|
Director
of CTT
since
|
|
|
|
|
|
Richard
E. Carver
|
69
|
Director
and Chairman of the
Board
of Directors
|
C,
N
|
January
2000
|
|
|
|
|
|
George
W. Dunbar, Jr.
|
60
|
Director
|
C,
N*
|
November
1999
|
|
|
|
|
|
Donald
J. Freed, Ph.D.
|
64
|
Director,
President and
Chief
Executive Officer
|
--
|
January
2005
|
|
|
|
|
|
Maria-Luisa
Maccecchini, Ph.D.
|
55
|
Director
|
A,
N
|
January
2005
|
|
|
|
|
|
Charles
J. Philippin
|
56
|
Director
|
A,
C*
|
June
1999
|
|
|
|
|
|
John
M. Sabin
|
51
|
Director
|
A*
|
December
1996
|
A
- Audit
Committee
C
-
Compensation and Stock Option Committee
N
-
Nominating and Corporate Governance Committee
*
-
Committee Chair
Richard
E. Carver. Mr.
Carver is the President and Chief Executive Officer of MST America, an
international business strategies consultancy. Mr. Carver has served in this
capacity since January 1995. From November 1998 to April 2000, he served as
President and Chief Executive Officer of RPP America, a seller of solid waste
wrapping systems. From May 1988 to December 1999, he was Chairman and Chief
Executive Officer of Carver Lumber Company, a provider of building materials
for
new home construction and prefabrications. In 1973 he was elected mayor of
Peoria, IL and served in that capacity until 1984 when he resigned to become
an
Assistant Secretary for Financial Management of the Air Force. During that
same
period, he served as president of the U.S. Conference of Mayors, a director
of
the National League of Cities, a member of the President’s Advisory Commission
on Intergovernmental Relations, president of the National Conference of
Republican Mayors, and a member of the President’s Commission on Housing. Mr.
Carver is also Chairman of the Advisory Board of Americorps National Civilian
Community Corps.
George
W. Dunbar, Jr. Mr.
Dunbar currently is the President and Chief Executive Officer, and a member
of
the Board of Directors of Aastrom Biosciences, Inc. (Nasdaq: ASTM), a company
that is developing products for the repair and regeneration of multiple human
tissues based on adult stem cell technology. Mr. Dunbar has served in this
capacity since July 2006. From
February 2004 to October 2005, at which time the company was sold to Invitrogen
Corporation, Mr.
Dunbar served as the Chief Executive Officer and Director of Quantum Dot
Corporation, a privately held bioscience company commercializing proprietary
labeling and detection nanotechnology with applications in life science research
and medicine. From February 2003 to 2004, when the company was restructured
and
sold, Mr. Dunbar served as President, Chief Executive Officer and Director
of
Targesome, Inc., an early stage developer of targeted nanoparticle drug delivery
technology. From September 2000 to November 2002, he was Chief Executive Officer
of EPIC Therapeutics, Inc., a drug delivery technology company. He also served
as acting President and Chief Executive Officer of StemCells, Inc. from February
2000 to January 2001, and acting President of StemCells California, Inc. (a
wholly-owned subsidiary of StemCells, Inc., developers of organ-specific, human
stem cell technologies), from November 1999 to January 2001. Mr. Dunbar also
serves as a Director of Sonus Pharmaceuticals, Inc.
Dr.
Donald J. Freed. Dr.
Freed
has been our President and Chief Executive Officer since June 2005. Prior to
this position, from January 2004 through June 2005, Dr. Freed served as our
Executive Vice President and Chief Technology Officer. From April 2003 to
December 2003, Dr. Freed was a consultant to us. From November 1998 through
March 2003, he served as Vice President, Business Development, and prior
thereto, as Vice President of Marketing, of Nanophase Technologies Corporation,
a publicly held nanomaterials company. His background is in commercializing
new
technologies. Dr. Freed was responsible for the successful start-up of advanced
materials initiatives in three large multi-national firms, and has extensive
experience in licensing and technology transfer on a global basis throughout
Europe and Asia. Dr. Freed has been an advisor to the Nanobusiness Alliance
and
a frequent speaker at public nanotechnology forums.
Dr.
Maria-Luisa Maccecchini. Dr.
Maccecchini is a partner in three “angel” funds that invest in early stage
biotechnology companies: Robin Hood Ventures, Mid-Atlantic Angel Group and
Business Angels Switzerland. She actively promotes biotechnology early stage
companies with strategic and financial assistance. From March 2004 to April
2005, Dr.
Maccecchini was President of Biomaterials Worldwide of Synthes, Inc., an
international medical device company specializing in the development,
manufacture and marketing of instruments and implants for the surgical treatment
of bones (osteosynthesis). From 2002 to 2004, Dr. Maccecchini was a strategic
consultant to companies planning to enter the biotech industry. In
1991,
Dr. Maccecchini founded Symphony Pharmaceuticals, Inc., later renamed Annovis,
Inc., a biotech company that performs research, development, manufacturing
and
marketing of nucleic acid-based products and services, specifically focused
on
brain associated diseases and genomics. She served as President and Chief
Executive Officer of Symphony Pharmaceuticals, Inc. from 1991 to 2002, when
she
sold the company to Transgenomic. In addition, Dr. Maccecchini serves on the
boards of private biotech companies and organizations that promote
biotechnology, entrepreneurship, women and international trade.
Charles
J. Philippin. Mr.
Philippin is a Principal of Garmark Advisors, LLC, a mezzanine investment fund,
and has served in this capacity since May 2002. From June 2000 to January 2003,
he served as Chief Executive Officer of Accordia, Inc., formerly On-Line Retail
Partners, a provider of management and technology resources for branded
e-commerce businesses. From July 1994 to May 2000, he served as a member of
the
management committee of Investcorp International, Inc., a global investment
group acting as a principal and intermediary in international investment
transactions. Prior to 1994, he was a partner with PriceWaterhouseCoopers.
Mr.
Philippin also serves as a Director of Samsonite Corp., CSK Auto Corp. and
Alliance Laundry Systems, LLC.
John
M. Sabin. Mr.
Sabin
has served as Chief Financial Officer and General Counsel of Phoenix Health
Systems, Inc., a health care IT consulting and outsourcing firm, since October
2004. From January 2000 to October 2004, he served as Chief Financial Officer
and General Counsel of NovaScreen Biosciences Corporation, a developer of
biotechnology-based tools to accelerate drug discovery and development. From
September 1999 to January 2000, he was a business consultant. From May 1998
to
September 1999, he served as Executive Vice President and Chief Financial
Officer of Hudson Hotels Corporation, a limited service hotel development and
management company. Mr. Sabin also serves as a Trustee of Hersha Hospitality
Trust, a Trustee of Prime Group Realty Trust and a Director of North American
Scientific, Inc. Mr. Sabin is a
certified public accountant and is admitted to the bar in several
states.
