UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.         )

 

Filed by the Registrant ☒ 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 Rule14a-6(e)(2))
   
Definitive Proxy Statement
   
Definitive Additional Materials
   
Soliciting Material under § 240.14(a)-12

 

Ocean Power Technologies, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant

 

Payment of Filing Fee (Check all boxes that apply):

 

No fee required
   
Fee paid previously with preliminary materials
   
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

 

 

 

PRELIMINARY PROXY STATEMENT, DATED NOVEMBER 16, 2023

SUBJECT TO COMPLETION

 

 

OCEAN POWER TECHNOLOGIES, INC.

28 Engelhard Drive, Suite B
Monroe Township, NJ 08831

 

NOTICE OF THE 2023 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON WEDNESDAY, JANUARY 31, 2024

 

NOTICE IS HEREBY GIVEN that the 2023 Annual Meeting of Stockholders of Ocean Power Technologies, Inc. (the “Company,” “OPT,” “we,” “us” or “our”) will be held on Wednesday, January 31, 2024, at 10:00 a.m., Eastern Time, in virtual meeting format only, via live webcast (including any adjournments, postponements, or continuations thereof, the “2023 Annual Meeting”). The 2023 Annual Meeting will be conducted in a virtual format to provide stockholders the opportunity to attend, irrespective of location.

 

The 2023 Annual Meeting will be held for the following purposes:

 

1.To elect as directors the six (6) persons named in this Proxy Statement as the Board’s nominees to serve on our Board of Directors (the “Board” or the “OPT Board”) until the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier death, resignation, or removal;
   
2.To approve an amendment to the 2015 Omnibus Incentive Plan (the “2015 Plan”) to increase the number of shares of our common stock available for grant under the 2015 Plan from 4,382,036 to 7,282,036 to ensure that adequate shares will be available under the 2015 Plan for future grants and to amend the aggregate number of shares available for incentive awards;
   
3.To ratify, by a non-binding advisory vote, the adoption of our Section 382 Tax Benefits Preservation Plan, dated as of June 29, 2023, by and between OPT and Computershare Trust Company, N.A., as Rights Agent;
   
4.To ratify, by a non-binding advisory vote, the selection of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024;
   
5.To approve, by a non-binding advisory vote, the compensation of our named executive officers; and
   
6.To transact such other business as may properly come before the 2023 Annual Meeting.

 

 
 

 

Who Can Vote:

 

Stockholders of record at the close of business on December 4, 2023.

 

How You Can Vote:

 

You may cast your vote via mail, telephone, or the Internet. Certain stockholders may only be able to vote by mail. You may also vote virtually at the 2023 Annual Meeting.

 

Who May Attend:

 

All stockholders are cordially invited to attend the 2023 Annual Meeting by visiting www.cesonlineservices.com/optt23_vm, where you will be able to listen to the meeting live, submit questions, and vote. To attend the 2023 Annual Meeting, you must pre-register at www.cesonlineservices.com/optt23_vm by 10:00 a.m. Eastern Time on January 30, 2024.

 

Your vote will be especially important this year. As you may be aware, Paragon Technologies, Inc. (“Paragon”), which owns approximately 4.0% of OPT’s common stock, submitted materials to OPT purporting to provide notice (the “Purported Nominating Notice”) of Paragon’s intent to nominate a majority slate of director candidates for election to our six-member Board at the 2023 Annual Meeting and, thereby, seek control of our Board. OPT has informed Paragon that the Board rejected the Purported Nominating Notice for failing to comply with OPT’s Amended and Restated Bylaws (the “OPT Bylaws”) and, accordingly, any attempt by Paragon at the 2023 Annual Meeting to nominate its purported nominees for election to our Board shall be disregarded. Paragon has sued OPT and its directors in the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”) seeking, among other remedies, declaratory and injunctive relief to prevent OPT from continuing to reject the Purported Nominating Notice. The Delaware Court of Chancery has scheduled a hearing on November 28, 2023 to determine whether to grant Paragon its requested relief.

 

Unless the litigation results in a ruling that prevents OPT from rejecting the Purported Nominating Notice, any director nominations attempted by Paragon will be disregarded, and no proxies or votes in favor of its purported nominees will be recognized or tabulated at the 2023 Annual Meeting. As Paragon’s nominations will not be recognized as valid nominations under Delaware law unless otherwise so required by the Delaware Court of Chancery, the WHITE proxy card accompanying this Proxy Statement does not include the names of Paragon’s purported nominees on a “universal proxy card.” However, if the litigation results in a ruling that prevents OPT from rejecting the Purported Nominating Notice, then OPT will amend this Proxy Statement and the accompanying WHITE proxy card to reflect those developments and to include the names of Paragon’s nominees on a WHITE universal proxy card, and OPT will mail the revised proxy statement and a WHITE universal proxy card to stockholders. In addition, in this scenario, no proxies or votes received on OPT’s previously circulated WHITE proxy card will be recognized or tabulated at the 2023 Annual Meeting. Accordingly, if you vote on OPT’s WHITE proxy card accompanying this Proxy Statement and the result of the litigation is that the Purported Nominating Notice cannot be rejected, your votes will not be recognized or tabulated, and you will have to vote again for your vote to be counted.

 

Despite the Board’s determination to reject the Purported Nominating Notice for not complying with the OPT Bylaws, you may receive solicitation materials from Paragon. OUR BOARD URGES YOU TO VOTE ONLY ON THE WHITE PROXY CARD “FOR ALL” OF OUR BOARD’S NOMINEES (TERENCE J. CRYAN, J. PHILIPP STRATMANN, CLYDE W. HEWLETT, NATALIE LORENZ-ANDERSON, DIANA G. PURCEL, AND PETER E. SLAIBY), TO DISREGARD ANY MATERIALS SENT TO YOU BY OR ON BEHALF OF PARAGON, AND NOT TO SIGN, RETURN, OR VOTE ANY PROXY CARD SENT TO YOU BY OR ON BEHALF OF PARAGON. OPT is not responsible for the accuracy of any information provided by Paragon in solicitation materials filed or disseminated by or on behalf of Paragon or any other statements that Paragon may make.

 

A list of stockholders entitled to vote at the 2023 Annual Meeting will be available for examination by any stockholder, for any purpose germane to the 2023 Annual Meeting, for ten (10) days prior to the 2023 Annual Meeting during ordinary business hours at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831, OPT’s principal place of business.

 

 
 

 

OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR ALL” OF THE BOARD’S NOMINEES (TERENCE J. CRYAN, J. PHILIPP STRATMANN, CLYDE W. HEWLETT, NATALIE LORENZ-ANDERSON, DIANA G. PURCEL, AND PETER E. SLAIBY) ON PROPOSAL 1, “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, “FOR” PROPOSAL 4, AND “FOR” PROPOSAL 5 USING THE ENCLOSED WHITE PROXY CARD.

