SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fees paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 10, 2004
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 Fox Hollow Inn, 7725 Jericho Turnpike,
Woodbury, New York 11797, on June 10, 2004 at 11:00 A.M., local
time, for the following purposes:
1. To elect two Class II directors;
2. To ratify the selection of KPMG LLP as independent
auditors of the Company for the fiscal year ending December 31,
2004; and
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April
19, 2004 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting or any adjournments
thereof.
Management 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.
By Order of the Board of Directors,
VICTOR F. KEEN, Secretary
Woodbury, New York
April 30, 2004
RESEARCH FRONTIERS INCORPORATED
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held Thursday, June 10, 2004
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 Fox
Hollow Inn, 7725 Jericho Turnpike, Woodbury, New York 11797,
on June 10, 2004, at 11:00 A.M., local time, and all adjournments
thereof.
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
nominees for director listed below, and (ii) for the ratification of the
selection of the independent auditors. 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 11797-2033. Research Frontiers
encourages you to communicate with your Company. If you are
interested in communicating directly with the entire board of
directors of the Company, you may do so by sending an email to
Directors@SmartGlass.com and your email will be sent directly to
each member of the Company's Board of Directors automatically.
On or about April 30, 2004 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, 2003,
including financial statements, are to be mailed to each stockholder
of record at the close of business on April 19, 2004.
VOTING SECURITIES
Only stockholders of record at the close of business on April
19, 2004 are entitled to vote at the meeting. As of April 19, 2004,
the Company had issued and outstanding and entitled to vote
12,791,330 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. The majority of all the outstanding shares
of Common Stock will constitute a quorum at the meeting. A
shareholder voting either in person or through a proxy who abstains
with respect to a matter being voted upon is considered to be present
and entitled to vote on such matter at the meeting, and is in effect a
negative vote upon such matter, but a shareholder (including a
broker) who does not give authority to a proxy to vote, or withholds
authority to vote, on a matter shall not be considered present and
entitled to vote on the matter.
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 Company's Common Stock, and for all
directors and executive officers of the Company individually and as
a group.
Total Exercisable
Beneficial Warrants Percent
Name of Beneficial Owner Ownership(1) and Options of Class
Robert L. Saxe . . . . . . . . . . . . . . . . 1,532,665(2) 1,114,600 11.02
c/o Research Frontiers Incorporated
240 Crossways Park Drive
Woodbury, NY 11797
Joseph M. Harary . . . . . . . . . . . . . . . 615,374(3) 502,200 4.63
Robert M. Budin. . . . . . . . . . . . . . . . 229,377 197,000 1.77
Victor F. Keen . . . . . . . . . . . . . . . . 227,160 75,000 1.77
Albert P. Malvino. . . . . . . . . . . . . . . 98,200 27,500 0.77
Michael R. LaPointe. . . . . . . . . . . . . . 86,009(4) 83,500 0.67
All directors and officers
as a group (6 persons) 2,788,785(5) 1,999,800 18.85
----------------------------------
(1) All information is as of April 19, 2004 and was determined
in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934 based upon information furnished
by the persons listed or contained in filings made by them
with the Securities and Exchange Commission or otherwise
known to the Company. Unless otherwise indicated,
beneficial ownership disclosed consists of sole voting and
dispositive power. 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.
(2) Includes (i) 2,687 shares of Common Stock owned by Mr.
Saxe's wife, Marie Saxe; (ii) 68,702 shares owned by a
trust u/w Leonard S. Saxe for which Mr. Saxe serves as a
co-trustee, and has a beneficial interest in one-half of the
income from such trust; and (iii) 11,250 shares of Common
Stock owned by a trust for the children of the late George
Backer and certain others for which Mr. Saxe serves as sole
trustee. Mr. Saxe disclaims beneficial ownership to all
securities described in items (i) and (iii) above.
(3) Includes 600 shares of Common Stock owned by Mr.
Harary's minor children, as to which shares Mr. Harary
disclaims beneficial ownership.
(4) Includes 898 shares of Common Stock owned by Mr.
LaPointe's wife, as to which shares Mr. LaPointe disclaims
beneficial ownership.
(5) Includes the securities described above in footnotes (2)
through (4).
