DEF 14A
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 (Amendment
No. )
Filed by the
Registrant þ
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))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
Ocean Power 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):
|
|
þ
|
No fee required.
|
|
o
|
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
|
|
|
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
(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:
|
|
|
|
|
o
|
Fee paid previously with preliminary materials.
|
|
|
o |
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.:
|
Ocean Power Technologies, Inc.
1590 Reed Road
Pennington, NJ 08534 USA
609-730-0400,
Fax:
609-730-0404
August 28, 2008
Dear Stockholder,
We cordially invite you to attend our 2008 Annual Meeting of
Stockholders to be held at 10:00 a.m. Eastern Daylight
Time on Thursday, October 2, 2008 at our offices at 1590
Reed Road, Pennington, New Jersey 08534. The attached
notice of annual meeting and proxy statement describe the
business we will conduct at the meeting and provide information
about Ocean Power Technologies, Inc. that you should consider
when you vote your shares.
Your vote is very important, regardless of the number of shares
you hold. Whether or not you plan to attend the meeting, please
carefully review the enclosed proxy statement and then cast your
vote.
We hope that you will join us on October 2, 2008.
Sincerely,
Dr. George W. Taylor
Chief Executive Officer
OCEAN
POWER TECHNOLOGIES, INC.
1590 Reed Road
Pennington, New Jersey 08534
Notice of
2008 Annual Meeting of Stockholders
NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of
Stockholders of Ocean Power Technologies, Inc., a Delaware
corporation, will be held on:
|
|
|
Time: |
|
10:00 a.m. Eastern Daylight Time |
|
Place: |
|
1590 Reed Road
Pennington, New Jersey 08534
USA |
|
Purposes: |
|
1. To elect five persons to our Board of Directors;
|
|
|
|
2. To consider and take action on the ratification of
the selection of KPMG LLP as our
independent registered public accounting firm for fiscal year
2009; and
|
|
|
|
3. To transact such other business as may properly
come before the meeting or any
adjournments thereof.
|
|
Record Date: |
|
The Board of Directors has fixed the close of business on
August 19, 2008 as the record date for determining
stockholders entitled to notice of, and to vote at, the meeting
or any adjournment or postponement of the meeting. |
FOR THE BOARD OF DIRECTORS
/s/ Charles F. Dunleavy
Charles F. Dunleavy
Senior Vice President, Chief Financial Officer,
Secretary and Treasurer
Pennington, New Jersey
August 28, 2008
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
23
|
|
|
|
|
24
|
|
|
|
|
24
|
|
OCEAN
POWER TECHNOLOGIES, INC.
1590 Reed Road
Pennington, New Jersey 08534
Annual Meeting of
Stockholders To Be Held October 2, 2008
GENERAL
INFORMATION
This Proxy Statement is furnished to stockholders of Ocean Power
Technologies, Inc., a Delaware corporation, in connection with
the solicitation by our Board of Directors of proxies for use at
our Annual Meeting of Stockholders (the Meeting). The Meeting is
scheduled to be held on Thursday, October 2, 2008, at
10:00 a.m., Eastern Daylight Time, at our offices located
at 1590 Reed Road, Pennington, New Jersey. We anticipate that
this Proxy Statement and the enclosed form of proxy will be
mailed to stockholders on or about August 28, 2008.
At the Meeting, stockholders will be asked to vote upon:
(1) the election of five directors; (2) the
ratification of the selection of our independent registered
public accounting firm for fiscal year 2009; and (3) such
other business as may properly come before the Meeting and at
any adjournments thereof.
Voting
Rights and Votes Required
The close of business on August 19, 2008 has been fixed as
the record date for the determination of stockholders entitled
to receive notice of and to vote at the Meeting. As of the close
of business on such date, we had outstanding and entitled to
vote 10,210,354 shares of common stock, par value $0.001
per share (the Common Stock). Because stockholders often cannot
attend the meeting in person, a large number is usually
represented by proxy. You may vote your shares by completing the
proxy card and mailing it in the envelope provided. Stockholders
who hold shares in street name should refer to their proxy card
or the information forwarded by their bank, broker or other
holder of record for instructions on the voting options
available to them.
A majority of the shares of Common Stock entitled to vote at the
Meeting must be represented in person or by proxy at the Meeting
in order to constitute a quorum for the transaction of business.
The record holder of each share of Common Stock entitled to vote
at the Meeting will have one vote for each share so held.
Abstentions and broker nonvotes will count for quorum purposes.
Directors are elected by a plurality of the votes cast.
Stockholders may not cumulate their votes. The five candidates
receiving the highest number of votes will be elected. In
tabulating the votes, votes withheld in connection with the
election of one or more nominees and broker nonvotes will be
disregarded and will have no effect on the outcome of the vote.
The affirmative vote of a majority of the votes cast at the
Meeting by the holders of Common Stock represented at the
Meeting in person or by proxy and entitled to vote will be
required to ratify the selection of our independent registered
public accounting firm. Abstentions and broker nonvotes will be
disregarded and will have no effect on the outcome of the
selection of our independent registered public accounting firm.
Voting of
Proxies
If the accompanying proxy is properly executed and returned, the
shares represented by the proxy will be voted at the Meeting as
specified in the proxy. If no instructions are specified, the
shares represented by any properly executed proxy will be voted
FOR the election of the nominees listed below under
Election of Directors, and FOR the
ratification of the selection of our independent registered
public accounting firm.
1
Revocation
of Proxies
Any proxy given pursuant to this solicitation may be revoked by
a stockholder at any time before it is exercised by:
(i) providing written notice to our Secretary,
(ii) delivery to us of a properly executed proxy bearing a
later date, or (iii) voting in person at the Meeting.
Solicitation
of Proxies
We will bear the cost of this solicitation, including amounts
paid to banks, brokers, and other record owners to reimburse
them for their expenses in forwarding solicitation materials
regarding the Meeting to beneficial owners of Common Stock. The
solicitation will be by mail, with the materials being forwarded
to stockholders of record and certain other beneficial owners of
Common Stock, and by our officers and other regular employees
(at no additional compensation). Such officers and employees may
also solicit proxies from stockholders by personal contact, by
telephone, or by other means if necessary in order to assure
sufficient representation at the Meeting.
Computershare Investor Services has been retained to receive and
tabulate proxies.
MATTERS
SUBJECT TO STOCKHOLDER VOTE
Pursuant to our by-laws, our directors serve one-year terms and
are elected for a new one-year term at each annual meeting of
stockholders.
The five persons listed in the table below have been designated
by the Board of Directors as nominees for election as directors
with terms expiring at the 2009 annual meeting. One of our
current Directors, Sir Eric A. Ash, is not
standing for re-election at the Meeting. Unless a contrary
direction is indicated, it is intended that proxies received
will be voted for the election as directors of the five
nominees, to serve for one-year terms, and in each case until
their successors are elected and qualified. Each of the nominees
has consented to being named in this Proxy Statement and to
serve as a director if elected. In the event any nominee for
director declines or is unable to serve, the proxies may be
voted for a substitute nominee selected by the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES.
Our directors, their ages and positions as of August 19,
2008 and other biographical information are set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Position(s) with Ocean Power
|
|
Served as Director
|
Name
|
|
Age
|
|
Technologies, Inc.
|
|
From
|
|
Paul F. Lozier
|
|
|
61
|
|
|
Director
|
|
|
2007
|
|
Thomas J. Meaney
|
|
|
73
|
|
|
Director
|
|
|
2006
|
|
Seymour S. Preston III
|
|
|
74
|
|
|
Chairman
|
|
|
2003
|
|
Dr. George W. Taylor
|
|
|
74
|
|
|
Chief Executive Officer and Director
|
|
|
1984
|
|
Charles F. Dunleavy
|
|
|
59
|
|
|
Chief Financial Officer and Senior Vice President, Treasurer and
Secretary and Director
|
|
|
1990
|
|
Paul F. Lozier has been a director since November 2007.
Mr. Lozier was a director of Somerset Hills Bancorp
(NASDAQ: SOMH) from 1998 to March 2008, and served on its audit
committee from 1998 to 2008. He was also a director of Logical
Design Solutions, Inc. and served on its audit committee from
2001 to 2004. From 1986 to 1996, Mr. Lozier was a Managing
Director and senior investment banker specializing in energy
finance with Merrill Lynch & Co. Mr. Lozier
received his Master of Business Administration in Finance from
Harvard Business School.
2
Thomas J. Meaney has been a director since June 2006. He
has been the president, chief executive officer and a director
of Mikros Systems Corp., an electronics equipment company, since
1986. From 1983 to 1986, Mr. Meaney served as a senior vice
president and director at Robotic Vision Systems, Inc., an
electronics company, and from 1977 to 1983 he served as the vice
president of business development of the Norden Systems Division
of United Technologies Corp., an electronics company.
Mr. Meaney holds a Master of Science degree in Mechanical
Engineering from Drexel University and a Bachelors degree in
Mechanical Engineering from Villanova University.
Seymour S. Preston III has been a director since
September 2003. Mr. Preston is also a director and serves
on the audit committee of Independent Publications, Inc., a
newspaper publisher. Mr. Preston was a director of
Albemarle Corporation, a specialty chemicals company, from 1996
to 2008; Scott Specialty Gas Corporation, a provider of gases
for calibration, testing and emission standards, from 1994 to
2007; and Tufco Technologies, Inc., a consumer products contract
manufacturing company, from 1999 to 2008. From 1994 to 2003, he
was the chairman and chief executive officer of AAC Engineered
Systems, Inc., a privately-held manufacturing company. Over the
period from 1961 to 1989, Mr. Preston held various
positions at Pennwalt Corporation, including serving as
president, chief operating officer and director from 1978 to
1989. Mr. Preston served as president and chief executive
officer of Elf Atochem North America, Inc., a chemical and
plastics company, from 1990 to 1993. Mr. Preston received
his Masters of Business Administration from Harvard Business
School and his B.A. degree from Williams College.
Dr. George W. Taylor has served as our chief
executive officer since 1993 and as a director since 1984, when
he co-founded our company. From 1990 to 2004, Dr. Taylor
was our president, and from 1984 to 1990, he was our vice
president. In 1979, he co-founded and served as president of
Princeton Research Associates, Inc., a consulting engineering,
technical marketing and product development company. In 1971,
Dr. Taylor co-founded Princeton Materials Science, Inc., a
manufacturer of liquid crystal displays and digital watches.
Dr. Taylor received a Bachelor of Engineering degree with
First Class Honours in Electrical Engineering and a Doctor
of Engineering degree from the University of Western Australia
and a Ph.D. in Electrical Engineering degree from the University
of London. He is a Fellow of the Institute of Engineers,
Australia and the Institute of Electrical Engineers, London.