 

OUR BOARD DOES NOT ENDORSE ANY OF PARAGON’S PURPORTED NOMINEES AND URGES YOU TO DISREGARD ANY MATERIALS SENT TO YOU BY ON BEHALF OF PARAGON AND NOT TO SIGN, RETURN, OR VOTE ANY PROXY CARD SENT TO YOU BY PARAGON.

 

If you vote, or have previously voted, using a proxy card sent to you by or on behalf of Paragon, you can subsequently revoke that proxy by following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone or by completing, signing and dating the WHITE proxy card and mailing it in the postage-paid envelope provided. Only your latest dated vote will count. Any proxy may be revoked prior to its exercise at the 2023 Annual Meeting as described in this Proxy Statement.

 

Whether or not you attend the 2023 Annual Meeting, it is important that your shares be represented at the 2023 Annual Meeting. We encourage you to please vote TODAY to ensure your voice is heard. You may vote by marking, signing, and dating the enclosed WHITE proxy card and returning it in the postage-paid envelope. Stockholders may also vote via the Internet or by telephone.

 

For more information and up-to-date postings, please go to www.oceanpowertechnologies.com. Information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the SEC. If you need assistance with voting or have any questions, please contact Morrow Sodali LLC (“Morrow Sodali”), our proxy solicitor assisting us in connection with the 2023 Annual Meeting. Stockholders may call toll free at (800) 662-5200. Banks and brokers may call collect at (203) 658-9400.

 

Regardless of the number of shares of OPT common stock that you own, your vote is important. Thank you for your continued support, interest, and investment in OPT.

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  /s/ Nicholas Day
  Nicholas Day
  General Counsel and Secretary

 

Monroe Township, NJ

December [●], 2023

 

This Notice of the 2023 Annual Meeting of Stockholders and the accompanying Proxy Statement are first being made available to stockholders of record as of December 4, 2023, on or about December [●], 2023.

 

If you have any questions or require any assistance in voting your shares, please contact our proxy solicitor:

 

 

509 Madison Avenue Suite 1206

New York, NY 10022

 

Stockholders Call Toll Free: (800) 662-5200

Banks, Brokers, Trustees, and Other Nominees Call Collect: (203) 658-9400

Email: OPT@investor.MorrowSodali.com

 

 

Important Notice Regarding the Availability of Proxy Materials for the 2023 Annual Meeting

to Be Held at 10:00 a.m., Eastern Time on Wednesday, January 31, 2024.

 

The Notice of the 2023 Annual Meeting of Stockholders, this Proxy Statement,

the accompanying WHITE proxy card and our Annual Report on Form 10-K for

the fiscal year ended April 30, 2023 are available at
https:// www.oceanpowertechnologies.com  

 

 

 
 

 

PRELIMINARY PROXY STATEMENT, DATED NOVEMBER 16, 2023

SUBJECT TO COMPLETION

 

 

OCEAN POWER TECHNOLOGIES, INC.

28 Engelhard Drive, Suite B

Monroe Township, NJ 08831

 

PROXY STATEMENT

 

INTRODUCTION

 

This proxy statement (including all appendices attached hereto, this “Proxy Statement”) and the enclosed WHITE proxy card are being furnished to stockholders in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of Ocean Power Technologies, Inc., a Delaware corporation (“OPT,” the “Company,” “we,” “us” or “our”), for use at OPT’s 2023 Annual Meeting of Stockholders (including any adjournments, postponements, or continuations thereof, the “2023 Annual Meeting”). We anticipate that this proxy statement and the enclosed form of WHITE proxy card will be mailed to stockholders on or about December [●], 2023.

 

PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in this Proxy Statement, including under “Executive Compensation.” References to “2023,” “2022,” “2021,” “2020,” “2019” and the like refer to the fiscal year ending, or ended, on April 30 of that year. As this summary does not contain all of the information that you should consider, we encourage you to carefully read the entire Proxy Statement for more information before voting.

 

THE 2023 ANNUAL MEETING

 

2023 Annual Meeting of Stockholders

 

Time and Date:   On January 31, 2024, at 10:00 a.m., Eastern Time.
     
Place:   Via live webcast by visiting www.cesonlineservices.com/optt23_vm. To attend the 2023 Annual Meeting, you must pre-register at www.cesonlineservices.com/optt23_vm by 10:00 a.m. Eastern Time on January 30, 2024.
     
Record Date:   The close of business on December 4, 2023 (the “Record Date”).
     
Proxy Materials:   The Notice of the 2023 Annual Meeting of Stockholders, this Proxy Statement, the accompanying WHITE proxy card, and OPT’s Annual Report on Form 10-K for the year ended April 30, 2023 are first being sent to stockholders of record as of the Record Date on or about December [●], 2023.

 

1
 

 

Proposals and Board Recommendations for Voting

 

PROPOSAL

 

RECOMMENDATION

ON THE WHITE PROXY CARD

  PAGE
         
Proposal 1 – Elect as directors the six (6) persons named in this Proxy Statement as the Board’s nominees to serve on our Board of Directors until the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier death, resignation, or removal   FOR ALL   24
         
Proposal 2 – To approve an amendment to the 2015 Omnibus Incentive Plan (the “2015 Plan”) to increase the number of shares of our common stock, par value $.001 per share (“Common Stock”), available for grant under the 2015 Plan from 4,382,036 to 7,282,036 to ensure that adequate shares will be available under the 2015 Plan for future grants and to amend the aggregate number of shares available for incentive awards   FOR   38
         
Proposal 3 – To ratify, by a non-binding advisory vote, the adoption of our Section 382 Tax Benefits Preservation Plan, dated as of June 29, 2023, by and between OPT and Computershare Trust Company, N.A., as Rights Agent (the “Tax Benefits Preservation Plan”)   FOR   39
         
Proposal 4 – To ratify, by a non-binding advisory vote, the selection of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024   FOR   46
         
Proposal 5 – To approve, by a non-binding advisory vote, the compensation of our named executive officers   FOR   62

 

Your vote will be especially important this year. As you may be aware, Paragon Technologies, Inc. (“Paragon”), which owns approximately 4.0% of the Common Stock, submitted materials to OPT purporting to provide notice (the “Purported Nominating Notice”) of Paragon’s intent to nominate a majority slate of director candidates for election to our six-member Board at the 2023 Annual Meeting and, thereby, seek control of our Board. OPT has informed Paragon that the Board rejected the Purported Nominating Notice for failing to comply with OPT’s Amended and Restated Bylaws (the “Bylaws”) and, accordingly, any attempt by Paragon to nominate its purported nominees for election to our Board at the 2023 Annual Meeting shall be disregarded. Paragon has sued OPT and its directors in the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”) seeking, among other remedies, declaratory and injunctive relief to prevent OPT from continuing to reject the Purported Nominating Notice. The Delaware Court of Chancery has scheduled a hearing on November 28, 2023 to determine whether to grant Paragon its requested relief.