ELECTION OF DIRECTORS
(Item 1)
Pursuant to the Company's By-Laws, five Directors
constitute the entire Board of Directors of the Company. A
majority of the Board of Directors of the Company are
independent directors. The Board of Directors is divided into
three classes, as nearly equal in number as possible. Each class
serves three years, with the terms of office of the respective
classes expiring in successive years. The term of office of the
directors in Class II expires at the 2004 Annual Meeting of
Stockholders. The Board of Directors proposes that the
nominees described below be elected to hold office for a three-
year term expiring at the 2007 Annual Meeting of Stockholders,
and until the election and qualification of their respective
successors. If no other choice is specified in the accompanying
proxy, the persons named therein have advised management that
it is their present intention to vote the proxy for the election of
the nominees set forth below. Each of the members of the Board
of Directors of the Company, including the nominees listed
below, is presently a director of the Company, and was elected
to such office by the stockholders of the Company, or in the case
of Victor Keen and Albert Malvino, appointed to such position
by the Board of Directors to fill a vacancy. Should any nominee
become unable to accept nomination or election, it is intended
that the persons named in the accompanying proxy will vote for
the election of such other person as management may
recommend in the place of such nominee. There is no indication
at present that the nominees will be unable to accept nomination.
The following biographical information is provided with
respect to each director:
Directors Standing for Election
Victor F. Keen
Victor F. Keen, age 63, has been a director of the Company
since June 2001, and has served as the Company's corporate
Secretary since 1987. Mr. Keen is a partner and chairman of the
tax department of the law firm of Duane Morris LLP, a law firm
with over 500 attorneys and offices in 19 cities throughout the
U.S. and Europe. Mr. Keen is a graduate of Trinity College
(1963) and Harvard Law School (1966). Mr. Keen serves as
Chairman of the Company's Compensation Committee.
Albert P. Malvino
Albert P. Malvino, age 73, has been a director of the Company
since August 2002 and has also been a member of the
Company's Advisory Board since June 2002. Dr. Malvino
serves as Chairman of the Company's Nominating Committee.
Dr. Malvino trained at the Naval Electronics Technician School
and graduated from the University of Santa Clara Summa Cum
Laude in 1959 with a B.S. degree in Electrical Engineering. For
the next five years, he worked as an electronics engineer at
Microwave Laboratories and at Hewlett-Packard while earning
his MSEE from San Jose State University in 1964. He then
taught at Foothill College for the next four years, wrote five
textbooks, and was awarded a National Science Foundation
Fellowship in 1968. After receiving a Ph.D. in Electrical
Engineering from Stanford University in 1970, Dr. Malvino
embarked on a full-time writing career, creating and revising
electronics-technology textbooks now used throughout the
world. In 1984, he founded Malvino Inc. to publish animated
textbooks and other educational software for electronics. He has
written 10 textbooks that are used at universities, technical
institutes and corporations worldwide and which have been
translated into 20 foreign languages with over 108 editions, and
which have sold over 2 million copies.
Directors Continuing in Office
Class I - Term to Expire at the 2006Annual Meeting of Stockholders
Joseph M. Harary
Mr. Harary, age 43, 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 has been counsel to the law firm of
Eiseman, Levine, Lehrhaupt & Kakoyiannis, New York, New
York, since 1992. Mr. Harary was associated with the law firm
of Howard, Darby & Levin from 1990 to 1992, and with the law
firm of Kronish, Lieb, Weiner & Hellman from 1986 to 1990.
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.
Prior to attending law school, Mr. Harary was an economist with
the Federal Reserve Bank of New York.
Class III - Term Expires at the 2005 Annual Meeting of Stockholders
Robert L. Saxe
Mr. Saxe, age 68, is a founder of the Company and has been
Chairman of the Board of Directors of the Company since its
inception in 1965, was its President from 1966 to February
2002, and Treasurer since October 1966. He graduated from
Harvard College in 1956 with an A.B. degree, Cum Laude in
General Studies (with a major in physics). Mr. Saxe also
received an M.B.A. degree from Harvard Business School in 1960.
Robert M. Budin
Mr. Budin, age 71, has been a director of the Company since
1987. Mr. Budin was a Senior Vice President of Harold C.
Brown & Co., Inc. until his retirement in 1990. Mr. Budin was a
stockbroker and had been employed at Harold C. Brown & Co.,
Inc. since 1963. Mr. Budin serves as Chairman of the
Company's Audit Committee.
The Board of Directors has an Executive Committee
composed of Robert L. Saxe, Joseph M. Harary and Robert M.