BOARD
MEETINGS AND COMMITTEES
The
members of the committees of the Board are as follows:
Audit
Committee
|
|
Compensation
and Stock
Option
Committee
|
|
Nominating
and Corporate
Governance
Committee
|
|
|
|
|
|
John
M. Sabin, Chairman
|
|
Charles
J. Philippin, Chairman
|
|
George
W. Dunbar, Jr., Chairman
|
|
|
|
|
|
Maria-Luisa
Maccecchini
|
|
Richard
E. Carver
|
|
Richard
E. Carver
|
|
|
|
|
|
Charles
J. Philippin
|
|
George
W. Dunbar, Jr.
|
|
Maria-Luisa
Maccecchini
|
Corporate
Governance Principles
Our
Restated Certificate of Incorporation, Amended and Restated Bylaws, Corporate
Governance Principles and the charters of the Audit Committee, the Compensation
and Stock Option Committee (the “Compensation Committee”) and the Nominating and
Corporate Governance Committee (the “Nominating Committee”) provide the
framework for managing and governing CTT.
The
Board
is elected by and responsible to our stockholders. Except with respect to
matters reserved to stockholders, the Board is the ultimate decision making
body
of CTT. In that capacity, the Board takes an engaged and focused approach to
its
responsibilities and duties, and sets standards to better ensure that we are
committed to business success and enhancement of stockholder value by
maintaining the highest standard of responsibility and ethics. The Board has
designed its governance approach to be a working structure for principled
actions, effective decision-making and appropriate monitoring of both compliance
and performance.
Our
employees, managers and officers conduct our business under the direction of
senior management and the leadership of our Chief Executive Officer (“CEO”), who
are accountable to the Board and ultimately to the stockholders. Management
is
responsible for the day-to-day operation of our business, strategic planning,
budgeting, financial reporting and risk management.
Our
Corporate Governance Principles (and the Amended and Restated Bylaws), provide
that a majority of the Board shall be independent directors in accordance with
the rules of the American Stock Exchange and any other applicable legal or
regulatory requirements. They also establish factors for the Board to consider
in nominating or appointing directors, including:
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--
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reputation,
strength of character, integrity, business ethics and, for non-management
directors, independence of the
individual;
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--
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business,
government or other professional experience and
acumen;
|
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--
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the
number of other companies as to which the individual serves as a
director
and the individual’s time availability to serve CTT;
|
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--
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knowledge
and expertise in life, digital, nano or physical sciences and related
business enterprises, and other skills relevant to our
business;
|
|
-- |
tenure as a member of our
Board. |
Audit
Committee
The
function of the Audit Committee is to assist the Board in fulfilling its
responsibility to the stockholders relating to our corporate accounting matters,
financial reporting practices, and the quality and integrity of our financial
reports. The Audit Committee’s purpose is to assist the Board with
overseeing:
|
--
|
the
reliability and integrity of our financial statements, accounting
policies, internal controls and disclosure
practices;
|
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--
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our
compliance with legal and regulatory requirements, including our
disclosure controls and procedures;
|
|
--
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our
independent auditor’s qualifications, engagement, compensation, and
independence;
|
|
--
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the
performance of our independent auditor;
and
|
|
--
|
the
production of an annual report of the Audit Committee for inclusion
in our
annual proxy statement.
|
The
Audit
Committee is to be composed of not less than three of our independent directors.
The Board has determined that each member of the Audit Committee is an
independent director in accordance with the applicable rules of the American
Stock Exchange and the Securities Exchange Act of 1934. It has also determined
that each member is financially literate and has identified Mr. Sabin and Mr.
Philippin, both of whom are certified public accountants, as audit committee
financial experts as defined by the Securities and Exchange Commission. The
Audit Committee operates pursuant to its charter, which was adopted by the
Board, a copy of which was filed as Appendix A to our 2004 Proxy Statement.
The
Audit Committee evaluates the adequacy of its charter annually.
Compensation
and Stock Option Committee
The
purpose of the Compensation Committee is to:
|
--
|
review
and approve corporate goals and objectives relevant to CEO compensation,
evaluate the CEO’s performance in light of those goals and objectives, and
determine and approve the CEO’s compensation level based on this
evaluation;
|
|
--
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review
and approve the compensation of our other officers based on
recommendations from the CEO;
|
|
--
|
review,
approve and make recommendations to the Board with respect to incentive
compensation plans or programs, or other equity-based plans or programs,
including but not limited to our Annual Incentive Plan, our 1997
Employees’ Stock Option Plan, and our 401(k) Plan;
and
|
|
--
|
produce
an annual report of the Compensation Committee on executive compensation
for inclusion in our annual proxy
statement.
|
The
Compensation Committee is to be composed
of not less than three of our independent directors.
The
Board has determined that each member of the Compensation Committee is (a)
an
independent director in accordance with the applicable rules of the American
Stock Exchange and any other applicable legal or regulatory requirement, (b)
a
non-employee director within the meaning of Rule 16-b3(i) under the Securities
Exchange Act of 1934, and (c) an outside director within the meaning of Section
162(m) of the Internal Revenue Code of 1986 (the “Internal Revenue
Code”).
Nominating
and Corporate Governance Committee
The
purpose of the Nominating Committee is to:
|
--
|
identify
individuals qualified to become members of the Board, consistent
with
criteria approved by the Board;
|
|
--
|
recommend
to the Board candidates for all directorships to be filled by the
Board or
our stockholders;
|
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--
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in
consultation with the Chairman of the Board, recommend to the Board
members of the Board to be appointed to committees of the Board and
the
chairpersons thereof, including filling any
vacancies;
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--
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develop
and recommend to the Board a set of corporate governance principles
applicable to us;
|
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--
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oversee,
evaluate and monitor the Board and its individual members, and our
corporate governance principles and procedures;
and
|
|
--
|
fulfill
such other duties and responsibilities as may be set forth in its
charter
or assigned by the
Board from time to time.
|
The
Nominating Committee is to be composed of not less than three of our independent
directors. The Board has determined that each member of the Nominating Committee
is an independent director in accordance with the applicable rules of the
American Stock Exchange and any other applicable legal or regulatory
requirement. The Nominating Committee operates pursuant to its charter, which
was adopted by the Board, a copy of which was filed as Appendix B to our 2004
Proxy Statement.
The
Nominating Committee will consider nominees recommended by stockholders but
it
has not identified any special procedures stockholders need to follow in
submitting such recommendations. The Nominating Committee has not identified
any
such procedures because as discussed below under the heading “Stockholder
Communications to the Board,” stockholders are free to send communications in
writing directly to the Board, committees of the Board, and/or individual
directors, at our corporate address in care of our Secretary.
Board
Meetings and Attendance
During
the year ended July 31, 2006, the Board held seven (7) meetings. During the
same
period, the Audit Committee met eight (8) times, the Compensation Committee
met
five (5) times, and the Nominating Committee met once. All of the directors
standing for re-election attended at least 90% of the aggregate number of
meetings of the Board and committees of which the director was a member. CTT
does not have a specific policy regarding directors’ attendance at the annual
meeting of stockholders. All directors attended the annual meeting of
stockholders held on January 17, 2006.