 

Unless the litigation results in a ruling that prevents OPT from rejecting the Purported Nominating Notice, any director nominations attempted by Paragon will be disregarded, and no proxies or votes in favor of its purported nominees will be recognized or tabulated at the 2023 Annual Meeting. As Paragon’s nominations will not be recognized as valid nominations under Delaware law unless otherwise so required by the Delaware Court of Chancery, the WHITE proxy card accompanying this Proxy Statement does not include the names of Paragon’s purported nominees on a “universal proxy card.” However, if the litigation results in a ruling that prevents OPT from rejecting the Purported Nominating Notice, then OPT will amend this Proxy Statement and the accompanying WHITE proxy card to reflect those developments and to include the names of Paragon’s nominees on a WHITE universal proxy card, and OPT will mail the revised proxy statement and a WHITE universal proxy card to stockholders. In addition, in this scenario, no proxies or votes received on OPT’s previously circulated WHITE proxy card will be recognized or tabulated at the 2023 Annual Meeting. Accordingly, if you vote on OPT’s WHITE proxy card accompanying this Proxy Statement and the result of the litigation is that the Purported Nominating Notice cannot be rejected, your votes will not be recognized or tabulated, and you will have to vote again for your vote to be counted.

 

2
 

 

Despite the Board’s determination to reject the Purported Nominating Notice for not complying with the OPT Bylaws, you may receive solicitation materials from Paragon. OUR BOARD URGES YOU TO VOTE ONLY ON THE WHITE PROXY CARD FOR ALL OF OUR BOARD’S NOMINEES (TERENCE J. CRYAN, J. PHILIPP STRATMANN, CLYDE W. HEWLETT, NATALIE LORENZ-ANDERSON, DIANA G. PURCEL, AND PETER E. SLAIBY), TO DISREGARD ANY MATERIALS SENT TO YOU BY OR ON BEHALF OF PARAGON, AND NOT TO SIGN, RETURN, OR VOTE ANY PROXY CARD SENT TO YOU BY OR ON BEHALF OF PARAGON. OPT is not responsible for the accuracy of any information provided by Paragon in solicitation materials filed or disseminated by or on behalf of Paragon or any other statements that Paragon may make.

 

THE BOARD DOES NOT ENDORSE ANY OF PARAGON’S PURPORTED NOMINEES AND URGES YOU TO DISREGARD ANY MATERIALS SENT TO YOU BY ON BEHALF OF PARAGON AND NOT TO SIGN, RETURN, OR VOTE ANY PROXY CARD SENT TO YOU BY PARAGON.

 

If you vote, or have previously voted, using a proxy card sent to you by or on behalf of Paragon, you can subsequently revoke that proxy by following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone or by completing, signing and dating the WHITE proxy card and mailing it in the postage-paid envelope provided. Only your latest dated vote will count. Any proxy may be revoked prior to its exercise at the 2023 Annual Meeting as described in this Proxy Statement.

 

WE URGE YOU TO COMPLETE, DATE, AND SIGN THE ENCLOSED WHITE PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, OR VOTE VIA THE INTERNET OR BY TELEPHONE AS INSTRUCTED ON THE WHITE PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE 2023 ANNUAL MEETING.

 

For more information and up-to-date postings, please go to www.oceanpowertechnologies.com. Information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the SEC. If you need assistance with voting or have any questions, please contact Morrow Sodali, our proxy solicitor assisting us in connection with the 2023 Annual Meeting. Stockholders may call toll free at (800) 662-5200. Banks and brokers may call collect at (203) 658-9400.

 

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the 2023 Annual Meeting, we encourage you to vote as soon as possible so that your shares are represented. We urge you to vote TODAY either by completing, signing, and dating the enclosed WHITE proxy card and promptly mailing it in the postage pre-paid envelope provided or by following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone. Returning your WHITE proxy card will not prevent you from voting at the 2023 Annual Meeting but will ensure that your vote is counted if you are unable to attend.

 

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QUESTIONS AND ANSWERS ABOUT THE 2023 ANNUAL MEETING AND VOTING

 

Why am I receiving these proxy materials?

 

You received these proxy materials because you are a stockholder of OPT. The Board is providing these proxy materials to you in connection with OPT’s Annual Meeting to be held on Wednesday, January 31, 2024 at 10:00 a.m., Eastern Time, via live webcast at www.cesonlineservices.com/optt23_vm. These materials were first sent or made available to stockholders on or about December [●], 2023 by mail. You are invited to attend the 2023 Annual Meeting and are requested to vote on the proposals described in this Proxy Statement.

 

These materials also include a WHITE voting instruction form or WHITE proxy card for the 2023 Annual Meeting. WHITE voting instruction forms and WHITE proxy cards are being solicited on behalf of the Board. OPT’s proxy materials include detailed information about the matters that will be discussed and voted on at the 2023 Annual Meeting and provide updated information about OPT that you should consider in order to make an informed decision when voting your shares.

 

When and where will the 2023 Annual Meeting be held?

 

The 2023 Annual Meeting is scheduled to be held at 10:00 a.m., Eastern Time, on Wednesday, January 31, 2024 in a virtual only meeting format via live webcast at www.cesonlineservices.com/optt23_vm. You will not be able to attend the 2023 Annual Meeting at a physical location. To attend the 2023 Annual Meeting, you must pre-register at www.cesonlineservices.com/optt23_vm by 10:00 a.m., Eastern Time on January 30, 2024. Attendance at the 2023 Annual Meeting will be limited to stockholders as of the Record Date, their authorized representatives, and guests of OPT. Access to the 2023 Annual Meeting may be granted to others at the discretion of OPT and the chair of the 2023 Annual Meeting.

 

Please have your voting instruction form, WHITE proxy card, or other communication containing your control number available and follow the instructions to complete your registration request. Upon completing registration, participants will receive further instructions via email, including unique links that will allow them to access the 2023 Annual Meeting.

 

Stockholders may log into the meeting platform beginning at 9:30 a.m., Eastern Time, on January 31, 2024. We encourage you to log in prior to the 2023 Annual Meeting’s start time by following the instructions found in the reminder email sent the day before the 2023 Annual Meeting.