Charles F. Dunleavy has served as our chief financial
officer and our senior vice president since 2001 and as our
treasurer, secretary and director since 1990. From 1993 to 2001,
Mr. Dunleavy served as our vice president, finance. From
1990 to 1993, Mr. Dunleavy served as vice president and
chief financial officer of Whole Systems International Corp., a
privately held company specializing in multimedia instructional
systems and information technology. From 1983 to 1990,
Mr. Dunleavy was the corporate controller for Intermetrics,
Inc., a publicly held software engineering company that is now a
part of Titan Corporation. Mr. Dunleavy is a Certified
Public Accountant and holds a Masters of Business Administration
with honors from Rutgers Graduate School of Business
Administration. He received his A.B. degree from Colgate
University with honors.
Executive
Officers
Our executive officers who are not also directors, their ages
and positions as of August 19, 2008 and other biographical
information are set forth below.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Mark R. Draper
|
|
|
45
|
|
|
Chief Operating Officer; Chief Executive and Director of Ocean
Power Technologies Ltd.
|
Herbert Nock
|
|
|
59
|
|
|
Vice President, Business Development & Marketing
|
Mark R. Draper was appointed our chief operating officer
on June 15, 2007, and has served as the chief executive and
director of our wholly-owned European subsidiary based in the
UK, Ocean Power Technologies Ltd., since September 2004. From
2001 to May 2004, Mr. Draper served as managing director,
generation business of PowerGen plc, a UK power utility. In this
capacity, he was responsible for over 9,000 megawatts (MW) of
power generating assets, including a 60MW offshore wind power
station. He is a fellow of both the
3
Institutes of Mechanical and Electrical Engineers and serves as
a non-executive director on the board of Slough Heat &
Power, a utility company. He also serves as a director of
Iberdrola Energias Marinas de Cantabria, S.A., the joint venture
in which we participate with affiliates of Iberdrola and Total.
Mr. Draper holds a Masters degree in Mechanical and
Electrical Engineering from Cambridge University.
Herbert T. Nock was appointed as our vice president,
business development and marketing on January 3, 2008. From
2002 to 2007, Mr. Nock served as Senior Vice President
Marketing and Sales at Fuel Cell Energy, Inc. Prior to then,
Mr. Nock held various positions in the Power Systems
Division of General Electric Company over a 29 year period.
At GE, Mr. Nock served as Product General Manager,
Manager Power Plant Generation Programs,
Manager Marketing and Sales, and in other positions.
In these roles, he managed international, multi-channel
marketing agreements for gas turbine systems.
There are no family relationships among any of our directors or
executive officers.
Director
Compensation
In June 2007, our Board of Directors approved a revised
compensation program pursuant to which we pay each of our
directors who is not our employee, to whom we refer as
non-employee directors, fees for service on our Board of
Directors and for attendance at Board and Board committee
meetings. The revised compensation schedule became effective
October 5, 2007. Annually, each non-employee director
currently receives $15,000 and a choice of either (a) an
option to purchase 2,000 shares of our stock that is fully
vested at the time of grant, or (b) common stock of the
Company worth $10,000, which vests 50% at the time of grant and
50% one year later. Each non-employee director also receives
$3,000 for each Board meeting he attends in person or by video
or teleconference, $2,500 for each Audit Committee meeting he
attends in person or by video or teleconference, $2,000 for each
Compensation Committee he attends in person or by video or
teleconference and $1,500 for each Nominating and Corporate
Governance Committee meeting that he attends in person or by
video or teleconference.
We reimburse each non-employee director for out-of-pocket
expenses incurred in connection with attending our Board and
Board committee meetings. Compensation for our directors,
including cash and equity compensation, is determined, and
remains subject to adjustment, by our Board of Directors.
The following table summarizes compensation paid to our
non-employee directors in fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Option Awards
|
|
|
|
|
|
|
Paid in Cash
|
|
($)
|
|
All Other
|
|
Total
|
Name
|
|
($)
|
|
(1)(3)(4)
|
|
Compensation ($)
|
|
($)
|
|
Sir Eric A. Ash
|
|
|
50,500
|
|
|
|
49,300
|
|
|
|
|
|
|
|
99,800
|
|
Paul F. Lozier
|
|
|
11,000
|
|
|
|
12,707
|
|
|
|
|
|
|
|
23,707
|
|
Thomas J. Meaney
|
|
|
43,500
|
|
|
|
49,300
|
|
|
|
57,600
|
(2)
|
|
|
150,400
|
|
Seymour S. Preston III
|
|
|
48,000
|
|
|
|
49,300
|
|
|
|
|
|
|
|
97,300
|
|
|
|
|
(1) |
|
Represents the amount recognized as stock-based compensation for
fiscal 2008 financial statement reporting purposes in accordance
with Statement of Financial Accounting Standards (SFAS) No.
123(R), Share-Based Payments (SFAS 123R). The amount
includes option awards granted to our non-employee directors for
service on the Board of Directors during fiscal 2008 and 2007,
since the actual option grants for fiscal 2007 were made after
April 30, 2007. For Mr. Lozier, the amount includes an
award of 1,500 fully-vested options granted in October 2007
for his service on the Companys Board of Advisors prior to
his joining the Board of Directors. See Note 2(l) of the
Notes to Consolidated Financial Statements in our Annual Report
on
Form 10-K
for the fiscal year ended April 30, 2008 for a discussion
of the relevant assumptions used to determine the value of our
stock options for accounting purposes. |
|
(2) |
|
Mr. Meaney is a party to a consulting agreement with the
Company for the provision of marketing services and receives
fees from the Company of $800 per day of services provided. The
amount in this column reflects consulting fees paid in fiscal
2008. |
|
(3) |
|
At fiscal year-end, option awards outstanding to the directors
are as follows: Mr. Ash-18,250; Mr. Lozier-9,000;
Mr. Meaney-5,000; Mr. Preston-11,500. |
4
|
|
|
(4) |
|
The number of shares underlying stock options granted to our
directors in fiscal 2008 and the grant date fair value of such
stock options are: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: Number
|
|
|
Exercise or Base
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
of Securities
|
|
|
Price of Option
|
|
|
Value of Stock and
|
|
|
|
|
|
|
Underlying
|
|
|
Awards ($/Sh)
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
Options (#)
|
|
|
(a)
|
|
|
(b)
|
|
|
Sir Eric A. Ash
|
|
|
6/15/2007
|
|
|
|
2,500
|
|
|
|
16.11
|
|
|
$
|
26,725
|
|
|
|
|
1/11/2008
|
|
|
|
2,500
|
|
|
|
14.02
|
|
|
$
|
22,575
|
|
Paul F. Lozier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
Thomas J. Meaney
|
|
|
6/15/2007
|
|
|
|
2,500
|
|
|
|
16.11
|
|
|
$
|
26,725
|
|
|
|
|
1/11/2008
|
|
|
|
2,500
|
|
|
|
14.02
|
|
|
$
|
22,575
|
|
Seymour S. Preston
|
|
|
6/15/2007
|
|
|
|
2,500
|
|
|
|
16.11
|
|
|
$
|
26,725
|
|
|
|
|
1/11/2008
|
|
|
|
2,500
|
|
|
|
14.02
|
|
|
$
|
22,575
|
|
Corporate
Governance
Our Board of Directors believes that good corporate governance
is important to ensure that Ocean Power Technologies, Inc. is
managed for the long-term benefit of stockholders. This section
describes key corporate governance guidelines and practices that
our Board has adopted. Complete copies of our corporate
governance guidelines, committee charters and code of business
conduct and ethics are available on the corporate governance
section of our website, www.oceanpowertechnologies.com.
Alternatively, you can request a copy of any of these documents
by writing to our Secretary at 1590 Reed Road, Pennington, New
Jersey 08534.
Corporate
Governance Guidelines
Our Board has adopted corporate governance guidelines to assist
in the exercise of its duties and responsibilities and to serve
the best interests of Ocean Power Technologies, Inc. and our
stockholders. These guidelines, which provide a framework for
the conduct of the Boards business, provide that:
|
|
|
|
|
the Boards principal responsibility is to oversee the
management of Ocean Power Technologies, Inc.;
|
|
|
|
a majority of the members of the Board shall be independent
directors;
|
|
|
|
the non-employee directors shall meet regularly in executive
session;
|
|
|
|
directors have full and free access to management and, as
necessary and appropriate, independent advisors;
|
|
|
|
new directors participate in an orientation program and all
directors are expected to participate in continuing director
education on an ongoing basis; and
|
|
|
|
at least annually, the Board and its committees will conduct a
self-evaluation to determine whether they are functioning
effectively.
|
Board
Determination of Independence
Under applicable NASDAQ rules, a director will only qualify as
an independent director if, in the opinion of our
Board of Directors, that person does not have a relationship
which would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director.
Our Board has determined neither Mr. Ash, Mr. Lozier,
Mr. Meaney nor Mr. Preston have a relationship that
would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director and that each of
these directors is an independent director as
defined under Rule 4200(a)(15) of the NASDAQ Stock Market,
Inc. Marketplace Rules.
In determining the independence of the directors listed above,
our Board considered each of the transactions discussed in
Certain Relationships and Related Person
Transactions and, in the case of
5
Mr. Meaney, a consulting agreement for marketing services
which was entered into prior to Mr. Meaney joining the
Board. See Board Committees Audit
Committee below for a discussion of this consulting
agreement.
Meetings
of the Board of Directors
The Board of Directors held seven meetings during fiscal 2008.
During fiscal 2008, each director attended at least 75% of the
aggregate of the total number of meetings of (a) the Board
of Directors, and (b) the committees on which the director
served.
Our corporate governance guidelines provide that directors are
expected to attend the annual meeting of stockholders. All
directors attended the 2007 annual meeting of stockholders.
Board
Committees
Our Board of Directors has established three standing
committees: an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee. Each committee
operates under a charter that has been approved by the Board.
The charters of all Board Committees are available on our
website at www.oceanpowertechnologies.com.
Our Board has determined that all of the members of the
Compensation Committee and the Nominating and Corporate
Governance Committee are independent as defined under
Rule 4200 of the NASDAQ Stock Market. Our Board has also
determined that all Audit Committee members meet the
independence requirements contemplated by Rule 4350(d) of
the NASDAQ Stock Market and
Rule 10A-3
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), with the exception of Mr. Meaney, as
described below.
Audit Committee. The current members of our
Audit Committee are Eric Ash, Paul Lozier and Seymour Preston.
Seymour Preston is the chair of the committee. Eric Ash, Paul
Lozier and Seymour Preston are our Audit Committee financial
experts. Eric Ash is not standing for re-election as a director
at the Meeting and therefore will be stepping down from the
Audit Committee as of the Meeting date. Thomas Meaney served as
a member of the Audit Committee until April 2008, when he
stepped down from his position on the Audit Committee, because
he does not meet the independence requirements of
Rule 10A-3,
due to a consulting agreement between Mr. Meaney and the
Company for marketing services which has been in effect since
August 1999. We had previously relied on Exchange Act
Rule 10A-3
(b)(I)(IV)(A) to allow Mr. Meaney to serve on the Audit
Committee for one year following our U.S. initial public
offering. The Audit Committee met four times in fiscal 2008.
