UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant [X]
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by a Party other than the Registrant [ ]
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the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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[ ]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Pursuant to §240.14a-12
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Research
Frontiers Incorporated
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4)
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Proposed
maximum aggregate value of transaction:
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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1)
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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240
Crossways Park Drive
Woodbury,
NY 11797
(516)
364-1902
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
June
10, 2021 at 11:00 A.M.
To
the Stockholders of Research Frontiers Incorporated:
Notice
is hereby given that the Annual Meeting of Stockholders of Research Frontiers Incorporated (the “Company”) will be
held at the Company’s corporate office located at 240 Crossways Park Drive, Woodbury, New York 11797, on June 10, 2021 at
11:00 A.M., local time, for the following purposes:
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1.
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To
elect two Class I directors;
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2.
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To
ratify the selection of CohnReznick LLP as the independent registered public accountants of the Company for the fiscal year
ending December 31, 2021;
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3.
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To
transact such other business as may properly come before the meeting or any adjournments thereof.
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The
Board of Directors has fixed the close of business on April 16, 2021 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting or any adjournments thereof.
The
Board of Directors requests all stockholders to sign and date the enclosed form of proxy and return it in the postage paid, self-addressed
envelope provided for your convenience. Please do this whether or not you plan to attend the meeting. Should you attend, you may,
if you wish, withdraw your proxy and vote your shares in person. BECAUSE YOUR BROKER MAY NOT HAVE DISCRETION TO VOTE ON ALL
OF THE ABOVE MATTERS, IT IS IMPORTANT THAT YOU SEND IN YOUR PROXY.
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By
Order of the Board of Directors,
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JOSEPH
M. HARARY, Secretary
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Woodbury,
New York
April
29, 2021
RESEARCH
FRONTIERS INCORPORATED
240
CROSSWAYS PARK DRIVE, WOODBURY, NY 11797 (516) 364-1902
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
To
be held on Thursday, June 10, 2021
This
Proxy Statement is furnished by the Board of Directors of Research Frontiers Incorporated (the “Company”) in connection
with the solicitation by the Company of proxies to be voted at the Annual Meeting of Stockholders which will be held at the Company’s
corporate offices located at 240 Crossways Park Drive, Woodbury, New York 11797, on June 10, 2021 at 11:00 A.M., local time, and
all adjournments thereof.
We
currently intend to hold our annual meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation
and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state,
and local governments may impose. In the event it is not possible or advisable to hold our annual meeting in person, we will announce
alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of
remote communication. Please monitor our annual meeting website at https://www.cstproxy.com/smartglass/2021/ for updated
information. If you are planning to attend our meeting, please check the website one week prior to the meeting date. As always,
we encourage you to vote your shares prior to the annual meeting.
Any
stockholder giving a proxy will have the right to revoke it at any time prior to the time it is voted. A proxy may be revoked
by written notice to the Company, Attention: Secretary, by execution of a subsequent proxy or by attendance and voting in person
at the Annual Meeting of Stockholders. Attendance at the meeting will not automatically revoke the proxy. All shares represented
by effective proxies will be voted at the Annual Meeting of Stockholders, or at any adjournment thereof. Unless otherwise specified
in the proxy, shares represented by proxies will be voted (i) for the election of the nominee for director recommended by the
Board of Directors listed below; and (ii) for the ratification of the selection of the independent registered public accountants.
The cost of proxy solicitations will be borne by the Company. In addition to solicitations of proxies by use of the mails, some
officers or employees of the Company, without additional remuneration, may solicit proxies personally or by telephone. The Company
will also request brokers, dealers, banks and their nominees to solicit proxies from their clients, where appropriate, and will
reimburse them for reasonable expenses related thereto.
The
Company’s executive offices are located at 240 Crossways Park Drive, Woodbury, New York 11797. The Company believes that
it can learn from constructive dialog with stockholders and other stakeholders and therefore actively encourages communications
with all such interested parties. All appropriate e-mail communications to Directors@SmartGlass.com will be forwarded to each
director of the Company. Furthermore, subject to the limits imposed by U.S. Securities and Exchange Commission (“SEC”)
regulations regarding disclosure of information that is not made generally available to all stockholders at the same time, we
will endeavor to respond to specific questions or suggestions which, in the opinion of management or the Board, merit individual
response. On or about April 30, 2021 this Proxy Statement and the accompanying form of proxy, together with a copy of the Annual
Report of the Company for the year ended December 31, 2020, including financial statements, are to be mailed to each stockholder
of record at the close of business on April 16, 2021.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 10, 2021.
This
Proxy Statement is available at www.smartglass.com/proxy.asp.
VOTING
SECURITIES AND SECURITY OWNERSHIP
Shares
Entitled to Vote, Quorum and Required Vote
Only
stockholders of record at the close of business on April 16, 2021 are entitled to vote at the meeting. As of April 16, 2021, the
Company had issued and outstanding and entitled to vote 31,650,396 shares of common stock, par value $0.0001 per share (the “Common
Stock”), the Company’s only class of voting securities outstanding. Each share of Common Stock entitles the holder
thereof to one vote.
As
a stockholder of record, you may vote in person at the Annual Meeting, or you may vote by proxy without attending the meeting.
If you are a registered stockholder, you may vote your shares by giving a proxy via mail, telephone or internet. To vote your
proxy by mail, indicate your voting choices, sign and date your proxy card and return it in the postage-paid envelope provided.
You may vote by telephone or internet by following the instructions on your proxy card. If you hold your shares through a broker,
bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares.
If
you provide a properly executed proxy before voting at the Annual Meeting is closed, the persons listed on the proxy card will
vote your shares of Common Stock in accordance with your directions. If you do not indicate how your shares are to be voted, the
persons listed on the proxy card will vote your shares as recommended by the Board of Directors. The persons listed on the proxy
card will also have the discretionary authority to vote on your behalf on any other matter that is properly brought before the
Annual Meeting. If you wish to give a proxy to someone other than the persons listed on the proxy card, please cross out the names
of the people listed on the proxy card and add the name of the person holding your proxy.
If
we receive a valid proxy before voting at the Annual Meeting is closed, your shares are voted as indicated on the proxy card.
If you indicate on your proxy card that you wish to “abstain” or “withhold,” as the case may be, from
voting on an item, your shares will not be voted on that item.
If
you do not provide voting instructions to your broker or nominee at least ten days before the Annual Meeting, that person has
discretion to vote your shares on matters that the Nasdaq Capital Market has determined are routine. However, a broker or nominee
cannot vote shares on non-routine matters without your instructions, and this is referred to as a “broker non-vote.”
Even
though your broker may have discretionary authority under current Nasdaq Capital Market rules to vote your shares on your behalf
on the proposal regarding the ratification of CohnReznick LLP as the independent registered public accountants of the Company
for 2021, your broker does not have authority to vote on the election of directors, so it is important that you vote your shares
and send in your proxy.
We
cannot conduct business at the Annual Meeting unless a quorum is present. In order to have a quorum, a majority of the shares
of the Common Stock that are outstanding and entitled to vote at the meeting must be represented in person or by proxy. Abstentions
and broker non-votes will be counted to determine whether there is a quorum present. If a quorum is not present, the Annual Meeting
will be rescheduled for a later date.
A
Director is elected by a plurality of the votes cast at the meeting and the two nominees for Class I director who receives the
most votes will be elected. Please note that brokerage firms or other nominees may not vote your shares with respect to matters
that are not “routine” under the rules. The rules were amended to provide that the election of directors is no longer
a “routine” matter. Brokerage firms or other nominees may not vote your shares with respect to the election of directors
without specific instructions from you as to how your shares are to be voted. Broker non-votes will have no effect on the outcome
of the vote.
The
ratification and appointment of our independent registered public accounting firm for 2021 requires an affirmative majority
of the total votes cast “FOR” and “AGAINST” to be approved. This matter is considered a “routine”
under the rules and, therefore, brokerage firms and other nominees have the authority under the rules to vote your unvoted shares
with respect to this matter if you have not furnished voting instructions within a specified period prior to the meeting. Abstentions
will have the same effect as votes against the proposal. Broker non-votes will have no effect on the outcome of the vote.
Security
Ownership of Principal Stockholders and Management
The
following table sets forth certain information with respect to those persons or groups known to the Company who beneficially own
more than 5% of the Common Stock and for all directors and executive officers of the Company individually and as a group.
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Amount and
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Nature of
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Exercisable
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Beneficial
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Warrants
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Percent
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Name of Beneficial Owner
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Ownership (1)
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and Options
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of Class
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Five Percent Stockholders:
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Black Rock, Inc.
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2,006,761
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-
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6.3
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55 East 52md Street
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New York, NY 10055
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Gauzy Ltd.
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1,838,824
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-
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5.8
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14 Hathiya Street
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Tel-Aviv Yafo Israel 6816914
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Directors and Executive Officers:
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Joseph M. Harary
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732,650
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(2)
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234,100
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2.3
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Darryl Daigle
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622,825
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(3)
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203,880
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2.0
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Alexander Kaganowicz
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386,008
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(4)
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203,880
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1.2
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William Graham Settle
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382,201
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155,826
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1.2
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Michael R. LaPointe
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84,884
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(5)
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40,850
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0.3
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All directors and officers as a group (5 persons)
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2,208,568
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(6)
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838,536
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7.0
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(1)
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All
information is as of April 16, 2021 and was determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), based upon information furnished by the persons listed or contained in
filings made by them with the SEC or otherwise known to the Company. Unless otherwise indicated, beneficial ownership disclosed
consists of sole voting and dispositive power, and also includes options and warrants held by the listed persons that are
presently exercisable or exercisable within the next 60 days, and awards of restricted stock subject to vesting are assumed
to be fully issued and outstanding. Shares of Common Stock of the Company acquired by officers, directors and employees through
the exercise of stock options or otherwise are subject to restrictions on their transfer, including restrictions imposed by
applicable securities laws, as well as additional restrictions imposed by the Company in accordance with written agreements
and policy statements. The mailing address for the above individuals is c/o Research Frontiers Incorporated, 240 Crossways
Park Drive, Woodbury, NY 11797.