Budin. The Board of Directors also has an Audit Committee, a
Compensation Committee, and a Nominating Committee. The
members of each of these three latter committees, Robert M.
Budin, Victor F. Keen, and Albert P. Malvino, consists solely of
the three non-management directors, each of whom the Board
has determined meets the independence requirements under the
applicable listing standards of the NASDAQ National Market
governing the independence of directors. 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 attached as
an Exhibit to this Proxy Statement. The Compensation
Committee and Nominating Committee, are not required to, and
do not have, written charters.
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 public accountants, the scope of audit procedures,
general accounting policy matters, and the performance of the
Company's independent public accountants.
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.
The Nominating Committee 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 Committee considers candidates for Board
membership suggested by its members and by other Board
members. Additionally, in selecting nominees for directors, the
Nominating 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 Committee will
also consider whether to nominate any person nominated by a
shareholder on a timely basis and in accordance with the
provisions of the Company's by-laws relating to shareholder
nominations and as described in "2005 Stockholder Proposals
and Director Nominations" below.
Once the Nominating Committee has identified a
prospective nominee, it or a subcommittee of the Nominating
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
subcommittee with the recommendation of the prospective
candidate, as well as the subcommittee's own knowledge of the
prospective candidate, which may be supplemented by inquiries
of the person making the recommendation or others. The
preliminary 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 below. Based on the
recommendation of the subcommittee, the full 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 National Market,
or other requirements defined under applicable Securities and
Exchange Commission 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 Committee's internal evaluation is
positive, the subcommittee and possibly others will interview
the candidate. Upon completion of this evaluation and interview
process, the Nominating 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.
During 2003, the Company's Board of Directors had four
formal meetings and also met ten additional times informally as
a Board, the Board's Audit Committee met four times, and the
Board's Compensation Committee met twice. The Company's
Nominating Committee did not meet in 2003 as it was formed in
2004. No incumbent director failed to attend any meetings of the
Board of Directors during 2003. The Company encourages and
expects all of its directors to attend its Annual Meeting of
Stockholders, and all directors attended last year's Annual
Meeting of Stockholders.
In addition to Robert L. Saxe and Joseph M. Harary, whose
biographical information is provided above, the only other
executive officer of the Company is Michael R. LaPointe, age
45, who is the Company's Vice President - Marketing since
March 2002, joined the Company as its Director of Marketing
for Architectural Windows and Displays in March 2000. 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
Research Frontiers, assisting the Company with its marketing strategy.
The Board of Directors recommends a vote FOR
election of the nominees listed above and it is intended that
proxies not marked to the contrary will be so voted. Election
of such nominees requires the affirmative vote of the holders
of a plurality of the shares of the Company's Common Stock
present, or represented, and entitled to vote at the Annual Meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
(Item 2)
The Audit Committee has selected the firm of KPMG LLP
to serve as our independent accountants for the fiscal year
ending December 31, 2004. KPMG LLP has served as the
Company's independent auditors for many years and is
considered by management to be well-qualified. We expect that
representatives of KPMG LLP 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 KPMG LLP for the audit
of our annual financial statements for the years ended December
31, 2003 and 2002, and fees billed to us for other services
rendered by KPMG during those periods:
2003 2002
Audit fees (1) $ 60,000 $ 52,000
Audit related fees 7,500 0
Tax fees (2) 12,500 12,500
All other fees 0 0
Total $ 80,000 $ 64,500
(1) Audit fees includes the audit of Research Frontiers
Incorporated annual financial statements, review of financial
statements included in Research Frontiers Incorporated's
Form 10-Q Quarterly Reports and services that are normally
provided by the independent auditors in connection with
regulatory filings for those fiscal years.
(2) Tax fees include fees for all services performed by the
independent auditor's 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 by
KPMG LLP, has considered whether the provision of the non-
audit services described above is compatible with maintaining
KPMG LLPs' independence, and has determined that the
provision of such services is compatible with maintaining
KPMG LLPs' independence.
The Board of Directors unanimously recommends a vote
FOR ratification of the selection of the accounting firm of
KPMG LLP as independent auditors of the Company for the
fiscal year ending December 31, 2004. The ratification
requires a majority vote of those shares of Common Stock
represented and eligible to vote at the 2004 Annual Meeting
of Stockholders.
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 or the Securities Exchange Act of
1934, except to the extent the Company specifically
incorporates this Report by reference therein.
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.
