UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange
Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
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Preliminary
Proxy Statement |
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Confidential,
for Use of the Commission Only (as permitted by
Rule14a-6(e)(2)) |
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Definitive
Proxy Statement |
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| ☐ |
Definitive
Additional Materials |
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Soliciting
Material under § 240.141-12 |
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):
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☒ |
No
fee required. |
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Fee
paid previously with preliminary materials. |
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Fee
computed on table in exhibit required by Item 25(b) per Exchange
Act Rules 14a-6(i)(1) and 0-11. |
28
Engelhard Drive, Suite B
Monroe
Township, NJ 08831
Tel:
609-730-0400 — Fax: 609-730-0404
October
18, 2022
Dear
Shareholder:
On
behalf of the Board of Directors, I wish to express our thanks and
appreciation for your continued support and investment in Ocean
Power Technologies, Inc. (“OPT” or the “Company”).
Our
role as Independent Directors is to represent you, the
shareholders, and to provide a strong foundation of governance for
the Company’s leadership. Leaning on our collective experience and
skills, the Board of Directors provides strategic guidance,
encourages innovation in ways that will accelerate the Company’s
growth, and ensures accountability at every level of the
organization.
The
OPT Board of Directors is committed to providing oversight and
governance to the Company in ways that will create long-term value
for shareholders. We believe that our decisions to invest in both
organic and inorganic growth has positioned OPT to better meet the
needs of a rapidly developing global marketplace. Our acquisition
of Marine Advanced Robotics is an excellent example of just the
type of inorganic growth business that aligns well with our current
Power as a Service and Data as a Service offerings. In addition, we
believe there is substantial and growing global need for precisely
the type of Maritime Domain Awareness Solution that OPT has
developed. Similarly, we seek to meet the power needs of the
offshore industry through the power generation of the Company’s
current products and through power platform development projects
such as the Mass-on-Spring Wave Energy Converter (MOSWEC),
scheduled for its initial prototype deployment this year. Finally,
we see the role of Consulting Services, through our acquisition of
3Dent, continuing to grow over time, as OPT’s experienced
engineering team finds innovative ways to help customers develop
innovative engineering solutions and mitigate some of their most
significant risks.
We
are asking OPT shareholders to vote in favor of the important
proposals set out in our proxy that we believe will be essential to
advancing our business plan. As part of your consideration, we
offer some reasons for your “FOR” vote:
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● |
We
ask that you vote For All to approve our slate of Board of
Directors. Joining me on this year’s slate of director nominees
as independent directors are: Natalie Lorenz-Anderson, Clyde
Hewlett, Diana Purcel, and Pete Slaiby - all of whom bring
substantial experience in mergers and acquisitions, offshore
energy, safety, finance, technology, cybersecurity, government
contracting and governance. In addition, our President and Chief
Executive Officer, Philipp Stratmann, will continue to serve with
us on our Board of Directors. The contributions of the Board of
Directors over this past year toward enhancing governance,
strategic planning, and strengthening our leadership team have been
invaluable. The Board enthusiastically recommends a ‘YES’ vote
on our slate of six candidates for the OPT Board. |
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● |
We
are asking you to vote in favor of amending our 2015 Omnibus
Incentive Plan (the “2015 Plan”) to increase the number of shares
of common stock available to grant under the 2015 Plan to ensure
adequate shares will be available for future grants. The
majority of the shares in the 2015 Plan used for management
compensation are performance-based and therefore, are not
guaranteed. These shares only vest if the Company meets the
performance criteria set out in the vesting schedule. The
management team’s long term incentive compensation comes in the
form of shares in the company. We believe that long term
incentive-based compensation that increases the management team’s
ownership in the Company aligns pay with performance and
shareholder value. This increase in shares available under the 2015
Plan is necessary in order to meet the Company’s stock ownership
and holdings guidelines, increasing stock ownership over time and
meeting the goal of aligning management’s interests with that of
shareholders. |
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We
ask that you vote For ratifying the approval of EisnerAmper, LLC as
our independent registered public accounting firm for fiscal
2023. |
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We
ask that you vote For on “Say on Pay”. We have listened to
shareholder feedback and worked to align our short term and long
term incentive compensation plans directly with performance goals.
Please look at our compensation discussion and analysis section of
the proxy and approve our executive officer
compensation. |
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● |
We
ask that you vote to approve the frequency of future advisory votes
on our executive compensation on an annual basis (one year). We
have elected to make this an annual approval process for our
shareholders, even though we could choose to recommend the “Say on
Pay” vote every two or three years. |
In
closing, we wish to thank all of our stakeholders, and acknowledge
how much we appreciate and value the ability for OPT employees to
continue to innovate and deliver superior products and solutions.
Your vote is very important to us, and we ask that each of you take
the time to vote your shares in favor of these important
items.
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Sincerely, |
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/s/
TERENCE J. CRYAN |
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Terence
J. Cryan |
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Chairman
of the Board of Directors |
OCEAN
POWER TECHNOLOGIES, INC.
28
Engelhard Drive, Suite B
Monroe
Township, NJ 08831
Notice
of 2022 Annual Meeting of Shareholders
NOTICE
IS HEREBY GIVEN that the 2022 Annual Meeting of Shareholders of
Ocean Power Technologies, Inc., a Delaware corporation, will be
held in virtual format only on:
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Date: |
December
14, 2022 |
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Time: |
9:00
a.m. Eastern Standard Time |
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Website: |
www.cesonlineservices.com/optt22_vm |
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Purposes: |
1. |
To
elect six persons to our Board of Directors; |
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2. |
To
approve an amendment to the 2015 Omnibus Incentive Plan (the “2015
Plan”) to increase the number of shares of our common stock
available for grant under the 2015 Plan from 3,132,036 to 4,382,036
to ensure that adequate shares will be available under the 2015
Plan for future grants and to amend the aggregate number of shares
available for incentive awards; |
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3. |
To
consider and take action on the ratification of the selection of
EisnerAmper LLP as our independent registered public accounting
firm for fiscal year 2023; |
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4. |
To
vote on an advisory resolution to approve our executive officer
compensation; |
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5. |
To
vote on an advisory resolution to approve the frequency of future
advisory votes on our executive compensation; and |
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Record Date: |
The
Board of Directors has fixed the close of business on October 18,
2022 as the record date for determining shareholders entitled to
notice of, and to vote at, the meeting or any adjournment or
postponement of the meeting. |
These
items are fully discussed in the following pages, which are made
part of this Notice of 2022 Annual Meeting of Shareholders. We ask
you to vote your shares as promptly as possible.
You
may vote your shares by telephone, via the Internet or by mail.
Shareholders of record who participate at the meeting may vote
electronically, even if they already voted their shares by
telephone, via the Internet or by returning a proxy card or voting
instruction card. Your vote is very important to us, and we
encourage each shareholder to vote.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 14,
2022:
Copies
of this proxy statement and our annual report for the fiscal year
ended April 30, 2022 are available by visiting the following
website:
http://www.oceanpowertechnologies.com.
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FOR
THE BOARD OF DIRECTORS |
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/s/
Nicholas Day |
| |
Nicholas
Day |
| Monroe
Township, NJ |
General
Counsel and Secretary |
| October
18, 2022 |
|
TABLE
OF CONTENTS
OCEAN
POWER TECHNOLOGIES, INC.
28
Engelhard Drive, Suite B
Monroe
Township, NJ 08831
PROXY STATEMENT
Annual
Meeting of Shareholders to be held on December 14,
2022
GENERAL
INFORMATION
This
proxy statement is furnished to shareholders of Ocean Power
Technologies, Inc., a Delaware corporation (the “Company”), in
connection with the solicitation by our Board of Directors of
proxies for use at our 2022 Annual Meeting of Shareholders (the
“Meeting”). The Meeting is scheduled to be held on Wednesday,
December 14, 2022, at 9:00 a.m. Eastern Standard Time, in virtual
format only at www.cesonlineservices.com/optt22_vm. We anticipate
that this proxy statement and the enclosed form of proxy will be
mailed to shareholders on or about October 22, 2022.
At
the Meeting, shareholders will be asked to vote upon: (1) the
election of six directors; (2) an amendment to the 2015 Plan to
increase the number of shares of our common stock available for
grant under the 2015 Plan from 3,132,036 to 4,382,036 to ensure
that adequate shares will be available under the 2015 Plan for
future grants and to amend the aggregate number of shares available
for incentive awards; (3) the ratification of the selection of our
independent registered public accounting firm for fiscal year 2023;
(4) an advisory resolution to approve our executive officer
compensation; (5) an advisory vote to approve the frequency of
future advisory votes on our executive compensation; and (6) 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 October 18, 2022 has been fixed as the record
date (the “Record Date”) for the determination of shareholders
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 55,921,880 shares of common stock. You may vote your shares
by completing the enclosed proxy card and mailing it in the
envelope provided or by telephone or internet as instructed on the
proxy card. Shareholders 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 electronically (given the virtual
nature of the Meeting) or by proxy at the Meeting 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 non-votes will
count as present for the purpose of determining the presence of a
quorum.
Assuming
the presence of a quorum at the Meeting, the following votes are
required for approval of the following P:
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Directors
are elected by a plurality of the votes cast (Proposal 1). This
means that the six nominees with the highest number of “FOR” votes
will be elected as directors. Shareholders may not cumulate their
votes. If the shares you own are held in “street name” by a bank or
brokerage firm, that bank or brokerage firm, as the record holder
of your shares, is required to vote your shares according to your
instructions. If you do not instruct your bank or broker how to
vote with respect to this item, your bank or broker may not vote
with respect to the election of directors. In tabulating the
votes, withheld votes for the election of one or more nominees and
broker non-votes, if any, are not treated as votes cast, and
therefore will have no effect on the outcome of the
vote. |
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The
proposal to approve the amendment to the 2015 Plan (Proposal 2),
the proposal to ratify the selection of our independent registered
public accounting firm (Proposal 3), the advisory resolution to
approve our executive officer compensation (Proposal 4), and the
advisory vote to approve the frequency of future advisory votes on
our executive compensation (Proposal 5) each require the
affirmative vote of the holders of a majority of the shares of our
common stock present or represented at the Meeting and voting on
the proposal. Abstentions and broker non-votes are not considered
votes cast and therefore will have no effect on the outcome of the
vote on these proposals. |
Our
Board of Directors has retained Morrow Sodali LLC, an independent
proxy solicitation firm, to assist it in soliciting proxies, for
approximately $40,000. Proxies may be solicited by mail, telephone
or other electronic means.
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
“Proposal One - Election of Directors,” FOR the amendment to
the 2015 Plan, FOR the ratification of the selection of our
independent registered public accounting firm, FOR the
approval of the advisory resolution to approve our executive
compensation, and the ONE YEAR option on the frequency of
future advisory votes on our executive compensation.
Broker
Non-Votes
A
“broker non-vote” occurs when a broker, bank, or other holder of
record holding shares for a beneficial owner does not vote on a
particular proposal because that holder (i) has not received
instructions from the beneficial owner and (ii) does not have
discretionary voting power for that particular item.
If
you are a beneficial owner and you do not give instructions to your
broker, bank, or other holder of record, such holder of record will
be entitled to vote the shares with respect to “routine” items but
will not be permitted to vote the shares with respect to
“non-routine” items (those shares are treated as “broker
non-votes”). If you are a beneficial owner, your broker, bank, or
other holder of record has discretion to vote your shares on the
proposal to ratify the appointment of EisnerAmper LLP as our
independent registered public accounting firm if the holder of
record does not receive voting instructions from you. However, such
holder of record may not vote your shares on the election of
directors, the amendment to the 2015 Plan, the advisory resolution
regarding executive compensation or the advisory vote on the
frequency of future advisory votes on our executive compensation
without your voting instructions on those proposals. Accordingly,
without your voting instructions on those proposals, a broker
non-vote will occur.
We
encourage you to provide instructions to your bank, brokerage firm,
or other nominee by voting your proxy. This action ensures that
your shares will be voted in accordance with your wishes at the
Meeting.
Revocation
of Proxies
Any
proxy given pursuant to this solicitation may be revoked by a
shareholder 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 electronically
at the Meeting.
Solicitation
of Proxies
We
will bear the cost of this solicitation, including amounts paid to
banks, brokers, proxy solicitors, 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 shareholders of record and certain other beneficial
owners of common stock, and by our officers and other regular
employees (at no additional compensation). Our officers, employees
and proxy solicitors may also solicit proxies from shareholders by
personal contact, by telephone, or by other means if necessary to
ensure sufficient representation at the Meeting. Computershare
Investor Services has been retained to receive and tabulate
proxies. Morrow Sodali LLC has been retained to assist in
soliciting proxies.
Attending
a Virtual Annual Meeting
Due
to the continuing public health concerns regarding the COVID-19
pandemic, and to provide our shareholders with broader access to
the meeting, we are holding the Annual Meeting in a virtual only
meeting format to support the health and well-being of our
shareholders, directors, officers and employees. You will not be
able to attend the Annual Meeting at a physical location. In order
to attend, you must register in advance at
www.cesonlineservices.com/optt22_vm prior to the deadline of
December 13, 2022 at 9:00 a.m. Eastern Time.
Registering
to Attend the Annual Meeting — Shareholders of Record: If you were
a shareholder of record as of the close of business on the record
date, you may register to attend the Annual Meeting by accessing
www.cesonlineservices.com/optt22_vm. Please have your proxy card
containing your control number available and follow the
instructions to complete your registration request. After
registering, you will receive a confirmation email with a link and
instructions for accessing the Annual Meeting. Requests to register
to participate in the Annual Meeting must be received no later than
9:00 a.m. Eastern Time on Tuesday, December 13, 2022.