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(2)
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All
of Mr. Harary’s shares of Common Stock are pledged to a third party as collateral security for certain obligations.
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(3)
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Includes:
(i) 69,808 shares of Common Stock held by Mr. Daigle’s business of which he has a 50% ownership interest, (ii) 125,000
shares of Common Stock owned by Mr. Daigle’s wife, as to which shares Mr. Daigle disclaims beneficial ownership,
(iii) 21,726 shares of Common Stock held in an IRA by Mr. Daigle’s wife, and (iv) 2,769 shares of Common Stock held
as a custodian for Mr. Daigle’s grandchildren.
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(4)
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Includes
19,205 shares of Common Stock held in an IRA by reporting person’s wife.
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(5)
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Includes
898 shares of Common Stock owned by Mr. LaPointe’s wife, as to which shares Mr. LaPointe disclaims beneficial ownership.
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(6)
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Includes
the securities described above in footnotes (2) through (5).
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ELECTION
OF DIRECTORS
(Item
1)
Two
directors of the Company will be elected at the 2021 Annual Meeting of Stockholders.
The
Board of Directors recommends a vote FOR Joseph M. Harary and FOR William Graham Settle as Class I directors, and it is intended
that proxies not marked to the contrary will be so voted.
Background
The
Board of Directors is divided into three classes, Class I, Class II and Class III, which is intended to be as nearly equal in
number as possible. Each class typically serves three years, with the terms of office of the respective classes expiring in successive
years. The Company currently has four directors with three of these directors being independent directors. Two of these individuals
are Class I directors, one of these individuals is a Class II director, and one of these individuals is a Class III director.
DIRECTORS
RECOMMENDED BY THE BOARD OF DIRECTORS
The
Board of Directors, upon recommendation of the Nominating and Corporate Governance Committee, proposes that Joseph M. Harary and
William Graham Settle each be elected to serve as Class I directors and hold office for a three-year term expiring at the 2024
Annual Meeting of Stockholders, and until the election and qualification of a respective successor. Mr. Harary and Mr. Settle
(each, a “Board Nominee”) has each indicated a willingness to serve as a director. If no other choice is specified
in the accompanying proxy, the persons named therein as proxies have advised the Board of Directors that it is their present intention
to vote the proxy for the election of each Board Nominee. Each of the current members of the Board of Directors of the Company
was elected to such office by the stockholders of the Company other than Mr. Settle who was appointed in August 2020 to fill a
vacancy on the Board. Should a Board Nominee become unable to accept nomination or election, it is intended that the person named
in the accompanying proxy will vote for the election of such other person as the Board of Directors may nominate in the place
of such Board Nominee on the recommendation of the Nominating and Corporate Governance Committee. There is no indication at present
that the Board Nominee will be unable to accept nomination.
We
believe that the members of our Board of Directors represent a desirable mix of backgrounds, skills and experience. The following
biographical information is provided with respect to each Board Nominee, including the specific experience, qualifications, attributes
or skills that led to the conclusion that each Board Nominee should serve as one of our directors considering our business and
structure.
Director
Nominees Standing for Election
Class
I - Term Expires at the 2024 Annual Meeting of Stockholders
Joseph
M. Harary
Joe
Harary, age 60, became Vice President and General Counsel to the Company in April 1992 and has been a director of the Company
since February 1993. In December 1999, Mr. Harary was promoted to the position of Executive Vice President and General Counsel,
and in February 2002 was promoted to the position of President and Chief Operating Officer of the Company. Mr. Harary was promoted
to his present position of President and Chief Executive Officer of the Company in January 2009. Mr. Harary has also been the
Treasurer and Chief Financial Officer of the Company from 2005 to 2010, and its corporate Secretary since 2007. Prior to joining
the Company, Mr. Harary’s corporate law practice emphasized technology, licensing, mergers and acquisitions, securities
law, and intellectual property law at three prestigious New York City law firms. Mr. Harary graduated Summa Cum Laude from Columbia
College in 1983 with an A.B. degree in economics and received a Juris Doctor degree from Columbia Law School in 1986 where he
was a Harlan Fiske Stone Scholar. Prior to attending law school, Mr. Harary was an economist with the Federal Reserve Bank of
New York. Mr. Harary’s significant and diverse managerial experience with the Company for more than 29 years, including
executive and operational roles, gives him unique insights into the Company’s business, relationships, challenges, opportunities
and operations.
William
Graham Settle
Graham
Settle, age 62, brings to the Board 35 years of experience in both the public and private sectors. Mr. Settle has served on the
Company’s Board of Directors since August 2020.
Mr.
Settle was first introduced to the Company by its founder, Bob Saxe, in 1986 at the time of Research Frontiers Initial Public
Offering, four years after beginning his career on Wall Street with Morgan Stanley/Dean Witter in 1982. His due diligence and
involvement over time has led him to make significant investments including direct participation in the Company’s capital
raising transactions and purchases in the open market.
In
1994, Mr. Settle was tapped to manage AT&T Capital’s newly established small and medium enterprise initiative in North
and South Carolina. The 1996 acquisition of AT&T Capital marked the beginning of 18 years of foreign operations with a move
to Bosnia and Herzegovina to establish the war-torn nation’s first micro-finance institution. Under his leadership, and
in partnership with bilateral and multilateral shareholders, the fledgling firm reached profitability and went on to rank #14
in Forbes Top 50.
Mr.
Settle continued to serve in the Balkans as Chief of Mission for World Bank Group’s private sector International Finance
Corporation (IFC) in Sarajevo and later in Belgrade where he led the in-country liaison for World Bank Group’s diplomatic
accreditation and forensic audit of Serbia’s arrears in the prelude to Paris Club negotiations.
After
the World Bank Group assignments, Graham Settle’s high-level roles in the Asian Development Bank (ADB) included board membership
on investee companies, focal point for all private sector development programs for developing member countries in the Asia and
Pacific region and Regional Mission Head of Private Sector Development for Central Asia in Almaty, Kazakhstan.
Mr.
Settle was also Senior Advisor to Kazakhstan Independent Directors Association and primary instructor for CFA candidates in Ethics
and Professional Standards. In 2012 he was a Founder of the Intelligence By Design Eurasian Training Alliance public-private partnership
with SAP, Pearson Education and the Government of Kazakhstan.
Through
his participation on special projects for Research Frontiers in Asia, Europe and North America, Graham Settle developed first-hand
knowledge of the Company, its technology and the industries it serves, with personal interaction with key SPD emulsion/film and
glass licensees and customers around the globe. His international business and government experience and financial and strategic
consulting abroad contributed a global perspective to Research Frontiers on these projects and continue to provide this as a member
of the Research Frontiers Board.
Graham
Settle was also a founding member of identity theft and cybersecurity firm InfoArmor in 2007. InfoArmor was acquired by All State
Insurance for $525 million in 2018.
After
the loss of his wife Amy, Graham took a year-long sabbatical homeschooling his two young children as they traveled to 15 countries
in 2017-2018. Mr. Settle also personally sponsored a Bosnian student for university studies in the USA.
Mr.
Settle is a Chartered Financial Analyst, completed the US Marine Corps Platoon Leader Course in Quantico, was an AAU Boxing champion,
completed the Strategic Negotiations executive program at Harvard University and has an MBA from East Carolina University.
Graham
has 18 years of international in-country operational experience in Asia and Pacific, Caucuses and Eurasia, Central Asia, Middle
East, Southern and Central Europe.
In
addition to his accomplishments in developing countries, Graham Settle has created companies, trained professionals and published
and lectured around the globe in multiple disciplines.
INFORMATION
ABOUT DIRECTORS CONTINUING IN OFFICE
The
following directors will be continuing in office for the term indicated and are not up for re-election at the 2021 Annual Meeting
of Stockholders:
Class
II - Term Expires at the 2022 Annual Meeting of Stockholders
Alexander
Kaganowicz
Alexander
Kaganowicz, age 74, has been a shareholder of Research Frontiers since 1998 and has been a director of the Company since June
2013. Dr. Kaganowicz is the Chairman of the Company’s Nominating and Corporate Governance Committee and is a member of the
Audit and Compensation and Stock Option Committees. In addition to being a shareholder, Dr. Kaganowicz has been involved in the
performance and market testing of SPD products, including several demonstration installations of SPD SmartGlass in his home and
work locations. For the past 30 years Dr. Kaganowicz has been the proprietor of a successful automotive services business in Freeport,
NY. He holds a Doctorate in Chemistry from the University of Rome, has served as Adjunct Associate Professor at the New York Institute
of Technology, and has worked as a clinical chemist with titles of Director of the Chemistry Department and Manager of the Pathology
Department at the Booth Memorial Medical Center in Queens, NY (from 1974 to 1989). In addition, he owned and operated several
successful medical supply companies in New York and Pennsylvania from 1989 to 2005. Dr. Kaganowicz research experience has resulted
in several publications and textbook contributions.
Class
III - Term Expires at the 2023 Annual Meeting of Stockholders
Darryl
Daigle
Darryl
Daigle, age 63, has been a shareholder of Research Frontiers since 1991 and has been a director of the Company since June 2012.