Stockholder
Communications to the Board
Stockholders
may send communications in writing to the Board, committees of the Board, and/or
to individual directors, at our corporate address in care of our Secretary.
Written communications addressed to the Board are reviewed by the Chairman
of
the Board for appropriate handling. Written communications addressed to an
individual Board member are forwarded to that person directly.
BENEFICIAL
OWNERSHIP OF SHARES
The
following information indicates the beneficial ownership of our Common Stock
by
each director and nominee, by our three Named Executive Officers (as defined
under the caption “Executive Compensation” below), and by each person known to
us to be the beneficial owner of more than 5% of our outstanding Common Stock.
The indicated owners furnished such information to us as of November 20, 2006,
except as otherwise indicated in the footnotes.
Names
of Beneficial Owners
(and
address, if ownership
is
more than 5%)
|
|
Amount
Beneficially
Owned
|
|
(A)
|
|
Percent
|
|
(B)
|
|
|
|
|
|
|
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Directors,
nominees and executive officers
|
|
|
|
|
|
|
|
|
|
Richard
E. Carver
|
|
|
88,604
|
|
|
(C)
|
|
|
1.1
|
%
|
|
|
|
Michael
D. Davidson
|
|
|
29,532
|
|
|
(D)
|
|
|
--
|
|
|
|
|
George
W. Dunbar, Jr.
|
|
|
86,109
|
|
|
(E)
|
|
|
1.1
|
%
|
|
|
|
Donald
J. Freed
|
|
|
69,080
|
|
|
(F)
|
|
|
--
|
|
|
|
|
Michael
E. Kiley
|
|
|
47,487
|
|
|
(G)
|
|
|
--
|
|
|
|
|
Maria-Luisa
Maccecchini
|
|
|
24,500
|
|
|
(H)
|
|
|
--
|
|
|
|
|
Charles
J. Philippin
|
|
|
124,884
|
|
|
(I)
|
|
|
1.6
|
%
|
|
|
|
John
M. Sabin
|
|
|
61,484
|
|
|
(J)
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
directors, nominees and executive officers as a group
|
|
|
531,680
|
|
|
(K)
|
|
|
6.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________
(A)
|
Except
as indicated in the notes that follow, the designated person or group
has
sole voting and investment power.
|
(B)
|
Percentages
of less than 1% are not shown.
|
(C)
|
Consists
of 24,604 shares of Common Stock plus 64,000 stock options deemed
exercised solely for purposes of showing total shares owned by Mr.
Carver.
|
(D)
|
Consists
of 7,032 shares of Common Stock plus 22,500 stock options deemed
exercised
solely for purposes of showing total shares owned by Mr. Davidson.
Includes
5,032 shares of Common Stock held under our 401(k) Plan, as to which
Mr.
Davidson has full investment power. Does not include 1,677 unvested
shares
of Common Stock allocated to Mr. Davidson under our 401(k)
Plan.
|
(E)
|
Consists
of 16,109 shares of Common Stock and 70,000 stock options deemed
exercised
solely for purposes of showing total shares owned by Mr.
Dunbar.
|
(F)
|
Consists
of 24,080 shares of Common Stock plus 45,000 stock options deemed
exercised solely for purposes of showing total shares owned by Dr.
Freed.
Includes 9,080 shares of Common Stock held under our 401(k) Plan,
as to
which Dr. Freed has full investment
power.
|
(G)
|
Consists
of 13,737 shares of common stock plus 33,750 stock options deemed
exercised solely for purposes of showing total shares owned by Mr.
Kiley.
Includes 5,237 shares of common stock held under our 401(k) Plan,
as to
which Mr. Kiley has full investment power. Does not include 1,745
unvested
shares of common stock allocated to Mr. Kiley under our 401(k) Plan.
|
(H)
|
Consists
of 4,500 shares of common stock plus 20,000 stock options deemed
exercised
solely for purposes of showing total shares owned by Dr.
Maccecchini.
|
(I)
|
Consists
of 54,884 shares of Common Stock plus 70,000 stock options deemed
exercised solely for purposes of showing total shares owned by Mr.
Philippin.
|
(J)
|
Consists
of 11,484 shares of Common Stock plus 50,000 stock options deemed
exercised solely for purposes of showing total shares owned by Mr.
Sabin.
Includes 200 shares of Common Stock held by his
spouse.
|
(K)
|
Consists
of 156,430 shares of Common Stock plus 375,250 stock options to purchase
shares of Common Stock deemed exercised solely for purposes of showing
total shares owned by the group.
|
At
November 20, 2006, the stock transfer records maintained by us with respect
to
our Preferred Stock showed that the largest holder of Preferred Stock owned
500
shares.
EXECUTIVE
COMPENSATION
Our
most
recent fiscal year ended July 31, 2006. Thus, references herein to 2006 is
the
year ended July 31, 2006, and 2005 and 2004 are the years ended July 31, 2005,
and 2004, respectively.
Summary
Compensation
The
following table summarizes the total compensation awarded to, earned by or
paid
by us for services rendered during each of the last three fiscal years to the
three individuals who served as our executive officers during the year ended
July 31, 2006 (the “Named Executive Officers”).
SUMMARY
COMPENSATION TABLE
|
|
|
|
Long
Term
Compensation
Awards
|
|
Name
and
|
|
Annual
Compensation
|
Securities
|
All
Other
|
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Underlying
Options
(#)
|
Compensation
($)
|
|
|
|
|
|
|
Donald
J. Freed
President
and Chief Executive Officer since June 14, 2005; previously Executive
Vice
President and Chief Technology Officer since January 1,
2004
|
2006
2005
2004
|
325,000
242,789
116,667
|
60,000
160,000
30,000
|
50,000
40,000
25,000
|
21,470
(A)
10,619
(B)
73,180
(C)
|
|
|
|
|
|
|
Michael
E. Kiley (D)
Executive
Vice President and Chief Operating Officer since July 27, 2006; previously
Executive Vice President and Chief Technology Officer since August
15,
2005
|
2006
|
225,000
|
50,000
|
35,000
|
12,670
(E)
|
|
|
|
|
|
|
Michael
D. Davidson
Senior
Vice President and Chief Financial Officer since July 27, 2006; previously
Vice President and Chief Financial Officer since
May
3, 2004
|
2006
2005
2004
|
195,000
150,000
37,500
|
29,000
72,500
10,000
|
20,000
20,000
10,000
|
12,670
(E)
8,483
(F)
--
|
|
|
|
|
|
|
_
|
(A) |
Consists
of vested CTT discretionary contribution to 401(k) Plan ($12,670
paid in
5,357 shares of Common Stock) and $8,800 car
allowance.
|
|
(B) |
Consists
of vested CTT discretionary contribution to 401(k) Plan ($10,619
paid in
1,693 shares of Common Stock).
|
|
(C) |
Consists
of income earned as a consultant to us ($65,080) prior to full time
employment, and vested CTT discretionary contribution to 401(k) Plan
($8,100 paid in 2,030 shares of Common
Stock).
|
|
(D) |
Mr.