 

If you are a beneficial holder, you must obtain a “legal proxy” from your broker, bank, or other nominee in order to vote at the 2023 Annual Meeting. If you need assistance with registration or voting, or have any questions, please contact Morrow Sodali, our proxy solicitor assisting us in connection with the 2023 Annual Meeting.

 

We will provide stockholders with the opportunity to ask questions. Questions submitted during the meeting pertinent to meeting matters will be answered during the meeting, subject to time constraints. Instructions for submitting questions and making statements will be posted on the virtual meeting website. The question-and-answer session will be conducted in accordance with certain rules of conduct. The rules of conduct will be available at https://oceanpowertechnologies.com/stockholder-meeting/ prior to the date of the 2023 Annual Meeting and may include certain procedural requirements.

 

Even if you plan to attend the 2023 Annual Meeting, we strongly urge you to vote in advance either by completing, signing, and dating the enclosed WHITE voting instruction form or WHITE proxy card and returning it in the postage-paid envelope provided or by voting via the Internet or by telephone, as soon as possible. This will ensure your vote will be counted if you later are unable or decide not to attend the 2023 Annual Meeting.

 

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What if I experience technical issues with the virtual meeting platform?

 

We will have technicians ready to assist you with any technical difficulties you may have while accessing the virtual Annual Meeting. If you encounter any difficulties accessing the virtual meeting during check-in or during the 2023 Annual Meeting, please call the technical support number that will be included in the reminder email you will receive the day before the meeting. We encourage you to access the virtual meeting prior to the start time. If you need assistance with registration, voting or have any questions, please contact Morrow Sodali, our proxy solicitor assisting us in connection with the 2023 Annual Meeting.

 

What is a proxy?

 

A proxy is your legal designation of another person (your “proxy”) to vote the shares of Common Stock you own at the 2023 Annual Meeting. By completing and returning the proxy card(s), which identify the individuals or trustees authorized to act as your proxy, you are giving each of those individuals the authority to vote your shares of Common Stock as you have instructed. By voting via proxy, each stockholder is able to cast his or her vote without having to attend the 2023 Annual Meeting.

 

Why did I receive more than one proxy card?

 

You will receive multiple proxy cards if you hold your shares of Common Stock in different ways (e.g., different names, trusts, custodial accounts, joint tenancy) or in multiple accounts. If your shares of Common Stock are held by a broker or bank (i.e., in “street name”), you will receive your WHITE proxy card and other voting information directly from your brokerage firm, bank, trust, or other nominee. It is important that you complete, sign, date and return each WHITE proxy card you receive, or vote via the Internet or by telephone as described in the instructions included with your WHITE proxy card(s). You also may receive materials, including a proxy statement and proxy card from Paragon.

 

Why might I be receiving proxy materials from Paragon?

 

As further described in the “Background of the Solicitation” section of this Proxy Statement, on August 25, 2023, Paragon, which owns approximately 4.0% of the Common Stock, submitted the Purported Nominating Notice to OPT. The Purported Nominating Notice purported to provide OPT with notice of Paragon’s intent to nominate a majority slate of director candidates for election to our six-member Board at the 2023 Annual Meeting and, thereby, seek control of our Board. OPT has informed Paragon that the Board rejected the Purported Nominating Notice for failing to comply with the OPT Bylaws and, accordingly, any attempt by Paragon at the 2023 Annual Meeting to nominate its purported nominees for election to our Board shall be disregarded. Paragon has sued OPT and its directors in the Delaware Court of Chancery seeking, among other remedies, declaratory and injunctive relief to prevent OPT from continuing to reject the Purported Nominating Notice. The Delaware Court of Chancery has scheduled a hearing on November 28, 2023 to determine whether to grant Paragon its requested relief.

 

Unless the litigation results in a ruling that prevents OPT from rejecting the Purported Nominating Notice, any director nominations attempted by Paragon will be disregarded, and no proxies or votes in favor of its purported nominees will be recognized or tabulated at the 2023 Annual Meeting. Nonetheless, you may receive proxy solicitation materials from, or on behalf of, Paragon, including an opposition proxy statement and one or more proxy cards.

 

As Paragon’s nominations will not be recognized as valid nominations under Delaware law unless otherwise so determined by a Delaware court, the WHITE proxy card accompanying this Proxy Statement does not include the names of Paragon’s purported nominees on a “universal proxy card.” However, if the result of the litigation is that the Purported Nominating Notice is valid, then OPT will amend this Proxy Statement and the accompanying WHITE proxy card to reflect those developments and to include the names of the purported dissident nominees on a new WHITE universal proxy card and mail the revised proxy statement and the new WHITE universal proxy card to stockholders. In addition, in this scenario, no proxies or votes received on OPT’s previously circulated WHITE proxy card will be recognized or tabulated at the 2023 Annual Meeting. Accordingly, if you vote on OPT’s WHITE proxy card accompanying this Proxy Statement and the result of the litigation is that the Purported Nominating Notice is valid, your votes will not be recognized or tabulated, and you will have to vote again for your vote to be counted.

 

We strongly urge you NOT to sign or return any proxy cards sent by or on behalf of Paragon even if Paragon’s proxy card provides an option to vote for the Board’s nominees. If you have already voted using a proxy card sent to you by Paragon, you can revoke it by (1) executing and delivering the enclosed WHITE proxy card, voting via the Internet using the Internet address on the enclosed WHITE proxy card or voting by telephone using the toll-free number on the enclosed WHITE proxy card or (2) voting electronically at the 2023 Annual Meeting. Only your last-dated proxy submitted will count, and any proxy may be revoked at any time prior to its exercise at the 2023 Annual Meeting.

 

5
 

 

What should I do if I receive a proxy card or other proxy materials from Paragon?

 

As noted above, OPT has informed Paragon that the Purported Nominating Notice has been rejected by the Board due to its failure to comply with the OPT Bylaws. Unless the result of the litigation is that the Board cannot reject the Purported Nominating Notice, any director nominations made by Paragon will be disregarded, and no proxies or votes in favor of its purported nominees will be recognized or tabulated at the 2023 Annual Meeting. Nonetheless, you may receive proxy solicitation materials from, or on behalf of, Paragon, including an opposition proxy statement and one or more proxy cards.

 

The Board strongly urges you not to sign or return any proxy card sent to you by Paragon even if Paragon’s proxy card provides an option to vote for the Board’s nominees. If you vote on any proxy card other than the WHITE proxy card provided to you by OPT, you may risk your vote not being counted as a valid vote by proxy card.

 

If you have any questions or need assistance voting, please contact Morrow Sodali, OPT’s proxy solicitor, at (800) 662-5200 or OPT@investor.MorrowSodali.com.