Mr. Daigle is the Chairman of the Company’s Audit Committee and is a member of the Compensation and Stock Option and Nominating
and Corporate Governance Committees. Mr. Daigle has been a principal owner of several profitable family-owned businesses in Louisiana.
One of these, SPD Equipment Sales Inc., sells oilfield and marine equipment to the marine and oil and gas industries. Another
business, S&D Bait Company LLC serves the commercial and recreational fishing industries in Louisiana. Mr. Daigle earned a
business degree from Texas Tech University and is a former member of the Louisiana Seafood Promotion Board, to which he was appointed
by Governor Murphy J. Foster, Jr.
CORPORATE
GOVERNANCE
Board
Leadership Structure and Risk Oversight
The
Company promoted the Company’s President, Joseph M. Harary, to his current position as Chief Executive Officer effective
in January 2009. Since 2009, the Company had separated the positions of Chairman and Chief Executive Officer. The Company’s
founder, Robert L. Saxe served as the Company’s Chairman since the Company’s formation until his death in 2016. A
new Chairman has not been appointed since the Company believes that the separation of responsibilities between the Chairman and
Chief Executive is not necessary given the size of the Company’s Board of Directors and its composition, level of involvement,
composition by long-term shareholders of the Company, and diversity. In addition, since the Board is responsible for the monitoring
of the performance of the Company and of its Chief Executive Officer, together with the fact that the majority of the Board members
are independent under the applicable listing standards of the NASDAQ Capital Market, helps to ensure that management functions
are properly executed. The committees of the Board are each chaired by an independent director. Mr. Gregory Grimes and William
Graham Settle each chaired the Compensation Committee in 2020, Mr. Alexander Kaganowicz chairs the Nominating and Corporate Governance
Committee, and Mr. Darryl Daigle chairs the Audit Committee. Board Committee chairs are typically reviewed and determined annually
after the Corporation’s Annual Meeting of Stockholders.
Our
Board oversees a Company-wide approach to risk management that is designed to support the achievement of organizational objectives,
including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental part
of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks,
but also understanding what level of risk is appropriate. In setting our business strategy, our Board assesses the various risks
that now or in the future may be faced by the Company and the degree to which they are being mitigated by management and determines
what constitutes an appropriate level of risk for us.
While
our Board has the ultimate oversight responsibility for the risk management process, various committees of our Board also have
responsibility for risk management in their areas of responsibility. The Audit Committee focuses on financial risk, including
internal controls. Risks related to our compensation programs are reviewed by the Compensation Committee and the Company’s
overall compensation policies covering all employees are meant to motivate employees with an effective balance between cash and
equity compensation, focus on performance, and improve our results on a cost-effective basis without encouraging excessive risk
taking. Legal and regulatory compliance risks are reviewed by the Nominating and Corporate Governance Committee. Our Board is
advised by the Committees of significant risks and management’s response via periodic updates.
Board
Composition
The
number of directors is currently set at four. The Board of Directors is divided into three classes, Class I, Class II and Class
III, which is divided as nearly equal in number as possible. Members of each class are elected to serve for staggered three-year
terms. The Company believes that a classified board of directors provides continuity and stability in pursuing the Company’s
business strategies and policies and reinforces the Company’s commitment to a long-term perspective and increases the Board’s
negotiating leverage when dealing with a potential acquirer. As discussed below under “Director Independence” a majority
of the Board of Directors of the Company are “independent” directors.
At
a minimum, Board members and candidates for membership on the Board of Directors must possess the experience, skills and background
necessary to gain a basic understanding of the principal operational and financial objectives and plans of the Company, the results
of operations and financial condition of our Company and its business segments and the relative standing of our Company and its
business in relation to its competitors. In addition, candidates must have a perspective that will enhance the Board’s strategic
discussions and must be capable of and committed to devoting adequate time to Board duties, including attendance at regularly-scheduled
Board and Board Committee meetings.
The
Nominating and Corporate Governance Committee reviews and assesses with the Board of Directors the specific skills, experience,
and background sought of Board members in the context of our business and the then-current membership on the Board. This assessment
includes a consideration of independence, diversity, skills, business experience, and personal and industry backgrounds. Although
the Company does not have a formal policy on diversity, as a matter of practice, the Nominating and Corporate Governance Committee
strives to have a diverse set of skills, experience and backgrounds represented on the Board in order to bring many different
viewpoints to guide and assist management of the Company. The Nominating and Corporate Governance Committee and the Board generally
regard the following as key skills and experience important for the Company’s Directors, as a group, to have in light of
our current business and structure: senior leadership experience, public company board experience, experience in financial markets
and with financing transactions, knowledge of accounting and financial reporting processes, experience in various industries relevant
to the markets for the Company’s light-control technology, technical knowledge relevant to our products, licensing, marketing
and strategic planning expertise and legal education and experience.
Director
Independence
The
Board has determined that the following current directors of the Company are “independent” in accordance with applicable
listing standards of the NASDAQ Capital Market: Messrs. Daigle, Kaganowicz and Settle. Mr. Harary is employed as executive officers
of the Company and does not qualify as independent.
The
NASDAQ Capital Market rules provide that a director cannot be considered independent if:
●
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the
director is, or at any time during the past three years was, an employee of the company;
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●
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the
director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period
of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including,
among other things, compensation for board or board committee service);
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●
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a
family member of the director is, or at any time during the past three years was, an executive officer of the company;
|
|
|
●
|
the
director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity
to which the company made, or from which the company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject
to certain exclusions);
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●
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the
director or a family member of the director is employed as an executive officer of an entity where, at any time during the
past three years, any of the executive officers of the company served on the compensation committee of such other entity;
or
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●
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the
director or a family member of the director is a current partner of the Company’s outside auditor, or at any time during
the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s
audit.
|
In
addition, an independent director must be a person who lacks a relationship that, in the opinion of the Board, would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has not established categorical
standards or guidelines to make these subjective determinations but considers all relevant facts and circumstances.
In
addition to the Board-level standards for director independence, the directors who serve on the Audit Committee each satisfy standards
established by the SEC providing that to qualify as “independent” for the purposes of membership on that committee,
members of audit committees may not accept directly or indirectly any consulting, advisory, or other compensatory fee from the
company other than their director compensation.
Board
Committees
The
Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Board
has determined that each member of these committees is an “independent director” in accordance with applicable listing
standards of the NASDAQ Capital Market. The current members of the Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee are Messrs. Daigle, Kaganowicz and Settle.
Audit
Committee.
During
fiscal 2000, the Audit Committee of the Board of Directors developed a written charter for the Committee that was approved by
the Board of Directors which was updated in 2004 and was updated again in February 2009. The complete text of the Audit Committee’s
current charter is available on Company’s website at www.SmartGlass.com.
The
Audit Committee reviews and reports to the Board of Directors with respect to various auditing and accounting matters, including
the nomination of the Company’s independent registered public accountants, the scope of audit procedures, general accounting
policy matters and the performance of the Company’s independent registered public accountants. The Company believes that
all members of its Audit Committee, due to their backgrounds and business experience, are Audit Committee’s “financial
expert” (as such term is defined by applicable rules) and have a sufficient understanding of generally accepted accounting
principles and financial statements, the ability to assess the general application of such principles, an understanding of internal
controls over financial reporting and of audit committee functions to perform their duties as an Audit Committee.
Compensation
Committee.
During
fiscal 2014, the Compensation Committee of the Board of Directors developed a written charter for the Committee that was approved
by the Board of Directors in June 2014. The complete text of the Compensation Committee’s current charter is available on
Company’s website at www.SmartGlass.com.
The
Compensation Committee reviews and reports to the Board of Directors its recommendations for compensation of all employees and
sets the compensation of the management of the Company. In addition, each committee member is a “non-employee director”
as defined in Rule 16b-3 under the Exchange Act and an “outside director” as defined for purposes of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
The
Company’s Compensation Committee has the authority specified in Rule 5605(d)(3) which requires the compensation committees
of Nasdaq-listed companies to have specific responsibilities and authority with regard to compensation consultants, legal counsel,
or other similar advisors to the compensation committee. Specifically, the compensation committee must have sole discretion to
retain such advisors, must be directly responsible for oversight of their work, and must determine reasonable compensation to
be paid to such advisors by the Company. Rule 5605(d)(3) also requires that the Compensation Committee may only select, or receive
advice from, a compensation consultant, legal counsel, or other advisor after taking into consideration the following factors:
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●
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the
provision of other services to the company by the person that employs the compensation consultant, legal counsel or other
advisor;
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●
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the
amount of fees received from the company by the person that employs the compensation consultant, legal counsel or other advisor,
as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other advisor;
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|
|
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●
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the
policies and procedures of the person that employs the compensation consultant, legal counsel or other advisor that are designed
to prevent conflicts of interest;
|
|
●
|
any
business or personal relationship of the compensation consultant, legal counsel or other advisor with a member of the compensation
committee;
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|
|
|
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●
|
any
stock of the company owned by the compensation consultant, legal counsel or other advisor; and
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|
|
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●
|
any
business or personal relationship of the compensation consultant, legal counsel, other advisor or the person employing the
advisor with an executive officer of the company.
|
Nominating
and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee is responsible for overseeing the governance practices of the Company and for making
recommendations to the Board for any modifications to such practices. It also identifies individuals qualified to become Board
members and recommends to the Board the director nominees for the next annual meeting of stockholders and candidates to fill vacancies
on the Board. Additionally, the committee recommends to the Board the directors to be appointed to Board committees. Because the
Board of Directors of the Company has a majority of independent directors, these independent directors control the Board of Directors’
selection of nominees for director. The Nominating and Corporate Governance Committee is not required to, and does not have, a
written charter.