Kiley resigned his employment with CTT on November 27,
2006.
|
|
(E) |
Consists
of vested CTT discretionary contribution to 401(k) Plan ($12,670
paid in
5,357 shares of Common Stock).
|
|
(F) |
Consists
of CTT discretionary contribution (25% vested) to 401(k) Plan ($8,483
paid
in 1,352 shares of Common Stock).
|
Option
Grants
The
following table summarizes the stock options granted to the Named Executive
Officers during the year ended July 31, 2006.
OPTION
GRANTS IN LAST FISCAL YEAR
|
|
Individual
Grants
|
|
Name
|
|
Options
Granted
#
(1)
|
|
Percent
of
Total
Options
Granted
to
Employees
in
Fiscal
Year
|
|
Exercise
Price
($/Share)
|
|
Expiration
Date
|
|
Grant
Date
Present
Value
under
Black-Scholes
Pricing
Model (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald
J. Freed
|
|
|
50,000
|
|
|
26
|
%
|
$
|
5.34
|
|
|
10/17/15
|
|
$
|
177,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
E. Kiley
|
|
|
35,000
|
|
|
18
|
%
|
$
|
5.34
|
|
|
10/17/15
|
|
$
|
124,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Davidson
|
|
|
20,000
|
|
|
10
|
%
|
$
|
5.34
|
|
|
10/17/15
|
|
$
|
71,080
|
|
________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Options
vest 25% per year over four years beginning August 1, 2006.
(2) Estimated
on grant date assuming no dividend yield, 80.2% expected volatility,
3.9%
risk-free interest rate, and a 5 year expected option
life.
|
|
Option
Exercises and Year End Value
For
the
Named Executive Officers, the following table summarizes aggregated stock option
exercises during the year ended July 31, 2006, and stock options held at July
31, 2006.
AGGREGATED
OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
Name
|
|
Shares
Acquired
On
Exercise
(#)
|
|
Value
Realized
($)
|
|
Number
of
Securities
Underlying
Unexercised
Options
At
FY-End (#)
Exercisable/
Unexercisable
|
|
Value
of
Unexercised
In-the-Money
Options
at
FY-End
($)
Exercisable/
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
Donald
J. Freed
|
|
|
--
|
|
|
-/-
|
|
|
16,250/86,250
|
|
|
|
|
Michael
E. Kiley
|
|
|
--
|
|
|
-/-
|
|
|
20,000/55,000
|
|
|
$-/$-
|
|
Michael
D. Davidson
|
|
|
--
|
|
|
-/-
|
|
|
12,500/37,500
|
|
|
$-/$-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
summary
of total compensation paid to the Named Executive Officers for the year ended
July 31, 2006, is as follows:
|
|
Annual
Compensation
|
|
Long
Term Compensation
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary
|
|
Bonus
|
|
Present
value of stock options granted (Black- Scholes)
(A)
|
|
Perquisites
|
|
All
Other Compensation
|
|
|
|
Total
Compensation Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald
J. Freed
|
|
$
|
325,000
|
|
$
|
60,000
|
|
$
|
177,700
|
|
$
|
--
|
|
$
|
21,470
|
|
|
(B)
|
|
$
|
584,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
E. Kiley
|
|
|
225,000
|
|
|
50,000
|
|
|
124,390
|
|
|
--
|
|
|
12,670
|
|
|
(C)
|
|
|
412,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
D. Davidson
|
|
|
195,000
|
|
|
29,000
|
|
|
71,080
|
|
|
--
|
|
|
12,670
|
|
|
(C)
|
|
|
307,750
|
|
(A) |
Estimated
on grant date assuming no dividend yield, 80.2% expected volatility,
3.9%
risk-free interest rate, and a 5 year expected option
life.
|
(B) |
Consists
of vested CTT discretionary contribution to 401(k) Plan ($12,670
paid in
5,357 shares of common stock) and $8,800 car
allowance.
|
(C) |
Consists
of vested CTT discretionary contribution to 401(k) Plan ($12,670
paid in
5,357 shares of common stock).
|
Employment
Agreements
Effective
October 1, 2005, CTT and Dr. Freed amended and restated Dr. Freed’s employment
agreement, and further amended Dr. Freed’s employment agreement on February 15,
2006. The amended and restated agreement provides for his employment as our
President and CEO at a base compensation of $325,000 per year, subject to change
upon approval of our Compensation Committee. We and Dr. Freed agreed that his
employment is at will and can be terminated by either party at any time and
for
any reason. The agreement also provides for:
|
--
|
an
expense allowance whereby Dr. Freed will be reimbursed for business
related expenses reasonably and necessarily incurred and advanced
by Dr.
Freed in performing his duties for us, subject to and in accordance
with
our policies as they exist from time to
time;
|
|
--
|
a
car allowance in the amount of $800 per
month;
|
|
--
|
participation
in all employee benefit plans and programs offered, from time to
time, to
our executive employees, subject to the same terms and conditions
as such
benefits are provided by us and at the discretion of the Board, including
our annual incentive plan. All such benefits are subject to plan
documents
(where applicable) and our policies and procedures. Nothing guarantees
that any specific benefit will be provided or offered by us, and
we have
the right to add, modify, or terminate benefits at any
time;
|
|
--
|
upon
a termination of employment due to death or disability (as defined
in the
agreement), we shall pay base compensation and accrued benefits to
Dr.
Freed’s estate through date of termination, and, in the event of a
disability, shall provide a continuation of medical benefits through
the
end of the then current fiscal year. In addition, any previously
granted
but unvested stock options (“Plan Options”) will become fully vested and
immediately exercisable;
|
|
--
|
upon
a termination of employment by Dr. Freed for good reason (as defined
in
the agreement), or if we terminate Dr. Freed’s employment without cause
(as defined in the agreement), Dr. Freed shall be entitled to receive
all
accrued but unpaid salary and benefits through the date of termination
plus a severance benefit. The severance benefit consists of a continuation
of base compensation and group insurance benefits for a period of
six (6)
months, and continued vesting of Plan Options issued for a period
of six
(6) months or until the next employment anniversary date, whichever
is
longer;
|
|
--
|
upon
a resignation of employment other than for good reason (as defined
in the
agreement), or if we terminate Dr. Freed’s employment for cause (as
defined in the agreement), we shall have no liability to Dr. Freed
except
to pay his base compensation and any accrued benefits through his
last day
worked, and he shall not be entitled to receive any severance or
other
benefits; and
|
|
--
|
upon
a termination of employment without cause in conjunction with a change
in
control, (as defined in the agreement), Dr. Freed will be entitled
to
receive all accrued but unpaid salary and benefits through the date
of the
termination plus a change in control benefit. The change in control
benefit consists of continuation of his base compensation and group
insurance benefits for a period of twelve (12) months, and full vesting
and immediate ability to exercise any previously granted but unvested
Plan
Options.
|
On
February 15, 2006, CTT and Mr. Kiley entered into an employment agreement.