The complete text of the current charter is reproduced in the
appendix to this Proxy Statement.
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 is comprised of the independent directors of the
Company: Robert M. Budin, who serves as the Audit
Committee's Chairman, Victor F. Keen and Albert P. Malvino.
The Company is not required to have a "financial expert" (as
such term is defined by applicable rules) on its Audit
Committee, and does not have one because of the simple nature
of accounting for the Company's operations as a licensing
company. The Company believes that all of the members of its
Audit Committee, due to their background and business
experience, 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. Part of the Audit Committee's duties specifically
include the appointment, compensation and supervision of the
Company's auditors, as well as pre-approval of all auditing and
non-auditing services provided by the Company's accounting
firm. Management is responsible for the Company's internal
controls and financial reporting process. The independent
accountants are responsible for performing an independent audit
of the Company's financial statements in accordance with
generally accepted auditing standards and to issue a report
thereon. As set forth in more detail in the charter, the Audit
Committee's responsibility is to monitor and oversee the processes.
In connection with these responsibilities, the Audit
Committee met with management and the Company's
independent auditors, KPMG LLP, to review and discuss all
financial statements included in the Company's quarterly and
annual reports for the fiscal year ended December 31, 2003 (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 auditors. Our review included discussions with
the independent auditors of matters required to be discussed by
the Statement on Auditing Standards No. 61 (communication
with Audit Committees).
The Audit Committee also received written disclosures
from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and the Audit Committee discussed
with the independent 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 accountants and the Audit
Committee's review of the representations of management and
the independent 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, 2003, for filing with the Securities and Exchange Commission.
Members of the Audit Committee
Robert M. Budin (Chairman)
Victor F. Keen
Albert P. Malvino
EXECUTIVE COMPENSATION
The following table sets forth information regarding all
cash compensation paid by the Company and stock options
granted during the fiscal years indicated to Robert L. Saxe, the
Company's chief executive officer, and to each of the
Company's executive officers during the past fiscal year.
Name of Executive and Other Annual Number of Stock
Principal Positions Year Salary Compensation(1) Options Awarded
Robert L. Saxe, 2003 $424,200 $ 10,000 0
Director, Chairman of 2002 $404,051 $ 56,795 60,000
the Board 2001 $381,174 $425,109 180,000
Joseph M. Harary, 2003 $353,500 $ 36,923 0
Director, President, General 2002 $309,750 $ 22,449 35,000
Counsel, Treasurer, 2001 $283,305 $337,687 90,000
Ass't Secretary
Michael R. LaPointe 2003 $101,776 $ 18,354 7,000
Vice-President Marketing 2002 $113,060 $ 4,082 7,000
(1) Consists of the payment of accrued but unused vacation, and
performance bonuses where applicable.
Report on Executive Compensation
The compensation of executive officers of the Company,
including the Company's chief executive officer, is determined
by the Compensation Committee of the Company's Board of
Directors, whose names are listed below at the end of this report.
The salaries of all executive officers are reviewed at least twice
annually by the Board. 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, years of service, performance of the
Company's stock, and other relevant considerations. The
Company's goal is to set salary levels somewhat below those
received by executives at other companies with comparable
experience and qualifications, and to supplement such
compensation with the grant of stock options and performance-
based bonuses. This approach is designed to more closely align
total executive compensation with the long-term performance of
the Company and enable all employees of the Company to
participate in the Company's growth. Through ownership of
stock options, the executive is rewarded if the Company's
stockholders receive the benefit of appreciation of the price of
the Company's Common Stock. Because the Company believes
that its success is dependent upon the coordinated efforts of all
of its employees, and that teamwork is essential in further
developing the Company's technology and meeting the
expectations of the Company's licensees and stockholders, all
current employees of the Company (other than Robert L. Saxe
and Joseph M. Harary) were granted stock options since the
beginning of the past fiscal year.
The Board of Directors and the stockholders have adopted
a stock option plan which remains in effect. The purpose of
this stock option plan is to attract key employees, officers and
directors and to encourage their continued employment and
services and their increased stock ownership in the Company.
The Board of Directors believes that the granting of stock
options under this stock option plan will promote continuity of
management, and will result in the 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.
Currently awards for 514,822 shares of common stock were
available for issuance under the Company's stock option plan.
If any options expire or terminate for any reason without having
been exercised in full, the unpurchased shares subject thereto
will again be available for issuance under this stock option plan.