The
Nominating and Corporate Governance Committee considers candidates for Board membership suggested by its members and by other
Board members. The Nominating and Corporate Governance Committee may also engage the services of a director candidate search consultant.
In that case, the director candidate search consultant will seek out candidates who have the experiences, skills, and characteristics
that the Nominating and Corporate Governance Committee has determined are necessary to serve as a member of the Board and then
present the most qualified candidates to the Nominating and Corporate Governance Committee and the Company’s management.
Once
a prospective nominee has been identified, the Nominating and Corporate Governance Committee makes an initial determination as
to whether to conduct a full evaluation of the candidate. This initial determination is based on the information provided to the
committee with the recommendation of the prospective candidate, as well as the committee’s own knowledge of the prospective
candidate, which may be supplemented by inquiries of the person making the recommendation or others. The initial determination
is based primarily on the need for additional Board members to fill vacancies or expand the size of the Board and the likelihood
that the prospective nominee can satisfy the evaluation factors described under the heading “Board Composition” above.
The committee then evaluates the prospective nominee and his or her qualifications, as well as other factors which may include
such things as whether the prospective nominee meets the independence requirements and other qualifications or criteria set forth
under applicable listing standards of the NASDAQ Capital Market, or other requirements defined under applicable SEC rules and
regulations; the extent to which the prospective nominee’s skills, experience and perspective add to the range of talent
appropriate for the Board and whether such attributes are relevant to the Company’s industry; the prospective nominee’s
ability to dedicate the time and resources sufficient for the diligent performance of Board duties; and the extent to which the
prospective nominee holds any position that would conflict with responsibilities to the Company.
If
the Nominating and Corporate Governance Committee’s internal evaluation is positive, the committee and possibly others will
interview the candidate. Upon completion of this evaluation and interview process, the Nominating and Corporate Governance Committee
makes a recommendation and report to the full Board as to whether the candidate should be nominated by the Board and the Board
determines whether to approve the nominee after considering this recommendation and report.
Additionally,
in selecting nominees for directors, the Nominating and Corporate Governance Committee will review candidates recommended by stockholders
in the same manner and using the same general criteria as candidates recruited by the committee and/or recommended by the Board.
The Nominating and Corporate Governance Committee will also consider whether any person nominated by a stockholder has been so
nominated on a timely basis and in accordance with the provisions of the Company’s By-Laws relating to stockholder nominations
and other applicable provisions including those described in “2022 Stockholder and Director Nominations” below.
2021
STOCKHOLDER AND DIRECTOR NOMINATIONS
Attendance
at Board, Committee, and Annual Stockholders’ Meetings
During 2020, the Company’s Board of
Directors had 22 formal and informal meetings, the Board’s Audit Committee met four times and also met several times informally,
the Board’s Compensation Committee met ten times, and the Board’s Nominating and Corporate Governance Committee met
six times. No incumbent director attended less than 75% of meetings of the full Board of Directors and of the Board committee(s)
of which that director was a member during 2020. The Company encourages and expects all of its directors to attend its Annual
Meeting of Stockholders in person or remotely, and all incumbent directors attended last year’s Annual Meeting of Stockholders.
Executive
Officers
In
addition to Joseph M. Harary, whose biographical information is provided above, the only other executive officer of the Company
is Michael R. LaPointe.
Michael
R. LaPointe
Michael
R. LaPointe, age 62, joined the Company as its Director of Marketing for Architectural Windows and Displays in March 2000 and
served as the Company’s Vice President - Marketing from March 2002 until he became the Company’s Vice President-Aerospace
Products in July 2013. Mr. LaPointe, a graduate of Brown University with a B.A. in Organizational Behavior & Management and
a B.A. in Psychology, worked in a marketing capacity for IBM Corporation in the early 1980s. He subsequently founded and developed
several companies involved in the application and licensing of new technologies for various consumer products. During that period
Mr. LaPointe also worked as a management consultant, where in 1994 he began his relationship with the Company, assisting the Company
with its marketing strategy.
Compensation
Committee Interlocks and Insider Participation
In
2020, the Compensation Committee of our Board of Directors consisted solely of independent directors. None of the Company’s
executive officers served as a director or member of the compensation committee of another entity which had an executive officer
that served as a director or member of the Company’s Compensation Committee. No member of the Company’s Compensation
Committee is a current or former employee of the Company.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
(Item
2)
The
Audit Committee, with the concurrence of the Board of Directors, has selected the firm of CohnReznick LLP to serve as our independent
registered public accountants for the fiscal year ending December 31, 2021. We expect that representatives of CohnReznick will
attend the meeting, have the opportunity to make a statement if they so desire, and be available to respond to appropriate questions.
Audit
and Other Fees
The
following table presents fees paid or accrued for professional audit services rendered by the Company’s independent registered
public accountants for the audit of our annual financial statements for the years ended December 31, 2020 (CohnReznick only) and
December 31, 2019 (both BDO and CohnReznick), and fees billed to us for other services rendered by BDO and CohnReznick during
these periods:
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2020
|
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2019
|
|
|
|
|
|
|
|
|
Audit Fees (1)
|
|
$
|
117,810
|
|
|
$
|
163,800
|
|
Audit-Related Fees (2)
|
|
|
-
|
|
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|
35,000
|
|
Tax Fees (3)
|
|
|
12,240
|
|
|
|
16,100
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
130,050
|
|
|
$
|
214,900
|
|
(1)
|
Audit
fees include fees for the audit of the Company’s annual financial statements, review of financial statements included
in the Company’s Form 10-Q Quarterly Reports, and services that are normally provided by the independent registered
public accountants in connection with regulatory filings for those fiscal years.
|
(2)
|
Consent
fees paid to BDO relating to the Company’s 2019 Form 10-K filing regarding the use of their report on the Company’s
2018 audited financial statements.
|
(3)
|
Tax
fees include fees for all services performed by the independent registered public accountants’ tax personnel except
those services specifically related to the audit of the financial statements and includes fees for tax compliance and
tax advice.
|
The
Audit Committee has approved the above-listed fees, has considered whether the provision of the tax services described above is
compatible with maintaining such accounting firms’ independence, and has determined that the provision of such services
is compatible with maintaining such accounting firms’ independence.
The
Board of Directors recommends a vote FOR ratification of the selection of the accounting firm of CohnReznick LLP as independent
registered public accountants of the Company for the fiscal year ending December 31, 2021.
AUDIT
COMMITTEE REPORT
The
following Audit Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent the Company specifically incorporates this Report by reference therein.
The
Audit Committee of the Board is responsible for providing independent, objective oversight of the Company’s accounting functions
and internal controls. The Audit Committee’s duties specifically include the appointment, compensation and supervision of
the Company’s independent registered public accountants, as well as pre-approval of all auditing and non-auditing services
provided by the Company’s independent registered public accounting firm. Management is responsible for the Company’s
internal controls and financial reporting process. The independent registered public accountants are responsible for performing
an independent audit of the Company’s financial statements and its internal controls over financial reporting, in accordance
with auditing standards of the Public Company Accounting Oversight Board, and to issue a report thereon. As set forth in more
detail in its charter, the Audit Committee’s responsibility is to monitor and oversee these processes.
The
Audit Committee has discussed with the independent registered public accounting firm the matters required by the applicable requirements
of the Public Company Accounting Oversight Board and the SEC. In connection with these responsibilities, the Audit Committee met
with management and the Company’s independent registered public accountants, to review and discuss all financial statements
included in the Company’s quarterly and annual reports for the fiscal year ended December 31, 2020 (the “Financial
Statements”) prior to their issuance and to discuss significant accounting issues. Management has advised us that the Financial
Statements were prepared in accordance with generally accepted accounting principles, and the Committee discussed the Financial
Statements with both management and the independent registered public accountants.
The
Audit Committee also received written disclosures and the letter from the independent registered public accountants required by
applicable requirements of the PCAOB Rule 3526 regarding the independent accountant’s communications with the Audit Committee
concerning independence and has discussed with the independent registered public accountants that firm’s independence. Finally,
the Audit Committee continued to monitor the integrity of the Company’s financial reporting processes and its internal procedures
and controls.
Based
upon the Audit Committee’s discussions with management and the independent registered public accountants, and the Audit
Committee’s review of the representations of management and the independent registered public accountants, the Audit Committee
recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, for filing with the SEC.
|
Members
of the Audit Committee:
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|
|
|
Darryl
Daigle (Chairman)
|
|
Alexander
Kaganowicz
William
Graham Settle
|
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
This
Compensation Discussion and Analysis (“CD&A”) provides an overview of the Company’s executive compensation
program including our philosophy, key program elements, the decisions made under the program and the factors that were considered
in making those decisions. The commentary in the CD&A is intended to facilitate an understanding of the data found in the
accompanying compensation tables.
This
Compensation Discussion and Analysis primarily addresses the compensation of our Named Executive Officers listed below:
Joseph
M. Harary, President and Chief Executive Officer
Michael
R. LaPointe, Vice President – Aerospace Products
The
foregoing named executive officers comprise all of our executive officers. These two executive officers are referred to as the
“named executive officers” throughout this Proxy Statement.
Our
executive compensation program is intended to drive results, recognize contributions to the success of our company, and retain
leadership talent. Our executive officers have shown solid leadership in the developments and commercialization of the Company’s
proprietary SPD technology. The Company believes that the continued development of our growth strategy will be the key factor
to establishing strong financial performance for shareholders in the future.