If
you do not have your proxy card, you may still register to attend
the Annual Meeting by accessing
www.cesonlineservices.com/optt22_vm, but you will need to provide
proof of ownership of shares of our common stock as of the record
date during the registration process. Such proof of ownership may
include a copy of your proxy card received either from the Company
or a statement showing your ownership as of the record
date.
Registering
to Attend the Annual Meeting — Beneficial Owners: If you were the
beneficial owner of shares (that is, you held your shares in street
name through an intermediary such as a broker, bank or other
nominee) as of the record date, you may register to attend the
Annual Meeting by accessing www.cesonlineservices.com/optt22_vm and
providing evidence during the registration process that you
beneficially owned shares of our common stock as of the record
date, which may consist of a copy of the voting instruction form
provided by your broker, bank or other nominee, an account
statement or a letter or legal proxy from such broker, bank or
other nominee. After registering, you will receive a confirmation
email prior to the Annual Meeting with a link and instructions for
entering the virtual Annual Meeting.
Although
the meeting webcast will begin at 9:00 a.m. Eastern Time on
December 14, 2022, we encourage you to access the meeting site
prior to the start time to allow ample time to log into the meeting
webcast and test your computer system. Accordingly, the Annual
Meeting site will first be accessible to registered shareholders
beginning at 8:30 a.m. Eastern Time on December 14, 2022, the day
of the meeting. All shareholders who register to attend the Annual
Meeting will receive an email prior to the Annual Meeting
containing the contact details of technical support in the event
they encounter difficulties accessing the virtual meeting or during
the meeting. Shareholders are encouraged to contact technical
support if they encounter any technical difficulties with the
meeting webcast.
Conducting
a Virtual Annual Meeting
The
Annual Meeting will be conducted in a virtual-only meeting format.
Only shareholders who entered the Annual Meeting by following the
instructions under ‘Attending a Virtual Annual Meeting’ and
successfully pre-registering, may vote and ask questions at the
Annual Meeting. Questions by those shareholders may be submitted in
real time during the Annual Meeting by using the ‘Ask a
Question’ box available on the virtual meeting website at
www.cesonlineservices.com/optt22_vm.
If
you have any questions or need assistance in voting your shares,
please contact our proxy solicitor, Morrow Sodali LLC, at (800)
662-5200, or via email at
OPTT@investor.morrowsodali.com
PROPOSAL ONE
ELECTION
OF DIRECTORS
Our
director nominees bring a variety of qualifications, including
unique backgrounds, diverse perspectives, skills and experiences to
the Board. We believe that an effective Board should be composed of
members who collectively provide a balance of skills, perspectives
and professional experiences that are relevant to the governance of
our Company and to our strategic goals and direction.
As
part of our governance practices, the Nominating and Corporate
Governance Committee identified the set of skills, knowledge,
capabilities and experiences desired to oversee the Company’s
strategy, manage risk, and meet the organization’s current and
future challenges. As part of this process, we applied those
desired attributes to our slate of independent director candidates.
The following skill matrix summarizes those results:
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Leadership |
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Governance |
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C-Level
/ Mgmt
Experience
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Accounting
/ Finance |
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Corporate
Governance |
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SEC
Regulatory |
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Risk
Mgmt
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H&S/
E&S
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| Director |
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| Terence J.
Cryan |
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● |
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● |
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● |
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| Diana G.
Purcel |
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● |
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● |
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● |
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● |
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● |
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| Clyde W.
Hewlett |
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● |
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● |
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● |
| Peter E.
Slaiby |
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● |
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● |
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● |
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● |
| Natalie
Lorenz-Anderson |
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● |
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● |
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● |
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|
Industry Experience |
|
Technology/ IT / Cyber |
|
Commercial Sales / Mkting |
|
Compensation / HR |
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Government Contracting |
|
International Operations |
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Mergers & Acquisitions |
| Director |
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| Terence J.
Cryan |
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● |
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● |
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| Diana G.
Purcel |
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● |
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● |
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● |
| Clyde W.
Hewlett |
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● |
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● |
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● |
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● |
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● |
| Peter E.
Slaiby |
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● |
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● |
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● |
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● |
| Natalie
Lorenz-Anderson |
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● |
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● |
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● |
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H&S
= Health and Safety
E&S
= Environmental and Sustainability
The
six persons listed in the table below have been designated by the
Board of Directors as nominees for election as directors with terms
expiring at our 2023 Annual Meeting of Shareholders. 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
Shareholders.
Terence
J. Cryan has been a member of our Board of Directors since October
2012 and was our lead independent director from October 2013 to
June 2014 when he became our Chairman of the Board. Philipp
Stratmann became a Director and assumed the position of President
and Chief Executive Officer in June 2021. Clyde W. Hewlett, Diana
G. Purcel, and Peter E. Slaiby joined our Board of Directors in
December 2020. Natalie Lorenz-Anderson joined our Board of
Directors in December 2021.
Unless
a contrary direction is indicated, it is intended that proxies
received will be voted for the election as directors of the six
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.
Board
Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES.
All
of the nominees for election as directors bring to our Board of
Directors executive leadership experience from their service as
executives and/or directors of our Company and/or other entities.
The biography of each of the nominees below contains information
regarding the person’s service as a director, business experience,
director positions held currently or at any time during the last
five years, and the experiences, qualifications, attributes and
skills that caused the Nominating and Corporate Governance
Committee and our Board of Directors to determine that the person
should serve as a director, given our business, strategic
objectives and structure.
|
Name |
|
Age |
|
Position(s)
with the Company |
|
Served
as Director From |
| Terence
J. Cryan |
|
60 |
|
Chairman
of the Board |
|
2012 |
| Philipp
Stratmann |
|
43 |
|
President,
Chief Executive Officer and Director |
|
2021 |
| Clyde
W. Hewlett |
|
68 |
|
Independent
Director |
|
2020 |
| Diana
G. Purcel |
|
56 |
|
Independent
Director |
|
2020 |
| Peter
E. Slaiby |
|
64 |
|
Independent
Director |
|
2020 |
| Natalie
Lorenz-Anderson |
|
59 |
|
Independent
Director |
|
2021 |
Terence
J. Cryan has been a member of our Board of Directors since
October 2012 and Chairman of the board since June 2014. Mr. Cryan
was our lead independent director from October 2013 to June 2014
when he became Chairman of the Board. Mr. Cryan currently serves as
a Managing Director of MACCO Restructuring Group, LLC, which
provides qualified interim leadership and advice to stakeholders
across a broad spectrum of business sectors. Since August 2017, Mr.
Cryan has served as the Chairman of the Board of Westwater
Resources, Inc. Mr. Cryan has served on the boards of directors of
a number of other publicly traded companies including Uranium
Resources, Inc. from 2006 to 2016; Global Power Equipment Group
Inc. from 2008 to 2017; Superior Drilling Products, Inc. from May
2014 to 2016; Gryphon Gold Corporation from 2009 to 2012; and The
Providence Service Corporation from 2009 to 2011. Mr. Cryan served
as President and CEO of Global Power Equipment Group Inc., from
March 2015 until July 2017. From September 2012 until April 2013,
Mr. Cryan served as interim President and CEO of Uranium Resources,
Inc., and was elected as Chairman of the Board of Directors of
Uranium Resources, Inc. in June 2014 and served until March 2016.
Mr. Cryan earned his Bachelor of Arts degree from Tufts University
in 1983 and a Master of Science degree in Economics from The London
School of Economics in 1984. In December 2014, Terence Cryan was
named a Board Leadership Fellow by the National Association of
Corporate Directors. We believe Mr. Cryan’s qualifications to sit
on our Board of Directors include his significant experience in
financial matters, his prior board and executive management
experience at other companies, his broad energy industry background
and his extensive expertise in financings, mergers and
acquisitions.
Philipp
Stratmann has served as our President, Chief Executive Officer
and a member of the Board of Directors since June 2021. Prior to
this, Mr. Stratmann served as Vice President – Global Business
Development of the Company since 2019. Prior to that, he was Vice
President, Biofuels for Velocys, which he joined in 2015 as
Business Development Director. He previously served as General
Manager Global Development and West Africa for InterMoor and has
held leadership positions with Acteon Group and Ernst & Young,
in addition to experience with VT Group and Shell. He is a graduate
of the United Kingdom’s University of Southampton, where he
received his Engineering Doctorate and his Master of Engineering
degree in Ship Science. We believe Mr. Stratmann’s significant
leadership experience in the energy and maritime industries
qualifies him to serve on our Board of Directors.
Clyde
W. Hewlett has served on the Board of Directors since December
2020. Mr. Hewlett has over 40 years of experience in offshore
engineering design, manufacturing, and operations. Mr. Hewlett has
served on the Board of Directors of Seismic City, Inc. since April
2000. From 2015 until 2019, Mr. Hewlett served as Chief Operating
Officer (COO) of Oceaneering International, Inc., a global provider
of engineered services and products to the offshore energy industry
as well as the defense, entertainment, and aerospace industries.
Prior to his service as COO, Mr. Hewlett was the Senior Vice
President for Projects (from 2007 to 2015) and a Vice President and
Project Manager (1988 to 2007) with Oceaneering International, Inc.
Prior to joining Oceaneering, Mr. Hewlett worked in various project
engineering and project management roles with Vetco Gray, Inc.
(from 1987 to 1988), with Hughes Offshore (from 1985 to 1987), with
CanOcean Resources, Ltd. (from 1979 to 1984) and with Esso Canada
(from 1978 to 1979). Mr. Hewlett obtained his Bachelor of
Engineering in Mechanical Engineering from Memorial University of
Newfoundland, Canada in 1978. We believe that Mr. Hewlett’s
significant engineering, manufacturing and operational experience
in the offshore environment qualifies him to serve on our Board of
Directors.
Diana
G. Purcel has served on the Board of Directors since December
2020. Ms. Purcel has 20 years of experience as a Chief Financial
Officer (CFO) including 17 years with small cap publicly traded
companies. Since April 2022, Ms. Purcel has served on the Board of
Directors of PetMeds Express, Inc., as well as on their
Compensation Committee, Governance and Nominating Committee and
Audit Committee. In July 2022, she was named Chair of the Audit
Committee. Ms. Purcel currently serves on the Board of Directors
for the Animal Humane Society (since 2017), and previously served
on the Board of Directors of Now Boarding (from 2019 to 2021 when
the company was sold) and for Multicultural Foodservice and
Hospitality Alliance (from 2005 to 2008), including service as the
Chair of its Audit Committee. From 2018 until 2019, Ms. Purcel
served as Executive Vice President and CFO for iMedia Brands, Inc.
(formerly Evine Live, Inc.), an interactive video and digital
commerce company. From 2014 until 2017, Ms. Purcel served as the
CFO for Cooper’s Hawk Winery & Restaurants, LLC, which operated
restaurants, manufactured private-label wines, and managed the
largest wine club in the world. From 2003 until 2014, Ms. Purcel
served as CFO, Chief Accounting Officer and Corporate Secretary for
BBQ Holdings, Inc. (formerly Famous Dave’s of America, Inc.), which
franchised and operated a casual dining restaurant chain in over 35
states. From 1999 until 2003, Ms. Purcel served as CFO, Chief
Accounting Officer and Secretary for Paper Warehouse, Inc., a
party-good retailer and franchisor in 10 states. Ms. Purcel also
worked for Arthur Andersen & Co. (1988 to 1993) and with other
companies including Target Corporation (from 1994 to 1998). Ms.
Purcel obtained her Master’s in Business Administration from the
University of St. Thomas in 2021 with honors, obtained her Bachelor
of Science in Management, with a concentration in Accounting, from
Tulane University in 1988, and is a certified public accountant
(inactive). We believe that Ms. Purcel’s significant financial,
strategy and governance experience as a CFO in numerous public and
private entities qualifies her to serve on our Board of
Directors.
Peter
E. Slaiby has served on the Board of Directors since December
2020. Mr. Slaiby has over 40 years of experience in the oil and gas
industry including over 37 years working with Royal Dutch Shell.
Mr. Slaiby serves on the Board of Directors for Glacier Oil and Gas
(since 2019) and The Harris School in Houston, Texas (since 2017).
Previously Mr. Slaiby served on the Board of Directors for the
Alaska Oil & Gas Association (from 2009 to 2014) including as
its Chairman (in 2014) and served on the Chancellors Advisory Board
for University of Alaska – Anchorage (from 2010 to 2013). Mr.
Slaiby is serving as the Managing Director for Quartz Upstream
(since 2017) and is serving as Managing Partner for Floris Energy
(since April 2020). From 2019 to 2020, Mr. Slaiby was a co-founder
for Novara Energy. From 1980 to 2017, Mr. Slaiby worked with Shell
in various roles: as Vice President, Decommissioning and
Restoration, as Vice President, Shell Alaska, and as Asset Manager
– Brunei and UK Shell Petroleum. Mr. Slaiby also worked with Pecten
(a Shell subsidiary) as Technical Manager – Cameroon, as Project
and Technical Manager – Brazil, and as Project Manager – Syria. Mr.
Slaiby began his professional career in 1980 working for Shell Oil
Company in various production roles in the Gulf of Mexico. Mr.
Slaiby obtained his Bachelor of Engineering in Mechanical
Engineering from Vanderbilt University in 1980. We believe that Mr.
Slaiby’s significant experience in the oil and gas industry
qualifies him to serve on our Board of Directors.