The Company's stock option plan is administered by a
committee of at least two directors who are not officers and
employees of the Company (the "Administrators"). Currently
the Administrators consist of Mr. Budin, Mr. Keen and Dr.
Malvino, who serve as members of the Company's Stock Option
Committee. Options which qualify as Incentive Stock Options
("ISO's") under the Internal Revenue Code of 1986, as amended
(the "Code"), and non-qualifying options ("NQSO's") may be
issued under the Company's 1998 Stock Option Plan. Also
stock appreciation rights and restricted stock may be awarded
under the Company's 1998 Stock Option Plan, although there
have been no awards of stock appreciation rights and restricted
stock under such plan to date. The number of options to be
granted under these stock option plans are determined by the
Administrators in their discretion.
The purchase price of Common Stock subject to each
option issued under this stock option plan will be determined
by the Board of Directors or the Administrators, as the case may
be, but in the case of an ISO may not be less than (i) the fair
market value of the Common Stock subject to the option on the
date of grant or (ii) in the case of an option granted to an
employee who, at the time the option is granted, owns (within
the meaning of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company, 110% of
the fair market value of the Common Stock subject to the option
on the date of grant. Options under this stock option plan may
be exercised in the manner and at such times fixed by the Board
of Directors, but may not be exercised for a term of more than
10 years, or for a term of five years in the case of an employee
who, at the time an ISO is granted, owns (within the meaning of
the Code) more than 10% of the total combined voting power of
all classes of stock of the Company. In no event may ISO's
exercisable for stock having an aggregate fair market value
determined on the date of grant of $100,000 (together with all
ISO's granted under any other stock option) be granted which
first become exercisable in any one calendar year. Options are
not transferable except by will or intestacy on the death of the
optionee. In general, ISOs terminate when an optionee ceases to
be employed by the Company or within a specified period after
the termination of such employment depending upon the reason
for such termination.
BOARD OF DIRECTORS:
Robert M. Budin*
Joseph M. Harary
Victor F. Keen*
Albert P. Malvino*
Robert L. Saxe
* Indicates member of Compensation Committee of the Board of Directors.
Employment Arrangements
The Company entered into an employment agreement with
Mr. Robert L. Saxe which automatically renews itself for
successive one-year terms unless either the Company or Mr.
Saxe gives the other at least 90 days prior written notice of the
intention not to renew the employment agreement. Pursuant to
that agreement, Mr. Saxe received an annual base salary from
the Company of $424,200 during 2003 and will receive an
annual base salary of $436,968 through December 31, 2004.
The Compensation Committee of the Board of Directors may, in
its discretion, authorize a higher salary for Mr. Saxe. Pursuant
to his employment agreement, Mr. Saxe has agreed not to
compete with the Company for a period of two years following
the termination of his employment thereunder. The Company
maintains key-man life insurance on the life of Mr. Saxe in the
amount of $500,000.
Stock Options Granted in 2003
The following table sets forth information regarding all
grants of options to the individuals named in the executive
compensation table appearing on page 9 during the fiscal year
ended December 31, 2003, and the potential realizable value of
such options using a 5% and 10% assumed annual rate of
appreciation in the price of the Company's Common Stock. The
particular assumed annual rates of stock price appreciation used
in this table are specified under the rules and regulations of the
Securities and Exchange Commission and are not necessarily
indicative of future stock price performance or the Company's
projections thereof. Over a ten-year option term, the
corresponding increase in the Company's market capitalization
over the same period would be (a) $102,179,353 with an
assumed 5% annual rate of stock appreciation, and (b)
$258,942,542 with an assumed 10% annual rate of stock
appreciation. No options were granted to Robert L. Saxe or
Joseph M. Harary during 2003 or to date in 2004.
Percent Potential Realizable
of Total Value at Assumed
Options Annual Rates of
Granted Stock Price
Number of to Exercise Appreciation for
Options Employees Price Expiration Term of Option
Name Granted in 2003 Per Share Date 5% ($) 10% ($)
Michael R. LaPointe 7,000 4.17% $12.81 June 11, 2013 $ 56,393 $ 142,911
Stock Options Exercised in 2003 and Year-End Option Values
The following table sets forth information regarding all exercises
of options by the individuals named in the executive compensation
table appearing on page 9 during the fiscal year ended December 31,
2003 and the value of options realized upon exercise, and of
unexercised options held by such persons on December 31, 2003,
measured in terms of the average trading price of the Company's
Common Stock on the date of exercise and on the last trading day of
the year, respectively. A total of 2,440,501 stock options issued by the
Company were exercisable at year-end.