Our
Compensation Philosophy and Objectives
The
Company seeks to include in compensation for the Company’s executive officers a combination of base salary, equity incentives,
and performance-based bonuses that is intended to attract, retain and motivate executive officers who have the skills, experience
and knowledge important to the success of the Company and to reward superior performance and encourage actions that drive our
business strategy. The objective of this approach is to align total executive compensation with the long-term performance of the
Company and the interests of its stockholders and enable employees of the Company to participate in the Company’s growth.
Through ownership of stock and options, the Company believes that executive officers are rewarded if the Company’s stockholders
receive the benefit of appreciation of the price of the Common Stock.
The
Compensation Committee reviewed and evaluated the Company’s executive and non-executive compensation policies and practices,
including, specifically, the mix between salary and bonus, cash and equity, short-term and long-term incentives, and the use of
performance measures and discretion with respect to individual awards. The Compensation Committee also evaluated how the Company’s
compensation policies and practices could encourage excessive risk taking and how the Company’s policies and practices are
structured to mitigate any such risks. In this regard, the Compensation Committee considered the following: (i) while base salary
is the primary component of total compensation for most of the Company’s employees and such salaries are generally competitive,
the Company has attempted to better align the interests of its executive officers and its stockholders by increasingly emphasizing
incentive compensation for its executive officers, (ii) the Compensation Committee believes that the Company’s incentive
plans for senior management, executive officers and its employees include an appropriate mix of short-term and long-term performance
incentives and cash and equity compensation, (iii) the Compensation Committee believes that the goals and objectives in the Company’s
incentive plans are reasonable and do not incentivize employees to take excessive risks, and (iv) the Company has one business
unit so that there does not exist the risk that (A) any one business unit of the Company carries a significant portion of the
Company’s risk profile, (B) is significantly more profitable than other business units within the Company, or (C) that the
compensation structure is inconsistent among business units. As a result of this review and evaluation, the Compensation Committee
concluded that any risks that may result from the Company’s compensation policies and practices are not reasonably likely
to have a material adverse effect on the Company.
Role
of the Compensation Committee in Compensation Decisions
The
compensation of executive officers of the Company, including its named executive officers, is determined by the Compensation Committee
of the Company’s Board of Directors. The salaries of all executive officers are also reviewed at least annually by the Compensation
Committee and by the entire Board of Directors. Numerous factors are reviewed in determining compensation levels. These factors
include: the compensation levels of executive officers with comparable experience and qualifications, compensation levels at comparable
companies, individual and Company performance, past compensation levels, building stockholder value, and other relevant considerations,
including a review of applicable compensation studies and other reference materials.
Compensation
Consultants and Benchmarking
The
Compensation Committee believes that it is neither necessary nor cost-effective to hire advisors to benchmark the structure and
level of its executive officer compensation on an annual basis. However, from time to time, the Compensation Committee retains
compensation consultants to advise it and compare the Company’s compensation practices versus similar companies. In 2020,
the Company did not retain a compensation consultant.
In
2011, the Company retained Connell & Partners to analyze and compare the compensation of independent directors and of Mr.
Harary against the compensation paid by a peer group of publicly-traded companies (the “Peer Group”). The Compensation
Committee used the companies in the Peer Group based on its belief that they are similar to the Company in terms of business type,
employee skill sets, revenue, and market capitalization.
The
Company updated the Peer Group information with compensation data that was reported during 2019 and 2020. This updated compensation
data for the Peer Group was considered by the Compensation Committee when evaluating the executive compensation for Mr. Harary.
The following companies were included in the updated Peer Group:
Peer Company
|
|
Ticker
|
Arrowhead
Pharmaceuticals, Inc.
|
|
ARWR
|
Aware,
Inc.
|
|
AWRE
|
Creative
Realities, Inc.
|
|
CREX
|
eMagin
Corp.
|
|
EMAN
|
Image
Sensing Systems, Inc.
|
|
ISNS
|
Innovative
Solutions and Support, Inc.
|
|
ISSC
|
Mesa
Laboratories, Inc.
|
|
MLAB
|
Microvision,
Inc.
|
|
MVIS
|
MoSys,
Inc.
|
|
MOSY
|
ParkerVision,
Inc.
|
|
PRKR
|
PCTEL,
Inc.
|
|
PCTI
|
PowerFleet,
Inc.
|
|
PWFL
|
PURE
Bioscience, Inc.
|
|
PURE
|
Riot
Blockchain, Inc.
|
|
RIOT
|
All
fourteen of the Peer Group companies reported compensation data for 2019, however only nine Peer Group companies have currently
reported their compensation data for 2020. As consequence, the following Compensation Analysis will consider compensation data
for all the Peer Group companies in 2019 and the nine reporting Peer Group companies in 2020.
Compensation
Analysis:
The
Compensation Committee reviewed and compared the following components of Mr. Harary’s compensation to that of executive
officers serving in similar roles for companies in our compensation peer group: (1) base salary; (2) actual total cash compensation
(base salary plus actual bonus); (3) long-term incentive compensation (fair value of stock options, restricted shares, and performance-based
long-term incentive plans, annual equity participation (annual shares granted as a percent of shares outstanding); and (4) actual
total direct compensation (actual total cash plus long-term incentive compensation) (“ATDC”). The following sets forth,
as a percentage of ATDC, the first four of the aforementioned compensation components with respect to Mr. Harary as compared to
that of our peer group.
2019
Compensation:
Base
Salary:
Mr.
Harary’s base salary in 2019 was $500,000. Base salary for executive officers performing similar roles for peer group members
ranged from $175,000 to $674,375 with an average of $384,297. Mr. Harary’s base salary in 2019 represents 62% of his ATDC.
Base salary as a percentage of ATDC for executive officers performing similar roles for Peer Group CEO Executives ranged from
16% to 98% with an average of 51%.
Actual
Total Cash Compensation:
Mr.
Harary’s actual total cash compensation in 2019 was $626,696. Actual total cash compensation for executive officers performing
similar roles for Peer Group CEO Executives ranged from $175,000 to $2,216,264 with an average of $773,879. Mr. Harary’s
actual total cash compensation in 2019 as a percentage of his ATDC was 78%. Actual Total Cash Compensation as a percentage of
ATDC for executive officers performing similar roles for Peer Group CEO Executives ranged from 35% to 100% with an average of
78%.
Long-Term
Incentive Compensation:
Mr.
Harary’s long-term incentive compensation in 2019 was $177,909. Long-term incentive compensation for Peer Group CEO Executives
ranged from $0 to $2,126,289 with an average of $337,701. Mr. Harary’s long-term incentive compensation in 2019 as a percentage
of his ATDC was 22%. Long-term incentive compensation as a percentage of ATDC for executive officers performing similar roles
for Peer Group CEO Executives ranged from 0% to 65% with an average of 22%.
Actual
Total Direct Compensation:
Mr.
Harary’s actual total direct compensation in 2019 was $804,605. Actual total direct compensation for Peer Group CEO Executives
ranged from $274,000 to $3,270,589 with an average of $1,111,580.
2020
Compensation:
Base
Salary:
Mr.
Harary’s base salary in 2020 was $500,000. Base salary for executive officers performing similar roles for peer group members
ranged from $262,500 to $785,625 with an average of $365,128. Mr. Harary’s base salary in 2020 represents 74% of his ATDC.
Base salary as a percentage of ATDC for executive officers performing similar roles for Peer Group CEO Executives ranged from
0% to 98% with an average of 48%.
Actual
Total Cash Compensation:
Mr.
Harary’s actual total cash compensation in 2020 was $580,707. Actual total cash compensation for executive officers performing
similar roles for Peer Group CEO Executives ranged from $46,000 to $1,608,517 with an average of $541,660. Mr. Harary’s
actual total cash compensation in 2020 as a percentage of his ATDC was 86%. Actual Total Cash Compensation as a percentage of
ATDC for executive officers performing similar roles for Peer Group CEO Executives ranged from 11% to 100% with an average of
56%.
Long-Term
Incentive Compensation:
Mr.
Harary’s long-term incentive compensation in 2020 was $90,750. Long-term incentive compensation for Peer Group CEO Executives
ranged from $0 to $12,686,000 with an average of $1,846,297. Mr. Harary’s long-term incentive compensation in 2020 as a
percentage of his ATDC was 14%. Long-term incentive compensation as a percentage of ATDC for executive officers performing similar
roles for Peer Group CEO Executives ranged from 0% to 89% with an average of 44%.
Actual
Total Direct Compensation:
Mr.
Harary’s actual total direct compensation in 2020 was $671,457. Actual total direct compensation for Peer Group CEO Executives
ranged from $288,000 to $14,294,517 with an average of $2,387,958.
The
Compensation Committee, having met and deliberated ten times during 2020, believes that the current compensation approach
and level of compensation of the Company’s named executive officers is appropriate and in the best interests of the Company
and its stockholders.