 

What matters will be voted on at the 2023 Annual Meeting?

 

We are aware of five matters that stockholders may vote on at the 2023 Annual Meeting. The following items are each listed on the WHITE proxy card:

 

1.The election as directors the six (6) persons named in this Proxy Statement as the Board’s nominees to serve on our Board until the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier death, resignation, or removal (Proposal 1);
   
2.The approval of an amendment to the 2015 Plan to increase the number of shares of Common Stock available for grant under the 2015 Plan from 4,382,036 to 7,282,036 to ensure that adequate shares will be available under the 2015 Plan for future grants and to amend the aggregate number of shares available for incentive awards (Proposal 2);
   
3.The ratification, by a non-binding advisory vote, of the adoption of our Tax Benefits Preservation Plan (Proposal 3);
   
4.The ratification, by a non-binding advisory vote, of the selection of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024 (Proposal 4); and
   
5.The approval, by a non-binding advisory vote, of the compensation of our named executive officers (Proposal 5).

 

We will also transact such other matters as may properly come before the 2023 Annual Meeting.

 

6
 

 

Could other matters be decided at the 2023 Annual Meeting?

 

The Board does not intend to present to the 2023 Annual Meeting any business other than the proposals described in this Proxy Statement. Our Board is not aware of any other business to be presented for action at the 2023 Annual Meeting. However, if any other matters properly come before the 2023 Annual Meeting, the individuals named as proxies on the WHITE proxy card, or their duly constituted substitutes acting at the 2023 Annual Meeting, will be authorized to vote or otherwise act thereon in accordance with their judgment on such matters to the extent authorized by Rule 14a-4(c) of the Exchange Act.

 

What are the Board’s voting recommendations?

 

The Board unanimously recommends that you vote your shares using the WHITE proxy card:

 

FOR ALL six (6) of the Board’s highly qualified and very experienced nominees to be elected to serve on the Board until the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier death, resignation, or removal (Proposal 1);
   
FOR the approval of an amendment to the 2015 Plan to increase the number of shares of Common Stock available for grant under the 2015 Plan from 4,382,036 to 7,282,036 to ensure that adequate shares will be available under the 2015 Plan for future grants and to amend the aggregate number of shares available for incentive awards (Proposal 2);
   
FOR the ratification, by a non-binding advisory vote, of the adoption of our Tax Benefits Preservation Plan (Proposal 3);
   
FOR the ratification, by a non-binding advisory vote, of the selection of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024 (Proposal 4); and
   
FOR the approval, by a non-binding advisory vote, of the compensation of our named executive officers (Proposal 5).

 

All shares represented by validly executed WHITE proxy cards received prior to the taking of the vote at the 2023 Annual Meeting will be voted by the designated proxy holders and, where a stockholder specifies by means of the WHITE proxy card a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions.

 

THE BOARD RECOMMENDS A VOTE “FOR ALL” OF OUR BOARDS HIGHLY QUALIFIED AND VERY EXPERIENCED NOMINEES LISTED ON THE ENCLOSED WHITE PROXY CARD. If you indicate on your WHITE proxy card, via the Internet or by telephone, that you want to withhold authority to vote for a particular nominee, then your shares will not be voted for that nominee.

 

We do not expect any additional matters to be presented for action at the 2023 Annual Meeting other than the matters described in this Proxy Statement. However, by either signing, dating, and returning your WHITE proxy card or following the instructions on the enclosed WHITE proxy card to submit your proxy and voting instructions via the Internet or by telephone, you will give to the persons named as proxies discretionary voting authority, to the extent authorized by Rule 14a-4(c) of the Exchange Act, with respect to any other matter that may properly come before the 2023 Annual Meeting. The proxies will vote on any such matter in accordance with their best judgment to the extent authorized by Rule 14a-4(c) of the Exchange Act.

 

Do I have to attend the 2023 Annual Meeting to vote?

 

No. If you want to have your vote count at the 2023 Annual Meeting, but not actually attend the meeting, you may vote by granting a proxy or—for beneficial owners (i.e., “street name” stockholders)—by submitting voting instructions to your broker or nominee. In most instances, you will be able to do this via the Internet, by telephone, or by mail.

 

In the United States, if you are not in possession of your voting proxy or instruction form, please contact your broker or bank for assistance in obtaining a duplicate control number.

 

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Do non-U.S. stockholders have to vote a different way?

 

Yes. Non-U.S. stockholders must contact their custodian bank or broker directly, as non-U.S. banks and brokerage houses do not necessarily forward the proxy materials to stockholders. As we are a Delaware corporation, there is no need for your bank or brokerage house to block your shares. Non-U.S. banks and brokerage houses simply need to certify the number of shares owned by their clients as of the close of business on December 4, 2023, the Record Date. You should contact your bank or brokerage house to confirm the applicable voting deadline.

 

The proxy materials are available at: https://www.oceanpowertechnologies.com.

 

How may I obtain a paper copy of the proxy materials?

 

To receive, free of charge, a separate paper copy of this Proxy Statement or OPT’s 2023 Annual Report, stockholders may write or call our offices at the following address or telephone number:

 

Ocean Power Technologies, Inc.

Attn: Investor Relations

28 Engelhard Drive, Suite B

Monroe Township, NJ 08831

(609) 730-0400

 

Beneficial owners (i.e., “street name” stockholders) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information.

 

What is the Record Date and what does it mean?

 

Our Board established the close of business on December 4, 2023 as the Record Date for the 2023 Annual Meeting to be held on Wednesday, January 31, 2024. Stockholders of record at the close of business on the Record Date are entitled to notice of and to vote at the 2023 Annual Meeting.

 

What is the difference between a “registered stockholder” and a “street name stockholder?”

 

These terms describe how your shares of Common Stock are held.

 

If your shares of Common Stock are registered directly in your name with Computershare Trust Company, N.A.—OPT’s transfer agent—you are a stockholder of record (also known as a “registered stockholder”).

 

If your shares of Common Stock are held in the name of a brokerage, bank, trust, or other nominee as a custodian, you are a beneficial owner (i.e., a “street name” stockholder). As a beneficial owner, you have the right to instruct the broker, bank, or other nominee on how to vote the shares of Common Stock in your account. Please refer to the voting instructions provided by your bank, broker, or other nominee to direct it how to vote your shares. You are also invited to attend the 2023 Annual Meeting. However, because you are not the stockholder of record, you will not be able to vote the shares of which you are the beneficial owner electronically at the 2023 Annual Meeting unless you obtain a legal proxy from the stockholder of record authorizing you to vote the shares.