Number of Value of Exerci-
Exercisable sable In-the-Money
Number of Options which Options which
Shares Acquired Value Remain Unexercised Remain Unexercised
Name on Exercise Realized at Dec. 31,2003 at Dec. 31, 2003
Robert Saxe 15,000 $ 109,000 1,143,975 $1,237,000
Joseph Harary 43,100 $ 181,725 520,200 $ 398,276
Michael R. LaPointe -- $ -- 83,500 $ 0
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2003 with respect
to shares of the Company's Common Stock that may be issued under the Company's
existing Stock Option Plan, and any other equity that may be issued to officers
or directors of, or consultants to, the Company.
Number of Securities Weighted Average Number of Securities
to be Issued Upon Exercise Price Remaining Available
Exercise of Outstanding of Outstanding for
Plan Category Options and Warrants Options and Warrants Future Issuance
Equity compensation plans
approved by security holders 2,439,526 $12.22 544,822
Equity compensation plans not
approved by security holders (see
Notes 9(b)(ii) and (d) to the
Company's 12-31-03
financial statements) 252,200 $ 8.38 0
Total 2,691,726 $11.86 544,822
Stock Price Performance
The following table sets forth the range of the high and low
selling prices (as provided by the National Association of
Securities Dealers) of the Company's common stock for each
quarterly period within the past two fiscal years:
Quarter Ended Low High
March 31, 2002 15.31 21.00
June 30, 2002 11.09 18.60
September 30, 2002 6.35 15.25
December 31, 2002 7.81 11.76
March 31, 2003 4.28 9.51
June 30, 2003 5.82 14.09
September 30, 2003 11.09 17.20
December 31, 2003 8.33 12.66
These quotations may reflect inter-dealer prices, without
retail mark-up, mark-down, or commission, and may not
necessarily represent actual transactions.
The following graph compares the total returns (assuming
reinvestment of dividends) on $100 invested on December 31,
1998 in the Company's Common Stock (REFR), the NASDAQ
Composite (U.S.) Stock Index, and the NASDAQ Electronic
Component Stock Index. The stock price performance shown on
the graph below reflects historical data provided by the National
Association of Securities Dealers, Inc. and is not necessarily
indicative of future price performance.
[graph with the following data points]
Date Index Index Index
U.S. NASDAQ Electronics REFR Ask
12/31/98 $100.00 $100.00 $100.00
01/29/99 $114.50 $116.16 $90.48
02/26/99 $104.25 $99.67 $76.79
03/31/98 $112.12 $102.77 $67.86
04/30/98 $115.68 $108.69 $88.69
05/31/99 $112.43 $101.41 $85.12
06/30/99 $122.53 $117.08 $92.26
07/30/99 $120.32 $129.11 $91.67
08/31/99 $125.39 $148.92 $120.24
09/30/99 $125.53 $139.73 $95.24
10/29/99 $135.58 $152.69 $95.83
11/30/99 $152.02 $163.28 $93.45
12/31/99 $185.43 $185.99 $141.07
01/31/00 $178.61 $215.73 $252.38
02/29/00 $212.67 $283.83 $332.74
03/31/00 $208.33 $298.03 $280.95
04/28/00 $175.22 $275.66 $183.33
05/31/00 $154.08 $251.93 $192.26
06/30/00 $181.14 $291.97 $285.71
07/31/00 $171.67 $287.64 $251.79
08/31/00 $191.96 $326.34 $182.14
09/29/00 $167.02 $245.74 $182.74
10/31/00 $153.29 $231.98 $183.33
11/30/00 $118.10 $176.81 $151.79
12/29/00 $111.83 $152.85 $166.67
01/31/01 $125.38 $175.76 $197.05
02/28/01 $ 97.06 $115.28 $152.38
03/30/01 $ 83.41 $93.25 $173.81
04/30/01 $ 95.85 $112.24 $225.24
05/31/01 $ 95.74 $105.95 $264.29
06/29/01 $ 98.36 $107.76 $257.14
07/31/01 $ 92.11 $106.95 $247.62
08/31/01 $ 82.08 $96.14 $185.71
09/28/01 $ 68.25 $69.45 $154.76
10/31/01 $ 77.01 $88.23 $169.62
11/30/01 $ 87.97 $109.61 $161.14
12/31/01 $ 88.71 $104.43 $159.62
01/31/02 $ 88.04 $110.69 $174.38
02/28/02 $ 78.88 $87.05 $152.38
03/28/02 $ 84.06 $98.96 $168.38
04/30/02 $ 77.07 $89.40 $155.14
05/31/02 $ 73.67 $86.88 $131.52
06/28/02 $ 67.00 $65.20 $141.52
07/31/02 $ 60.88 $61.42 $83.71
08/30/02 $ 60.24 $58.41 $89.52
09/30/02 $ 53.76 $46.32 $85.33
10/31/02 $ 61.10 $54.89 $94.95
11/29/02 $ 67.92 $70.21 $100.48
12/31/02 $ 61.33 $55.92 $79.43
01/31/03 $ 60.67 $55.77 $69.90
02/28/03 $ 61.52 $59.89 $63.81
03/31/03 $ 61.70 $57.08 $68.57
04/30/03 $ 67.31 $65.03 $67.52
05/30/03 $ 73.22 $74.16 $109.04
06/30/03 $ 74.39 $73.59 $133.14
07/31/03 $ 79.52 $83.99 $129.42
08/29/03 $ 82.98 $92.25 $110.29
09/30/03 $ 81.90 $89.43 $109.23
10/31/03 $ 88.50 $102.67 $100.57
11/28/03 $ 89.81 $108.56 $89.62
12/31/03 $ 91.70 $107.60 $88.48