Components
of Named Executive Officer Compensation
The
principal components of compensation for the named executive officers are base salary, performance-based annual cash compensation
and long-term equity compensation. The Compensation Committee seeks to achieve a mix of these components such that total compensation
is competitive in the marketplace. Historically, the Company’s compensation program focused on base salary as a primary
means to compensate its named executive officers. In recent years, the Company has relied increasingly on short-term and long-term
incentive compensation to better align the interests of the named executive officers with the interests of stockholders in both
short-term and long-term growth. The Company continues to transition its compensation program from its historical base salary
orientation to a program with an increasing emphasis on incentive compensation. The Compensation Committee does not have a formal
policy for allocation between cash and non-cash or short-term and long-term incentive compensation. The following table shows
the components of named executive officer compensation:
Component
|
|
Purpose
|
|
Characteristics
|
Base
Salary
|
|
Compensate
named executive officers for performing their roles and assuming their levels of executive responsibility. Intended to provide
a competitive level of compensation, it is a necessary component in recruiting and retaining executives.
|
|
Fixed
component. Annually reviewed and adjusted as appropriate.
|
Performance-based
Annual Incentive Compensation
|
|
Promote
the achievement of short-term business and financial goals. Align named executive officers and stockholder interests in the
short-term performance of the Company and reward named executive officers for superior Company performance during the short-term.
|
|
Performance-based
bonus opportunity based on the achievement of certain goals, which may be individual performance goals, Company performance
goals or a combination of the two.
|
Long-Term
Equity Compensation
|
|
Promote
the achievement of the Company’s long-term financial goals and increases in value for the Company’s stockholders.
Align named executive officers and stockholder interests, promote named executive officers’ retention and reward named
executive officers for superior Company performance over time.
|
|
Reviewed
annually and granted, if appropriate, in the form of stock options and stock awards.
|
Base
Salary. The amount of base salary for any executive officer is based on the level of responsibility of the executive officer,
the Company’s performance, the executive officer’s individual performance and the executive officer’s compensation
compared to similarly situated executives in the Compensation Peer Group. As mentioned above, historically the Company’s
compensation program has focused on base salary as its primary compensation element. Base salary is an important element in recruiting
and retaining executive officers.
Performance-based
Annual Incentive Compensation. To better align our compensation practices with the market and to promote the achievement of
short-term business and financial goals, the Compensation Committee has increasingly emphasized bonus opportunities for its executive
officers in the form of performance-based annual incentive compensation.
A
portion of Mr. Harary’s 2020 compensation was tied to the achievement of various business and financial goals during the
year. Under his employment agreement, Mr. Harary is eligible to earn a cash bonus based upon the achievement of performance goals
established by the Board. As set forth below, the performance goals established by the Board for 2020 were divided into two main
categories and, at the end of the performance period, the Compensation Committee determined the extent to which the pre-established
performance goals were satisfied during the performance period.
For
2020, Mr. Harary’s target bonus was based on: (i) the achievement of revenue goals, and (ii) the achievement of other non-revenue
performance objectives. The revenue bonus for 2020 was different for revenue levels above and below $3 million, and the Company’s
fee income for 2020 was $828,450, so a revenue-based bonus of $42,245 was paid to Mr. Harary in 2020. The amount of compensation
awarded for 2020 to Mr. Harary as a bonus is reflected in the “Non-Equity Incentive Plan Compensation” column of the
“Summary Compensation Table” below.
A
cash bonus may be awarded to any officer of the Company at the discretion of the Board and Compensation Committee for extraordinary
individual achievement or for other reasons. The Board paid Mr. LaPointe a bonus of $10,419 for the achievement of certain other
performance and strategic goals for the entire Company and their efficient implementation and management in 2020. The amount of
compensation awarded for 2020 to Mr. LaPointe as a bonus is reflected in the “Non-Equity Incentive Plan Compensation”
column of the “Summary Compensation Table” below.
Long-Term
Equity Compensation. The Company uses long-term equity compensation to provide incentives to those most responsible for the
Company’s success, to promote the achievement of the Company’s long-term financial goals and to align the interests
of its executive officers, employees and consultants with that of its stockholders. The award of long-term equity compensation
also assists the Company in attracting and retaining executive officer talent and reduces the amount of cash compensation that
would otherwise be necessary to do so. The Company has granted equity awards to executive officers in the form of stock options
or restricted stock under the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) and its predecessor plan,
the 2008 Stock Option Plan (which expired in April 2018).
The
Compensation Committee does not employ quantitative criteria or performance measures from year to year in the granting of equity
awards. Rather, the form and amount of equity awards are based on a subjective determination by the Compensation Committee of
the effectiveness of each named executive officer and the extent of his contributions to the Company. The Company seeks to emphasize
equity compensation to better align the interests of its named executive officers and stockholders and to promote the retention
of its named executive officers. Accordingly, the Company awards long-term equity awards at levels it believes reflect these goals.
The
Compensation Committee and Board believe that an equity incentive plan is essential to the Company’s continued success.
The purpose of such equity incentive plans is to afford an incentive to executive officers, other employees, non-employee directors
and consultants of the Company to acquire a proprietary interest in the Company, to continue as employees, non-employee directors
or consultants (as the case may be), to increase their efforts on behalf of the Company and to promote the success of the Company’s
business. The Compensation Committee and Board believe that the granting of equity incentive awards will promote continuity of
management, help attract new employees, and encourage employees, directors, officers and consultants, to increase their stock
ownership in the Company and provide an increased incentive and personal interest in the welfare of the Company by those who are
or may become primarily responsible for shaping and carrying out the long range plans of the Company and securing its continued
growth, development and financial success. To further such purposes, stock options, stock appreciation rights, restricted stock
and restricted stock units may be granted pursuant to such equity incentive plans. The Company has relied primarily on stock option
grants and awards of restricted stock under its prior equity incentive plans to compensate named executive officers. The Company
has not awarded stock appreciation rights or restricted stock units.
During
2020, the Compensation Committee awarded option awards to its named executive officers as set forth in the “Grants of Plan-Based
Awards in 2020” table below.
Employment
Arrangements
In
2009, the Company entered into a five-year employment agreement with Joseph M. Harary, which was effective as of January 1, 2009
when Mr. Harary was promoted to the position of Chief Executive Officer of the Company. Pursuant to that agreement, in addition
to possible future equity incentive awards granted by the Board of Directors of the Company in their discretion, Mr. Harary received
150,000 shares of restricted stock of the Company which vested monthly over a three-year period. An amendment to this agreement
was executed effective as of September 26, 2019 between the Company and Joseph M. Harary which extended the agreement through
December 31, 2024. The agreement automatically renews itself for successive one-year terms unless either the Company or Mr. Harary
gives the other at least 90 days prior written notice of the intention not to renew the employment agreement prior to its expiration.
Mr. Harary received an annual base salary from the Company of $500,000 in 2020 and will receive an annual base salary of $500,000
in 2021. In addition, Mr. Harary will be eligible to also earn a bonus based upon the achievement of performance goals established
by the Board of Directors. Pursuant to his employment agreement, if Mr. Harary’s employment is terminated due to his death
or disability, Mr. Harary shall be entitled to receive his base salary (less any disability payments) for six months as well as
any earned or accrued bonus. If Mr. Harary’s employment is not renewed or is terminated by the Company other than due to
death, disability, or for cause (as defined in the agreement) prior to its scheduled expiration date, then Mr. Harary shall also
receive his base salary for between one and three years, depending upon the date of such termination. If there is a change in
control of the Company, Mr. Harary shall receive his base salary for the longer of three years or the scheduled date of termination
of Mr. Harary’s employment agreement. Unless vesting is otherwise accelerated under the terms of an equity award (which
is usually done in the case of death or disability of an employee), if Mr. Harary’s employment is terminated by the Company
in breach of his employment agreement or is terminated by Mr. Harary other than for good reason (as defined in the agreement),
any unvested equity awards shall also become immediately vested. Pursuant to the employment agreement, Mr. Harary is also entitled
to four weeks paid vacation each year, and other fringe benefits generally applicable to other employees of the Company. Under
his employment agreement, Mr. Harary has also agreed to certain restrictive covenants including Mr. Harary’s agreement not
to solicit employees or compete with the Company for a period of two years following the termination of his employment thereunder.
The
Company does not have employment agreements, written or unwritten, with its other executive officer, Mr. LaPointe.
COMPENSATION
COMMITTEE REPORT
The
following Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated
by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically incorporates this Report by reference therein.
The
Compensation Committee of the Board of Directors of the Company has reviewed and discussed with management the Compensation Discussion
and Analysis included in this Proxy Statement. Based on its reviews and discussions, the Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into
the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
This
report is submitted on behalf of the Compensation Committee.
|
Members
of the Compensation Committee
|
|
|
|
William
Graham Settle (Chairman)
|
|
Darryl
Daigle
|
|
Alexander
Kaganowicz
|
EXECUTIVE
COMPENSATION TABLES
Summary
Compensation Table
The
following table sets forth information regarding each element of compensation that we pay or award to our named executive officers.
The Company has not and does not currently provide, and has no plan to provide in the future, pension benefits, non-qualified
defined contributions, or deferred contributions.