Our Audit Committee assists our Board of Directors in its
oversight of the integrity of our consolidated financial
statements, our independent registered public accounting
firms qualifications and independence and the performance
of our independent registered public accounting firm.
Our Audit Committees responsibilities include: appointing,
approving the compensation of, and assessing the independence
of, our independent registered public accounting firm;
overseeing the work of our independent registered public
accounting firm, including through the receipt and consideration
of reports from our independent registered public accounting
firm; reviewing and discussing with management and our
independent registered public accounting firm our annual and
quarterly consolidated financial statements and related
disclosures; monitoring our internal control over financial
reporting, disclosure controls and procedures and code of
business conduct and ethics; establishing procedures for the
receipt and retention of accounting related complaints and
concerns; meeting independently with our independent registered
public accounting firm and management; and preparing the Audit
Committee report required by Securities and Exchange Commission
(the SEC) rules.
Compensation Committee. The current members of
our Compensation Committee are Eric Ash and Seymour Preston.
Eric Ash is the chair of the committee. Eric Ash is not standing
for re-election as a director at the Meeting and therefore will
be stepping down from the Compensation Committee as of the
Meeting date. The Board will appoint an independent director to
the Compensation Committee in the near future. Our
6
Compensation Committee assists our Board of Directors in the
discharge of its responsibilities relating to the compensation
of our executive officers.
Our Compensation Committees responsibilities include:
reviewing and approving, or making recommendations to the Board
of Directors with respect to, our chief executive officers
compensation; evaluating the performance of our executive
officers and reviewing and approving, or making recommendations
to the Board of Directors with respect to, the compensation of
our executive officers; overseeing and administering, and making
recommendations to the Board of Directors with respect to, our
cash and equity incentive plans; reviewing and making
recommendations to the Board of Directors with respect to
director compensation; reviewing and recommending inclusion of
our Compensation Discussion and Analysis in our
annual report or proxy statement; and preparing the Compensation
Committee report required by SEC rules. The Compensation
Committee met five times in fiscal 2008.
The Compensation Committee has the authority to retain
compensation consultants and other outside advisors to assist in
the evaluation of executive officer compensation.
The processes and procedures followed by our Compensation
Committee in considering and determining executive compensation
are described below in the Compensation Discussion and Analysis
section of this Proxy Statement.
Additional information regarding compensation of executive
officers is provided on pages 12 through 23 of this Proxy
Statement.
Nominating and Corporate Governance
Committee. The members of our Nominating and
Corporate Governance Committee are Eric Ash and Thomas Meaney.
Thomas Meaney is the chair of the committee. Eric Ash is not
standing for re-election as a director at the Companys
Meeting and therefore will be stepping down from the Nominating
and Corporate Governance Committee as of the Meeting date.
Our Nominating and Corporate Governance Committees
responsibilities include: recommending to the Board of Directors
the persons to be nominated for election as directors or to fill
vacancies on the Board of Directors, and to be appointed to each
of the Boards committees; overseeing an annual review by
the Board of Directors with respect to management succession
planning; developing and recommending to the Board of Directors
corporate governance principles and guidelines; and overseeing
periodic evaluations of the Board of Directors. The Nominating
and Corporate Governance Committee met two times in fiscal 2008.
Director
Nomination Process
The current nominees for election to the Board were nominated by
the full Board of Directors. At the Meeting, stockholders will
be asked to consider the election of Paul F. Lozier, Thomas J.
Meaney, Seymour S. Preston III, Dr. George W. Taylor and
Charles F. Dunleavy. Paul F. Lozier has been nominated for
election as a director for the first time because he was
appointed by our Board as a new director in November 2007.
Mr. Lozier was originally proposed to the Board by our
chief executive officer and the Board determined to include him
among its nominees.
The process followed by our Nominating and Corporate Governance
Committee to identify and evaluate director candidates includes
requests to Board members and others for recommendations,
meetings from time to time to evaluate biographical information
and background material relating to potential candidates and
interviews of selected candidates by members of the Nominating
and Corporate Governance Committee and the Board.
In considering whether to recommend any particular candidate for
inclusion in the Boards slate of recommended director
nominees, our Nominating and Corporate Governance Committee
applies the criteria set forth in our corporate governance
guidelines. These criteria include the candidates
integrity, business acumen, knowledge of our business and
industry, experience, diligence, potential conflicts of interest
and the ability to act in the interests of all stockholders. The
Nominating and Corporate Governance Committee does not assign
specific weights to particular criteria and no particular
criterion is a prerequisite for each prospective nominee. Our
Board believes that the backgrounds and qualifications of its
directors, considered as a group, should provide a composite mix
of experience, knowledge and abilities that will allow it to
fulfill its responsibilities.
7
Stockholders may recommend individuals to our Nominating and
Corporate Governance Committee for consideration as potential
director candidates. The Nominating and Corporate Governance
Committee will evaluate stockholder-recommended candidates by
following substantially the same process, and applying
substantially the same criteria, as it follows for candidates
submitted by others.
Stockholders may directly nominate a person for election to our
Board by complying with the procedures set forth in
Article I, Section 1.10 of our bylaws, and with the
rules and regulations of the SEC. Under our bylaws, only persons
nominated in accordance with the procedures set forth in the
bylaws will be eligible to serve as directors. In order to
nominate a candidate for service as a director, you must be a
stockholder at the time you give the Board notice of your
nomination, and you must be entitled to vote for the election of
directors at the meeting at which your nominee will be
considered. In accordance with our bylaws, director nominations
generally must be made pursuant to notice to our Corporate
Secretary delivered to or mailed and received at our principal
executive offices at 1590 Reed Road, Pennington, NJ 08534, not
later than the 90th day, nor earlier than the
120th day, prior to the first anniversary of the prior
years annual meeting of stockholders. Your notice must set
forth (i) the name, age, business address and residence
address of the nominee, (ii) the principal occupation or
employment of the nominee, (iii) the class and number of
shares of capital stock of Ocean Power Technologies, Inc. owned
beneficially or of record by the nominee and (iv) all other
information relating to the nominee that is required to be
disclosed in solicitations of proxies for the election of
directors in an election contest, or is otherwise required, in
each case pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder. The
stockholder making the nomination must include his or her name
and address, a statement as to the class and amount of shares
beneficially owned by the stockholder, a description of any
arrangements or understandings between the stockholder and the
nominee, and a representation that the stockholder intends to
appear in person or by proxy at the annual meeting.
Communicating
with the Independent Directors
Our Board will give appropriate attention to written
communications that are submitted by stockholders, and will
respond if and as appropriate. The Chairman of the Board (if an
independent director), or the Lead Director (if one is
appointed), or otherwise the Chairman of the Nominating and
Corporate Governance Committee is primarily responsible for
monitoring communications from stockholders and for providing
copies or summaries to the other directors as he or she
considers appropriate.
Communications are forwarded to all directors if they relate to
important substantive matters and include suggestions or
comments considered to be important for the directors to know.
In general, communications relating to corporate governance and
corporate strategy are more likely to be forwarded than
communications relating to ordinary business affairs, personal
grievances and matters as to which we receive repetitive or
duplicative communications.
Stockholders who wish to send communications on any topic to our
Board should address such communications to Board of Directors
c/o Secretary,
Ocean Power Technologies, Inc., 1590 Reed Road, Pennington, NJ
08534.
Code
of Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to our employees, officers (including our principal
executive officer and principal financial officer) and
directors. The Code of Business Conduct and Ethics is posted on
our website at www.oceanpowertechnologies.com and can
also be obtained free of charge by sending a request to our
Secretary at 1590 Reed Road, Pennington, New Jersey 08534. Any
changes to or waivers under the Code of Business Conduct and
Ethics as it relates to our chief executive officer, chief
financial officer, controller or persons performing similar
functions must be approved by our Board of Directors and will be
disclosed in a Current Report on
Form 8-K
within four business days of the change or waiver.
Section 16(a)
Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act and the rules
issued thereunder, our executive officers and directors are
required to file with the SEC reports of ownership and changes
in ownership of Common Stock. Copies of such reports are
required to be furnished to us. Based solely on a review of the
copies of such
8
reports furnished to us, or written representations that no
other reports were required, we believe that during fiscal 2008,
all of our executive officers and directors complied with the
requirements of Section 16(a).
|
|
2.
|
RATIFICATION
OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
The Board of Directors, in accordance with the recommendation of
the Audit Committee, has selected KPMG LLP, to audit our
consolidated financial statements for fiscal 2009. KPMG LLP has
audited our consolidated financial statements since fiscal 2005.
Although stockholder approval of the selection of KPMG LLP is
not required by law, our Board of Directors believes it is
advisable to give stockholders an opportunity to ratify this
selection. If this proposal is not approved at the Meeting, the
Board will reconsider its selection of KPMG LLP.
We expect representatives of KPMG LLP to attend the Meeting, to
be available to respond to appropriate questions from
stockholders, and to have the opportunity to make a statement if
so desired.
Fees of
Independent Registered Public Accounting Firm
The following table summarizes the fees of KPMG LLP, our
independent registered public accounting firm, billed to us for
each of the last two fiscal years.
|
|
|
|
|
|
|
|
|
Fee Category
|
|
Fiscal 2008
|
|
|
Fiscal 2007
|
|
|
Audit Fees(1)
|
|
$
|
377,570
|
|
|
$
|
574,645
|
|
Audit-Related Fees(2)
|
|
|
8,530
|
|
|
|
75,000
|
|
Tax Fees(3)
|
|
|
26,775
|
|
|
|
10,262
|
|
All Other Fees(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
412,875
|
|
|
$
|
659,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consist of fees for the audit and quarterly reviews
of our consolidated financial statements and other professional
services provided in connection with statutory and regulatory
filings or engagements, and included fees in fiscal 2007 of
approximately $389,000 for services related to our initial
public offering in the United States. |
|
(2) |
|
Audit-related fees consist of fees for assurance and related
services that are reasonably related to the performance of the
audit and the review of our consolidated financial statements
and which are not reported under Audit Fees.
Audit-related fees in fiscal 2008 consist of fees for the review
of grant milestones in the UK. Audit-related fees for fiscal
2007 consist of fees for accounting advisory services provided
by our independent registered public accounting firm prior to
our initial public offering in the United States. Provision of
these services was not approved in advance by the Audit
Committee. |
|
(3) |
|
Tax fees for fiscal 2008 and fiscal 2007 consist of fees for tax
return preparation assistance and review. |
|
(4) |
|
We were not billed any Other Fees in fiscal 2008 or
fiscal 2007. |
Pre-Approval
Policies and Procedures
Our policy is that all audit services and all non-audit services
to be provided to us by our independent registered public
accounting firm must be approved in advance by our Audit
Committee. However, in 2008, less than 1% of the total fees
billed related to tax services that were provided under the de
minimus exception to the Audit Committee
pre-approval
requirement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR
2009.