Natalie
Lorenz-Anderson has served on the Board of Directors since
December 2021. Ms. Lorenz-Anderson has over 38 years of experience
with government contracting and various technology fields including
cybersecurity, privacy, risk management, information technology,
energy, and solutions management across multiple markets including
Defense, National Security, Energy, Environment, and Health. She is
a limited partner and advisory member of the Board of Safar
Partners LLC, a seed-stage technology venture fund (since 2019), a
Board Director for Embr Labs, an MIT technology start-up in
personal temperature regulation (since 2020), a Board director for
247Solar Inc, a renewable energy technology start-up (since 2021)
and a member of Lutron’s Cyber Advisory Board (since 2022). She is
also a Board member of John Hopkins University’s Whiting School of
Engineering (since 2017) and its Department of Environmental Health
and Engineering (since 2018), a member of the Board and Executive
Committee (since 2008) and former Chair of the Board for AFCEA
International (from 2008-2010), a Vice President of the Board of
Girl Scouts Nation’s Capital Board focusing on STEM topics, and
member of the Society of Women Engineers Annual Conference Board
(since 2019). From 2017 to Present, Ms. Lorenz-Anderson has been
working with 247Solar Inc as a VP for Operations and Special
Projects. From 1984 until 2017, Ms. Lorenz-Anderson enjoyed a
career in Cybersecurity with Booz Allen Hamilton, including as a
Partner and Senior Vice President (from 2002 until 2017) and as
Chief Scientist and Program Manager (from 1997 until 2002). Ms.
Lorenz-Anderson obtained her Bachelor of Science degree in
Electrical Engineering from MIT in 1984 and Master of Science
degree in Electrical Engineering from John Hopkins University in
1989. We believe that Ms. Lorenz-Anderson’s significant experience
in government contracting, information technology, cybersecurity,
energy, and the environment qualifies her to serve on our Board of
Directors.
Executive
Officers
We
have two executive officers who are not directors:
|
Name |
|
Age |
|
Position(s)
with the Company |
| Robert
Powers |
|
51 |
|
Senior
Vice President & Chief Financial Officer |
| Joseph
DiPietro |
|
56 |
|
Principal
Accounting Officer, Controller, & Treasurer |
Robert
Powers joined the Company in December 2021 with more than 25
years of experience providing domestic and international leadership
to entrepreneurial, privately owned, and founder-led companies, as
well as SEC registrants and private equity backed companies. Prior
to joining the Company, Mr. Powers was CFO of Constellation
Advisors, a private equity-owned provider of outsourced back-office
operations and compliance services. He has held financial
leadership roles with Sterling Talent Solutions, Wood Group PPS – a
division of Wood Group, GTE, SABIC Innovative Plastics, and Plug
Power. He has also provided financial consulting services to
various companies. Mr. Powers began his career at
PricewaterhouseCoopers, LLP. He received a Bachelor of Science in
Accounting degree from Fordham University and an MBA in Business
Administration from Rensselaer Polytechnic Institute and he is a
Certified Public Accountant.
Joseph
DiPietro, the Company’s Controller since August 2021, was
appointed to the additional positions of the Company’s Treasurer
and principal accounting officer in September 2021. Prior to that,
Mr. DiPietro spent the prior five years as Vice President - Finance
and Corporate Controller of Myos Corp. In addition, he also served
in various finance roles at Juno Online, Audible, Celgene, Pfizer
and Zoetis. Mr. DiPietro holds a Bachelor of Science in Finance
from St. John’s University and is a Certified Public
Accountant.
Director
Compensation
For
Board service year 2022, the Board of Directors approved, for each
non-employee director, an annual payment of $70,000 and restricted
shares of our common stock equal in value to $75,000. Each
non-employee director also receives a per annum supplement ranging
from $8,000 to $30,000 for each committee that they belong to or
chair. In addition, the Chairman of the Board annually receives an
additional $75,000.
We
reimburse each non-employee director for out-of-pocket expenses
incurred in connection with attending our Board and Board committee
meetings. Compensation for our directors, including cash and equity
compensation, is determined, and remains subject to adjustment, by
the Nominating and Corporate Governance Committee of our Board of
Directors.
The
following table summarizes compensation paid to each of our
non-employee directors who served during fiscal year
2022.
|
Name |
|
Fees
Earned or
Paid
in Cash
($)
(2)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Total
($)
|
|
| Terence J. Cryan |
|
$ |
176,250 |
|
|
$ |
75,000 |
|
|
$ |
— |
|
|
$ |
251,250 |
|
| Clyde W. Hewlett |
|
$ |
80,750 |
|
|
$ |
75,000 |
|
|
$ |
— |
|
|
$ |
155,750 |
|
| Diana G. Purcel |
|
$ |
100,650 |
|
|
$ |
75,000 |
|
|
$ |
— |
|
|
$ |
175,650 |
|
| Peter E. Slaiby |
|
$ |
81,105 |
|
|
$ |
75,000 |
|
|
$ |
— |
|
|
$ |
156,105 |
|
| Natalie Lorenz-Anderson (1) |
|
$ |
23,274 |
|
|
$ |
75,000 |
|
|
$ |
— |
|
|
$ |
98,274 |
|
|
(1) |
First
elected to the Board at the 2021 Annual Meeting of Shareholders on
December 10, 2021. |
| (2) |
Fees
earned or paid in cash reflect annual retainer and committee
fees. |
The
following table summarizes stock grants during fiscal year
2022.
|
Name |
|
Stock Awards (1) |
|
|
Option Awards |
|
|
Total |
|
| Terence J. Cryan |
|
|
52,448 |
|
|
|
— |
|
|
|
52,448 |
|
| Clyde W. Hewlett |
|
|
52,448 |
|
|
|
— |
|
|
|
52,448 |
|
| Diana G. Purcel |
|
|
52,448 |
|
|
|
— |
|
|
|
52,448 |
|
| Peter E. Slaiby |
|
|
52,448 |
|
|
|
— |
|
|
|
52,448 |
|
| Natalie Lorenz-Anderson |
|
|
52,448 |
|
|
|
— |
|
|
|
52,448 |
|
(1)On
January 14, 2022, each non-executive board member was granted
restricted stock of 52,448 shares for Board service. These shares
will vest 100% on the date of the first Annual Shareholders Meeting
following the Grant Date or one year after the Grant Date,
whichever is earlier.
Corporate
Governance
Our
Board of Directors believes that good corporate governance is
important to ensure that the Company is managed for the long-term
benefit of our shareholders. 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 28 Engelhard Drive, Suite B, Monroe Township, NJ
08831.
Corporate
Governance Guidelines
Our
Board adopted corporate governance guidelines to assist in the
exercise of its duties and responsibilities and to serve the best
interests of the Company and its shareholders. These guidelines
provide a framework for the conduct of the Board’s business as
follows:
|
|
● |
Oversee
Management of the Company. The principal responsibility of the
directors is to oversee the management of the Company and, in so
doing, serve the best interests of the Company and its
shareholders. This responsibility includes: |
|
|
○ |
Reviewing
and approving fundamental operating, financial and other corporate
plans, strategies and objectives. |
| |
○ |
Evaluating
the performance of the Company and its executive officers and
taking appropriate action, including removal, when
warranted. |
| |
○ |
Evaluating
the Company’s compensation programs on a regular basis and
determining the compensation of its executive officers. |
| |
○ |
Reviewing
and approving executive officer succession plans. |
| |
○ |
Evaluating
whether corporate resources are used only for appropriate business
purposes. |
| |
○ |
Establishing
a corporate environment that promotes timely and effective
disclosure (including robust and appropriate controls, procedures
and incentives), fiscal accountability, high ethical standards and
compliance with all applicable laws and regulations. |
| |
○ |
Reviewing
and approving material transactions and commitments not entered
into in the ordinary course of business. |
| |
○ |
Developing
a corporate governance structure that allows and encourages the
Board to fulfill its responsibilities. |
| |
○ |
Providing
advice and assistance to the Company’s executive
officers. |
| |
○ |
Evaluating
the overall effectiveness of the Board and its
committees. |
|
|
● |
Exercise
Business Judgment. In discharging their fiduciary duties of
care, loyalty and candor, directors are expected to exercise their
business judgment to act in what they reasonably believe to be the
best interests of the Company and its shareholders. |
| |
|
|
|
|
● |
Understand
the Company and its Business. Directors have an obligation to
become and remain informed about the Company and its business,
including the following: |
|
|
○ |
The
principal operational and financial objectives, strategies and
plans of the Company. |
| |
○ |
The
results of operations and financial condition of the Company and of
significant subsidiaries and business segments. |
| |
○ |
The
relative performance of the business segments within the Company
and vis-à-vis competitors. |
| |
○ |
The
principal factors that determine the Company’s success. |
| |
○ |
The
principal risks and problems that affect the Company’s business and
prospects. |
|
|
● |
Establish
Effective Systems. Directors are responsible for determining
that effective systems, as appropriate, are in place for the
periodic and timely reporting to the Board on important matters
concerning the Company, including the following: |
|
|
○ |
Current
business and financial performance, the degree of achievement of
approved objectives and the need to address forward-planning
issues. |
| |
○ |
Future
business prospects and forecasts, including actions, facilities,
personnel and financial resources required to achieve forecasted
results. |
| |
○ |
Financial
statements, with appropriate segment or divisional
breakdowns. |
| |
○ |
Compliance
programs to assure the Company’s compliance with law and corporate
policies. |
| |
○ |
Material
litigation and governmental and regulatory matters. |
| |
○ |
Monitoring
and, where appropriate, responding to communications from
shareholders. |
| |
○ |
Directors
should also periodically review the integrity of the Company’s
internal control and management information systems. |
|
|
● |
Board,
Shareholder and Committee Meetings. Directors are responsible
for attending Board meetings, meetings of committees on which they
serve and the Annual Meeting of Shareholders, and devoting the time
needed, and meeting as frequently as necessary, to discharge their
responsibilities properly. |
| |
|
|
|
|
● |
Reliance
on Management and Advisors; Indemnification. The directors are
entitled to rely on the Company’s executive officers and its
outside advisors, auditors and legal counsel, except to the extent
that any such person’s integrity, honesty or competence is in
doubt. The directors are also entitled to Company-provided
indemnification, statutory exculpation and directors’ and officers’
liability insurance. |
Board
Determination of Independence
Our
Board has determined that all of our current directors are
“independent directors” within the meaning of the applicable
listing standards of the NYSE American, except for Philipp
Stratmann who is our President and Chief Executive
Officer.
Meetings
of the Board of Directors
As of
the date of this proxy statement, our Board has six members. The
Board of Directors held twelve meetings during fiscal 2022. During
fiscal 2022, each director attended 100% of meetings of (a) the
Board of Directors and (b) the committees on which such director
served.
Our
corporate governance guidelines provide that directors are expected
to attend the Meeting. All current directors attended our 2021
Annual Meeting of Shareholders.
Board
Leadership Structure
The
Board of Directors is led by the Chairman, and Mr. Cryan is
currently serving in that role. The Board of Directors has
established the position of President and Chief Executive Officer
(CEO), and currently Mr. Stratmann is serving as President and CEO.
The Board of Directors recognizes that, depending on the
circumstances, other leadership structures might be appropriate,
and as such, the Board of Directors periodically reviews its
leadership structure.
Board
Committees
As of
the date of this proxy statement, our Board of Directors has
established five standing committees: an Audit Committee, a
Compensation Committee, a Nominating and Corporate Governance
Committee, a Health and Safety Committee, and an Environmental and
Sustainability 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 current members of the Audit
Committee, the Compensation Committee and the Nominating and
Corporate Governance Committee are “independent directors” within
the meaning of the applicable rules of NYSE American. Our Board has
also determined that all current Audit Committee members meet the
independence requirements contemplated by Section 803 of the NYSE
American Listing Rules and Rule 10A-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
Audit
Committee. The current members of our Audit Committee are Diana
G. Purcel, Terence J. Cryan and Peter E. Slaiby. Ms. Purcel is the
chair of the Audit Committee. The Board of Directors has determined
that Ms. Purcel is an “audit committee financial expert” within the
meaning of the regulations of the Securities and Exchange
Commission (the “SEC”). The Audit Committee met four times in
fiscal year 2022.
Our
Audit Committee assists our Board of Directors in its oversight of
the integrity of our consolidated financial statements, our
independent registered public accounting firm’s qualifications,
independence and performance. The charter of the Audit Committee
can be found on the Company’s website.
Our
Audit Committee’s responsibilities include: appointing, approving
the compensation of, and assessing the independence of our
independent registered public accounting firm; approving any
material expenses not part of the budget, 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 SEC regulations.
In
addition, the Audit Committee oversees the Company’s internal audit
functions and meets separately with the Company’s independent
accounting firm.
Compensation
Committee. The current members of our Compensation Committee
are Terence J. Cryan and Diana G. Purcel. Mr. Cryan is the Chair of
the Compensation Committee. Our Compensation Committee assists our
Board of Directors in the discharge of its responsibilities
relating to the compensation of our executive officers.
Our
Compensation Committee’s responsibilities include: establishing the
goals and objectives for the Company and evaluating the Company’s
performance against those goals and objectives; reviewing and
approving, or making recommendations to the Board of Directors with
respect to our CEO and other 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 overseeing and administering, monitoring holding
guidelines in compliance with policies, and making recommendations
to the Board of Directors with respect to, our cash and equity
incentive plans. The Compensation Committee met four times in
fiscal year 2022. The charter of the Compensation Committee can be
found on the Company’s website.
The
Compensation Committee has the authority to retain compensation
consultants and other outside advisors to assist in the evaluation
of executive officer compensation and any such compensation
consultants and other advisors retained by the Compensation
Committee will report directly to the Committee, which has the
authority to select, retain and terminate any such consultants or
advisors. As discussed on page 25 below, in March 2021, the
Compensation Committee retained NFP Compensation Consultants, an
independent compensation consultant, to assist the Compensation
Committee during fiscal 2021.