Name and
Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock/Option Awards
($)(1)
|
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
|
All Other Compensation ($)(2)
|
|
|
Total ($)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph M. Harary, President
|
|
|
2020
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
90,750
|
|
|
|
42,245
|
|
|
|
38,462
|
|
|
|
671,457
|
|
and Chief Executive Officer
|
|
|
2019
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
177,909
|
|
|
|
88,234
|
|
|
|
38,462
|
|
|
|
804,605
|
|
|
|
|
2018
|
|
|
|
450,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,000
|
|
|
|
34,615
|
|
|
|
654,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth L. Van Voorhees, Chief
|
|
|
2020
|
|
|
|
174,558
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,231
|
|
|
|
188,789
|
|
Financial Officer, Treasurer,
|
|
|
2019
|
|
|
|
215,000
|
|
|
|
-
|
|
|
|
64,694
|
|
|
|
-
|
|
|
|
-
|
|
|
|
279,694
|
|
VP-Business Development (4)
|
|
|
2018
|
|
|
|
255,000
|
|
|
|
-
|
|
|
|
27,732
|
|
|
|
19,683
|
|
|
|
21,087
|
|
|
|
323,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven M. Slovak,
|
|
|
2020
|
|
|
|
21,635
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,385
|
|
|
|
32,020
|
|
Vice President-Chief
|
|
|
2019
|
|
|
|
225,000
|
|
|
|
-
|
|
|
|
113,215
|
|
|
|
-
|
|
|
|
-
|
|
|
|
338,215
|
|
Technology Officer (4)
|
|
|
2018
|
|
|
|
160,000
|
|
|
|
-
|
|
|
|
9,230
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
184,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. LaPointe,
|
|
|
2020
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
8,250
|
|
|
|
10,419
|
|
|
|
-
|
|
|
|
58,669
|
|
Vice President-Marketing
|
|
|
2019
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
7,628
|
|
|
|
24,920
|
|
|
|
-
|
|
|
|
72,548
|
|
|
|
|
2018
|
|
|
|
104,167
|
|
|
|
-
|
|
|
|
27,732
|
|
|
|
22,293
|
|
|
|
-
|
|
|
|
154,192
|
|
|
(1)
|
Amounts
in this column represent stock options issued in 2020, 2019 and 2018 (no restricted stock awards were issued during this
period). The dollar value of option awards listed in this column are estimated grant date fair values based upon the
Black-Scholes valuation method in accordance with Financial Accounting Standards Board Accounting Standard Codifications
Topic 718 (“ASC 718”) and using the assumptions set forth in the Company’s Annual Report on Form 10-K for
the respective year in question.
|
|
|
|
|
(2)
|
Consists
of cash payments of accrued but unused vacation and other taxable benefits.
|
|
|
|
|
(3)
|
Consists
of cash compensation (salary, bonus, and accrued vacation) plus non-equity incentive compensation and the estimated grant
date fair value of stock and option awards calculated based upon the valuation methods described in footnote (1) above. These
amounts do not indicate the amount received by the individual since estimated values will fluctuate based upon future market
conditions.
|
|
|
|
|
(4)
|
Dr.
Van Voorhees left the Company on December 4, 2020. Steven M. Slovak passed away on January 19, 2020.
|
Grants
of Plan-Based Awards in 2020
The
table below provides information regarding payment of non-equity incentive plan compensation and awards of stock options pursuant
to the 2019 Equity Incentive Plan (the “2019 Plan”) to the named executive officers of the Company.
|
|
|
|
Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1)
|
|
|
All Other Equity Awards: Number of
|
|
|
Grant Date Fair Value of Stock and Option
|
|
|
Closing Stock
|
|
|
Restricted
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Options
(#) (2)
|
|
|
Awards
($)
|
|
|
Price
($)
|
|
|
Stock Grant
|
|
Joseph M. Harary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,000
|
|
|
|
85,359
|
|
|
|
2.81
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. LaPointe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
8,250
|
|
|
|
2.81
|
|
|
|
-
|
|
|
(1)
|
These
columns report the range of cash payouts for 2020 performance under Mr. Harary’s employment agreement as described in
the Compensation Discussion and Analysis.
|
|
|
|
|
(2)
|
Represents
awards of stock options made under the 2019 Plan.
|
Outstanding
Equity Awards at December 31, 2020
The
following table shows all options outstanding as of the end of 2020 that have been granted to named executive officers of the
Company. All options were fully vested and exercisable as of the end of 2020.
|
|
Option Awards
|
|
|
|
|
|
Name
|
|
Number of Securities Underlying Unexercised Options (#) Exerciseable
|
|
|
Option
Exercise Price
($)
|
|
|
Option Grant Date
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
Joseph M. Harary
|
|
|
119,400
|
|
|
|
5.56
|
|
|
12/31/2013
|
|
12/30/2023
|
|
|
|
59,700
|
|
|
|
5.19
|
|
|
12/31/2014
|
|
12/30/2024
|
|
|
|
55,000
|
|
|
|
2.785
|
|
|
12/31/2020
|
|
12/30/2030
|
|
|
|
234,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth L. Van Voorhees
|
|
|
73,400
|
|
|
|
5.56
|
|
|
12/31/2013
|
|
12/30/2023
|
|
|
|
36,700
|
|
|
|
5.19
|
|
|
12/31/2014
|
|
12/30/2024
|
|
|
|
40,000
|
|
|
|
5.26
|
|
|
12/31/2015
|
|
12/30/2025
|
|
|
|
150,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. LaPointe
|
|
|
15,900
|
|
|
|
5.56
|
|
|
12/31/2013
|
|
12/30/2023
|
|
|
|
7,950
|
|
|
|
5.19
|
|
|
12/31/2014
|
|
12/30/2024
|
|
|
|
7,000
|
|
|
|
5.26
|
|
|
12/31/2015
|
|
12/30/2025
|
|
|
|
5,000
|
|
|
|
3.11
|
|
|
12/31/2019
|
|
12/30/2029
|
|
|
|
5,000
|
|
|
|
2.875
|
|
|
12/31/2020
|
|
12/30/2030
|
|
|
|
40,850
|
|
|
|
|
|
|
|
|
|
Stock
Options Exercised and Stock Vested in 2020
On
February 21, 2020 Joseph M. Harary exercised 50,000 stock options having an exercise price of $1.06 per share of common stock,
and on May 29, 2020 Mr. Harary exercised 110,000 stock options having an exercise price of $2.89 to $3.11 per share of common
stock. On June 26, 2020 Mr. Michael LaPointe exercised 12,000 stock options having an exercise price of $1.06 to $2.89 per share
of common stock. On February 21, 2020 Dr. Seth Van Voorhees exercised 155,091 stock options having an exercise price of between
$1.00 to $3.11 per share of common stock. No stock options were exercised in 2019 by any other named executive officer of the
Company. No shares of stock were acquired by any
named executive officer in 2020 upon vesting of awards of stock pursuant to the 2019 Plan.
There are no unvested awards of restricted stock outstanding as of the end of 2020 that have been awarded to our named
executive officers.
Potential
Payments upon Termination or Change of Control
Mr.
Harary’s employment agreements provide for certain payments and benefits upon a termination, separation, or change in control.
Neither of our other named executive officers has an employment agreement with us or are otherwise entitled to any sort of cash
payment upon termination or separation from us.
The
2019 Plan, and its predecessor plan (2008 Plan which expired in April 2018), provide for the continuation or acceleration of certain
awards and grants thereunder in the event of specified separations from employment with us. Under the standard grant agreements
for options granted under our 2019 Plan and 2008 Plan, the option holder generally has three months after the date of termination
to exercise options that were exercisable on or before the date that employment ends unless the options’ expiration date
occurs first (other than for death or disability). Upon an option holder’s death or disability, the holder or the holder’s
estate, as applicable, may exercise options that were exercisable on or before the date that employment ends due to death or disability
for a period of six months thereafter, unless the options’ expiration date occurs first. All of the outstanding options
issued to our named executive officers are vested.
Under
award agreements with our named executive officers for restricted stock granted pursuant to our 2008 Plan, each named executive
officer’s unvested restricted stock shall immediately become fully vested as of the date of his termination due to death
or disability. In addition, Mr. Harary’s employment agreement provides that his restricted stock and any additional equity
incentive awards granted to him under the 2019 Plan and the 2008 Plan or otherwise will immediately vest upon his termination
by the Company (other than for cause or in connection with his death or disability), his resignation for good reason or upon change
of control of the Company.
Joseph
M. Harary
The
following table describes the potential payments and benefits to Mr. Harary upon termination of his employment or a change of
control of the Company had such termination or change of control occurred on December 31, 2020.
|
|
|
|
|
|
|
|
By Company
|
|
|
By Mr. Harary
|
|
|
|
|
Payments and Benefits
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
For Cause ($)
|
|
|
Other than for Disability or Cause ($)
|
|
|
For Good Reason ($)
|
|
|
Other than Good Reason ($)
|
|
|
Change of Control ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated vesting of
Restricted Stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payment under
employment agreement
|
|
|
250,000
|
(1)
|
|
|
250,000
|
(2)
|
|
|
-
|
|
|
|
500,000
|
(3)
|
|
|
500,000
|
(3)
|
|
|
-
|
|
|
|
1,500,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus payable under
employment agreement (4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
The
amount of the benefit shown would be paid over a six-month period following the date of his death in the manner it would have
been paid if Mr. Harary’s employment would have continued.
|
|
|
|
|
(2)
|
The
amount of the benefit shown would be paid in equal installments over a six-month period following the date of Mr. Harary’s
termination on December 31, 2020 at such intervals (at least monthly) as salaries are paid generally to executive officers
of the company. Mr. Harary’s employment agreement provides that the company shall pay the amount, if any, by which Mr.
Harary’s base salary for the period commencing on the date of termination and ending on the six-month anniversary of
such date the exceeds the sum of (i) the amount of base salary received by Mr. Harary with respect to the period he was disabled
and (ii) the sum of the amounts, if any, payable to him under the Company’s benefit plans. The amount of the benefit
shown assumes that Mr. Harary became disabled and was terminated on December 31, 2020, that Mr. Harary did not receive his
base salary during the period in which he was disabled and that no amounts were payable to him under the Company’s benefit
plans.
|
|
|
|
|
(3)
|
The
amount of the benefit shown would be paid over a three-year period following the date of his termination in the manner it
would have been paid if Mr. Harary’s employment had not so terminated.
|
|
|
|
|
(4)
|
Assumes
that Mr. Harary was eligible as of the date of his termination to receive a bonus in the amount reported in the “Summary
Compensation Table” for 2020 and that such bonus payment had not already been made.
|
Michael
R. LaPointe
Mr.