2005 STOCKHOLDER PROPOSALS 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 2005 Annual Meeting of Stockholders, must
comply with and meet the requirements of the Company's By-
Laws and of Rule 14a-8 of the Securities and Exchange
Commission. 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: General Counsel, by January 1, 2005. Section 2.12
of the Company's By-Laws (a copy of which is available upon
request) set 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 Securities Exchange Act of 1934, as
amended (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 Securities Exchange Act of 1934
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the
Company's directors, its executive officers, and any persons
holding more than ten percent of the Company's Common Stock
are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership
to the Securities and Exchange Commission. Specific due dates
for these reports have been established, and the Company is
required to disclose in this Proxy Statement any failure to file by
these dates. All of these filing requirements were satisfied on a
timely basis. In making these disclosures, the Company has
relied solely on written representations of its directors and
executive officers and copies of the reports that they have filed
with the Commission.
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
VICTOR F. KEEN
Secretary
Woodbury, New York
April 30, 2004
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2003 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: ASSISTANT SECRETARY. REQUESTS FROM BENEFICIAL STOCKHOLDERS
MUST SET FORTH A REPRESENTATION AS TO SUCH OWNERSHIP ON APRIL 19, 2004.
APPENDIX TO PROXY STATEMENT
Amended and Restated
Charter of the Audit Committee
of the Board of Directors
of Research Frontiers Incorporated
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of
Directors to assist the Board of Directors in fulfilling its
oversight responsibilities. The Company's auditors shall
report directly to the Audit Committee. The Audit
Committee's primary duties and responsibilities are to:
o Monitor the integrity of the Company's financial
reporting process and systems of internal controls
regarding finance, accounting, and legal compliance.
o Monitor the independence and performance of the
Company's independent auditors and internal auditing
department.
o Provide an avenue of communication among the
independent auditors, management, the internal auditing
department, and the Board of Directors.
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities,
and it has direct access to the independent auditors as well
as anyone in the organization. The Audit Committee has
the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it deems
necessary in the performance of its duties.
For purpose of clarification, the Audit Committee's duties
also specifically include: the appointment, compensation
and supervision of the Company's auditors; resolution of
any disputes between the Company's management and its
auditors; receipt and treatment of complaints regarding the
company's accounting, internal accounting controls or
audits, including complaints submitted anonymously by the
Company's employees; pre-approval of all auditing and
non-auditing services provided by accounting firms; and
the review of the auditor's reports, all critical accounting
policies and practices used by the Company, alternative
treatments of financial information and the ramifications of
their use, and material written communications between
accounting firms and the management of the Company.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of
applicable laws and regulations. The members of the Audit
Committee shall be determined by the Board of Directors,
each of whom shall be independent non-executive
directors, free from any relationship that would interfere
with the exercise of his or her independent judgment. All
members of the Audit Committee shall have a basic
understanding of finance and accounting and be able to
read and understand fundamental financial statements, and
at least one member of the Audit Committee shall have
accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board
of Directors. If an audit committee Chairman is not
designated or present, the members of the Audit Committee
may designate a Chairman by majority vote of the Audit
Committee membership.