Additional
information regarding compensation of executive officers is
provided on pages 25 through 32 of this proxy
statement.
Nominating
and Corporate Governance Committee. The current members of our
Nominating and Corporate Governance Committee are Terence J. Cryan
and Diana G. Purcel. Mr. Cryan is the Chair of the Nominating and
Corporate Governance Committee. Our Nominating and Corporate
Governance Committee’s 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 Board’s 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, such as
the Corporate Governance Guidelines discussed above and the
Compensation Recovery Policy discussed at page 22 below; overseeing
periodic evaluations of the Board of Directors; developing
shareholder surveys including that discussed at page 27 below; and
reviewing and making recommendations to the Board of Directors with
respect to director compensation. The Nominating and Corporate
Governance Committee met five times in fiscal year 2022. The
charter of the Nominating and Corporate Governance Committee can be
found on the Company’s website.
Health
and Safety Committee (formerly the Health, Safety and Environmental
Committee). In September 2021, at the recommendation of the
Nominating and Corporate Governance Committee, the Board
restructured the Health, Safety and Environmental Committee to
concentrate its focus on health and safety matters (including
environmental matters that could impact safety),and renamed the
Committee accordingly. The current members of our Health and Safety
Committee are Clyde W. Hewlett and Peter E. Slaiby. Mr. Hewlett is
the Chair of the Health & Safety Committee. The restructured
Health and Safety Committee assists the Board of Directors in
fulfilling its oversight responsibilities by assessing the
effectiveness and promoting industry best practices for the
Company’s programs and initiatives that support health, safety and
security policies, programs, and practices of the Company. The
Health and Safety Committee met four times in fiscal year
2022.
Environmental
and Sustainability Committee. In September 2021, at the
recommendation of the Nominating and Corporate Governance
Committee, the Board created a new committee, the Environmental and
Sustainability Committee. The Board’s decision was made in
furtherance of its commitments to adopt best practices in promotion
of environmentally sound and socially responsible corporate
governance. The Environmental and Sustainability Committee will
assist the Board of Directors in fulfilling its oversight
responsibilities by assessing the effectiveness of the Company’s
programs and initiatives that support environmental stewardship,
social responsibility, and sustainability policies, programs, and
practices of the Company. In addition, the Environmental and
Sustainability Committee will advise the Board on matters impacting
the Company’s environmental stewardship and sustainability
responsibilities and the Company’s public reputation. The members
of the Environmental and Sustainability Committee are Peter Slaiby,
Philipp Stratmann and Natalie Lorenz-Anderson, with Mr. Slaiby
serving as Chair. The Board also agreed that the Environmental and
Sustainability Committee can utilize external consultants to assist
the Committee in its deliberations, and currently Terry D. Garcia
has been selected to provide that assistance. In addition to almost
40 years of experience in government and business, Mr. Garcia
previously served as General Counsel for the National Oceanic and
Atmospheric Administration (NOAA), was Chief Science and
Exploration Officer at National Geographic, and was also appointed
by President Obama to serve on the National Commission on the BP
Deepwater Horizon Oil Spill and Offshore Drilling. The
Environmental and Sustainability Committee met two times in fiscal
year 2022.
Risk
Oversight
The
Board of Directors, with support at the committee level, is
actively engaged in overseeing management of the Company’s risks.
At each Board meeting, the directors review the Company’s
significant risks along with management’s plans for addressing or
mitigating those risks. The Board of Directors regularly reviews
information regarding the Company’s financial position and
operations, as well as the potential risks associated with each.
While the Board of Directors is ultimately responsible for risk
oversight, including strategic and operational risks, our Board
committees assist the Board of Directors in fulfilling its
oversight responsibilities in certain areas of risk. The Audit
Committee assists the Board of Directors in fulfilling its
oversight responsibilities with respect to risk management in the
areas of financial reporting, internal controls, cyber security and
compliance with legal and regulatory requirements. The Compensation
Committee assists the Board of Directors in fulfilling its
oversight responsibilities with respect to the management of risks
arising from our compensation policies and programs. The Nominating
and Corporate Governance Committee assists the Board of Directors
in fulfilling its oversight responsibilities with respect to the
management of risks associated with the organization, membership
and structure of the Board of Directors, succession planning for
our directors and executive officers, and corporate governance. Our
Health and Safety Committee assists the Board of Directors in
fulfilling its oversight responsibilities with respect to the
Company’s health, safety and employee and facility security
policies, programs and practices. Our Environmental and
Sustainability Committee assists the Board of Directors in
fulfilling its oversight responsibilities with respect to the
Company’s environmental, social, and sustainability policies,
programs, and practices.
Director
Nomination Process
The
current nominees for election to the Board were recommended by our
Nominating and Corporate Governance Committee, which is composed
solely of independent directors, and based on such recommendation,
were nominated by the full Board of Directors. At the Meeting,
shareholders will be asked to consider the election of Terence J.
Cryan, Philipp Stratmann, Clyde W. Hewlett, Diana G. Purcel, Peter
E. Slaiby and Natalie M. Lorenz-Anderson.
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 as well as the Board. As part of our
governance practices, during this past year the Nominating and
Corporate Governance Committee identified the set of skills,
knowledge, capabilities and experiences desired to oversee the
Company’s strategy, manage risk, and meet the organization’s
current and future challenges. As part of this process, we applied
those desired attributes to our slate of director candidates. After
a review of the skill sets of the current directors serving on the
Board of Directors, we concluded that the desired attributes were
adequately represented among the director candidates. See the table
presented at page 4 above.
In
considering whether to recommend any particular candidate for
inclusion in the Board’s 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 candidate’s integrity, alignment with our
values, business acumen, knowledge of our business and industry or
of other industries with comparable risks and issues, experience,
diligence, potential conflicts of interest, appreciation for strong
ethics and corporate governance, willingness to devote adequate
time to Board duties, and the ability to act in the best interests
of all shareholders. The Nominating and Corporate Governance
Committee considers the value of diversity when recommending
candidates. The Committee views diversity broadly to include
diversity of experience, skills and viewpoint. 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.
Shareholders
may recommend individuals to our Nominating and Corporate
Governance Committee for consideration as potential director
candidates. The Nominating and Corporate Governance Committee will
evaluate shareholder-recommended candidates by following the same
process and applying the same criteria as it follows for candidates
submitted by others.
Shareholders
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 by-laws, and with the rules and regulations of the SEC.
Under our by-laws, only persons nominated in accordance with the
procedures set forth in the by-laws will be eligible to serve as
directors. To nominate a candidate for service as a director, you
must be a shareholder 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 by-laws, director nominations generally must
be made pursuant to notice to our Secretary delivered to or mailed
and received at our principal executive offices at 28 Engelhard
Drive, Suite B, Monroe Township, NJ 08831, not later than the 90th
day, nor earlier than the 120th day, prior to the first anniversary
of the prior year’s Annual Meeting of Shareholders. 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 shareholder 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 shareholder, a description of any
arrangements or understandings between the shareholder and the
nominee, a representation that the shareholder intends to appear in
person or by proxy at the Annual Meeting and a representation as to
whether such shareholder intends, or is part of a group that
intends, to deliver a proxy statement/and or solicit
proxies.
Communicating
with the Independent Directors
Our
Board will give appropriate attention to written communications
that are submitted by shareholders and will respond if and as
appropriate. The Chair is an independent director and primarily
responsible for monitoring communications from shareholders 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.
Shareholders
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., 28 Engelhard Drive, Suite B, Monroe
Township, NJ 08831.
Code
of Business Conduct and 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 28 Engelhard
Drive, Suite B, Monroe Township, NJ 08831. Any changes to or
waivers under the Code of Business Conduct and Ethics as it relates
to our chief executive officer, chief financial officer, principal
executive officer, principal financial officer, principal
accounting 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 the Company. Based solely on a review of the copies of such
reports furnished to us, or written representations that no other
reports were required, we believe that all required reports were
filed in fiscal 2022 in a timely manner.
Restrictions
on Trading Activities
The
Company’s Insider Trading Policy applies to directors, officers
(including but not limited to named executive officers) and
employees, as well as family members of directors, officers and
employees that share the same address or are financially dependent
on that person. The policy contains the following restrictions on
the buying or selling of the Company’s securities for the
identified individuals:
|
|
● |
No
one may purchase or sell Company securities on the basis of
material nonpublic information concerning the Company or disclose
material nonpublic information to others where it is reasonably
foreseeable that they might trade on the basis of that
information. |
| |
● |
No
one may purchase or sell Company securities during a corporate news
blackout period, or a regulation blackout trading restriction
period, or disclose to others that the Company is in either a
corporate news blackout period or a regulation blackout trading
restriction period. |
| |
● |
No
one may purchase or sell Company securities unless a written
approval to do so is obtained from the Company’s CFO and the
Company’s General Counsel prior to such purchase or
sale. |
| |
● |
No
one may engage in the following types of transactions: (i) short
sales of Company securities; or (ii) purchases of sales or puts or
calls for speculative purposes. |
PROPOSAL TWO
APPROVAL
OF AN AMENDMENT TO THE
OCEAN
POWER TECHNOLOGIES, INC. 2015 OMNIBUS INCENTIVE PLAN
General
As of
October 18, 2022, the 2015 Plan had 695,127 shares remaining that
are available for future issuances of awards. Our Board has
approved and adopted an amendment to the 2015 Plan, subject to
shareholder approval, to increase the number of shares available
for grant under the 2015 Plan by 1,250,000 shares to ensure that
adequate shares will be available for future grants and to amend
the aggregate number of shares available for incentive
awards.
We
believe that substantial equity participation by employees is
important in creating an environment in which employees will be
motivated to remain employed and be productive for long periods of
time in helping us to achieve our goals. We further believe that
the attraction, motivation and retention of highly qualified
personnel is essential to our continued growth and success and that
continued awards under the 2015 Plan are necessary for us to remain
competitive in our compensation practices. The current environment
for sourcing talented employees is highly competitive, which has
put a premium on attracting and retaining key employees. In
addition, we believe that the 2015 Plan is an effective way to
ensure alignment of employees’ and shareholders’ interests and
believe all such equity incentives are in the best interest of the
shareholders. For Board service year 2022 and beyond, our intention
is for the independent directors to receive an annual grant of
equity in the form of restricted stock units, or RSUs. Additional
shares are needed under the 2015 Plan to ensure that grants,
principally to our employees, as well as to directors, can continue
to be made on an annual basis.
A
copy of the amendment is attached to this proxy statement as
Annex A. The amendment to the 2015 Plan is being submitted
for your approval pursuant to the rules and regulations of the SEC
and the NYSE American.
Description
of 2015 Plan
A
summary description of the 2015 Plan is included in this proxy
statement under “Executive Compensation – Stock Option and Other
Compensation Plans – 2015 Omnibus Incentive Plan”.
Plan
Benefits
No
determination has been made as to any awards that will be made to
directors, officers or other employees upon approval of the
proposed amendment of the 2015 Plan.
Vote
Required
The
approval of the amendment to the 2015 Plan requires the affirmative
vote of the holders of a majority of the shares represented at the
Meeting, virtually during the Annual Meeting or by proxy, and
entitled to vote. For the approval of the amendment to the 2015
Plan, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting.
Abstentions will have the same effect as a vote “AGAINST” this
proposal. Broker non-votes will have no effect on the approval of
this proposal.
Board
Recommendation
THE
BOARD RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 2015
PLAN.
PROPOSAL THREE
RATIFICATION
OF THE SELECTION OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
On
September 18, 2020, the Company filed a Current Report on Form 8-K
that disclosed the decision to change auditors, from KPMG LLP
(“KPMG”) to EisnerAmper LLP (“EisnerAmper”), on the basis of
reducing ongoing costs related to the Company’s annual auditor
services. EisnerAmper served as the Company’ independent auditor
for a portion of fiscal 2021, from September 18, 2020 until April
30, 2021. KPMG previously audited our consolidated financial
statements from fiscal 2004 through fiscal 2020. The Board of
Directors, in accordance with the recommendation of the Audit
Committee, has selected EisnerAmper to continue the audit of our
consolidated financial statements for fiscal 2023.
During
the fiscal years ended April 30, 2020 and April 30, 2019 and during
the subsequent interim period through September 18, 2020, there
were (i) no disagreements (as described in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions) with KPMG on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which if not resolved
to KPMG’s satisfaction, would have caused KPMG to make reference to
the subject matter of the disagreements in its reports on the
Company’s consolidated financial statements for such years, and
(ii) no “reportable events” as defined in Item 304(a)(1)(v) of
Regulation S-K.