 

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How many shares of Common Stock are entitled to vote at the 2023 Annual Meeting?

 

As of the close of business on December 4, 2023, the Record Date, there were approximately [●] shares of Common Stock outstanding and entitled to vote at the 2023 Annual Meeting. Each share is entitled to one vote on all matters. There is no cumulative voting, and the holders of the Common Stock vote together as a single class. Delaware law does not provide stockholders with any dissenters’ or appraisal rights with respect to the matters to be voted on at the 2023 Annual Meeting.

 

How many votes must be present to hold the 2023 Annual Meeting?

 

A majority of the shares of Common Stock entitled to vote at the 2023 Annual Meeting must be represented electronically (given the virtual nature of the 2023 Annual Meeting) or by proxy at the 2023 Annual Meeting to constitute a quorum for the transaction of business. For purposes of determining whether a quorum is present, each share of Common Stock is deemed to entitle the holder to one vote per share.

 

Your shares will be counted for purposes of determining if there is a quorum if you:

 

Are entitled to vote and are present at the virtual Annual Meeting; or

 

Have properly voted via the Internet, by telephone or by submitting a proxy card or voting instruction form by mail.

 

Abstentions and broker non-votes (if any) are counted as present for purposes of determining the presence of a quorum at the 2023 Annual Meeting. However, if you receive proxy materials from or on behalf of both OPT and Paragon, then brokers holding shares in your account will not be permitted to exercise discretionary authority regarding any of the proposals to be voted on at the 2023 Annual Meeting. As a result, there would be no broker non-votes by such brokers. If you receive proxy materials from or on behalf of both OPT and Paragon and you do not submit any voting instructions to your broker, bank, or other nominee, then your shares will not be counted in determining the outcome of any of the proposals at the 2023 Annual Meeting, nor will your shares be counted for purposes of determining whether a quorum exists. For additional information regarding broker non-votes, please see “How do abstentions, against votes, broker non-votes, withhold votes and unmarked WHITE proxy cards affect the voting results?” in this Proxy Statement. A properly executed and valid proxy marked “withhold” with respect to the election of a director nominee will be counted for purposes of determining if there is a quorum at the 2023 Annual Meeting.

 

What vote is required to approve each proposal?

 

Proposal 1 – Election of Directors. Directors will be elected by a plurality of the votes cast by holders of shares represented by proxy or present at the 2023 Annual Meeting and entitled to vote on the election of directors. Therefore, the six (6) nominees for election as directors who receive the most votes cast by the shares represented by proxy or present at the 2023 Annual Meeting and entitled to vote in the election will be elected at the 2023 Annual Meeting. If the shares you own are held in “street name” by a bank or brokerage firm, that bank or brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. If you do not instruct your bank or broker how to vote with respect to this item, your bank or broker may not vote with respect to the election of directors.

 

Proposal 2 – Approval of an Amendment to the 2015 Plan. The affirmative vote of the holders of a majority in voting power of the shares of our Common Stock, represented by proxy or present at the 2023 Annual Meeting and voting on the matter, is required to approve the amendment to the 2015 Plan.

 

Proposal 3 – Ratification of the Tax Benefits Preservation Plan. The affirmative vote of the holders of a majority in voting power of the shares of our Common Stock, represented by proxy or present at the 2023 Annual Meeting and voting on the matter, is required to ratify, on a non-binding advisory basis, the Tax Benefits Preservation Plan. Although our Board will carefully consider the stockholders’ vote as expressed at the 2023 Annual Meeting, because the Board owes fiduciary duties to all stockholders, it must make an independent decision in the exercise of its fiduciary duties whether it is in the best interests of OPT and all of its stockholders to terminate the Tax Benefits Preservation Plan, and may not rely solely on the stockholders’ vote in making this decision. For additional information regarding the effect of the stockholders’ vote on Proposal 3, please see the section “Ratification of the Section 382 Tax Benefits Preservation Plan - Effect of Stockholder Vote on the Tax Benefits Preservation Plan” in this Proxy Statement.

 

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Proposal 4 - Ratification of the Selection of EisnerAmper LLP. The affirmative vote of the holders of a majority in voting power of the shares of our Common Stock, represented by proxy or present at the 2023 Annual Meeting and voting on the matter, is required to ratify, on a non-binding advisory basis, the selection of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024. If the stockholders do not ratify the appointment, the Audit Committee of the Board (the “Audit Committee”) will consider the results and any information submitted by the stockholders in determining whether to retain EisnerAmper LLP as OPT’s independent registered public accounting firm for the fiscal year ending April 30, 2024. Even if the appointment is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that a change would be in the best interests of OPT and its stockholders.

 

Proposal 5 – Advisory Vote on Our Named Executive Officer Compensation. The affirmative vote of the holders of a majority in voting power of the shares of our Common Stock, represented by proxy or present at the 2023 Annual Meeting and voting on the matter, is required to approve, on a non-binding advisory basis, the executive compensation of our named executive officers (Proposal 5). Although the advisory vote on Proposal 5 is non-binding—as provided by law—the Compensation Committee of our Board (the “Compensation Committee”) will review the results of the vote and take them into account in making its determination concerning executive compensation.

 

How do abstentions, against votes, broker non-votes, withhold votes, and unmarked proxy cards affect the voting results?

 

Abstentions and Broker Non-Votes. Abstentions, against votes, and withhold votes, if any, will have no effect on the outcome of Proposal 1. Broker discretionary voting is not permitted on Proposal 1, and broker non-votes, if any, will have no effect on the outcome of Proposal 1.

 

Abstentions are not considered votes cast and, accordingly, will have no effect on the outcome of Proposal 2. Broker non-votes, if any, will have no effect on the outcome of Proposal 2. Broker discretionary voting is not permitted on Proposal 2.

 

Abstentions are not considered votes cast and, accordingly, will have no effect on the outcome of Proposal 3. Broker non-votes, if any, will have no effect on the outcome of Proposal 3. Broker discretionary voting is not permitted on Proposal 3.

 

Abstentions are not considered votes cast and, accordingly, will have no effect on the outcome of Proposal 4. Broker non-votes, if any, will have no effect on the outcome of Proposal 4. Broker discretionary voting will also not be permitted on Proposal 4 if Paragon delivers its proxy materials to your broker, bank, or other nominee on your behalf. If Paragon does not provide you with a proxy card or voting instruction form, your broker, bank, or other nominee will be able to vote your shares with respect to Proposal 4, and broker non-votes will not be applicable.

 

Abstentions are not considered votes cast and, accordingly, will have no effect on the outcome of Proposal 5. Broker non-votes, if any, will have no effect on the outcome of Proposal 5. Broker discretionary voting is not permitted on Proposal 5.