9
ADDITIONAL
INFORMATION
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of July 31, 2008 by
(a) each person known by us to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock,
(b) each executive officer identified in the Summary
Compensation Table below, (c) each director and nominee for
director, and (d) all executive officers and directors as a
group.
Percentage of Common Stock outstanding is based on
10,210,354 shares of our Common Stock outstanding as of
July 31, 2008. For purposes of the table below, and in
accordance with the rules of the SEC, we deem shares of Common
Stock subject to options that are currently exercisable or
exercisable within sixty days of July 31, 2008 to be
outstanding and to be beneficially owned by the person holding
the options for the purpose of computing the percentage
ownership of that person, but we do not treat them as
outstanding for the purpose of computing the percentage
ownership of any other person. Except as otherwise noted, the
persons or entities in this table have sole voting and investing
power with respect to all of the shares of Common Stock
beneficially owned by them, subject to community property laws,
where applicable. Except as otherwise set forth below, the
street address of the beneficial owner is
c/o Ocean
Power Technologies, Inc., 1590 Reed Road, Pennington, NJ 08534.
|
|
|
|
|
|
|
|
|
Name
|
|
Amount
|
|
|
Percentage
|
|
|
Officers and Directors
|
|
|
|
|
|
|
|
|
Dr. George W. Taylor(1)
|
|
|
1,246,444
|
|
|
|
11.8
|
|
Charles F. Dunleavy(2)
|
|
|
287,076
|
|
|
|
2.8
|
|
Herbert T. Nock(3)
|
|
|
10,000
|
|
|
|
*
|
|
Mark F. Draper(4)
|
|
|
76,100
|
|
|
|
*
|
|
Sir Eric A. Ash(5)
|
|
|
21,250
|
|
|
|
*
|
|
Paul F. Lozier(6)
|
|
|
15,873
|
|
|
|
*
|
|
Thomas J. Meaney(7)
|
|
|
10,448
|
|
|
|
*
|
|
Seymour S. Preston III(8)
|
|
|
16,436
|
|
|
|
*
|
|
John A. Baylouny(9)
|
|
|
|
|
|
|
*
|
|
All executive officers and directors as a group (8 individuals)
|
|
|
1,683,627
|
|
|
|
15.4
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
FMR Corp.(10)
|
|
|
1,428,775
|
|
|
|
14.0
|
|
S.A.C. Capital Advisors, LLC(11)
|
|
|
610,354
|
|
|
|
6.0
|
|
Teachers Advisors, Inc./TIAA-CREF Investment Management, LLC(12)
|
|
|
600,000
|
|
|
|
5.9
|
|
|
|
|
* |
|
Represents a beneficial ownership of less than one percent of
our outstanding Common Stock. |
|
(1) |
|
Includes 543 shares held by Princeton Research Associates,
Inc. Dr. Taylor is president and a director of Princeton
Research Associates. Dr. Taylor disclaims beneficial
ownership of the shares held by Princeton Research Associates
except to the extent of his pecuniary interest therein. Also
includes 378,100 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
|
(2) |
|
Includes 211,100 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008 |
|
(3) |
|
Consists of 10,000 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
|
(4) |
|
Consists of 76,100 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
|
(5) |
|
Includes 18,250 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
10
|
|
|
(6) |
|
Includes 9,000 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
|
(7) |
|
Includes 5,000 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
|
(8) |
|
Includes 11,500 shares of Common Stock issuable upon the
exercise of options that are currently exercisable or
exercisable within sixty days of July 31, 2008. |
|
(9) |
|
Mr. Baylouny resigned from the Company effective
September 4, 2007. |
|
(10) |
|
Based on a Schedule 13G/A filed by FMR Corp. and Edward C.
Johnson 3d on February 14, 2008, FMR Corp. and Edward C.
Johnson 3d, in his capacity as Chairman of FMR Corp., have sole
power to vote 399,000 shares and sole power to dispose of
1,428,775 shares. The business address of FMR Corp. and
Edward C. Johnson 3d is 82 Devonshire Street, Boston,
Massachusetts 02109. |
|
(11) |
|
S.A.C. Capital Management, LLC, S.A.C. Capital Associates, LLC
and Steven A. Cohen filed a Schedule 13G on
February 1, 2008 reporting shared power to vote and shared
power to dispose of 610,354 shares. The business address of
S.A.C. Capital Advisors, LLC and Mr. Cohen is 72 Cummings
Point Road, Stamford, Connecticut, 06902, of S.A.C. Capital
Management, LLC is 540 Madison Avenue, New York, New York 1022
and of S.A.C. Capital Associates, LLC is PO Box 508,
Victoria House, The Valley, Anguilla, British West Indies. |
|
(12) |
|
Teachers Advisors, Inc. and TIAA-CREF Investment Management, LLC
filed a Schedule 13G on February 14, 2008 reporting
sole voting and dispositive power by Teachers Advisors, Inc of
95,342 shares and sole voting and dispositive power by
TIAA-CREF Investment Management, LLC of 504,658 shares. The
business address of both Teachers Advisors, Inc. and TIAA-CREF
Investment Management, LLC is 730 Third Avenue, New York, New
York 10017. |
Certain
Relationships and Related Person Transactions
Review
and Approval of Related Person Transactions
The Audit Committee is charged with the responsibility of
reviewing and approving all related person transactions (as
defined in SEC regulations), and periodically reassessing any
related person transaction entered into by the Company to ensure
continued appropriateness. This responsibility is set forth in
our Audit Committee charter. A related party transaction will
only be approved if the members of the Audit Committee determine
that the transaction is in the best interests of the Company. If
a director is involved in the transaction, he or she will be
recused from all decisions regarding the transaction.
Related
Person Transactions
In November 1993, we entered into an agreement providing for
royalty payments to Dr. George W. Taylor, our chief
executive officer, Michael Y. Epstein and Joseph R. Burns, whose
estate transferred his interests under this agreement to our
stockholder, JoAnne E. Burns. The royalty payments are based on
revenues from specified piezoelectric technology covered by
U.S. patent 4404490 entitled Power Generation from
Waves Near the Surface of Bodies of Water. Under the
agreement, we are obligated to pay to the other parties to this
agreement, royalties of six percent of license fees received and
four percent of product sales and development contract revenues,
up to an aggregate amount of $925,000. As of April 30,
2008, approximately $200,000 of royalties had been earned. We
made payments of $48,000 in fiscal 2004 and $26,000 in fiscal
2008 under this agreement. There were no payments in fiscal
2005, fiscal 2006 or fiscal 2007. We are not currently using the
technology covered by this patent, and we do not anticipate that
any further royalties will be earned under the agreement.
Because this agreement was entered into prior to our public
offerings in both the United Kingdom and the United States, the
Audit Committee has not approved this transaction. We believe
the terms contained in this agreement are comparable to those we
would receive from an unaffiliated third party for similar
technology.
11
Executive
Compensation
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis provides a narrative
describing how compensation for our named executive officers is
established and should be read in conjunction with the
compensation tables and related narrative descriptions set forth
below.
Our Compensation Committee is responsible for overseeing the
compensation of all of our executive officers. In this capacity,
the Compensation Committee designs, implements, reviews and
approves all compensation for our named executive officers. The
goal of the Compensation Committee is to ensure that our
compensation programs are aligned with our business goals and
objectives and that the total compensation paid to each of our
named executive officers is fair, reasonable and competitive.
Compensation
Objectives and Philosophy
Our compensation programs are designed to attract and retain
qualified and talented executives, motivating them to achieve
our business goals and rewarding them for superior short- and
long-term performance. In particular, our compensation programs
are intended to reward the achievement of specified
predetermined quantitative and qualitative goals and to align
our executives interests with those of our stockholders in
order to attain the ultimate objective of increasing stockholder
value.
Elements
of Total Compensation and Relationship to
Performance
Key elements of these programs include:
|
|
|
|
|
base salary compensation designed to reward annual achievements,
with consideration given to the executives qualifications,
scope of responsibility, leadership abilities and management
experience and effectiveness;
|
|
|
|
cash bonus awards designed to align executive compensation with
business objectives and performance; and
|
|
|
|
equity incentive compensation, typically in the form of stock
options, the value of which is dependent upon the performance of
our Common Stock, and which is subject to multi-year vesting
that requires continued service.
|
Determining
and Setting Executive Compensation
Our management develops our compensation plans by utilizing
publicly available compensation and
on-line
survey data for a broad selection of national and regional
companies, which we believe are generally comparable to the
Company in terms of public ownership, organization structure,
size and stage of development, and against which we believe we
may compete for executive talent. The results of these analyses
are reviewed with and approved by the Compensation Committee
annually. We believe that these compensation practices provide
us with appropriate compensation guidelines. The Compensation
Committee generally targets compensation for our executives near
the median range of compensation paid to similarly situated
executives in comparable companies covered by the on-line survey
data. Other considerations, including market factors, the unique
nature of our business and the experience level of an executive,
may dictate variations to this general target.
Our business is characterized by a long product development
cycle, including a lengthy engineering and product-testing
period and regulatory approval and licensing. Because of this,
many of the traditional benchmarking metrics, such as product
sales, revenues and profits are inappropriate for an early-stage
company such as Ocean Power Technologies. Instead, the specific
factors the Compensation Committee considers when determining
our named executive officers compensation include:
|
|
|
|
|
key product development initiatives;
|
12
|
|
|
|
|
technology advancements;
|
|
|
|
achievement of regulatory and other commercial milestones;
|
|
|
|
establishment and maintenance of key strategic relationships;
|
|
|
|
implementation of appropriate financing strategies; and
|
|
|
|
financial and operating performance.
|
The Compensation Committee determines executive compensation
after carefully reviewing corporate performance and performing a
detailed evaluation of a named executives annual
performance against established goals. The Compensation
Committee has implemented an annual performance review program
for our executives under which annual corporate and individual
performance goals are determined and set forth in writing at the
beginning of each fiscal year. Annual corporate goals are
proposed by our senior management and require the approval of
our Board of Directors. Individual goals focus on contributions
that facilitate the achievement of the corporate goals and are
proposed by each executive and approved by the chief executive
officer. On an annual basis the Compensation Committee and the
chief executive officer discuss and agree to the chief executive
officers goals, as included in the Companys business
and financial plan for the following year. Annual salary
increases, bonus payments and annual stock option awards granted
to our executives are at the discretion of the Compensation
Committee, but are tied to the achievement of these corporate
and individual performance goals.
Subsequent to the last quarter of each fiscal year, our senior
management evaluates our corporate performance and each
executives individual performance, as compared to the
goals for that year. Based on this evaluation, the chief
executive officer recommends to the Compensation Committee any
annual executive salary increases, bonus payments or annual
stock option awards. The chief executive officers
individual performance evaluation is conducted by the
Compensation Committee, which also determines his compensation
changes, bonus eligibility and stock option awards. Bonuses and
annual stock option awards are granted by the Board of Directors
at the time of the annual performance reviews. Any annual base
salary increases granted to our executives are implemented at
the same time.