KPMG’s
audit reports on the Company’s consolidated financial statements
relating to each of the two respective most recent fiscal years
ended April 30, 2020 and April 30, 2019 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles,
except that
|
|
(i) |
KPMG’s
report on the consolidated financial statements of the Company as
of and for the year ended April 30, 2020, contained separate
paragraphs stating that “As discussed in Note 2(n) to the
consolidated financial statements, the Company has changed its
method of accounting for leases as of May 1, 2019 due to the
adoption of Accounting Standards Update (ASU) No. 2016-02, Leases
(Topic 842), and the related amendments” and “The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
1(b) to the consolidated financial statements, the Company has
suffered recurring losses from operations and has an accumulated
deficit that raise substantial doubt about its ability to continue
as a going concern. Management’s plans in regard to these matters
are also described in Note 1(b). The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty”; and |
| |
|
|
|
|
(ii) |
KPMG’s
report on the consolidated financial statements of the Company as
of and for the year ended April 30, 2019, contained separate
paragraphs stating that “The accompanying consolidated financial
statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 1(b) to the
consolidated financial statements, as of April 30, 2019 the Company
has cash and cash equivalents of $16.7 million, and the Company has
suffered recurring losses from operations and has an accumulated
deficit. These factors raise substantial doubt about its ability to
continue as a going concern. Management’s plans in regard to these
matters are also described in Note 1(b). The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty” and “As discussed in Note 1(o) to
the consolidated financial statements, effective May 1, 2018, the
Company adopted Accounting Standards Update (ASU) 2014-09, Revenue
from Contracts with Customers, and several related amendments,
issued by the Financial Accounting Standards Board (FASB). This
change was adopted using the modified retrospective
method.” |
The
Company previously provided KPMG with a copy of the foregoing
disclosures and requested that KPMG furnish a letter addressed to
the SEC stating whether or not KPMG agrees with the statements
above. KPMG provided its letter dated September 18, 2020 to the
SEC, stating that it agreed, and that letter was included in the
Current Report on Form 8-K filed on September 18, 2020.
The
Audit Committee, effective as of September 18, 2020, appointed
EisnerAmper as the Company’s independent registered public
accounting firm for the Company’s fiscal yeas ended April 30, 2021
and April 30, 2022. During the Company’s fiscal year ended April
30, 2020 and April 30, 2019 and during the subsequent interim
period through September 18, 2020, neither the Company nor anyone
acting on its behalf consulted with EisnerAmper, regarding either:
(i) the application of accounting principles to a specific
transaction, completed or proposed, or the type of audit opinion
that might be rendered on the Company’s consolidated financial
statements, and neither a written report nor oral advice was
provided to the Company that EisnerAmper concluded was an important
factor considered by the Company in reaching a decision as to any
accounting, auditing, or financial reporting issue, or (ii) any
matter that was either the subject of a “disagreement” (as defined
in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event”
(as described in Item 304(a)(1)(v) of Regulation S-K).
Although
shareholder approval of the selection of EisnerAmper is not
required by law, our Board of Directors believes it is advisable to
give shareholders an opportunity to ratify this selection. If this
proposal is not approved at the Meeting, the Board will reconsider
its selection of EisnerAmper.
We
expect representatives of EisnerAmper to attend the Meeting, to be
available to respond to appropriate questions from shareholders,
and to have the opportunity to make a statement if so desired by
the shareholders.
Fees
of Independent Registered Public Accounting Firm
The
Audit Committee, effective as of December 10, 2021, appointed
EisnerAmper, LLP as the Company’s independent registered public
accounting firm for the Company’s fiscal year ended April 30, 2022.
EisnerAmper, LLP’s PCAOB firm ID is 274.
The
following table summarizes the fees of EisnerAmper, LLP and KPMG
LLP, our predecessor independent registered public accounting firm,
billed to us for each of the last two fiscal years.
EisnerAmper
Audit and Tax Fees
| |
|
Fiscal Year 2022 |
|
|
Fiscal Year 2021 |
|
| |
|
|
|
|
|
|
| Audit Fees (1) |
|
$ |
237,607 |
|
|
$ |
150,800 |
|
| Audit-Related Fees |
|
|
— |
|
|
|
— |
|
| Tax Fees (2) |
|
|
31,200 |
|
|
|
— |
|
| All Other Fees
(3) |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Total Fees |
|
$ |
268,807 |
|
|
$ |
150,800 |
|
KPMG
Audit and Tax Fees
| |
|
Fiscal Year 2022 |
|
|
Fiscal Year 2021 |
|
| |
|
|
|
|
|
|
| Audit Fees (1) |
|
$ |
96,600 |
|
|
$ |
153,584 |
|
| Audit-Related Fees |
|
|
— |
|
|
|
— |
|
| Tax Fees (2) |
|
|
— |
|
|
|
— |
|
| All Other Fees
(3) |
|
|
1,898 |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Total Fees |
|
$ |
98,498 |
|
|
$ |
153,584 |
|
(1)
Audit Fees consist of fees for the audit and quarterly reviews of
our consolidated financial statements, including fees related to
merger and acquisition activities, as well as other professional
services provided in connection with the statutory and regulatory
filings or engagements. KPMG audit fees from 2022 includes fees for
consents related to our securities filings.
(2)
Tax Fees include fees for tax consulting and tax return preparation
assistance and review for the Company.
(3)
All Other Fees for fiscal 2022 includes subscription fee for KPMG’s
accounting research tool.
Pre-Approval
Policies and Procedures
The
Audit Committee’s 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. The Audit Committee’s approval procedures
include the review and approval of a description of the services
that documents the fees for all audit services and non-audit
services, primarily tax advice and tax return preparation and
review.
All
audit services and all non-audit services in fiscal years 2022 and
2021 were pre-approved by the Audit Committee. The Audit Committee
has determined that the provision of the non-audit services for
which these fees were rendered is compatible with maintaining the
independent auditor’s independence.
Board
Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF EISNERAMPER AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR FISCAL 2023.
REPORT OF AUDIT
COMMITTEE
The
Audit Committee has reviewed the Company’s audited consolidated
financial statements for the fiscal year ended April 30, 2022 and
discussed them with the Company’s management and the Company’s
independent registered public accounting firm. Management
represented to the Audit Committee that the consolidated financial
statements of the Company were prepared in accordance with U.S.
generally accepted accounting principles.
The
Audit Committee has also received from, and discussed with, the
Company’s independent registered public accounting firm various
communications that the Company’s independent registered public
accounting firm is required to provide to the Audit Committee,
including the matters required to be discussed by Auditing Standard
No. 1301, Communications with Audit Committees, as adopted
by the Public Company Accounting Oversight Board. These matters
included a discussion of the independent registered public
accounting firm’s judgments about the quality (not just the
acceptability) of the accounting practices of the Company and
accounting principles as applied to the financial reporting of the
Company.
The
Audit Committee has received the written disclosures and the letter
from the Company’s independent registered public accounting firm
required by the Public Company Accounting Oversight Board Ethics
and Independence Rule 3526, Communications with Audit Committees
Concerning Independence, and has discussed with the Company’s
independent registered public accounting firm their
independence.
Based
on the review and discussions referred to above, the Audit
Committee recommended to the Company’s Board of Directors that the
audited consolidated financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended
April 30, 2022. We have concluded that the independent registered
public accounting firm for fiscal 2022 is independent from the
Company and its management.
By
the Audit Committee of the Board of Directors of Ocean Power
Technologies, Inc.
|
|
Diana
G. Purcel, Chair |
| |
Terence
J. Cryan |
| |
Peter
E. Slaiby |
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the
beneficial ownership of common stock as of October 18, 2022 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,
(c) each director and nominee for director, and (d) all executive
officers and directors as a group.
The
percentage of common stock beneficially owned is based on
55,921,880 shares of our common stock outstanding as of October 18,
2022. 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
October 18, 2022 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, each of the persons
or entities in this table has sole voting and investing power with
respect to all of the shares of common stock beneficially owned by
such person, subject to community property laws, where applicable.
The street address of each beneficial owner shown in the table
below is c/o Ocean Power Technologies, Inc., 28 Engelhard Drive,
Suite B, Monroe Township, NJ 08831.
|
Name of Beneficial Owner |
|
Number of Shares
Beneficially Owned
|
|
|
Percentage of Share
Beneficially Owned
|
|
| |
|
|
|
|
|
|
| Philipp Stratmann (1) |
|
|
83,662 |
|
|
|
* |
|
| Terence J. Cryan (2) |
|
|
103,653 |
|
|
|
* |
|
| Clyde W. Hewlett (3) |
|
|
71,577 |
|
|
|
* |
|
| Diana G. Purcel (3) |
|
|
71,577 |
|
|
|
* |
|
| Peter E. Slaiby (3) |
|
|
71,577 |
|
|
|
* |
|
| Natalie Lorenz-Anderson (4) |
|
|
52,448 |
|
|
|
* |
|
| Robert Powers (5) |
|
|
37,500 |
|
|
|
* |
|
| Joseph DiPietro (6) |
|
|
— |
|
|
|
* |
|
| |
|
|
|
|
|
|
|
|
| All director and executive officers as
a group (8 individuals) |
|
|
|
|
|
|
|
|
*
Represents a beneficial ownership of less the one percent of our
outstanding common stock
(1)
Beneficial ownership includes 28,995 shares of our common stock and
54,667 shares issuable upon the exercise of options that are
currently exercisable or exercisable within sixty days of October
18, 2022.
(2)
Beneficial ownership includes 248 shares of our common stock and
50,957 shares issuable upon the exercise of options that are
currently exercisable or exercisable within sixty days of October
18, 2022.
(3)
Beneficial ownership includes 19,129 shares issuable upon the
exercise of options that are currently exercisable or exercisable
within sixty days of October 18, 2022 and 52,448 in stock awards
that will be issued within sixty days of October 18,
2022
(4)
Beneficial ownership includes 52,448 in stock awards that will be
issued within sixty days of October 18, 2022.
(5)
Beneficial ownership includes 37,500 in stock awards that will be
issued within sixty days of October 18, 2022.
(6)
Individual does not have any ownership of our common stock or
options that are currently exercisable or exercisable within sixty
days of October 18, 2022.
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,
2022.
|
Plan Category |
|
Number of Shares to
be
Issued Upon Exercise
of
Outstanding Options
and Restricted Stock
|
|
|
Weighted-Average
Exercise Price of
Outstanding Options
|
|
|
Number of Shares
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Shares Reflected in First Column)
|
|
| |
|
|
|
|
|
|
|
|
|
| Equity compensation plans approved by
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| Stock Options |
|
|
1,320,090 |
|
|
$ |
2.17 |
|
|
|
696,627 |
(1) |
| Restricted Stock |
|
|
787,764 |
|
|
|
N/A |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity compensation plans not approved
by shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| Stock Options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Restricted Stock |
|
|
50,000 |
|
|
|
N/A |
|
|
|
261,487 |
(2) |
(1)
Consists of shares of our common stock available for issuance under
the 2015 Omnibus Incentive Plan.
(2)
Consists of shares of our common stock available for issuance under
the 2018 Employee Inducement Incentive Award Plan.
Our
equity compensation plans consist of the 2006 Stock Incentive Plan
and the 2015 Plan which were approved by our shareholders, and the
2018 Employee Inducement Incentive Award Plan which was not
approved by our shareholders. Once the 2015 Plan was approved by
the shareholders on October 22, 2015, no further stock options or
other awards were awarded under the 2006 Stock Incentive Plan and
it was terminated. Shares that are forfeited under the 2006 Stock
Incentive Plan on or after October 22, 2015 will become available
for issuance under the 2015 Plan.
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 after
conducting a reasonable prior review. If a director is involved in
the transaction, he or she will recuse himself or herself from all
decisions regarding the transaction.
EXECUTIVE
COMPENSATION
Overview
of Executive Compensation
Our
Compensation Committee is responsible for overseeing the
compensation of our named executive officers (NEOs), including the
design, review, approval and implementation of all compensation
programs. The goal of the Compensation Committee is to ensure that
our compensation practices are aligned with our business strategies
and objectives and that the total compensation paid to each of our
named executive officers is fair, reasonable and competitive.
During fiscal year 2022, our Company had three NEOs: (1) the
President and Chief Executive Officer (CEO); (2) the Senior Vice
President and Chief Financial Officer (CFO), and (3) the Principal
Accounting Officer, Controller and Treasurer.
The
Compensation Committee is composed entirely of independent,
non-management members of the Board. Each member of the
Compensation Committee is both a “non-employee director” within the
meaning of Rule 16b3 of the Exchange Act, and an “outside director”
within the meaning of Section 162(m) of the Internal Revenue Code.
No Compensation Committee member participates in any of the
Company’s employee compensation programs. Each year the Company
reviews any and all relationships that each director has with the
Company, and the Board subsequently reviews these findings. The
responsibilities of the Compensation Committee, as stated in its
charter, include the following:
|
|
● |
review
and make such recommendations to the Board as the Compensation
Committee deems advisable with regard to all incentive-based
compensation plans and equity-based plans; |
| |
|
|
|
|
● |
review
and approve the corporate goals and objectives that may be relevant
to the compensation of NEOs; |
| |
|
|
|
|
● |
evaluate
the performance of the NEOs in light of the goals and objectives
that were set and determine and approve the compensation of the
NEOs based on such evaluation; and |
| |
|
|
|
|
● |
review
and approve the recommendations of the CEO with regard to the
compensation of all officers of the Company other than the
CEO. |
The
Compensation Committee and the Board of Directors determine the
compensation of the CEO without any management input. The
Compensation Committee does take into consideration input from the
CEO when making compensation decisions for the CFO as it believes
that this input is useful because the CEO reviews and observes the
performance of the CFO. The CFO is not present or privy to the
recommendations of the CEO to the Compensation Committee. The full
Board of Directors also conducts an annual evaluation of the CEO,
which is designed to help assess the CEO’s performance against
established goals and objectives, and provide additional feedback
for the Compensation Committee..
Stock
Ownership and Holding Guidelines Policy
At
the recommendation of the Nominating and Corporate Governance
Committee, in October 2021 the Board adopted stock ownership and
holding guidelines, for all NEOs and all independent directors,
that are designed to increase stock ownership over time and thereby
better align their interests with the interests of shareholders.