Pursuant to the terms of the agreement, Mr. Kiley was employed as Executive
Vice
President and Chief Technology Officer, and received an annual base compensation
of $225,000, subject to change upon approval of our Board of Directors. On
July
27, 2006, our Board appointed Mr. Kiley to the position of Executive Vice
President and Chief Operating Officer. We and Mr. Kiley agreed that his
employment was at will and could be terminated by either party at any time
and
for any reason. The agreement also provided for:
|
--
|
an
expense allowance whereby Mr. Kiley will be reimbursed for business
related expenses reasonably and necessarily incurred and advanced
by Mr.
Kiley in performing his duties for us, subject to and in accordance
with
our policies as they exist from time to
time;
|
|
--
|
participation
in all employee benefit plans and programs offered, from time to
time, to
our executive employees, subject to the same terms and conditions
as such
benefits are provided by us and at the discretion of the Board, including
our annual incentive plan. All such benefits are subject to plan
documents
(where applicable) and our policies and procedures. Nothing guarantees
that any specific benefit will be provided or offered by us, and
we have
the right to add, modify, or terminate benefits at any
time;
|
|
--
|
upon
a termination of employment due to death or disability (as defined
in the
agreement), we shall pay base compensation and accrued benefits to
Mr.
Kiley’s estate through date of termination, and, in the event of a
disability, shall provide a continuation of medical benefits through
the
end of the then current fiscal year. In addition, any Plan Options
will
become fully vested and immediately
exercisable;
|
|
--
|
upon
a termination of employment for good reason (as defined in the agreement),
or if we terminate Mr. Kiley’s employment without cause (as defined in the
agreement), Mr. Kiley shall be entitled to receive all accrued but
unpaid
salary and benefits through the date of termination plus a severance
benefit. The severance benefit consists of a continuation of base
compensation and group insurance benefits for a period of six (6)
months,
and continued vesting of Plan Options issued for a period of six
(6)
months or until the next employment anniversary date, whichever is
longer;
|
|
--
|
upon
a resignation of employment other than for good reason (as defined
in the
agreement), or if we terminate Mr. Kiley’s employment for cause (as
defined in the agreement), we shall have no liability to Mr. Kiley
except
to pay his base compensation and any accrued benefits through his
last day
worked, and he shall not be entitled to receive any severance or
other
benefits; and
|
|
--
|
upon
a termination of employment without cause in conjunction with a change
in
control, (as defined in the agreement), Mr. Kiley will be entitled
to
receive all accrued but unpaid salary and benefits through the date
of the
termination plus a change in control benefit. The change in control
benefit consists of continuation of his base compensation and group
insurance benefits for a period of twelve (12) months, and full vesting
and immediate ability to exercise any previously granted but unvested
Plan
Options.
|
On
November 27, 2006, Mr. Kiley resigned his employment with CTT.
Other
Arrangements
401(k)
Retirement Savings Plan
Effective
January 1, 1997, we established the Competitive Technologies, Inc. 401(k) Plan,
a defined contribution plan
qualified under section 401(k) of the Internal Revenue Code (the
“401(k) Plan”). Participation in the 401(k) Plan is voluntary and open to all
employees who are at least 21 years of age and meet certain service
requirements. Employees
may defer compensation up to a specific dollar amount set by the Internal
Revenue Service each calendar year. We do not make matching contributions,
and
employees are not allowed to invest in our stock under the 401(k)
Plan.
Employee
contributions are fully vested when made.
The
Board
may authorize us to make discretionary contributions to the 401(k) Plan, subject
to limitations set forth in the Internal Revenue Code, and payable
in shares of our Common Stock valued as of the date the shares are contributed
to the 401(k)
Plan.
Employees vest in our discretionary contribution ratably over four (4) years
of
service, with a year of service defined as twelve (12) consecutive months during
which an employee is employed for at least 1,000 hours. After an employee has
completed four years of service, our discretionary contributions are fully
vested when they are made, except that once an employee reaches sixty (60)
years
of age, the employee becomes fully vested regardless of year of service.
Forfeitures are re-allocated to the remaining employees in the 401(k) Plan.
When
discretionary contributions are authorized, the Board determines the method
for
allocation among participants in accordance with the 401(k) Plan: based on
compensation, based on a per capita allocation, or based on a combination of
per
capita and compensation.
For
the
years ended July 31, 2006, 2005 and 2004, the Board authorized discretionary
contributions of $125,000, $100,000 and $100,000, respectively, payable in
shares of Common Stock. The Named Executive Officers received the following
allocations of our discretionary contributions: for Dr. Freed, 5,357, 1,693
and
2,030 shares, respectively, for 2006, 2005 and 2004, for Mr. Kiley, 5,357 shares
for 2006 (Mr. Kiley has 3,492 total vested shares), and for Mr. Davidson, 5,357,
and 1,352 shares, respectively, for 2006 and 2005, (of which 3,355 total shares
are vested).
Annual
Incentive Plan
The
Competitive Technologies, Inc. Annual Incentive Plan was approved by our Board
on November 22, 2005 (the “Incentive Plan”). This Incentive Plan replaced a
prior plan. The Compensation Committee administers the Incentive Plan. The
Compensation Committee may suspend or amend the Incentive Plan at any time
from
time to time, and the Board may terminate the Incentive Plan.
The
Incentive Plan provides for eligible employees to earn an annual bonus incentive
in cash. The targeted annual bonus incentive award is a percentage of the
participant’s salary earned during the plan year, as defined in the Incentive
Plan, and is comprised of two parts, 50% of which is dependent upon attainment
of financial performance metrics that serve as our company wide goals and
objectives and are set at the beginning of the year (the “Company Component”),
and 50% of which is dependent upon the individual’s performance compared to each
individual’s pre-established goals and objectives (the “Individual Component”).
If our financial performance is less than 70% of its goal, there will be no
award for the Company Component. If our financial performance is more than
120%
of its goal, then the Company Component award will increase to up 125% of the
award, and may, under certain conditions, as defined, increase up to a maximum
of 200% of the award. If a participant meets his or her individual goals, we
may
pay the Individual Component regardless of whether the Company Component is
met.
For
the
years ended July 31, 2006, 2005 and 2004, we charged $143,608, $291,423 and
$175,000, respectively, to expense for annual bonus incentive awards to
employees other than the Named Executive Officers. In addition, for the year
ended July 31, 2005, $800,000 was charged to expense for commissions paid under
our terminated prior annual incentive plan.