 

If you receive proxy materials from or on behalf of both OPT and Paragon, then brokers holding shares in your account will not be permitted to exercise discretionary authority regarding any of the proposals to be voted on at the 2023 Annual Meeting. As a result, there would be no broker non-votes at the 2023 Annual Meeting.

 

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Unmarked WHITE Proxy Cards. If you sign and return a WHITE proxy card or otherwise vote as directed herein, but do not mark how your shares are to be voted, the individuals named as proxies therein will vote your shares in accordance with the recommendation of the Board on the five proposals; accordingly, if no direction is made, an unmarked but signed WHITE proxy card will be voted:

 

FOR ALL six (6) of the Board’s highly qualified and very experienced nominees to be elected to serve on the Board until the 2024 Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier death, resignation, or removal (Proposal 1);

 

FOR the approval of an amendment to the 2015 Plan to increase the number of shares of our Common Stock available for grant under the 2015 Plan from 4,382,036 to 7,282,036 to ensure that adequate shares will be available under the 2015 Plan for future grants and to amend the aggregate number of shares available for incentive awards (Proposal 2);

 

FOR the ratification, by a non-binding advisory vote, of the adoption of our Tax Benefits Preservation Plan (Proposal 3);

 

FOR the ratification, by a non-binding advisory vote, of the selection of EisnerAmper LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024 (Proposal 4); and

 

FOR the approval, by a non-binding advisory vote, of the compensation of our named executive officers (Proposal 5).

 

If any other matters properly come before the 2023 Annual Meeting, the individuals named as proxies therein, or their duly constituted substitutes acting at the 2023 Annual Meeting, will be authorized to vote or otherwise act thereon in accordance with their judgment on such matters to the extent authorized by Rule 14a-4 of the Exchange Act.

 

Where will I be able to find voting results of the 2023 Annual Meeting?

 

Voting results will be tallied by the inspector of election. A representative from First Coast Results, Inc. will count the votes and serve as the independent inspector of election for the 2023 Annual Meeting. OPT will report the preliminary results in a Current Report on Form 8-K, to be filed with the U.S. Securities and Exchange Commission (“SEC”) within four business days following the 2023 Annual Meeting and will report the final results as soon as practicable following certification by the inspector of election.

 

How can I vote my shares of Common Stock?

 

Whether you are a stockholder of record or a beneficial owner holding any of your shares of Common Stock in “street name,” such as in a stock brokerage account with a broker or through a bank or other nominee, you may vote in the following ways:

 

By Phone:

 

Vote by dialing the number on the WHITE proxy card or WHITE voting instruction form and following the easy voice prompts.

 

By Internet;

 

Follow the instructions included on the WHITE proxy card or WHITE voting instruction form.

 

At the Virtual 2023 Annual Meeting:

 

Attend the virtual Annual Meeting and vote your shares electronically during the meeting. If you hold any shares in “street name,” you may not vote at the meeting unless you obtain a legal proxy from the organization that holds your shares.

 

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By Mail

 

If you request printed copies of the proxy materials by mail, you will receive a WHITE proxy card and you may vote the proxy by filling out the WHITE proxy card and returning it in the enclosed postage-paid envelope.

 

Even if you plan to attend the virtual Annual Meeting, we encourage you to vote your shares on the WHITE proxy card TODAY by Internet or mail to ensure that your votes are counted at the 2023 Annual Meeting.

 

The deadline for voting via the Internet or by telephone will vary depending upon how you vote your shares. Please follow the instructions shown on your WHITE proxy card or WHITE voting instruction form.

 

If you are not the stockholder of record, please refer to the voting instructions provided by your bank, broker, or other nominee to direct it how to vote your shares on the voting instruction form. Your vote is important. You are also invited to attend the 2023 Annual Meeting. However, if you are not the stockholder of record, you may not vote these shares electronically at the 2023 Annual Meeting unless you obtain a legal proxy from the stockholder of record authorizing you to vote the shares of Common Stock.

 

Certain of our stockholders hold their shares in more than one account and may receive separate WHITE proxy cards or WHITE voting instruction forms for each of those accounts. To ensure that all of your shares are represented at the 2023 Annual Meeting, we recommend that you submit every WHITE proxy card or WHITE voting instruction form you receive.

 

Paragon has notified OPT that Paragon intends to file its own proxy statement with the SEC in connection with the solicitation of proxies from stockholders of OPT. Accordingly, you may receive solicitation materials from Paragon seeking your proxy to vote in favor of Paragon’s purported nominees.

 

If you do receive any materials other than from OPT, our Board urges you NOT to sign or return any proxy card sent to you by Paragon even if Paragon’s proxy card provides an option to vote for the Board’s nominees. Our Board unanimously recommends a vote FOR ALL of the Board’s nominees by submitting the enclosed WHITE proxy card.

 

Can I change my vote after I have mailed in my proxy card(s) or submitted my vote via the Internet or by telephone?

 

If you are a stockholder of record, you may revoke your proxy or change your vote prior to the 2023 Annual Meeting by:

 

Voting again via the Internet or by telephone at a later time (but prior to January 31, 2024) ;
   
Signing, dating, and returning a new proxy card or voting instruction form with a later date (but prior to January 31, 2024);
   
Signing, dating, and mailing an instrument revoking the proxy to the attention of the Corporate Secretary, Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831; or
   
Voting electronically at the 2023 Annual Meeting.

 

If you are a beneficial owner of your shares and you have instructed your bank, broker, or other nominee to vote your shares, you may change your vote prior to the 2023 Annual Meeting by following directions provided by your bank, broker, or other nominee to change such voting instructions. If you hold shares in “street name,” your attendance at the 2023 Annual Meeting will not revoke your voting instructions. In the absence of a revocation, shares represented by proxies will be voted at the 2023 Annual Meeting.

 

If you have previously signed any proxy card sent to you by Paragon in respect of the 2023 Annual Meeting, you can revoke it by signing, dating, and returning the enclosed WHITE proxy card or by following the instructions provided in the WHITE proxy card for submitting a proxy to vote your shares over the Internet or voting electronically at the 2023 Annual Meeting.

 

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How will my proxy be voted?

 

If you complete, sign, date, and return your WHITE proxy card(s) or vote via the Internet or by telephone, your proxy will be voted in accordance with your instructions. If you are a stockholder of record, and you sign and date your WHITE proxy card(s) but do not indicate how you want to vote, your shares of Common Stock will be voted as our Board unanimously recommends for each of the proposals. If you are a beneficial owner (i.e., a “street name” stockholder), and you sign and date your WHITE proxy card(s) but do not indicate how you want to vote, then the organization that holds your shares of Common Stock may generally vote on “routine” matters (also referred to as “discretionary matters”) but cannot vote on “non-routine” matters (also referred to as “non-discretionary matters”), as determined by applicable SEC and New York Stock Exchange (“NYSE”) rules. Please see “What if my shares of common stock are held in “street name” by my broker?” below.