For the CEO, the guidelines provide for the achievement of stock
ownership of 3 times base salary over a period of 5 years. For the
CFO, the guidelines provide for the achievement of stock ownership
of 2 times base salary over a period of 5 years. For the
independent directors, the guidelines provide for the achievement
of stock ownership of 3 times the annual cash retainer over a
period of 5 years. All NEO’s and independent directors are in
compliance with the holding guidelines as of October 18th,
2022.
Compensation
Recovery Policy
At
the recommendation of the Nominating and Corporate Governance
Committee, in October 2021, the Board also adopted a Compensation
Recovery Policy that requires each NEO to repay or forfeit any
annual incentive or other performance-based compensation received
by the NEO within the preceding three years if any of the following
apply:
|
|
● |
the
payment, grant or vesting of such compensation was based on the
achievement of financial results that were subsequently the subject
of a restatement of the Company’s financial statements filed with
the SEC; |
|
|
● |
the
Board determines in its sole discretion, exercised in good faith,
that the executive officer engaged in conduct that caused or
contributed to the need for a reinstatement of the Company’s
financial statements filed with the SEC; |
|
|
|
|
|
|
● |
the
Board determines in its sole discretion, exercised in good faith,
that the executive officer caused or contributed to materially
inaccurate performance metrics or other similar criteria;
or |
|
|
|
|
|
|
● |
the
Board determines in its sole discretion, exercised in good faith,
that the executive officer’s conduct violated Company
policies. |
In
addition to the foregoing, the Board shall determine in its sole
discretion, exercised in good faith, that it is in the best
interests of the Company and its shareholders for the executive
officer to repay or forfeit all or any portion of the
compensation.
The
Board, or by delegation its Compensation Committee, either acting
solely by the independent directors as identified under the
applicable listing standards of the NYSE American, has the full and
final authority to make all determinations under this policy. All
determinations and decisions made by the Board pursuant to this
policy are final, conclusive and binding on all persons, including
the Company, its affiliates, its shareholders, its executive
officers and its employees.
Compensation
Objectives and Philosophy
The
Company’s compensation program is centered around a philosophy that
focuses on alignment of interests between management and its
shareholders, retention of key personnel, and pay-for-performance
compensation. The Company believes this philosophy allows the
Company to compensate its executive officers competitively, while
simultaneously ensuring support of its strategy and continued
development and achievement of key business goals. The Compensation
Committee firmly believes that a pay-for-performance philosophy
should recognize both short- and long-term performance and should
include both cash and equity compensation arrangements that are
supported by strong corporate governance, including active and
effective oversight by the Compensation Committee.
Our
compensation programs are intended to reward executives for the
achievement of specified predetermined quantitative and qualitative
goals aligned with the interests of shareholders and designed to
increase shareholder value. Our compensation programs are also
designed to attract and retain qualified executives and reward them
for attaining superior short-term and long-term
performance.
Total
Compensation Program Elements and Relationship to
Performance
Key
elements of these programs include:
|
● |
Base
salary that is fixed cash compensation designed to reward annual
achievements, with consideration given to the executive’s
qualifications, scope of responsibility, leadership abilities and
management experience and effectiveness; |
| |
|
| ● |
Short-term
incentive (STI) programs that provide yearly cash bonus awards,
where warranted, designed to incentivize and reward executives for
executing against predetermined business objectives with
demonstrated performance; and |
| |
|
| ● |
Long-term
incentive (LTI) programs that provide equity-based incentive
compensation, over a multi-year period, which further align
executive and shareholder interests. Grants prior to fiscal year
2022 had been primarily in the form of NQSOs. For fiscal year 2022
NEOs received equity grants in the form of RSUs instead of NQSOs.
For fiscal year 2023 and beyond, our intention is for NEOs to
receive equity grants in the form of RSUs. The value of LTI
compensation is based upon the market value of our common stock and
is subject to multi-year vesting that requires continued service
and/or the attainment of certain performance goals. |
Determining
and Setting Executive Compensation
The
Compensation Committee has been working closely with key members of management to set the
compensation for the Company’s executives. Under direction
by, and oversight from, the Compensation Committee, management
develops recommendations for the Company’s compensation plans by
utilizing market data sourced from publicly available compensation
sources, This includes reputable on-line compensation surveys for
comparable executive positions that reviews a broad selection of
national and regional companies, which the Company believes it may
compete with for executive talent. These companies are considered
to be comparable to the Company in terms of public ownership,
organizational structure, size and stage of development. The
Compensation Committee reviews the results of any compensation
analyses, and recommendations by management are reviewed with and
approved by the Compensation Committee annually; however, if the
Company becomes aware within the year that a market adjustment is
required based on market or other data, the Compensation Committee
can make changes as necessary. In early 2021, the Compensation
Committee engaged NFP Compensation Consultants, an independent
compensation consultant, to provide consulting services related to
executive compensation, including a review of the Company’s
compensation practices and compensation programs to ensure that the
Company’s practices and programs are commensurate with current
industry best practices for similarly situated companies. The
Compensation Committee generally targets compensation for our
executives within a competitive range, generally at the market 50th
percentile. Other considerations, including the unique nature of
our business, the experience level of an executive, performance,
tenure and other market and/or relevant factors may dictate
variations to this general target.
Our
business is characterized by a long development cycle, including a
lengthy engineering and product-testing period. In addition to
traditional benchmarking metrics, such as product sales, revenues
and profits, the additional factors the Compensation Committee
typically considers when determining the STI and LTI compensation
our NEOs’ compensation include:
|
|
● |
key
product and solution development initiatives; |
| |
● |
technology
advancements; |
| |
● |
achievement
of commercial milestones; |
| |
● |
establishment
and maintenance of key strategic relationships; |
| |
● |
implementation
of appropriate financing strategies; and |
| |
● |
financial
and operating performance. |
Results
of Recent Annual Meeting Votes on Executive
Compensation
The
results of the voting on the executive compensation proposals at
our last three Annual Meetings of Shareholders is presented in the
following table.
| |
|
For |
|
|
Against |
|
|
Abstain |
|
| 2021 Annual
Meeting |
|
|
78 |
% |
|
|
12 |
% |
|
|
10 |
% |
| 2020 Annual Meeting |
|
|
76 |
% |
|
|
18 |
% |
|
|
6 |
% |
| 2019 Annual Meeting |
|
|
59 |
% |
|
|
37 |
% |
|
|
4 |
% |
While
the results of the voting at the 2021
and 2020 meeting were markedly improved from the 2019 meeting, the
Board and Compensation Committee continue to focus on driving NEO
performance against specific goals and ensuring that the interests
of management and shareholders are aligned properly. Accordingly,
as part of our governance processes, we continually review our
incentive programs, including equity vehicles that better
align with our shareholders, in addition to our governance
policies.
Compensation
Considerations and Decisions for Fiscal Year 2021
In
May 2021, the Compensation Committee held two meetings to address
whether the STI objectives for the NEOs for fiscal year 2021 had
been met, to assess whether merit increases should be made for the
executive officers, and to establish the STI objectives for the
executive officers for fiscal year 2022. The Committee concluded
that the fiscal year 2021 commercial sales targets for bookings as
well as revenues from those bookings (collectively representing 75
percent of the STI goals) had not been met. However, the fiscal
year 2021 product development and safety targets (collectively
representing 25 percent of the STI goals) had been met. The
Compensation Committee determined that the Company’s
underperformance pertaining to its fiscal year 2021 commercial
sales and revenues, and booking targets was significant, and as
such, the Committee exercised negative discretion and reduced the
fiscal year 2021 STI awards for fiscal year 2021 for the NEOs from
25 percent to 20 percent of target.
During
the same meetings, the Compensation Committee also addressed
whether the NEOs should be awarded a merit-based salary increase.
Based on fiscal year 2021 performance that was significantly worse
than established goals and objectives, the Compensation Committee
decided not to award the CEO any merit increase for the second year
in a row. However, based upon additional contributing factors
including the successful completion of specific operational
initiatives, the Committee decided that a merit-based salary
increase for the CFO of two percent was warranted. In addition,
based on market data comparisons and input from the Committee’s
independent compensation consultant, the Compensation Committee
concluded that a three percent upward market adjustment for the
CFO’s salary was also warranted.
Compensation
Goals and Objectives for Fiscal Year 2022
In
May 2021, the Compensation Committee developed objectives for the
STI plan for the NEOs for fiscal year 2022. The Committee
established objectives across three main categories; financial
performance, operational performance, and safety performance as
reflected in the following table.
|
Category |
|
Metric |
|
Measurement |
|
Target
Points % |
|
Financial |
|
New
Bookings
|
|
$4.8M
new OPT/3Dent bookings |
|
40 |
|
|
Revenue |
|
$1.1M
3Dent Revenue Recognition |
|
10 |
|
Operational |
|
Maritime
Domain Awareness (MDA) – NJ Array |
|
Two
separate milestones: (1) the offshore installation of MDA on test
buoys and the hybrid PowerBuoy® with specific operational
requirements, budget and completion dates; and (2) refurbishment of
the PB3 PowerBuoy® with product improvements and new MDA software
with specific design requirements, budget and complete
dates |
|
30 |
|
|
MOSWEC |
|
Retrofit
the MOSWEC MES hull system, deployed off the NJ shore, and
providing sufficient power and data |
|
10 |
|
Safety |
|
Safety
Measure
|
|
Specific
lost-time incident (LTI) metrics and an exceedance of the maximum
metric may result in a total scorecard score of zero at the
discretion of the Board |
|
10 |
|
TOTAL |
|
|
|
|
|
100 |
In
addition, the Compensation Committee established a threshold for
obtaining any STI award for fiscal year 2022. A 75% threshold was
established, and upon attainment, a 50% award would be made.
Between 75% and 100%, the award would be linearly interpolated, and
between 100% and 200% (the maximum award), the award would be
interpolated.
Consistent
with fiscal year 2022, for equity grants to the NEOs in fiscal year
2023 and beyond, the intent is for the grant to be in the form of
RSUs instead of NQSOs.
Compensation
Considerations and Decisions for Fiscal Year 2022
In
May 2022, the Compensation Committee held a meeting to address
management’s recommendation for fiscal year 2022 in terms of: (i)
salary changes; (ii) STI bonus pool; and (iii) STI bonus
alternatives for the NEOs. The Compensation Committee assessment
included a review of the Company’s scorecard for the fiscal year,
the performance reviews of high performing individuals, and the
performance review of the NEOs. The Compensation Committee
determined that the overall performance of the Company in terms of
meeting the commercial targets for the fiscal year included in the
scorecard (particularly sales and bookings) had significantly
improved from the previous fiscal year, but still did not reached
the full score as determined in the scorecard. The Committee also
considered that fiscal year 2022 product development and safety
targets had been met.
Considering
the overall performance of the Company for the fiscal year, and
particularly the performance reviews of high performing individuals
within the staff, the Compensation Committee approved management’s
recommendation for salary adjustments and STI pool for the fiscal
year. The salary adjustment resulted on an average 3.3% pay
increase across the Company, and the STI pool resulted in a total
of $245,811 in bonus awards across the Company.
In
terms of NEOs compensation and STI bonus, the Compensation
Committee considered the following: (i) that all NEOs had been
recently named; (ii) that in their term in their respective offices
their efforts were already positively impacting the Company’s
performance; and, (iii) that the Company had met the product
development and safety targets in the scorecard (representing 25%
of the STI goals). Hence, the Compensation Committee resolved to
approve that the NEOs receive 20% of their respective target
bonuses for fiscal year 2022, pro-rated for any partial year of
service. Since the NEOs had not had a complete year of service as
of this assessment, no salary increases were approved at this time,
with the exception of the CFO who received a 4%
increase.
Compensation
Goals and Objectives for Fiscal Year 2023
In
May 2022, the Compensation Committee developed objectives for the
STI plan for the NEOs for fiscal year 2023. The Compensation
Committee established objectives across three main categories;
financial performance, operational performance, and safety
performance as reflected in the following table.
|
Category |
|
Metric |
|
Measurement |
|
Target
Points |
|
Financial |
|
New
Bookings |
|
$9.3M
new bookings |
|
60 |
|
Operational |
|
Manufacturing |
|
Successfully
start manufacturing of WAM-Vs in NJ by September 30, 2022 utilizing
external project management support to move the manufacturing
lines |
|
10 |
|
|
Demonstrations |
|
Deliver
test buoy with MDA to San Diego in time for USCG to install the
buoy in time for Navy’s ANTX. Stream live data from the deployed
MDA system for at least 1 week and intermittently whenever required
by Navy; demonstrate at least 1 night-time detection; demonstrate
at least one manual intervention |
|
10 |
|
|
PB2.0 |
|
(1)Validate
commercial and functional specifications for next-gen (PB2.0) WEC
and non-WEC system by July 31, 2022
(2)Validate
hull shape, external and internal, for PB2.0 taking into account
feedback from the FSD deployment, solar studies, and the
requirements of MDA payloads based on NJ tests and ANTX, by October
31, 2022
(3)Finalize
design for PB2.0 hull and obtain firm quotes and delivery timelines
by November 30, 2022; place order for PB2.0 hull by January 31,
2023
|
|
10 |
|
Safety |
|
Proactive
Measures Implementation |
|
(1)Roll-out
of the new observation card system by 7/31
(2)Implementation
of a QA/QC system by 10/31
|
|
5 |
|
|
LTIs |
|
(1)
Zero (0) LTI days results in a safety score of 5 points. LTI is
measured as any LTI occurring on an OPT led job not just per OSHA
definition
(2)
One (1) LTI day results in a safety score of 2 points.
(3)
Two (2) LTI days results in a safety score of 0 points.