1997
Employees’ Stock Option Plan
The
1997
Employees’ Stock Option Plan (the “Stock Option Plan”) provides for the granting
of stock options to purchase our Common Stock. The stock options may be either
incentive stock options pursuant to Section 422 of the Internal Revenue Code
or
non-statutory stock options. Stock options granted under the Stock Option Plan
must be granted at not less than 100% of the fair market value on the date
of
grant. The Compensation Committee determines the vesting period for the stock
options. Stock options expire upon termination of the grantee’s employment, or
ten (10) years after the grant date. In certain instances stock options which
are vested or become vested upon the happening of an event or events specified
by the Compensation Committee, may continue to be exercisable through up to
10
years after the grant date, irrespective of the termination of the optionee’s
employment with us. No options may be granted pursuant to this plan after
September 30, 2007.
EQUITY
COMPENSATION PLAN INFORMATION
Plan
Category
|
|
Number
of securities to be issued upon exercise of outstanding options
|
|
Weighted-average
exercise price of outstanding options
|
|
Number
of securities remaining available for future
issuance
(excluding
options outstanding)
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
992,973
|
|
$
|
5.46
|
|
|
447,075
|
|
DIRECTOR
COMPENSATION
Each
of
our non-employee directors is paid an annual cash retainer of $10,000 (paid
quarterly in arrears) for their services to CTT. In addition, the directors
are
issued shares of Common Stock pursuant to our 1996 Directors’ Stock
Participation Plan, as amended, and are granted stock options to purchase Common
Stock pursuant to our 2000 Directors Stock Option Plan, both as described below.
In addition, effective in fiscal year 2005 the Chairman of the Board and the
Chairman of the Audit Committee are paid annual stipends for the additional
responsibilities and time commitments required of them. Mr. Carver as Chairman
of the Board received stipends of $48,000 and $12,000 in 2006 and 2005,
respectively. Mr. Sabin as Chairman of the Audit Committee received a $6,000
stipend both in 2006 and 2005.
Each
non-employee director also is paid $1,000 for each Board meeting attended and
$500 for each committee meeting that they attend. All directors are reimbursed
for out-of-pocket expenses incurred to attend Board and committee
meetings.
Pursuant
to our 1996 Directors’ Stock Participation Plan, as amended, on the first
business day of January, each non-employee director who has been elected by
the
stockholders and has served at least one full year as a director is issued
a
number of shares of Common Stock equal to the lesser of (a) $15,000 divided
by
the per share fair market value of such stock on the issuance date, or (b)
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, we will issue to
the
director shares of Common Stock on a pro-rata basis up to the termination date.
Common Stock may not be issued pursuant to this plan after January 2, 2011.
In
January 2006, we issued an aggregate of 12,500 shares under this plan (2,500
shares to each of the five independent directors).
Pursuant
to our 2000 Directors Stock Option Plan, non-employee directors are granted
10,000 fully vested, non-qualified stock options to purchase our Common Stock
on
the date the individual first is elected a director, whether by the stockholders
or by the Board, and is granted additional grants of 10,000 stock options on
the
first business day of January thereafter, provided the individual still is
a
director. The stock options granted are at an exercise price not less than
100%
of the fair market value of the Common Stock at the grant date, and have a
term
of ten years from the grant date. If an individual’s directorship terminates
because of death or permanent disability, the stock options may be exercised
within one year after termination. If the termination is for any other reason,
the stock options may be exercised within 180 days after termination. However,
the Board has the discretion to amend previously granted stock options to
provide that such stock options may continue to be exercisable for specified
additional periods following termination. In no event may a stock option be
exercised after the expiration of its ten-year term. Stock options may not
be
granted pursuant to this plan after the first business day of January 2010.
On
January 3, 2006, we granted 50,000 stock options under this plan (10,000 stock
options to each of the five independent directors) at an exercise price of
$4.00. The exercise prices were equal to the market price of the Common Stock
on
the grant date.
A
summary
of total fees and other compensation paid to our directors for the year ended
July 31, 2006, is as follows:
Name
|
|
Cash
(A)
|
|
Present
value of stock options granted (Black- Scholes)
(B)
|
|
Value
of Common Stock received (C)
|
|
All
other (D)
|
|
Total
compensation paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
E. Carver
|
|
$
|
69,000
|
|
$
|
26,796
|
|
$
|
10,000
|
|
$
|
1,000
|
|
$
|
106,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
Dunbar
|
|
|
19,500
|
|
|
26,796
|
|
|
10,000
|
|
|
--
|
|
|
56,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maria-Luisa
Maccecchini
|
|
|
21,000
|
|
|
26,796
|
|
|
10,000
|
|
|
--
|
|
|
57,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
J. Philippin
|
|
|
22,500
|
|
|
26,796
|
|
|
10,000
|
|
|
--
|
|
|
59,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
M. Sabin
|
|
|
27,000
|
|
|
26,796
|
|
|
10,000
|
|
|
--
|
|
|
63,796
|
|
(A) |
Consists
of directors’ fees, Board and Audit Committee chairman’s stipends, if
applicable, and meeting fees.
|
(B) |
Estimated
on grant date assuming no dividend yield, 80.3% expected volatility,
4.4%
risk-free interest rate, and a 5 year expected option
life.
|
(C) |
Based
on 2,500 shares issued to each director valued at a price of $4.00
per
share.
|
(D) |
Consists
of consulting fees.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our
directors and officers, and persons who own more than ten percent of the Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission (“SEC”) and the American Stock Exchange. SEC regulations
require reporting persons to furnish us with copies of all Section 16(a) forms
they file.
Based
solely on a review of the copies of such reports received or written
representations from certain reporting persons with respect to fiscal 2006,
we
believe that all reporting persons complied with all applicable reporting
requirements, except that one report on Form 4 for one transaction was not
timely filed by Dr. Maccecchini.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr.
Carver, Mr. Dunbar and Mr. Philippin were members of the Compensation Committee
during 2006. There were no Compensation Committee interlocking relationships
in
2006.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
There
are
no transactions to be reported under this item.
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 CTT specifically incorporates this information by reference, and shall
not
otherwise be deemed filed under such Acts.
CTT’s
compensation program consists of base salary, bonus, stock options, other
incentive awards and other benefits, which the Committee generally reviews
annually. The Committee’s overall philosophy is to align compensation with our
business strategy and to support achievement of our long-term goals. In order
to
attract and retain competent executives, we believe that it is essential to
maintain an executive compensation program that provides overall compensation
competitive with that paid to executives with comparable qualifications and
experience.
The
purpose of CTT’s Incentive Plan, which was approved by the Board on November 22,
2005, is to attract and retain personnel of experience and ability by providing
an incentive to those who contribute to the successful operation of CTT. The
Incentive Plan provides for eligible employees to earn an annual bonus incentive
in cash. The targeted annual bonus incentive award is a percentage of the
participant’s salary earned during the plan year, as defined in the Incentive
Plan, and is comprised of two parts, 50% of which is dependent upon attainment
of financial performance metrics that serve as our company wide goals and
objectives and are set at the beginning of the year (the “Company Component”),
and 50% of which is dependent upon the individual’s performance compared to each
individuals’ pre-established goals and objectives (the “Individual Component”).