Components
of our Executive Compensation Program
The primary elements of our executive compensation program are:
|
|
|
|
|
base salary;
|
|
|
|
annual cash bonus;
|
|
|
|
a long-term incentive represented by stock options; and
|
|
|
|
insurance and other employee benefits.
|
The Company does not have a specific formal or informal policy
or target for allocating compensation between long-term and
short-term compensation, between cash and non-cash compensation
or among different forms of non-cash compensation. The
Compensation Committee, considering applicable information from
comparable industry groups and after reviewing information
provided by management, determines, for each named executive
officer, subjectively what it believes to be the appropriate
level and mix of the various compensation components.
Base Salary. Base salaries are provided to
named executive officers to compensate them with a fair and
competitive base level of compensation for services rendered
during the year. The Compensation Committee typically determines
base salary for each executive based on the executives
responsibilities, education, experience and, if applicable, the
base salary level of the executive at his or her prior
employment. In addition, the Compensation Committee reviews and
considers the level of base salary paid by comparable companies
for similar positions. Generally, we believe that executive base
salaries should be targeted near the median range of salaries at
comparable companies in our industry or similar industries and
in our geographic area. The minimum base salary is mandated by
our employment agreements with our named executive officers.
13
In 2008, the named executive officers received increases in base
salary, reflecting reviews of their annual performance and the
levels of base salary paid by comparable companies for similar
positions. See Employment Agreements on page 17.
Bonus. The Compensation Committee has the
authority to award annual bonuses to individual senior
executives. For each senior executive, the Compensation
Committee reviews specific performance criteria established each
year and determines bonus awards based on the extent to which
those criteria were achieved. The bonus criteria are not
quantified performance targets, but are established in a manner
intended to reward both overall corporate performance, an
individuals participation in attaining such performance
and the executives performance against additional goals
specific to each executive. The Compensation Committee has
discretion over the amount of annual bonus awarded, if any. Our
annual bonus is paid in cash in an amount reviewed and approved
by the Compensation Committee and ordinarily is paid in a single
installment in the first quarter following the completion of the
fiscal year.
Bonus amounts paid for fiscal 2008 to our named executive
officers were awarded by the Compensation Committee based on
Company and individual performance. In making these
determinations, the Compensation Committee considered each named
executive officers performance over the preceding twelve
months, as well as the overall Company performance over the same
period. The bonus amounts to be paid in fiscal 2009 will be
determined by the Compensation Committee following a review of
each executives individual performance and attainment of
objectives, and Company performance.
Equity Awards. We believe that long-term
Company performance is best achieved through an ownership
culture that encourages long-term performance by our executive
officers through the use of stock-based awards. Our 2006 Stock
Incentive Plan permits the grant of stock options, stock
appreciation rights, restricted shares, restricted stock units,
performance shares and other stock-based awards. Our equity
awards program is designed to:
|
|
|
|
|
reward demonstrated leadership and performance;
|
|
|
|
align named executives interests with those of our
stockholders;
|
|
|
|
retain named executives through the term of the awards;
|
|
|
|
maintain competitive levels of compensation; and
|
|
|
|
motivate for outstanding future performance.
|
We compete for qualified executive personnel with many companies
that have greater resources than we do. Accordingly, equity
compensation is a crucial component of any competitive executive
compensation package we may offer.
Our equity awards have taken the form of stock options. We
typically grant stock options to each of our executive officers
upon commencement of employment and annually in conjunction with
our review of individual performance. All stock option grants to
our executive officers are approved by the Compensation
Committee and, other than new hire grants, are typically granted
at the Compensation Committees regularly scheduled meeting
subsequent to the end of the fiscal year. All stock options
granted to our executives have exercise prices equal to the fair
market value of our Common Stock on the date of grant, so that
the recipient will earn no compensation from his or her options
unless the share price increases beyond the exercise price. In
addition, the stock options granted typically vest
proportionately over five years, which we believe provides an
incentive to our executives to add value to the Company over the
long term and to remain with us.
Stock option grant levels vary among executive officers based on
their positions and annual performance assessment, and draw on
publicly available compensation and survey data. In addition,
the Compensation Committee reviews all components of the
executives compensation to ensure that an executives
total compensation conforms to our overall philosophy and
objectives.
Typically, the stock options we grant to our executives have a
ten-year term and vest as to 20% of the shares on the first
anniversary of the grant date and as to an additional 20% of the
shares at the anniversary of the grant date until the fifth
anniversary of the grant date. Vesting ceases upon termination
of employment and
14
exercise rights cease three months following termination of
employment, except in the case of death or disability. Prior to
the exercise of an option, the holder has no rights as a
stockholder with respect to the shares subject to such option,
including voting rights and the right to receive dividends or
dividend equivalents.
The number of stock options granted to our named executive
officers in the 2008 fiscal year, and the value of those grants
determined in accordance with SFAS 123R, are shown below in
the 2008 Grants of
Plan-Based
Awards Table. In making the grant determinations, the
Compensation Committee considered each named executive
officers performance over the preceding twelve months, the
overall Company performance over the same period, the need to
motivate the named executive officers for outstanding future
performance, and the retention of the named executive officers
over future years. In June 2008, at the time of our annual
performance review, we awarded stock options to the named
executive officers. These awards are not reflected in the
Summary Compensation Table or 2008 Grants of Plan-Based Awards
Table because the awards were made in fiscal 2009, and therefore
no compensation costs for financial reporting purposes were
recorded for these awards in fiscal 2008.
We do not have guidelines specifying an equity ownership
requirement for our executives.
Benefits and Other Compensation. We maintain
broad-based benefits that are provided to all employees,
including health and dental insurance, life and disability
insurance and a 401(k) plan. We are permitted to match
employees 401(k) plan contributions; in the 2008 fiscal
year we implemented a 50% match, subject to vesting and other
terms and conditions. Executives are eligible to participate in
all of our employee benefit plans, in each case on the same
basis as other employees.
Severance and
Change-in-Control
Benefits. Pursuant to employment agreements we
have entered into with certain of our executives and our stock
plans, our executives are entitled to specified benefits in the
event of the termination of their employment under specified
circumstances, including termination following a change in
control of our Company. We have provided more detailed
information about these benefits, along with estimates of their
value under various circumstances, under the caption
Potential Payments Upon Termination of Employment or
Change in Control below.
We believe providing these benefits helps us compete for
executive talent. After reviewing the practices of
similarly-situated companies, we believe that our severance and
change in control benefits are generally in line with severance
packages offered in our industry and geographic region.
Tax
Considerations
Section 162(m) of the Internal Revenue Code prohibits us
from deducting any compensation in excess of $1 million
paid to certain of our executive officers, except to the extent
that such compensation is paid pursuant to a stockholder
approved plan upon the attainment of specified performance
objectives. The Compensation Committee believes that tax
deductibility is an important factor, but not the sole factor,
to be considered in setting executive compensation policy.
Accordingly, the Compensation Committee generally intends to
take such reasonable steps as are required to avoid the loss of
a tax deduction due to Section 162(m). However, the
Compensation Committee may, in its judgment, authorize
compensation payments that do not comply with the exemptions in
Section 162(m) when it believes that such payments are
appropriate to attract and retain executive talent.
Summary
Compensation Table
The following table sets forth the compensation paid or accrued
during the fiscal year ended April 30, 2008 to our chief
executive officer, chief financial officer, two other executive
officers who were serving as executive officers on
April 30, 2008 and one additional executive officer who
would have been among our
15
most highly compensated executive officers if he had been
serving as of April 30, 2008. We refer to these officers
collectively as our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Option
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
Awards ($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
Dr. George W. Taylor
|
|
|
2008
|
|
|
|
407,936
|
|
|
|
166,667
|
|
|
|
527,129
|
|
|
|
6,150
|
(h)
|
|
|
1,107,882
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
|
320,147
|
|
|
|
326,667
|
|
|
|
312,608
|
|
|
|
|
|
|
|
959,422
|
|
Charles F. Dunleavy
|
|
|
2008
|
|
|
|
260,183
|
|
|
|
129,167
|
|
|
|
240,205
|
|
|
|
3,416
|
(h)
|
|
|
632,971
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
|
225,326
|
|
|
|
261,667
|
|
|
|
162,667
|
|
|
|
|
|
|
|
649,660
|
|
Mark R. Draper
|
|
|
2008
|
|
|
|
399,449
|
(d)
|
|
|
150,821
|
(d)
|
|
|
401,332
|
|
|
|
75,509
|
(d)(e)
|
|
|
1,027,111
|
|
Chief Operating Officer, and
Chief Executive of Ocean Power Technologies Ltd.
|
|
|
2007
|
|
|
|
289,203
|
(d)
|
|
|
157,658
|
(d)
|
|
|
161,740
|
|
|
|
61,147
|
(d)(e)
|
|
|
669,748
|
|
Herbert T. Nock
|
|
|
2008
|
|
|
|
69,240
|
|
|
|
16,667
|
|
|
|
100,292
|
|
|
|
|
|
|
|
186,199
|
|
Vice President, Business Development and Marketing(f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Baylouny
|
|
|
2008
|
|
|
|
77,518
|
|
|
|
6,667
|
|
|
|
38,425
|
|
|
|
|
|
|
|
122,610
|
|
Senior Vice President, Engineering(g)
|
|
|
2007
|
|
|
|
212,295
|
|
|
|
39,167
|
|
|
|
72,013
|
|
|
|
|
|
|
|
323,475
|
|
|
|
|
(a) |
|
Salary represents actual salary earned during each fiscal year.