(4)
Greater than two (2) LTI days MAY result in a Total Scorecard score
of 0 points (at the discretion of the board).
|
|
5 |
|
Total |
|
|
|
|
|
100 |
In
addition, the Compensation Committee established a threshold for
obtaining any STI award for fiscal year 2023. A 75% threshold was
established, and upon attainment, a 50% award would be made.
Between 75% and 100%, the award would be linearly interpolated, and
between 100% and 200% (the maximum award), the award would be
interpolated.
In January 2022 the Company adopted a new program for long term
incentive (“LTI”) awards. Pursuant to the new program, named
executive officers (“NEOs”), vice presidents, and select other
direct reports to the Chief Executive Officer receive restricted
stock units (“RSUs”) while the rest of the Company’s employees
receive non-qualified stock options (“NQSOs”). NQSOs are subject to
time-based vesting, while RSUs are subject to both time-based and
performance-based vesting criteria. Performance-based vesting is
subject to a total shareholder return (“TSR”) formula, which can be
altered to allow for vesting in the second year if the TSR metric
is not achieved in the first year, and for vesting in the third
year if the TSR metric is not achieved for the second year. The TSR
metric has two components – an absolute TSR metric that evaluates
the performance of OPT’s common stock year-over-year, and a
relative TSR metric that evaluates the performance of OPT’s common
stock against a defined index, currently the Russell 3000 Microcap
index. One-third of RSU awards vest over time, one-third vest as
absolute TSR metrics are achieved and one-third vest as relative
TSR metrics are achieved.
Summary
Compensation Table
The
following table sets forth the compensation paid or accrued during
the fiscal years ended April 30, 2022 and April 30, 2021 to our
named executive officers.
|
Name
and Principal Position
|
|
Year |
|
|
Salary
($)
(1)
|
|
|
Bonus
($)
(2)
|
|
|
Stock
Awards
($)
(3)
|
|
|
Option
Awards
($)
(4)
|
|
|
All
Other Compensation
($)
|
|
|
Total
($)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philipp Stratmann |
|
2022 |
|
|
$ |
344,945 |
|
|
$ |
54,000 |
|
|
$ |
349,269 |
|
|
$ |
116,534 |
|
|
$ |
103,162 |
(7) |
|
$ |
967,910 |
|
| President and
Chief Executive Officer |
|
2021 |
|
|
$ |
240,000 |
|
|
$ |
33,600 |
|
|
$ |
— |
|
|
$ |
63,622 |
|
|
$ |
3,000 |
(7) |
|
$ |
340,222 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Robert Powers |
|
2022 |
|
|
$ |
108,182 |
|
|
$ |
11,667 |
|
|
$ |
284,140 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
403,989 |
|
| Senior Vice
President and Chief Financial Officer |
|
2021 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Joseph DiPietro |
|
2022 |
|
|
$ |
133,076 |
|
|
$ |
6,729 |
|
|
$ |
47,190 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
186,995 |
|
| Principal
Accounting Officer, Controller, and Treasurer |
|
2021 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| George H. Kirby III (5) |
|
2022 |
|
|
$ |
505,480 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
505,480 |
|
| Former President
and Chief Executive Officer |
|
2021 |
|
|
$ |
391,140 |
|
|
$ |
58,671 |
|
|
$ |
— |
|
|
$ |
374,919 |
|
|
$ |
1,500 |
(8) |
|
$ |
826,230 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Matthew T. Shafer (6) |
|
2022 |
|
|
$ |
114,874 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,571 |
(9) |
|
$ |
120,445 |
|
| Former Senior Vice
President, Chief Financial Officer and Treasurer |
|
2021 |
|
|
$ |
253,125 |
|
|
$ |
25,313 |
|
|
$ |
— |
|
|
$ |
215,863 |
|
|
$ |
10,139 |
(9) |
|
$ |
504,440 |
|
(1)
Salary represents actual salary earned during each fiscal year. The
amounts in this column may be different from the amounts listed
below under description of employment agreements.
(2)
This amount represents bonuses earned by the named executive
officers for fiscal years 2022 and 2021. For fiscal year 2022, the
Compensation Committee exercised discretion to award bonuses based
on the Company’s results of operations and other performance
metrics. For fiscal year 2021, the Compensation Committee exercised
negative discretion to reduce the bonus percentages from 25% to 20%
based on the Company’s results of operations.
(3)
The amounts in the “Stock Awards” column reflect the aggregate
grant date fair value of restricted stock granted during the year
computed in accordance with the provisions of Accounting Standards
Codification (ASC) No. 718, “Compensation- Stock Compensation.” The
assumptions used in calculating these amounts are incorporated by
reference to Note 14 to the financial statements in the Company’s
Annual Report on Form 10-K for the year ended April 30,
2022.
(4)
The amounts in the “Option Awards” column reflect the aggregate
grant date fair value of stock options granted during the year
computed in accordance with the provisions of Accounting Standards
Codification (ASC) No. 718, “Compensation- Stock Compensation.” The
assumptions used in calculating these amounts are incorporated by
reference to Note 14 to the financial statements in the Company’s
Annual Report on Form 10-K for the year ended April 30,
2022.
(5)
Mr. Kirby resigned from the Company on June 18, 2021.
(6)
Mr. Shafer resigned from the Company on September 22,
2021.
(7)
For fiscal year 2022, the amount of $103,162 includes $94,124 of
relocation expenses and $9,038 for the Company’s matching
contributions to the 401(K) Plan. For fiscal year 2021, the amount
of $3,000 relates to the Company’s matching contributions to the
401(K) Plan
(8)
For fiscal year 2021, the amount of $1,500 relates to the Company’s
matching contributions to the 401(K) Plan.
(9)
For fiscal year 2022, the amount of $5,571 relates to the Company’s
matching contribution to the 401(K) Plan. For fiscal year 2021, the
amount of $10,139 relates to the Company’s matching contributions
to the 401(K) Plan.
Employment
Agreements
A
discussion of the employment agreements of Mr. Kirby and Mr. Shafer
are not included as they are no longer serving as officers or
directors of the Company.
Philipp
Stratmann – President, Chief Executive Officer and
Director
Effective
June 18, 2021, in connection with his appointment as Chief
Executive Officer and President, Mr. Stratmann entered into an
Employment Agreement with the Company. Pursuant to the Employment
Agreement, Mr. Stratmann will receive an annual base salary of
$360,000, is eligible for an annual, discretionary,
performance-based bonus targeted at 75% of base salary on such
terms and conditions as may be determined by the Board or its
Compensation Committee, and is eligible to receive long-term
incentive equity based awards, pursuant to the Company’s 2015
Omnibus Incentive Plan, as amended, subject to such terms and
conditions as may be determined by the Board or its Compensation
Committee. At the time of signing the Employment Agreement, Mr.
Stratmann received a one-time grant of 100,000 restricted stock
units that vest, if at all, equally over two years with 1/3 of each
vesting based on time and 2/3 of each vesting based on positive
total shareholder return.
If he
is terminated other than for cause he will receive 12 months of
salary as severance. Mr. Stratmann is also subject to covenants
regarding non-competition, non-solicitation and
confidentiality.
Robert
Powers - Senior Vice President and Chief Financial
Officer
Effective
December 13, 2021, in connection with his appointment as Senior
Vice President and Chief Financial Officer, Mr. Powers entered into
an Employment Agreement with the Company. Pursuant to the
Employment Agreement, Mr. Powers will receive an annual base salary
not to exceed $280,000, is eligible for an annual, discretionary,
performance-based bonus targeted at 50% of base salary on such
terms and conditions as may be determined by the Board or its
Compensation Committee, and is eligible to receive long-term
incentive equity based awards, pursuant to the Company’s 2015
Omnibus Incentive Plan, subject to such terms and conditions as may
be determined by the Board or its Compensation
Committee.
If
Mr. Powers is terminated other than for cause (or Mr. Powers quits
for good reason) within the first 12 months (but with Mr. Powers
having worked at least six months), he will receive three months of
salary as severance, and if terminated other than for cause
thereafter, he will receive six months of salary as severance. Mr.
Powers is also subject to covenants regarding non-competition,
non-solicitation and confidentiality.
Joseph
DiPietro – Principal Accounting Officer, Controller, and
Treasurer
In
connection with his promotion in September 2021, Mr. DiPietro
entered into a new employment letter. His annual salary was
increased to $190,000 and he is eligible for an annual bonus at a
target of 25% of his annual salary.
Stock
Option and Other Compensation Plans
2015
Omnibus Incentive Plan
On
August 17, 2015, the Board of Directors approved, subject to the
receipt of shareholder approval, the 2015 Plan. On October 22,
2015, the shareholders approved the 2015 Plan, and the 2006 Stock
Incentive Plan was terminated.
The
2015 Plan is administered by a committee of the Board, which
consists of not fewer than two directors of the Company designated
by the Board, each of whom is a “non-employee director” within the
meaning of Rule 16b-3 promulgated under the Exchange Act, an
“outside director” within the meaning of Section 162(m) of the
Internal Revenue Code as amended (as now in effect or later amended
and any successor thereto, the “Code”) and, for so long as our
common stock is listed on the Nasdaq, an “independent director”
within the meaning of the Nasdaq rules. Among other things, the
committee administering the 2015 Plan has full power and authority
to take all actions and to make all determinations required or
provided for under the 2015 Plan, any award under the 2015 Plan or
any award agreement under the 2015 Plan, not inconsistent with the
specific terms and conditions of the 2015 Plan, which the committee
deems to be necessary or appropriate to the administration of the
2015 Plan. The committee administering the 2015 Plan, may amend,
modify or supplement the terms of any outstanding award, provided
that no amendment, modification or supplement of the terms of any
outstanding award shall impair a grantee’s rights under an award
without the consent of the grantee. The committee administering the
2015 Plan is also authorized to construe the award agreements and
may prescribe rules relating to the 2015 Plan. Notwithstanding the
foregoing, our full Board will conduct the general administration
of the 2015 Plan with respect to all awards granted to our
non-employee directors. In addition, in its sole discretion, our
Board may at any time and from time to time exercise any and all
rights and duties of the committee under the 2015 Plan except with
respect to matters which are required to be determined in the sole
discretion of the committee under Rule 16b-3 of the Exchange Act or
Section 162(m) of the Code, or any regulations or rules issued
thereunder.
The
2015 Plan provides for the grant of stock options, SARs, restricted
stock awards, stock unit awards and unrestricted stock awards,
dividend equivalent rights, performance share awards or other
performance-based awards, other equity-based awards or cash to
eligible employees, officers and non-employee directors of the
Company or any affiliate of the Company, or any consultant or
adviser to the Company or an affiliate who is currently providing
services to the Company or an affiliate, or to any other individual
whose participation in the 2015 Plan is determined to be in the
best interests of the Company by the committee administering the
2015 Plan. If any award expires, is cancelled, or terminates
unexercised or is forfeited, the number of shares subject thereto
is again available for grant under the 2015 Plan. The limitation on
the amount of shares of stock issuable under the 2015 Plan is
subject to adjustment in the event of certain changes in our
capital stock, such as recapitalization, reclassifications, stock
splits, reverse stock splits, spin-offs, combinations of our stock,
exchanges of our stock and other increases or decreases in our
stock without receipt of consideration.
Between
October 2015 and December 2021, the shareholders approved a number
of amendments to the 2015 Plan each of which increased the number
of shares available for grant under the 2015 Plan. On October 18,
2022, our Board approved and adopted an amendment to the 2015 Plan,
subject to shareholder approval to increase the number of shares
available for grant under the 2015 Plan from 3,132,036 to
4,382,036, to ensure that adequate shares will be available for
future grants. That proposal is part of this proxy statement (see
page 16) and pending for shareholder approval at the
Meeting.
As of
April 30, 2022, options to purchase 1,320,090 shares of our common
stock at a weighted average exercise price of $2.17 were
outstanding under our 2015 Plan.
As of
April 30, 2022, we had granted 805,122 shares of restricted common
stock under our 2015 Omnibus Incentive Plan. 24,354 shares have
vested, and 3,004 shares were cancelled.
The
2015 Plan will terminate automatically on October 22, 2025, which
is ten years after the date on which shareholders approved the 2015
Plan. As of October 18, 2022, there are 695,127 shares available
for grant under the 2015 Plan.
2018
Employment Inducement Incentive Award Plan
On
January 18, 2018, the Board adopted the Ocean Power Technologies,
Inc. Employment Inducement Incentive Award Plan (the “Inducement
Plan”) and, subject to the adjustment provisions of the Inducement
Plan, reserved 25,000 shares of the Company’s common stock for
issuance pursuant to equity awards granted under the Inducement
Plan.
The
Inducement Plan was adopted without shareholder approval pursuant
to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules.
In June 2021, the Company transferred its stock listing from Nasdaq
to NYSE American, and the Inducement Plan continued in effect. The
Inducement Plan provides for the grant of equity-based awards,
including restricted stock units, restricted stock, performance
shares and performance units, and its terms are substantially
similar to the Company’s 2015 Plan, including with respect to
treatment of equity awards in the event of a “change in control” as
defined under the Inducement Plan, but with such other terms and
conditions intended to comply with the Nasdaq inducement award
exception.
In
accordance with the applicable NYSE American Listing Rules, awards
under the Inducement Plan may only be made to individuals not
previously employees or non-employee directors of the Company (or
following such individuals’ bona fide period of non-employment with
the Company), as an inducement material to the individuals’ entry
into employment with the Company. An award is any right to receive
the Company’s common stock pursuant to the Inducement Plan,
consisting of a performance share award, restricted stock award, a
restricted stock unit award or a stock payment award. No Awards may
be granted or awarded during any period of suspension or after
termination of the Plan, and in no event may any Award be granted
under the Plan after the tenth (10th) anniversary of the date of
its adoption. Any Awards that are outstanding on the Expiration
Date, or the date of termination of the Plan (if earlier), shall
remain in force according to the terms of the Plan and the
applicable Award Agreement. On February 9, 2022, the 2018
Inducement Plan was amended to increase the authorized shares by
250,000 to 275,000. As of October 18, 2022, there were 113,513
shares outstanding and 161,487 shares available for grant under the
Inducement Plan.