The Audit Committee shall meet at least four times
annually, or more frequently as circumstances dictate. The
Audit Committee Chairman shall prepare and/or approve
an agenda in advance of each meeting. The Audit
Committee should meet privately in executive session at
least annually with management, the director of the internal
auditing department, the independent auditors, and as a
committee to discuss any matters that the Audit Committee
or each of these groups believe should be discussed. In
addition, the Audit Committee, or at least its Chairman,
should communicate with management and the
independent auditors quarterly to review the Company's
financial statements and significant findings based upon the
auditors limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at
least annually. Submit the Charter to the Board of
Directors for approval and have the document published
at least every three years in accordance with SEC
regulations.
2. Review the Company's annual audited financial
statements prior to filing or distribution. Review should
include discussion with management and independent
auditors of significant issues regarding accounting
principles, practices, and judgments.
3. In consultation with the management, the independent
auditors, and the internal auditors, consider the integrity
of the Company's financial reporting processes and
controls. Discuss significant financial risk exposures and
the steps management has taken to monitor, control, and
report such exposures. Review significant findings
prepared by the independent auditors and the internal
auditing department together with management's
responses.
4. Review with financial management and the
independent auditors the company's quarterly financial
results prior to the release of earnings and/or the
company's quarterly financial statements prior to filing
or distribution. Discuss any significant changes to the
Company's accounting principles and any items required
to be communicated by the independent auditors in
accordance with SAS 61 (see item 9) . The Chairman of
the Audit Committee may represent the entire Audit
Committee for purposes of this review.
Independent Auditors
5. The independent auditors are ultimately accountable to
the Audit Committee and the Board of Directors. The
Audit Committee shall review the independence and
performance of the auditors and annually recommend to
the Board of Directors the appointment of the
independent auditors or approve any discharge of
auditors when circumstances warrant.
6. Approve the fees and other significant compensation to
be paid to the independent auditors.
7. On an annual basis, the Audit Committee should review
and discuss with the independent auditors all significant
relationships they have with the Company that could
impair the auditors' independence.
8. Review the independent auditors audit plan - discuss
scope, staffing, locations, reliance upon management,
and internal audit and general audit approach.
9. Prior to releasing the year-end earnings, discuss the
results of the audit with the independent auditors.
Discuss certain matters required to be communicated to
audit committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about
the quality and appropriateness of the Company's
accounting principles as applied in its financial
reporting.
Legal Compliance
11. On at least an annual basis, review with the Company's
counsel, any legal matters that could have a significant
impact on the organization's financial statements, the
Company's compliance with applicable laws and
regulations, and inquiries received from regulators or
governmental agencies.
Other Audit Committee Responsibilities
12. Annually prepare a report to shareholders as required
by the Securities and Exchange Commission. The report
should be included in the Company's annual proxy
statement.
13. Perform any other activities consistent with this
Charter, the Company's by-laws, and governing law, as
the Audit Committee or the Board of Directors deems
necessary or appropriate.
14. Maintain minutes of meetings and periodically report to
the Board of Directors on significant results of the
foregoing activities.
15. Periodically review this Charter and recommend
revisions hereto to the Corporation's Board of Directors.
[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, 2004
The undersigned hereby appoints Robert L. Saxe and Joseph M.
Harary, 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, 2004, 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:____________________________________ ____, 2004
__________________________________________________
__________________________________________________
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]
1. ELECTION OF CLASS II DIRECTORS
NOMINEES: Victor F. Keen and Albert P. Malvino
[ ] FOR ALL nominees listed above.
[ ] FOR ALL nominees listed above
EXCEPT:____________________________
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. RATIFICATION OF THE SELECTION OF KPMG LLP
AS INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2004.
[ ] FOR RATIFICATION [ ] AGAINST RATIFICATION [ ] ABSTAIN
3. In their discretion, upon such other matters as may properly come before the
meeting. If no specification is made, this proxy will be voted FOR the
nominees listed above and FOR APPROVAL of Proposal 2.
Please indicate whether or not you plan to attend the Annual Meeting
on Thursday, June 10, 2004.
Yes [ ] No [ ]