The amounts in this column are different from the amounts listed
below under description of employment agreements, due to
increases in salary levels and payments for unused vacation
during each fiscal year. |
|
(b) |
|
The amounts in this column reflect cash bonuses paid to the
named executive officers for performance during the applicable
fiscal year. All bonuses for named executive officers were
entirely discretionary. |
|
(c) |
|
The entries in the option awards column reflect the dollar
amounts of stock-based compensation recognized for 2008 and
2007, as applicable, financial statement reporting purposes in
accordance with SFAS 123R, excluding forfeiture
assumptions. See Note 2(l) of the Notes to Consolidated
Financial Statements in our Annual Report on
Form 10-K
for the fiscal year ended April 30, 2008 for a discussion
of the relevant assumptions used to determine the valuation of
our stock options for accounting purposes. |
|
(d) |
|
Based on an average buying rate of $2.007 for £1 for the
period from May 1, 2007 through April 30, 2008 and of
$1.911 for £1 for the period from May 1, 2006 through
April 30, 2007. |
|
(e) |
|
All Other Compensation for Mr. Draper for 2008 includes
$16,981 for health insurance and $58,528 for pension benefits
and for 2007, includes $16,907 for health insurance and $44,240
for pension benefits. |
|
(f) |
|
Mr. Nock joined the Company on January 3, 2008. |
|
(g) |
|
Mr. Baylouny resigned from the Company effective
September 4, 2007. |
|
(h) |
|
Reflects Company 401(k) plan matching contributions. |
2008
Grants of Plan-Based Awards Table
The following table provides information regarding grants of
plan-based awards made to the named executive officers during
fiscal 2008. All grants were made under the 2006 Stock Incentive
Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: Number
|
|
|
Exercise or Base
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
of Securities
|
|
|
Price of Option
|
|
|
Value of Stock and
|
|
|
|
|
|
|
Underlying
|
|
|
Awards ($/Sh)
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
Options (#)
|
|
|
(a)
|
|
|
(b)
|
|
|
Dr. George W. Taylor
|
|
|
6/15/2007
|
|
|
|
50,000
|
|
|
|
16.11
|
|
|
$
|
539,500
|
|
Charles F. Dunleavy
|
|
|
6/15/2007
|
|
|
|
42,000
|
|
|
|
16.11
|
|
|
$
|
493,920
|
|
Mark R. Draper
|
|
|
6/15/2007
|
|
|
|
50,000
|
|
|
|
16.11
|
|
|
$
|
571,950
|
|
Herbert T. Nock
|
|
|
1/11/2008
|
|
|
|
25,000
|
|
|
|
14.02
|
|
|
$
|
240,000
|
|
John A. Baylouny(c)
|
|
|
6/15/2007
|
|
|
|
15,0000
|
|
|
|
16.11
|
|
|
$
|
176,400
|
|
16
|
|
|
(a) |
|
The exercise price listed in this column represents the closing
price of our Common Stock on the Nasdaq Global Market on the
date of grant. |
|
(b) |
|
The amounts in this column represent the grant date fair value
of the awards in accordance with SFAS 123R, excluding
forfeiture assumptions. Refer to Note 2(l) of the Notes to
Consolidated Financial Statements in our Annual Report on
Form 10-K
for the fiscal year ended April 30, 2008 for a discussion
of the relevant assumptions used to determine the valuation of
our stock and options for accounting purposes. |
|
(c) |
|
Mr. Baylouny resigned from the Company effective
September 4, 2007 and this award was forfeited. |
Employment
Agreements
Dr. George
W. Taylor Chief Executive Officer
Under an employment agreement entered into in October 2003,
Dr. Taylor was entitled to an annual base salary of
$250,000 for the first year of his employment with us, subject
to adjustment upon annual review by our Board of Directors.
Dr. Taylors annual base salary has been adjusted by
our Board of Directors and at April 30, 2008 was $410,000.
Effective July 1, 2008, Dr. Taylors annual base
salary was increased to $475,000. Dr. Taylor is also
eligible to earn discretionary incentive bonuses and incentive
compensation.
Upon the termination of his employment other than for cause, or
if he terminates his employment for good reason, Dr. Taylor
has the right to receive severance payments equal to one year of
his base salary then in effect. Dr. Taylor is not entitled
to severance if we terminate his employment for cause or if he
resigns without good reason. Pursuant to this agreement,
Dr. Taylor is prohibited from competing with us and
soliciting our customers, prospective customers or employees
during the term of his employment and for a period of one year
after the termination or expiration of his employment.
Charles
F. Dunleavy Chief Financial Officer and Senior Vice
President
Under an employment agreement entered into in October 2003,
Mr. Dunleavy was entitled to an annual base salary of
$170,000 for the first year of his employment with us, subject
to adjustment upon annual review by our Board of Directors.
Mr. Dunleavys annual base salary has been adjusted by
our Board of Directors and at April 30, 2008 was $255,000.
Effective July 1, 2008, Mr. Dunleavys annual
base salary was increased to $300,000. Mr. Dunleavy is also
eligible to earn discretionary incentive bonuses and incentive
compensation.
Upon the termination of his employment other than for cause, or
if he terminates his employment for good reason,
Mr. Dunleavy has the right to receive severance payments
equal to one year of his base salary then in effect.
Mr. Dunleavy is not entitled to severance if we terminate
his employment for cause or if he resigns without good reason.
Pursuant to this agreement, Mr. Dunleavy is prohibited from
competing with us and soliciting our customers, prospective
customers or employees during the term of his employment and for
a period of one year after the termination or expiration of his
employment.
Mark
R. Draper Chief Operating Officer, and Chief
Executive and Director of our wholly-owned UK subsidiary, Ocean
Power Technologies, Ltd.
Under a service agreement entered into in September 2004,
Mr. Draper was entitled to an annual base salary of
£136,000 for the first year of his employment with our
subsidiary, subject to adjustment upon annual review.
Mr. Drapers annual base salary has been adjusted and
at April 30, 2008 was £200,000. Effective July 1,
2008, Mr. Drapers annual base salary was increased to
£227,000. Mr. Draper is also eligible to earn a
discretionary annual incentive bonus in an amount up to 50% of
his annual base salary and incentive compensation.
Upon the termination of his employment or upon a termination or
resignation that occurs within six months of a change in
control, Mr. Draper has the right to receive a severance
payment equal to 25% of his base salary that is then in effect.
In addition, if we give Mr. Draper less than one
years written notice of termination, he is entitled to
receive his base salary for any unexpired portion of that
one-year notice period.
17
Pursuant to this agreement, Mr. Draper is prohibited from
competing with us and soliciting our customers, prospective
customers or employees during the term of his employment and for
a period of one year after the termination or expiration of his
employment.
Herbert
T. Nock Vice President, Business Development and
Marketing
Under a letter agreement entered into in December 2007,
Mr. Nock was entitled to an annual base salary of $210,000
for the first year of his employment with us, subject to
adjustment. Effective July 1, 2008, Mr. Nocks
annual base salary was increased to $221,000. Mr. Nock is
also eligible to earn a discretionary annual incentive bonus in
an amount up to 40% of his annual base salary and incentive
compensation.
Upon the termination of his employment other than for cause,
Mr. Nock has the right to receive a severance payment based
on a portion of his base salary then in effect. If the
termination occurs within the first year, the severance payment
will equal three months base salary; if the termination occurs
during years two or three, the severance payment will equal six
months base salary; if the termination occurs after the
three-year anniversary of his start date of January 3,
2008, the severance payment will equal 12 months base
salary. Mr. Nock is not entitled to severance if we
terminate his employment for cause. Pursuant to this agreement,
Mr. Nock is prohibited from competing with us and
soliciting our customers, prospective customers or employees
during the term of his employment and for a period of one year
after the termination or expiration of his employment.
John
A. Baylouny Senior Vice President,
Engineering
Mr. Baylouny resigned from the Company effective
September 4, 2007. Under a letter agreement entered into in
September 2005, Mr. Baylouny was entitled to an annual base
salary of $205,000 for the first year of his employment with us,
subject to adjustment. Mr. Baylounys annual base
salary was adjusted by our Board of Directors and at
September 4, 2007 was $224,000.
No severance payments were made to Mr. Baylouny upon his
resignation. Pursuant to his agreement, Mr. Baylouny is
prohibited from competing with us and soliciting our customers,
prospective customers or employees for a period of one year
after the termination or expiration of his employment.
Stock
Option and Other Compensation Plans
1994
Stock Option Plan
Our 1994 Stock Option Plan was adopted by our Board of Directors
on May 4, 1994, approved by our stockholders on
August 22, 1994 and expired on August 24, 2001. The
1994 Stock Option Plan provided for the grant of non-statutory
options to our employees, officers, directors, consultants and
advisors. A maximum of 187,500 shares of Common Stock were
authorized for issuance under this plan.
The 1994 Stock Option Plan provides that outstanding options
shall become fully exercisable if we undergo a fundamental
transaction, as defined in the 1994 Stock Option Plan, and the
successor entity does not assume the options under the 1994
Stock Option Plan or substitute equivalent options.
As of April 30, 2008, options to purchase 7,525 shares
of our Common Stock at a weighted average exercise price of
$18.42 were outstanding under our 1994 Stock Option Plan,
options to purchase 13,432 shares of Common Stock had been
exercised and options to purchase 104,342 shares of Common
Stock had been forfeited. No awards have been granted under the
1994 Stock Option Plan since its expiration in 2001.
Incentive
Stock Option Plan
Our Incentive Stock Option Plan was adopted by our Board of
Directors on May 4, 1994, approved by our stockholders on
August 22, 1994 and expired on August 24, 2001. The
Incentive Stock Option Plan provided for the grant of incentive
stock options to our employees and officers. A maximum of
337,500 shares of Common Stock were authorized for issuance
under this plan.
18
The Incentive Stock Option Plan provides that outstanding
options shall become fully exercisable if we undergo a
fundamental transaction, as defined in the Incentive Stock
Option Plan, and the successor entity does not assume the
options under the Incentive Stock Option Plan or substitute
equivalent options.
As of April 30, 2008, options to purchase
139,050 shares of our Common Stock at a weighted average
exercise price of $19.24 were outstanding under our Incentive
Stock Option Plan, options to purchase 28,525 shares of
Common Stock had been exercised and options to purchase
107,749 shares of Common Stock had been forfeited. No
awards have been granted under the Incentive Stock Option Plan
since its expiration in 2001.
2001
Stock Plan
Our 2001 Stock Plan was adopted by our Board of Directors and
approved by our stockholders on August 24, 2001. The 2001
Stock Plan provides for the grant of incentive stock options,
non-statutory options, restricted stock awards and stock awards.
A maximum of 1,000,000 shares of Common Stock are
authorized for issuance under our 2001 Stock Plan. Our
employees, officers, directors, consultants and advisors are
eligible to receive awards under our 2001 Stock Plan; however,
incentive stock options may only be granted to our employees.
Our Board of Directors administers our 2001 Stock Plan. Pursuant
to the terms of our 2001 Stock Plan, and to the extent permitted
by law, our Board may delegate administrative authority to a
committee composed of two or more of our non-executive
directors. Our Board of Directors, or a committee to whom the
Board of Directors delegates authority, selects the recipients
of awards and determines:
|
|
|
|
|
the number of shares of Common Stock covered by options and the
dates upon which the options become exercisable;
|
|
|
|
the exercise price of options;
|
|
|
|
the duration of the options; and
|
|
|
|
the terms and conditions of awards, including transfer
restrictions, conditions for repurchase and rights of first
refusal.
|
The 2001 Stock Plan provides that outstanding options shall
become fully exercisable if we undergo a fundamental
transaction, as defined in the 2001 Stock Plan, and the
successor entity does not assume the options under the 2001
Stock Plan or substitute equivalent options.