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,
2022:
| |
|
Option Awards |
|
Stock Awards |
|
Name
and Principal Position
|
|
Numbers of Shares Underlying Unexercised Options (#)
Exercisable |
|
|
Numbers of Shares Underlying Unexercised Options (#)
Unexercisable |
|
|
Option Exercise Price ($) |
|
|
Option Expiration Date |
|
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
|
|
Market
Value of Shares or Units of Stock That Have Not
Vested
($)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Philipp Stratmann |
|
|
4,667 |
|
|
|
4,666 |
|
|
$ |
2.93 |
|
|
|
1/14/2031 |
(1) |
|
|
|
|
|
|
|
|
| President and
Chief Executive Officer |
|
|
— |
|
|
|
18,667 |
|
|
$ |
2.93 |
|
|
|
1/14/2031 |
(2) |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
289,000 |
(3) |
|
$ |
306,340 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Robert Powers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,000 |
(4) |
|
$ |
183,380 |
|
| Senior Vice
President and Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Joseph DiPietro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
(5) |
|
$ |
34,980 |
|
| Principal
Accounting Officer, Controller, and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There
were no outstanding option awards or stock awards related to George
H. Kirby or Matthew T. Shafer as of April 30, 2022.
(1)
Represents stock options granted January 14, 2021 relating to an
aggregate of 9,333 shares which vest over a two-year period based
on service requirements.
(2)
Represents stock options, with market-based conditions, granted on
January 14, 2021 relating to an aggregate of 18,667 shares which
vest over a two-year period when certain market price targets are
met.
(3)
Represents restricted stock, with market-based conditions, granted
on June 18, 2021 relating to an aggregate 100,000 of which vest
over a two-year period when certain market price targets are met
and granted on January 14, 2022 relating to an aggregate 189,000 of
which vest over a three-year period when certain market price
targets are met.
(4)
Represents restricted stock, with market-based conditions, granted
on December 13, 2021 relating to an aggregate 75,000 of which vest
over a two-year period when certain market price targets are met
and granted on January 14, 2022 relating to an aggregate 98,000 of
which vest over a three-year period when certain market price
targets are met.
(5)
Represents restricted stock, with market-based conditions, granted
on January 14, 2022 related to an aggregate 33,000 which vest over
a three-year period when certain market price targets are
met.
Potential
Payments upon Termination of Employment or Change in
Control
The
following information sets forth the terms of potential payments to
each of our named executive officers in the event of a termination
of employment. We did not include information for Mr. Kirby or Mr.
Shafer since they are no longer employed by the Company. The terms
cause, good reason and change of control have the meanings given
such terms in the executive’s employment agreement.
Termination
by Company without Cause; Termination by Executive for Good
Reason. Our employment agreement with each of Messrs. Stratmann
and Powers provides, upon the termination of his employment other
than for cause, or if he terminates his employment for good reason,
that he has the right to receive severance payments of six months
of base salary (for Mr. Stratmann) or three months of his base
salary(for Mr. Powers) (during year one of employment) and twelve
months of base salary (for Mr. Stratmann) or six months of base
salary (for Mr. Powers) thereafter.
Termination
by Company for Cause; Termination by Executive without Good
Reason. Neither Mr. Stratmann nor Mr. Powers is entitled to any
benefits in the event of a termination of the Company for cause or
by the executive without good reason. The employment agreement with
Mr. DiPietro does not contain provisions regarding severance in the
event of a termination by the Company with or without cause or
termination by the executive without good reason.
Change
in Control. In the event of a termination by the Company in
connection with a change of control, or by the executive within 90
days of a change of control, the employment agreements for Mr.
Stratmann and Mr. Powers provide for a payment of twelve and three
months, respectively, of base salary. The employment agreement for
Mr. DiPietro does not contain change of control provisions;
therefore, payments for cash severance and continued healthcare
benefits are the same as for termination without cause. The
restricted stock agreement provides for accelerated stock vesting
upon a change in control.
Termination
upon Failure to Renew by the Company. In the event that the
Company elects not to renew the employment agreement, and the
executive terminates their employment within 30 days of notice of
non-renewal, the employment agreements for Mr. Stratmann and Mr.
Powers provide for a payment of twelve and three months,
respectively, of base salary. The employment agreement for Mr.
DiPietro does not contain provisions for payments in this
event.
Qualifying
retirement. Under our restricted stock agreements with the
named executive officers, upon a Qualifying Retirement, 50% of
unvested restricted shares will vest immediately. A “Qualifying
Retirement” means retirement by the recipient after satisfaction of
the conditions in either clause (A) or clause (B): (A) the
recipient has both (1) attained the age of 55 and (2) completed at
least ten years of employment with the Company; or (B) the sum of
the recipient’s age plus the number of years he or she has been
employed by the Company equals or exceeds 75 years. In addition,
the agreements of Messrs. Stratmann and Powers extend the
exercisability of vested options to 90 days after any termination
event.
PROPOSAL FOUR
ADVISORY
RESOLUTION ON EXECUTIVE COMPENSATION PRACTICES
The
Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted
in 2010, requires that we provide our shareholders with the
opportunity to vote to approve, on a non-binding, advisory basis,
the compensation of our named executive officers as disclosed in
this proxy statement in accordance with the compensation disclosure
rules of the SEC. Consistent with our shareholders’ preference
expressed in voting at the 2011 Annual Meeting of Shareholders, the
Board of Directors determined that an advisory vote on the
compensation of our named executive officers will be conducted
every year. In this proposal we are asking shareholders to approve
the following advisory resolution at the Meeting:
RESOLVED,
that the compensation paid to the Company’s named executive
officers, as disclosed pursuant to Item 402 of Regulation S-K,
including the compensation tables and narrative discussion in the
Company’s proxy statement for its 2022 Annual Meeting of
Shareholders, is hereby APPROVED.
The
Board of Directors recommends a vote FOR this resolution because it
believes that the policies and practices described in the Executive
Compensation section are effective in achieving our goals of
rewarding sustained financial and operating performance and
leadership excellence, aligning the executives’ long-term interests
with those of our shareholders and motivating our executives to
remain with us for long and productive careers. Named executive
officer compensation over the past two years reflects amounts of
cash and equity compensation consistent with our stated goals and
objectives. We urge shareholders to read the Executive Compensation
section beginning on page 23 of this proxy statement, including the
2022 Summary Compensation Table and related tables and narrative,
appearing on pages 29 through 30 which provide information on our
compensation policies and practices and the compensation of our
named executive officers.
This
advisory resolution, commonly referred to as a “say-on-pay”
resolution, is nonbinding on the Board of Directors. Although
nonbinding, the Board will review and consider the voting results
when evaluating our executive compensation program.
Board
Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
PROPOSAL FIVE
ADVISORY
VOTE ON THE FREQUENCY OF
FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION
In
accordance with Section 14A of the Securities Exchange Act of 1934,
as amended, we are asking stockholders to indicate their preference
for how frequently the Company should seek advisory approval of our
named executive officer compensation, such as the “say-on-pay” vote
included in Proposal No. 4 above. By voting on this Proposal No. 5,
stockholders may indicate whether they would prefer an advisory
vote on our named executive officer compensation once every one,
two or three years.
The
Company has held annual say-on-pay votes starting with the 2011
Annual Meeting. The Board continues to believe that an advisory
vote on our executive compensation every year is most appropriate
and recommends stockholders approve an annual advisory vote on
named executive officer compensation. Holding an annual advisory
vote on executive compensation allows stockholders to provide
timely input on our compensation philosophy, policies and practices
and provides a direct and simple means to express investor
sentiment regarding our executive compensation program.
Stockholders
should understand they are not voting “for” or “against” a
recommendation of the Board; rather, stockholders are asked to
choose whether future advisory votes on named executive officer
compensation should be held every one, two or three years.
Stockholders may also abstain from voting. This vote is advisory
and not binding on the Board or the Company and the final decision
on the frequency of future advisory votes on named executive
compensation remains with the Board. The Board values the opinions
expressed by our stockholders through their votes and will
carefully consider the outcome of the vote when making future
decisions regarding the frequency of future advisory votes on named
executive compensation.
Board
Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD FUTURE ADVISORY VOTES
ON EXECUTIVE COMPENSATION EVERY YEAR.
OTHER MATTERS
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.
Shareholder
Proposals for 2023 Annual Meeting
In
accordance with our by-laws, a shareholder who wishes to present a
proposal for consideration at the 2023 Annual Meeting must deliver
a notice of the matter the shareholder wishes to present to our
principal executive offices in Monroe Township, NJ, 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
year’s Meeting. Accordingly, any notice given by or on behalf of a
shareholder pursuant to these provisions of our by-laws (and not
pursuant to Rule 14a-8 under the Exchange Act) must be received no
earlier than August 10, 2023 and no later than September 12, 2023
(except that in the event that the date of the 2023 Annual Meeting
of Shareholders is advanced by more than 20 days, or delayed by
more than 60 days, from the first anniversary of the 2022 Annual
Meeting of Shareholders, a shareholder’s notice must be so received
no earlier than the 120th day prior to the 2023 Annual Meeting and
not later than the close of business on the later of (A) the 90th
day prior to the 2023 Annual Meeting and (B) the tenth day
following the day on which notice of the date of the 2023 Annual
Meeting was mailed or public disclosure of the date of the 2023
Annual Meeting was made, whichever first occurs). The notice should
include (i) a brief description of the business desired to be
brought before the 2023 Annual Meeting and the reasons for
conducting such business at the Annual Meeting, (ii) the name and
record address of the shareholder, (iii) the class or series and
number of shares of capital stock of the Company beneficially owned
or owned of record by the shareholder, (iv) a description of all
arrangements or understandings between the shareholder and any
other person or persons (including their names) in connection with
the proposal and any material interest of the shareholder in such
business, (v) a representation that the shareholder intends to
appear in person or by proxy at the 2023 Annual Meeting to bring
such business before the meeting and (vi) a representation as to
whether such shareholder intends, or is part of a group that
intends, to deliver a proxy statement and/or solicit proxies. Any
proposal should be addressed to the Corporate Secretary, Ocean
Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe
Township, NJ 08831. The proposal must comply with SEC regulations
regarding the inclusion of shareholder proposals in
company-sponsored proxy materials.
Annual
Report
Our
2022 Annual Report is concurrently being mailed to shareholders.
The 2022 Annual Report contains our consolidated financial
statements for fiscal year 2022 and the report thereon of
EisnerAmper, LLP, which was our independent registered public
accounting firm when the audit of our consolidated financial
statements for fiscal year 2022 was issued. Our 2022 Annual Report
does not constitute, and should not be considered, a part of this
proxy solicitation material. Shareholders may obtain an
additional copy of our 2022 Annual Report for the year ended April
30, 2022, without charge, by writing to Ocean Power Technologies,
Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ
08831.
Householding
of Annual Meeting Materials
We
have adopted the cost saving practice of “householding” proxy
statements and annual reports. Some banks, brokers and other
nominee record holders are also “householding” the proxy statements
and annual reports for their customers. This means that only one
copy of our proxy statement or annual report may have been sent to
multiple shareholders in your household. We will promptly deliver a
separate copy of either document to you if you call or write us at
the following address or phone number: Ocean Power Technologies,
Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831,
Attention: Secretary or (609) 730-0400. If you want to receive
separate copies of the annual report and proxy statement in the
future, or if you are receiving multiple copies and would like to
receive only one copy for your household, you should contact your
bank, broker or other nominee record holder, or you may contact us
at the above address and phone number.
|
|
BY |
ORDER
OF THE BOARD OF DIRECTORS |
| |
|
| |
/s/
Nicholas Day |
| |
Nicholas
Day |
| |
General
Counsel and Secretary |
Dated:
October 18, 2022
IT
IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
ANNEX A
SIXTH
AMENDMENT TO THE
OCEAN
POWER TECHNOLOGIES, INC.
2015
OMNIBUS INCENTIVE PLAN
WHEREAS,
Ocean Power Technologies, Inc. (the “Company”) previously adopted
the Ocean Power Technologies, Inc. 2015 Omnibus Incentive Plan
effective October 22, 2015 (the “2015 Plan”) and previously amended
the 2015 Plan effective October 21, 2016, December 7, 2018,
December 20, 2019, December 23, 2020 and December 13, 2021;
and
WHEREAS,
the Board of Directors of the Company has authorized an amendment
of the 2015 Plan to increase the number of shares authorized for
Awards thereunder from 3,132,036 shares to 4,382,036
shares.
NOW,
THEREFORE, effective as of December 14, 2022, 2022, subject to
approval by the Company’s shareholders within twelve (12) months of
the effective date of this Amendment, Sections 4.1 and 6.2 of the
Plan are amended to replace the number 3,132,036 with the number
4,382,036.
IN
WITNESS WHEREOF, the Company has caused this Amendment to the
Plan to be duly executed in its name and on its behalf by its duly
authorized officer.
| |
OCEAN
POWER TECHNOLOGIES, INC. |
|
|
|
|
| |
By: |
/s/
Philipp Stratmann |
| |
Name: |
Philipp
Stratmann |
| |
Title: |
President
& Chief Executive Officer |
Ocean Power Technologies (AMEX:OPTT)
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Ocean Power Technologies (AMEX:OPTT)
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