LaPointe is not entitled to any payment upon termination for any other reason or upon a change of control of the Company.
DIRECTOR
COMPENSATION
The
Company believes that it is appropriate to set target levels of director compensation based upon the factors described above for
service on the Company’s Board of Directors. Based in part upon its review of comparable directors fees paid among the Compensation
Peer Group companies, and upon the analysis and recommendations of the independent compensation consulting firm noted above, each
non-employee independent director was to receive total compensation with respect to service as a Director during 2020 having a
valuation initially targeted at approximately $80,000, which targeted amount is then subject to adjustment based upon results
achieved and future modification as a result of prevailing compensation levels and other factors. The mix of cash and equity grant
for 2020 was developed following the review of an independent compensation consulting firm’s report and an evaluation of
prevailing trends and best practices in corporate governance and director compensation in a broad range of public companies.
Non-management
directors of the Company each received compensation for service on the Board in 2020 in an option award granted in December
2020 for a total of 40,000 shares of Common Stock of the Company (having an estimated value at the time of grant of $66,000 and
a cash fee paid in January 2020 of $35,000. The following table summarizes compensation paid or awarded to the Company’s
non-management directors in 2020. The management director is not compensated separately for their service as a director and their
compensation as an employee of the Company is shown on the “Summary Compensation Table” of this Proxy Statement.
Name
|
|
Fees Paid in
Cash ($)
|
|
|
Stock/Option
Awards ($)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
Darryl Daigle
|
|
|
35,000
|
|
|
|
66,000
|
|
|
|
101,000
|
|
Gregory G. Grimes
|
|
|
35,000
|
|
|
|
-
|
|
|
|
35,000
|
|
Alexander Kaganowicz
|
|
|
35,000
|
|
|
|
66,000
|
|
|
|
101,000
|
|
William Graham Settle
|
|
|
-
|
|
|
|
66,000
|
|
|
|
66,000
|
|
RELATED-PARTY
TRANSACTIONS
The
Company has no related-party transactions to report for 2020. The Company’s policy is to follow the procedures established
under Delaware corporate law for approval of related-party transactions.
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth information as of December 31, 2020 with respect to shares of the Common Stock that may be issued under
the Company’s existing 2019 Equity Incentive Plan, and any other equity that may be issued to officers or directors of,
or consultants to, the Company. There are no equity compensation plans that were not approved by the Company’s stockholders.
Plan category
|
|
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
|
Number of securities remaining available for future issuance under equity compensation plans
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved
by security holders
|
|
|
1,400,000
|
|
|
|
4.09
|
|
|
|
683,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,400,000
|
|
|
$
|
4.09
|
|
|
|
683,500
|
|
STOCK
PRICE PERFORMANCE
The
following table sets forth the range of the high and low selling prices (as provided by the NASDAQ Capital Market) of the Common
Stock for each quarterly period within the past two fiscal years. The following high and low selling prices may reflect inter-dealer
prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.
Quarter Ended
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
$
|
1.48
|
|
|
$
|
3.49
|
|
June 30, 2019
|
|
|
1.97
|
|
|
|
3.71
|
|
September 30, 2019
|
|
|
2.70
|
|
|
|
5.38
|
|
December 31, 2019
|
|
|
2.76
|
|
|
|
3.80
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
$
|
2.20
|
|
|
$
|
4.24
|
|
June 30, 2020
|
|
|
1.66
|
|
|
|
5.70
|
|
September 30, 2020
|
|
|
2.01
|
|
|
|
4.11
|
|
December 31, 2020
|
|
|
2.50
|
|
|
|
3.57
|
|
The
following graph compares the total returns (assuming reinvestment of dividends) on $100 invested on December 31, 2015 in the Common
Stock (REFR), the NASDAQ Composite Index and the NASDAQ Electronic Components and Equipment Index. The stock price performance
shown on the graph below reflects historical data and is not necessarily indicative of future price performance.
2022
STOCKHOLDER AND DIRECTOR NOMINATIONS
Any
stockholder who intends to present a proposal for action, including the nomination of a candidate for Director, at the Company’s
2022 Annual Meeting of Stockholders, must comply with and meet the requirements of the Company’s By-Laws and of Rule 14a-8
of the SEC. Rule 14a-8 requires, among other things, that any proposal be received by the Company at its principal executive office,
240 Crossways Park Drive, Woodbury, New York 11797, Attention: Corporate Secretary, by December 31, 2021. Section 2.12 of the
Company’s By-Laws (a copy of which is available upon request) sets forth the procedures that must be followed with respect
to stockholder nominations, which include a requirement that the person making the nomination be a stockholder of record at the
time of giving notice for such stockholders meeting and who shall be entitled to vote for the election of directors at the meeting,
and that such nomination be made pursuant to timely notice in proper written form to the Secretary of the Company. To be in proper
written form, such notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election
as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment
of such person, (iii) the class and number of shares of the Company which are owned beneficially and of record by such person,
(iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A promulgated under the Exchange Act of 1934 (including,
without limitation, such person’s written consent to being named in the Proxy Statement as a nominee and to serving as a
director if elected), and (v) any other information that is or would be required to be disclosed in a Schedule 13D promulgated
under the Exchange Act regardless of whether such person would otherwise be required to file a Schedule 13D, and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the Company’s books, as such stockholder, (ii)
the class and number of shares of the Company which are owned beneficially and of record by such stockholder, and (iii) a description
of all arrangements or understandings between such stockholder and the person nominated by such stockholder, and any interest
by such stockholder in the election of the person nominated by such stockholder, and any relationship between such stockholder
and the person so nominated. In addition, a person providing notice under this Section shall supplementally and promptly provide
such other information as the Company otherwise requests. At the request of the Board, any person nominated by the Board for election
as a director shall furnish to the Secretary of the Company that information required to be set forth in a stockholder’s
notice of nomination which pertains to the nominee.
HOUSEHOLDING
INFORMATION
SEC
regulations permit the Company to send a single set of proxy materials, which includes this Proxy Statement and the Annual Report
to Stockholders, to two or more stockholders that share the same address. Each stockholder will continue to receive his or her
own separate proxy card. Upon written or oral request, the Company will promptly deliver a separate set of proxy materials to
a stockholder at a shared address that only received a single set of proxy materials for this year. If a stockholder would prefer
to receive his or her own copy, please contact Juliette Madden, by telephone at (516) 364-1902, by U.S. mail at Research Frontiers
Incorporated, 240 Crossways Park Drive, Woodbury, NY 11797, or by e-mail at info@SmartGlass.com. Similarly, if a stockholder would
like to receive his or her own set of the Company’s proxy materials in future years or if a stockholder shares an address
with another stockholder and both would like to receive only a single set of the Company’s proxy materials in future years,
please contact Juliette Madden.
GENERAL
AND OTHER MATTERS
Management
knows of no matter other than the matters described above which will be presented to the meeting. However, if any other matters
properly come before the meeting, or any of its adjournments, the person or persons voting the proxies will vote them in accordance
with his, her or their best judgment on such matters.
|
By
Order of the Board of Directors
|
|
|
|
|
|
JOSEPH
M. HARARY, Secretary
|
Woodbury,
New York
April
29, 2021
THE
COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020
INCLUDING FINANCIAL STATEMENTS AND ANY SCHEDULES THERETO (EXCEPT EXHIBITS), TO EACH OF THE COMPANY’S STOCKHOLDERS, UPON
RECEIPT OF A WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY’S OFFICES, ATTENTION: SECRETARY. REQUESTS FROM BENEFICIAL STOCKHOLDERS
MUST SET FORTH A REPRESENTATION AS TO SUCH OWNERSHIP ON APRIL 16, 2021.
[PROXY
CARD - FRONT]
PROXY
RESEARCH
FRONTIERS INCORPORATED
240
Crossways Park Drive, Woodbury, New York 11797-2033
THIS
PROXY IS SOLICITED ON BEHALF OF
THE
BOARD OF DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS - June 10, 2021
The
undersigned hereby appoints Joseph M. Harary and Michael R. LaPointe, or either of them, as Proxy or Proxies of the undersigned
with full power of substitution to attend and to represent the undersigned at the Annual Meeting of Stockholders of Research Frontiers
Incorporated to be held on June 10, 2021, and at any adjournments thereof, and to vote thereat the number of shares of stock of
the Company the undersigned would be entitled to vote if personally present, in accordance with the instructions set forth on
the reverse side hereof. Any proxy heretofore given by the undersigned with respect to such stock is hereby revoked.
Dated:
___________________________________________, 2021
______________________________________________________
______________________________________________________
Please
sign exactly as name appears above. For joint accounts, each joint owner must sign. Please give full title if signing in a representative
capacity.
PLEASE
MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
[PROXY
CARD - BACK]
|
CLASS
I NOMINEES: Joseph M Harary and William Graham Settle
|
|
|
|
|
[ ]
|
FOR
nominees listed above.
[ ]
FOR all nominees listed above EXCEPT:__________________
(Instruction:
To withhold authority to vote on any individual nominee, write the name in the space above.)
|
|
|
|
|
[ ]
|
WITHHOLD
AUTHORITY to vote for nominees listed above.
|
2.
|
RATIFICATION
OF THE SELECTION OF COHNREZNICK LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2021.
|
|
|
|
[ ]
FOR [ ] AGAINST [ ] ABSTAIN
|
3.
|
If
no specification is made, this proxy will be voted FOR the nominee listed above and FOR RATIFICATION of Proposal 2.
|
Please
indicate whether or not you plan to attend the Annual Meeting on Thursday, June 10, 2021.
[ ]
YES [ ] NO
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