The 2001 Stock Plan provides that, prior to an initial public
offering which is defined as an underwritten offering pursuant
to an effective registration statement under the Securities Act
of 1933, as amended (the Securities Act), we have a right of
first refusal on any shares held by optionees under the 2001
Stock Plan and we may repurchase any stock or stock awards upon
the exercise of options at the fair market value on the date of
purchase. The right of first refusal and the right to repurchase
terminated upon the completion of our initial public offering in
the U.S.
As of April 30, 2008, options to purchase
661,852 shares of our Common Stock at a weighted average
exercise price of $14.32 were outstanding under our 2001 Stock
Plan, 43,100 options to purchase shares of Common Stock had been
exercised and options to purchase 161,013 shares of Common
Stock had been forfeited. No further stock options or other
awards have been granted under the 2001 Stock Plan since the
effective date of the 2006 Stock Incentive Plan described below.
2006
Stock Incentive Plan
Our 2006 Stock Incentive Plan was adopted by our Board of
Directors on December 7, 2006, approved by our stockholders
on January 12, 2007 and became effective on April 24,
2007. The 2006 Stock Incentive Plan provides for the grant of
incentive stock options, non-statutory stock options, restricted
stock awards and other
stock-unit
awards. The number of shares of Common Stock reserved for
issuance under the 2006 Stock Incentive Plan is
803,215 shares, which consists of 680,000 new shares plus
123,215 shares of Common Stock previously available for
issuance under the 2001 Stock Plan.
19
Our employees, officers, directors, consultants and advisors are
eligible to receive awards under our 2006 Stock Incentive Plan;
however, incentive stock options may only be granted to our
employees. The maximum number of shares of Common Stock with
respect to which awards may be granted to any participant under
the 2006 Stock Incentive Plan is 200,000 per calendar year.
Our 2006 Stock Incentive Plan is administered by our Board of
Directors. Pursuant to the terms of the 2006 Stock Incentive
Plan, and to the extent permitted by law, our Board of Directors
may delegate authority to one or more committees or
subcommittees of the Board of Directors or to our officers. Our
Board of Directors or any committee to whom the Board of
Directors delegates authority selects the recipients of awards
and determines:
|
|
|
|
|
the number of shares of Common Stock covered by options and the
dates upon which the options become exercisable;
|
|
|
|
the exercise price of options; provided, however, that the
exercise price shall not be less than 100% of the fair market
value of the underlying Common Stock on the date the option is
granted;
|
|
|
|
the duration of the options; and
|
|
|
|
the number of shares of Common Stock subject to any restricted
stock or other
stock-unit
awards and the terms and conditions of such awards, including
conditions for repurchase, issue price and repurchase price.
|
If our Board of Directors delegates authority to an officer, the
officer has the power to make awards to all of our employees,
except to executive officers. Our Board of Directors will fix
the terms of the awards to be granted by such officer, including
the exercise price of such awards, and the maximum number of
shares subject to awards that such officer may make.
If a merger or other reorganization event occurs, our Board of
Directors may provide that all of our outstanding options are to
be assumed or substituted by the successor corporation. Our
Board of Directors may also provide that, in the event the
succeeding corporation does not agree to assume, or substitute
for, outstanding options, then all unexercised options will
become exercisable in full prior to the completion of the event
and that these options will terminate immediately prior to the
completion of the merger or other reorganization event if not
previously exercised. Our Board of Directors may also provide
for a cash out of the value of any outstanding options.
No award may be granted under the 2006 Stock Incentive Plan
after December 7, 2016, but the vesting and effectiveness
of awards granted before that date may extend beyond that date.
Our Board of Directors may amend, suspend or terminate the 2006
Stock Incentive Plan at any time, except that stockholder
approval will be required for any revision that would materially
increase the number of shares reserved for issuance, expand the
types of awards available under the plan, materially modify plan
eligibility requirements, extend the term of the plan or
materially modify the method of determining the exercise price
of options granted under the plan, or otherwise as required to
comply with applicable law or stock market requirements.
As of April 30, 2008, options to purchase
298,625 shares of our Common Stock at a weighted average
exercise price of $15.55 were outstanding under our 2006 Stock
Incentive Plan, no options to purchase shares of Common Stock
had been exercised and options to purchase 21,417 shares of
Common Stock had been forfeited.
20
2008
Outstanding Equity Awards at Fiscal Year End Table
The following table contains certain information regarding
equity awards held by the named executive officers as of
April 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Option
|
|
|
Option
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercise Price ($)
|
|
|
Expiration Date
|
|
|
Dr. George W. Taylor
|
|
|
15,000
|
(a)
|
|
|
|
|
|
$
|
16.70
|
|
|
|
6/8/2008
|
|
|
|
|
27,000
|
(a)
|
|
|
|
|
|
$
|
6.70
|
|
|
|
1/12/2010
|
|
|
|
|
63,000
|
(a)
|
|
|
|
|
|
$
|
20.00
|
|
|
|
1/12/2010
|
|
|
|
|
52,500
|
(a)
|
|
|
|
|
|
$
|
6.70
|
|
|
|
3/23/2011
|
|
|
|
|
30,000
|
(a)
|
|
|
|
|
|
$
|
20.00
|
|
|
|
3/23/2011
|
|
|
|
|
60,000
|
(a)
|
|
|
|
|
|
$
|
6.70
|
|
|
|
7/30/2011
|
|
|
|
|
20,000
|
(a)
|
|
|
|
|
|
$
|
14.50
|
|
|
|
11/22/2009
|
|
|
|
|
5,400
|
(b)
|
|
|
8,100
|
(b)
|
|
$
|
13.10
|
|
|
|
6/17/2010
|
|
|
|
|
45,000
|
(a)
|
|
|
|
|
|
$
|
13.80
|
|
|
|
6/16/2011
|
|
|
|
|
25,000
|
(a)
|
|
|
|
|
|
$
|
16.11
|
|
|
|
6/15/2017
|
|
|
|
|
|
|
|
|
25,000
|
(c)
|
|
$
|
16.11
|
|
|
|
6/15/2017
|
|
Charles F. Dunleavy
|
|
|
16,875
|
(a)
|
|
|
|
|
|
$
|
6.70
|
|
|
|
1/12/2010
|
|
|
|
|
39,375
|
(a)
|
|
|
|
|
|
$
|
20.00
|
|
|
|
1/12/2010
|
|
|
|
|
18,000
|
(a)
|
|
|
|
|
|
$
|
6.70
|
|
|
|
3/23/2011
|
|
|
|
|
12,000
|
(a)
|
|
|
|
|
|
$
|
20.00
|
|
|
|
3/23/2011
|
|
|
|
|
18,750
|
(b)
|
|
|
|
|
|
$
|
20.00
|
|
|
|
9/30/2011
|
|
|
|
|
22,500
|
(a)
|
|
|
|
|
|
$
|
6.70
|
|
|
|
9/30/2012
|
|
|
|
|
22,500
|
(a)
|
|
|
|
|
|
$
|
17.00
|
|
|
|
9/30/2013
|
|
|
|
|
13,600
|
(b)
|
|
|
3,400
|
(b)
|
|
$
|
17.90
|
|
|
|
9/30/2013
|
|
|
|
|
15,000
|
(a)
|
|
|
|
|
|
$
|
14.50
|
|
|
|
11/22/2014
|
|
|
|
|
5,400
|
(b)
|
|
|
8,100
|
(b)
|
|
$
|
11.90
|
|
|
|
6/17/2015
|
|
|
|
|
8,000
|
(b)
|
|
|
32,000
|
(b)
|
|
$
|
13.80
|
|
|
|
6/16/2016
|
|
|
|
|
|
|
|
|
42,000
|
(b)
|
|
$
|
16.11
|
|
|
|
6/15/2017
|
|
Mark R. Draper
|
|
|
10,000
|
(a)
|
|
|
|
|
|
$
|
12.80
|
|
|
|
9/15/2014
|
|
|
|
|
12,000
|
(b)
|
|
|
8,000
|
(b)
|
|
$
|
15.00
|
|
|
|
9/15/2014
|
|
|
|
|
5,400
|
(b)
|
|
|
8,100
|
(b)
|
|
$
|
11.90
|
|
|
|
6/17/2015
|
|
|
|
|
544
|
(b)
|
|
|
817
|
(b)
|
|
$
|
12.60
|
|
|
|
11/10/2015
|
|
|
|
|
7,455
|
(b)
|
|
|
11,183
|
(b)
|
|
$
|
12.60
|
|
|
|
11/10/2015
|
|
|
|
|
6,000
|
(b)
|
|
|
24,000
|
(b)
|
|
$
|
13.80
|
|
|
|
6/16/2016
|
|
|
|
|
15,000
|
(a)
|
|
|
|
|
|
$
|
16.11
|
|
|
|
6/15/2017
|
|
|
|
|
|
|
|
|
35,000
|
(b)
|
|
$
|
16.11
|
|
|
|
6/15/2017
|
|
Herbert T. Nock
|
|
|
10,000
|
(a)
|
|
|
|
|
|
$
|
14.02
|
|
|
|
1/10/2018
|
|
|
|
|
|
|
|
|
15,000
|
(b)
|
|
$
|
14.02
|
|
|
|
1/10/2018
|
|
John A. Baylouny(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
These options were fully vested on the grant date. |
|
(b) |
|
These options vest over a five-year period of employment. |
|
(c) |
|
These options vest in one year, on the first anniversary of the
grant date. |
|
(d) |
|
Mr. Baylouny resigned from the Company effective
September 4, 2007 and all his unvested option awards were
forfeited. |
21
2008
Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise ($)
|
|
|
Dr. George W. Taylor
|
|
|
|
|
|
$
|
|
|
Charles F. Dunleavy
|
|
|
|
|
|
|
|
|
Mark R. Draper
|
|
|
|
|
|
|
|
|
Herbert T. Nock
|
|
|
|
|
|
|
|
|
John A. Baylouny
|
|
|
17,500
|
|
|
|
55,895
|
|
Potential
Payments Upon Termination of Employment or Change in
Control
The following information and table set forth the amount of
payments to each of our named executive officers in the event of
a termination of employment.
Assumptions and General Principles. The
following assumptions and general principles apply with respect
to the following table and any termination of employment of a
named executive officer:
|
|
|
|
|
The amounts shown in the table assume that each named executive
officer, other than Mr. Baylouny, was terminated on
April 30, 2008. Accordingly, the table reflects amounts
earned as of April 30, 2008 and includes estimates of
amounts that would be paid to the named executive officer upon
the occurrence of a termination or change in control. The actual
amounts to be paid to a named executive officer can only be
determined at the time of an actual termination or change in
control.
|
|
|
|
Mr. Baylouny resigned from the Company effective
September 4, 2007. No severance payments were made to
Mr. Baylouny upon his resignation.
|
|
|
|
A named executive officer may exercise any stock options that
are exercisable prior to the date of termination and any
payments related to these stock options are not included in the
table because they are not severance payments.
|
Termination by Company without Cause; Termination by
Executive with Good Reason. Our employment
contracts with Dr. Taylor and Mr. Dunleavy provide for
severance pay equal to one year of base salary payable in one
lump sum within 30 days of termination or in 12 equal
monthly installments, and the continuation of health care
benefits for 12 months in the event that employment is
terminated by the Company other than for cause or by the
executive with good reason.