If our financial performance is less than 70% of its goal, there will be no
award for the Company Component. If our financial performance is more than
120%
of its goal, then the Company Component award will increase up to 125% of the
award and may, under certain conditions, as defined, increase up to a maximum
of
200% of the award. If a participant meets his or her individual goals, we may
pay the Individual Component regardless of whether the Company Component is
met.
The Committee may suspend or amend the Incentive Plan at any time from time
to
time, and the Board may terminate the Incentive Plan.
The
Committee also determines the number and terms of stock options to grant to
all
employees pursuant to the Stock Option Plan. This plan provides additional
long-term incentive for employees to maximize stockholder value and to attract,
retain and motivate our employees to continue employment with us. To encourage
and recognize the cooperative teamwork of all employees that is required to
achieve our goals, we grant stock options to all employees to give them a
proprietary interest in CTT.
Dr.
Freed’s and Mr. Kiley’s base salary and compensation packages were reviewed in
detail by the Committee. The Committee previously hired nationally recognized
compensation consulting firms to review the CEO’s compensation package in light
of CTT’s performance, compare it with others and make expert recommendations to
assist the Committee in their review of the CEO’s total
compensation.
For
the
year ended July 31, 2006, the Committee recommended, and the Board approved,
a
base salary for Dr. Freed of $325,000, a bonus of $60,000, and a grant of 50,000
stock options pursuant to the Stock Option Plan. In addition, a discretionary
contribution of Common Stock valued at approximately $12,700 was made to Dr.
Freed’s 401(k) account.
Compensation
and Stock Option Committee:
Charles
J. Philippin (Chairman)
Richard
E. Carver
George
W.
Dunbar, Jr.
REPORT
OF THE AUDIT COMMITTEE
This
report of the Audit Committee (the “Audit 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 CTT
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The
Audit
Committee reviewed and discussed with management our audited financial
statements as of and for the year ended July 31, 2006, as well as our Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q for the year ended July
31, 2006, before those reports were filed.
The
Audit
Committee discussed with our independent accountants, BDO Seidman, LLP, (“BDO”)
(see also “Independent Public Accountants” below) the matters required to be
discussed by Statement on Auditing Standards No. 61, “Communication with Audit
Committees,” as issued, modified or supplemented.
The
Audit
Committee received the written disclosures from BDO required by Independence
Standards Board Standard No. 1, “Independence Discussions with Audit
Committees,” as issued, modified or supplemented. The Audit Committee discussed
with BDO their independence from management and from CTT.
The
Audit
Committee discussed with BDO the overall scope, plans and budget for its audit.
In addition, the Audit Committee meets with BDO regularly, with or without
management present, to discuss the results of BDO’s examination, the evaluation
of CTT's internal controls, and the overall quality of CTT’s financial
reporting.
Based
on
the reviews and discussions referred to in the foregoing paragraphs, the Audit
Committee recommended to the Board of Directors that the audited financial
statements as of and for the year ended July 31, 2006, be included in our Annual
Report on Form 10-K for the year ended July 31, 2006.
Audit
Committee:
John
M.
Sabin (Chairman)
Charles
J. Philippin
Dr.
Maria-Luisa Maccecchini
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 Securities
Act of 1933 or the Securities Exchange Act of 1934 (the “Acts”),
except
to the extent that CTT specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
The
performance graph compares cumulative total return (assuming reinvestment of
dividends, if any) on our 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, 2001 in our Common Stock, the published SIC code index
of
public companies, and the American Stock Exchange Market Index.
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
Competitive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technologies,
Inc.
|
|
|
51.67
|
|
|
28.89 |
|
|
72.22
|
|
|
107.04
|
|
|
43.52
|
|
Industry
Index - 6794
|
|
|
96.85
|
|
|
155.46 |
|
|
150.09
|
|
|
226.33
|
|
|
212.97
|
|
Broad
Market AMEX Index
|
|
|
|
|
|
104.48 |
|
|
|
|
|
|
|
|
156.48
|
|
INDEPENDENT
PUBLIC ACCOUNTANTS
BDO
Seidman, LLP (“BDO”) served as independent public accountants for the year ended
July 31, 2006, and the Audit Committee expects to select them to serve for
the
fiscal year ending July 31, 2007. We expect a representative of BDO to attend
the annual meeting, to make a statement if he or she desires to do so, and
to be
available to respond to appropriate questions.
Fees
Billed by Principal Accountants
The
following table presents fees for professional services rendered by BDO and
PricewaterhouseCoopers, LLC (“PWC”) for the years ended July 31, 2006 and
2005
(prior
to 2003, PWC were our independent public accountants):
|
|
2006
|
|
2005
|
|
|
|
BDO
|
|
BDO
|
|
PWC
|
|
Audit
Fees (A)
|
|
$
|
109,000
|
|
$
|
191,000
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit-Related
Fees (B)
|
|
|
8,000
|
|
|
20,000
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Fees
|
|
|
--
|
|
|
2,000
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
117,000
|
|
$
|
213,000
|
|
$
|
10,000
|
|
(A)
|
Audit
fees for 2005 include the audit of our internal controls over financial
reporting in compliance with Section 404 of the Sarbanes-Oxley Act
of
2002. No such audit was required in 2006. The Audit Committee pre-approved
all 2006 and 2005 audit and Sarbanes-Oxley related services, except
for
de
minimus
amounts.
|
(B)
|
Audit-related
fees were for assurance and related services. For 2006, they were
in
connection with a Registration Statement on Form S-1, while in 2005
they
were in connection with a Registration Statement on Form
S-3.
|
Audit
Committee Pre-Approval of Services of Principal
Accountants
The
Audit
Committee has the sole authority and responsibility to select, evaluate,
determine the compensation of, and, where appropriate, replace the independent
auditor. After determining that providing the non-audit services is compatible
with maintaining the auditor’s independence, the Audit Committee pre-approves
all audit and permitted non-audit services to be performed by the independent
auditor, except for de
minimus
amounts.
If it is not practical for the Audit Committee to meet to approve fees for
permitted non-audit services, the Audit Committee has authorized its chairman,
currently Mr. Sabin, to approve them and to review such pre-approvals with
the
Audit Committee at its next meeting.
PROPOSALS
OF STOCKHOLDERS
Stockholders
who wish to present proposals under SEC Rule 14a-8 to be included in our Proxy
Statement and form of proxy in connection with next year’s annual meeting of
stockholders, must submit those proposals so that we receive them no later
than
120 days before the mailing date of our Proxy Statement in connection with
the
upcoming January 16, 2007 annual meeting. If we meet this year’s expected
mailing date of December 4, 2006, we must receive such proposals for next year’s
annual meeting no later than August 6, 2007.
Stockholders
who wish to present matters outside the processes of SEC Rule 14a-8 to be
included in our Proxy Statement and form of proxy in connection with the next
year’s annual meeting of stockholders, must submit notice of those matters so
that we receive them no later than 45 days before the mailing date of our Proxy
Statement in connection with the January 16, 2007 annual meeting. If we meet
this year’s expected mailing date of December 4, 2006, we must receive notice of
such matters for next year’s annual meeting no later than October 20, 2007.