Our employment contract with Mr. Draper provides for
severance pay equal to 25% of his base salary that is then in
effect. If we give Mr. Draper less than one years
written notice of termination, he is entitled to receive his
base salary for any unexpired portion of that one-year notice
period.
Our employment contract with Mr. Nock provides for
severance pay based on a portion of his base salary then in
effect. If the termination occurs within the first year, the
severance payment will equal three months base salary; if the
termination occurs during years two or three, the severance
payment will equal six months base salary; if the termination
occurs after the three-year anniversary of his start date of
January 3, 2008, the severance payment will equal
12 months base salary.
Termination by Company with Cause; Termination by Executive
without Good Reason. Under our employment
contracts with the named executive officers, upon termination
for cause or at the executives election without good
reason, the executive is entitled to the base salary and
benefits due and owing to the executive as of the date of
termination.
Change in Control. Our employment contract
with Mr. Draper provides for severance pay in the event of
termination in connection with a change in control transaction.
Mr. Drapers employment contract provides for a
payment equal to 25% of his base salary, plus if we give
Mr. Draper less than one years written notice
22
of termination, he is entitled to receive his base salary for
any unexpired portion of that one-year notice period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. George W.
|
|
|
Charles F.
|
|
|
Mark R.
|
|
|
Herbert T.
|
|
Event
|
|
Taylor
|
|
|
Dunleavy
|
|
|
Draper
|
|
|
Nock
|
|
|
Termination by Company without Cause or by Executive with
Good Reason and Change in Control with Termination(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance payment
|
|
$
|
410,000
|
|
|
$
|
255,000
|
|
|
$
|
495,500
|
(a)(b)
|
|
$
|
52,500
|
|
Continued healthcare benefits
|
|
|
9,384
|
|
|
|
13,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
419,384
|
|
|
$
|
268,320
|
|
|
$
|
495,500
|
|
|
$
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Based on a buying rate of $1.982 for £1 on April 30,
2008. |
|
(b) |
|
The amount shown for Mr. Draper is the sum of
(i) $99,100, which is 25% of his base salary in effect on
April 30, 2008 and (ii) $396,400, which is 100% of his
base salary in effect on April 30, 2008, assuming
termination on April 30, 2008 without the notice required
by his employment agreement. |
|
(c) |
|
The employment agreements for Mr. Taylor and
Mr. Dunleavy do not contain change of control provisions;
therefore, the amounts shown are the same as for termination
without cause. |
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management. Based on this review and discussion, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
this Proxy Statement.
By the Compensation Committee of the Board of Directors of Ocean
Power Technologies, Inc.
Eric A. Ash, Chairman
Seymour S. Preston III
Notwithstanding contrary statements set forth in any of our
previous filings under the Securities Act or the Exchange Act
that might incorporate future filings, including this Proxy
Statement, the Compensation Committee report and the Audit
Committee Report set forth below shall not be incorporated by
reference into such future filings.
Compensation
Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board
of directors or compensation committee, or other committee
serving an equivalent function, of any entity that has one or
more executive officers who serve as members of our Board of
Directors or our Compensation Committee. None of the members of
our Compensation Committee has ever been our employee.
23
Equity
Compensation Plan Information
The following table summarizes the total number of outstanding
options and shares available for other future issuances of
options under all of our equity compensation plans as of
April 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
Number of Shares to
|
|
|
|
|
|
Available for Future
|
|
|
|
be Issued Upon
|
|
|
|
|
|
Issuance Under the
|
|
|
|
Exercise of
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
Outstanding
|
|
|
Exercise Price of
|
|
|
Plan (Excluding
|
|
|
|
Options, Warrants
|
|
|
Outstanding Options,
|
|
|
Shares in First
|
|
Plan Category
|
|
and Rights
|
|
|
Warrants and Rights
|
|
|
Column)
|
|
|
Equity compensation plans approved by stockholders
|
|
|
1,445,302
|
|
|
$
|
14.61
|
|
|
|
504,590
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Report of
Audit Committee
The Audit Committee has reviewed the Companys audited
consolidated financial statements for the fiscal year ended
April 30, 2008 and discussed them with the Companys
management and the Companys independent registered public
accounting firm.
The Audit Committee has also received from, and discussed with,
the Companys independent registered public accounting firm
various communications that the Companys independent
registered public accounting firm is required to provide to the
Audit Committee, including the matters required to be discussed
by Statement on Auditing Standards No. 61, as amended,
Communications with Audit Committees, as adopted by the
Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received the written disclosures and the
letter from the Companys independent registered public
accounting firm required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees, as adopted by the Public Company Accounting
Oversight Board in Rule 3600T, and has discussed with the
Companys independent registered public accounting firm
their independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Companys Board of Directors
that the audited consolidated financial statements be included
in the Companys Annual Report on
Form 10-K
for the year ended April 30, 2008.
By the Audit Committee of the Board of Directors of Ocean Power
Technologies, Inc.
Seymour S. Preston III, Chairman
Eric A. Ash
Paul F. Lozier
Other
Business
As of the date of this Proxy Statement, the Board of Directors
knows of no business to be presented at the Meeting other than
as set forth herein. If other matters properly come before the
Meeting, the persons named as proxies will vote on such matters
in their discretion.
Stockholder
Proposals for 2009 Annual Meeting
In order for a stockholder proposal, including a director
nomination, to be considered for inclusion in our proxy
statement for the 2009 annual meeting of stockholders, the
written proposal must be received at our principal executive
offices on or before May 1, 2009. The proposal should be
addressed to Secretary, Ocean Power Technologies, Inc., 1590
Reed Road, Pennington, New Jersey 08534. The proposal must
comply with SEC regulations regarding the inclusion of
stockholder proposals in company-sponsored proxy materials.
24
In accordance with our bylaws, a stockholder who wishes to
present a proposal for consideration at the 2009 annual meeting
must deliver a notice of the matter the stockholder wishes to
present to our principal executive offices in Pennington, New
Jersey, at the address identified in the preceding paragraph,
not less than 90 nor more than 120 days prior to the first
anniversary of the date of this years Meeting.
Accordingly, any notice given by or on behalf of a stockholder
pursuant to these provisions of our bylaws (and not pursuant to
Rule 14a-8
of the SEC) must be received no earlier than June 4, 2009,
and no later than July 4, 2009. The notice should include
(i) a brief description of the business desired to be
brought before the 2009 annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the
name and record address of the stockholder, (iii) the class
or series and number of shares of capital stock of the Company
beneficially owned or owned of record by the stockholder,
(iv) a description of all arrangements or understandings
between the stockholder and any other person or persons
(including their names) in connection with the proposal and any
material interest of the stockholder in such business and
(v) a representation that the stockholder intends to appear
in person or by proxy at the 2009 annual meeting to bring such
business before the meeting.
Annual
Report
Our 2008 Annual Report on
Form 10-K
is concurrently being mailed to stockholders. The Annual Report
contains our consolidated financial statements and the report
thereon of KPMG LLP, independent registered public accounting
firm. Stockholders may obtain an additional copy of our
Annual Report on
Form 10-K
filed with the Securities and Exchange Commission for the year
ended April 30, 2008, without charge, by writing to Ocean
Power Technologies, Inc., 1590 Reed Road, Pennington, NJ
08534.
BY ORDER OF THE BOARD OF DIRECTORS
Charles F. Dunleavy
Secretary
Dated: August 28, 2008
IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING FORM OF PROXY IN THE ENCLOSED
ENVELOPE.
25
. NNNNNNNNNNNN NNNNNNNNNNNNNNN C123456789 000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) 000000000.000000 ext
000000000.000000 ext ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 NNNNNNNNN ADD 6 Using a black ink pen, mark
your votes with an X as shown in X this example. Please do not write outside the designated areas.
Annual Meeting Proxy Card 3 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals The Board of Directors recommends a vote FOR
the director nominees and FOR Proposal 2. 1. Election of Directors: For Withhold For Withhold
For Withhold + 01 Seymour S. Preston III* 02 Paul F. Lozier* 03 Thomas J. Meaney* 04 -
George W. Taylor* 05 Charles F. Dunleavy* * Each to serve for a one-year term expiring at the
2009 annual meeting of stockholders. For Against Abstain 2. Ratify the selection of KPMG LLP as
the independent registered public accounting firm for the fiscal year ending April 30, 2009. B
Non-Voting Items Change of Address Please print new address below. Meeting Attendance Mark
box to the right if you plan to attend the annual meeting. C Authorized Signatures This section
must be completed for your vote to be counted. Date and Sign Below NOTE: Sign exactly as your
name(s) appears on your stock certificate(s). If the shares are held jointly, each holder should
sign. When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature
within the box. Signature 2 Please keep signature within the box. C 1234567890 J N T MR A
SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND NNNNNNN5 1 C V 0 1 9 0 1 2 1 MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND + <STOCK#> 00Y00B |
3 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE. 3 Proxy OCEAN POWER TECHNOLOGIES, INC. PROXY FOR COMMON STOCK Annual Meeting of
Stockholders, October 2, 2008 THIS PROXY IS SOLICITED ON BEHALF OF OCEAN POWER TECHNOLOGIES, INC.
BY ITS BOARD OF DIRECTORS The undersigned revokes all previous proxies, acknowledges receipt of
the notice of the annual meeting of stockholders to be held on October 2, 2008, the proxy statement
and all other proxy materials and appoints George W. Taylor and Charles F. Dunleavy, and each of
them, the proxy of the undersigned, with full power of substitution, to vote all shares of common
stock of Ocean Power Technologies, Inc. which the undersigned is entitled to vote, either on his,
her or its own behalf or on behalf of any entity or entities, at the annual meeting of the
stockholders of the company to be held on October 2, 2008 at 10:00 a.m. local time at the companys
corporate offices located at 1590 Reed Road, Pennington, New Jersey, 08534, USA, and at any
adjournment or postponement thereof, with the same force and effect as the undersigned might or
could do if personally present thereat. The shares represented by this proxy shall be voted in the
manner set forth on the reverse side. The board of directors recommends a vote FOR the director
nominees listed on the reverse side and a vote FOR the other proposal listed on the reverse side.
This proxy, when properly executed, will be voted as specified on the reverse side. If no
specification is made, this proxy will be voted in favor of the election of the director nominees
listed on the reverse side and for the other proposal listed on the reverse side. The proxies are
authorized to vote, in their discretion, upon such other matter or matters that may properly come
before the meeting or any adjournment(s) or postponement(s) thereof. SEE REVERSE SIDE CONTINUED
AND TO BE VOTED ON REVERSE SIDE SEE REVERSE SIDE |