Notice received after October 20, 2007 will be untimely and subject to the
discretionary authority described in the last sentence of this Proxy
Statement.
GENERAL
We
bear
the cost of solicitation of proxies. In addition to being solicited by mail,
proxies may be solicited personally or by telephone or electronically. We
reimburse brokerage houses and other custodians, nominees and fiduciaries for
forwarding proxy materials to principals in obtaining their
proxies.
Copies
of
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K, any amendments to those reports and any other reports filed with
or
furnished to the SEC also are available on or through our website at
www.competitivetech.net
as soon
as reasonably practicable after they are filed with or furnished to the
SEC.
On
written request, we will provide without charge (except for exhibits) to any
record or beneficial owner of our securities, a copy of our Annual Report on
Form 10-K filed with the SEC for the year ended July 31, 2006, including the
financial statements and schedules thereto. Exhibits to said report will be
provided upon payment of fees limited to our reasonable expenses in furnishing
such exhibits. Written requests should be addressed to: Secretary, Competitive
Technologies, Inc., 777 Commerce Drive, Suite 100, Fairfield, Connecticut,
06825.
Some
brokers and other nominee record holders may be participating in the practice
of
“householding” corporate communications to stockholders, such as proxy
statements and annual reports. This means that only one copy of this Proxy
Statement may have been sent to multiple stockholders in your household. We
promptly will deliver a separate copy of this Proxy Statement to you if you
call
or write us at the following address or phone number: Secretary, Competitive
Technologies, Inc., 777 Commerce Drive, Suite 100, Fairfield, Connecticut,
06825, telephone: (203) 368-6044. If in the future you want to receive separate
copies of our corporate communications to stockholders, such as proxy statements
and annual reports, or if you are receiving multiple copies and would like
to
receive only one copy for your household, you should contact your broker or
other nominee record holders, or you may contact us at the above address and
phone number.
The
Board
of Directors is not aware of any matter that is to be presented for action
at
the meeting other than the matters set forth herein. Should any other matters
requiring a vote of the stockholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in respect of any such
other matters in accordance with their best judgment in the interest of
CTT.
By
Order
of the Board of Directors,
/s/
Kristin A. Kreuder
Kristin
A. Kreuder
Assistant
Secretary
Dated:
December 4, 2006
|
VOTE
BY INTERNET - www.proxyvote.com
|
|
Use
the Internet to transmit your voting instructions and
for
|
|
electronic
delivery of information up until 11:59 P.M. Eastern
Time
|
|
the
day before the cut-off date or meeting date. Have your
proxy
|
|
card
in hand when you access the web site and follow the
|
777
COMMERCE DRIVE
|
instructions
to obtain your records and to create an electronic
|
SUITE
100
|
voting
instruction form.
|
FAIRFIELD,
CT 06825
|
|
|
ELECTRONIC
DELIVERY OF FUTURE SHAREHOLDER
|
|
COMMUNICATIONS
|
|
If
you would like to reduce the costs incurred by
Competitive
|
|
Technologies,
Inc. in mailing proxy materials, you can consent to
|
|
receiving
all future proxy statements, proxy cards and annual
|
|
reports
electronically via e-mail or the Internet. To sign up
for
|
|
electronic
delivery, please follow the instructions above to vote
|
|
using
the Internet and, when prompted, indicate that you
agree
|
|
to
receive or access shareholder communications
electronically
|
|
in
future years.
|
|
|
|
VOTE
BY PHONE - 1-800-690-6903
|
|
Use
any touch-tone telephone to transmit your voting
instructions
|
|
up
until 11:59 P.M. Eastern Time the day before the cut-off
date
|
|
or
meeting date. Have your proxy card in hand when you
call
|
|
and
then follow the instructions.
|
|
|
|
VOTE
BY MAIL
|
|
Mark,
sign and date your proxy card and return it in the
postage-
|
|
paid
envelope we have provided or return it to
|
|
Competitive
Technologies, Inc., c/o ADP, 51 Mercedes
|
|
Way,
Edgewood, NY 11717.
|
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
|
|
|
|
COTEC1
|
|
|
KEEP
THIS
PORTION
FOR
YOUR
RECORDS
|
|
|
|
|
|
|
|
|
DETACH
AND RETURN THIS PORTION ONLY |
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
|
|
|
|
|
|
|
|
|
|
|
|
COMPETITIVE
TECHNOLOGIES, INC.
|
|
|
|
|
|
|
|
|
|
|
Vote
on Directors
|
|
|
|
|
|
|
|
|
|
|
|
1.
Election of Directors
|
|
|
|
|
For
|
|
Withhold
|
|
For
All
|
|
To
withhold authority to vote for any
|
NOMINEES:
|
|
|
|
|
All
|
|
All
|
|
Except
|
|
individual
nominee(s), mark “For All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Except”
and write the number(s) of the
|
01
|
)
|
Richard
E. Carver
|
04
|
)
|
Maria-Luisa Maccecchini, Ph.D.
|
|
0
|
|
0
|
|
0
|
|
nominee(s)
on the line below.
|
02
|
)
|
George
W. Dunbar, Jr.
|
05
|
)
|
Charles J. Philippin
|
|
|
|
|
|
|
|
|
03
|
)
|
Donald
J. Freed, Ph.D.
|
06
|
)
|
John M. Sabin
|
|
|
|
|
|
|
|
|
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 one. On other matters that
may
come before said meeting, this proxy will be voted in the discretion of the
afore-named Proxy Committee indicated on the reverse side.
Note:
|
|
Please
sign exactly as your name or names appear(s) on this
Proxy.
|
|
|
When
shares are held jointly, each holder should sign. When
signing
|
|
|
as
executor, administrator, attorney, trustee or guardian,
please
|
|
|
give
full title as such. If the signer is a corporation, please sign
full
|
|
|
corporate
name by duly authorized officer, giving full title as
such.
|
|
|
If
signer is a partnership, please sign in partnership name
by
|
|
|
authorized
person.
|
|
|
|
|
|
|
|
|
|
|
Signature
[PLEASE SIGN WITHIN BOX] |
Date |
|
Signature
(Joint Owners) |
Date |
ANNUAL
MEETING OF STOCKHOLDERS OF
COMPETITIVE
TECHNOLOGIES, INC.
January
16, 2007
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
Please
detach along perforated line
and
mail in the envelope provided.
COMPETITIVE
TECHNOLOGIES, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS, JANUARY 16, 2007
The
undersigned stockholder of COMPETITIVE TECHNOLOGIES, INC. hereby appoints
SHARON
A. GARBER and KRISTIN A. KREUDER (the "Proxy Committee"), 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 Tuesday, January 16, 2007, 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 on the reverse side, and
for
transacting of such other business as may properly come before said meeting
or
any adjournment thereof, all as set forth in the December 4, 2006 Proxy
Statement for said meeting:
(Continued
and to be signed on the reverse side)