 

If you vote, or have previously voted, using a proxy card or voting instruction form sent to you by Paragon, you may change your vote by completing, signing, dating, and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by voting via the Internet or by telephone by following the instructions on the WHITE proxy card or WHITE voting instruction form. Please note that submitting a proxy card sent to you by Paragon will revoke votes you have previously made via OPT’s WHITE proxy card.

 

Voting on a proxy card or voting instruction form sent to you by Paragon—even to withhold with respect to any of Paragon’s purported nominees—is not the same as voting for our Board’s nominees on the WHITE voting instruction form or WHITE proxy card because a vote to withhold with respect to any of Paragon’s purported nominees on Paragon’s voting instruction form or proxy card will revoke any WHITE voting instruction form or WHITE proxy card you may have previously submitted.

 

What if my shares of Common Stock are held in “street name” by my broker?

 

Please be sure to give specific voting instructions to your broker so that your vote can be counted. If you hold your shares of Common Stock in your broker’s name and wish to vote at the 2023 Annual Meeting, you must contact your broker and request a document called a “legal proxy.” You must obtain this legal proxy in order to vote at the 2023 Annual Meeting. Even if you plan to attend the 2023 Annual Meeting, management strongly recommends that you vote your shares prior to attending the meeting.

 

If you are a beneficial owner of shares held in “street name” and do not provide the organization that holds your shares with specific voting instructions, then the organization that holds your shares may generally vote on “routine” matters but cannot vote on “non-routine” matters, as determined by applicable SEC and NYSE rules. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the independent inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

 

Each of Proposal 1, Proposal 2, Proposal 3, and Proposal 5 included in this Proxy Statement is considered a non-routine matter, and therefore brokers, banks, and other nominees will not have authority to vote your shares on these proposals if you do not provide them with specific voting instructions.

 

The approval of the ratification of the appointment of EisnerAmper LLP as our independent registered public accounting firm (Proposal 4) is considered a “routine” proposal, and brokers have discretion to vote on this matter even if no instructions are received from the “street name” holder. However, to the extent that Paragon provides a proxy card or voting instruction form to stockholders who hold their shares in “street name,” Proposal 4 included in this Proxy Statement will be deemed a non-routine matter, and therefore brokers, banks, and other nominees will not have discretionary authority to vote your shares on such matter.

 

If, however, Paragon does not provide a proxy card or voting instruction form to stockholders who hold their shares in “street name,” then Proposal 4 would be considered a routine matter, and your broker, bank, or other nominee would be able to vote on those matters if you do not provide them with specific voting instructions. However, in that event, it is possible that a broker may choose not to exercise discretionary authority with respect to Proposal 4. In that case, if you do not instruct your broker how to vote with respect to Proposal 4, your broker may not vote with respect to such proposal.

 

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Does OPT have cumulative voting?

 

No.

 

Who may attend the 2023 Annual Meeting?

 

Attendance at the virtual Annual Meeting will be limited to stockholders as of the Record Date, their authorized representatives, and guests of OPT. Access to the 2023 Annual Meeting may be granted to others at the discretion of OPT and the Chair of the 2023 Annual Meeting. To attend the 2023 Annual Meeting, you must pre-register at www.cesonlineservices.com/optt23_vm by 10:00 a.m., Eastern Time on January 30, 2024.

 

Please have your voting instruction form, proxy card or other communication containing your control number available and follow the instructions to complete your registration request. If you are a beneficial holder, you must obtain a “legal proxy” from your broker, bank, or other nominee to vote during the 2023 Annual Meeting. Upon completing registration, participants will receive further instructions via email, including unique links that will allow them to access the meeting.

 

Even if you plan to attend the 2023 Annual Meeting, we strongly urge you to vote in advance either by completing, signing, and dating the enclosed WHITE voting instruction form or WHITE proxy card and returning it in the postage-paid envelope provided or by voting via the Internet or by telephone, as soon as possible. This will ensure your vote will be counted if you later are unable or decide not to attend the 2023 Annual Meeting.

 

Is a list of stockholders of record available?

 

OPT’s list of stockholders as of the Record Date and entitled to vote at the 2023 Annual Meeting will be available for examination by any stockholder, for any purpose germane to the 2023 Annual Meeting, for 10 days prior to the 2023 Annual Meeting during ordinary business hours at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831, OPT’s principal place of business.

 

Is my vote confidential?

 

Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within OPT or to third parties, except:

 

  As necessary to meet applicable legal requirements;
    
  To allow for the tabulation and certification of votes; and
    
  To facilitate a proxy solicitation.

 

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Who is paying the costs of the proxy solicitation?

 

OPT will bear the cost of the proxy solicitation by OPT and our Board, including amounts paid to banks, brokers, proxy solicitors, and other record owners to reimburse them for their expenses in forwarding solicitation materials regarding the 2023 Annual Meeting to beneficial owners of Common Stock. For additional information regarding the cost of this solicitation, please see the section “Solicitation of Proxies” in this Proxy Statement.

 

How will proxies be solicited?

 

The solicitation of proxies will be by mail, with the materials being forwarded to stockholders of record and certain other beneficial owners of Common Stock. Our directors, officers, and regular employees (at no additional compensation) may also solicit proxies from stockholders by personal contact, by telephone, by email, by facsimile transmission, by text messages, through social media platforms, or by other electronic means. Morrow Sodali, a proxy solicitation firm, has been retained by the Board to assist it in soliciting proxies. For additional information regarding how proxies will be solicited, please see the section “Solicitation of Proxies” in this Proxy Statement.

 

Who should I call if I have questions about the 2023 Annual Meeting?

 

If you have any questions or require assistance voting, or if you need additional copies of the proxy materials, please contact Morrow Sodali, our proxy solicitation firm, at:

 

 

509 Madison Avenue Suite 1206

New York, NY 10022

 

Stockholders Call Toll Free: (800) 662-5200

Banks, Brokers, Trustees, and Other Nominees Call Collect: (203) 658-9400

Email: OPT@investor.MorrowSodali.com

 

 

Important Notice Regarding the Availability of Proxy Materials for the 2023 Annual Meeting

to Be Held at 10:00 a.m., Eastern Time on Wednesday, January 31, 2024.

 

The Notice of the 2023 Annual Meeting of Stockholders, this Proxy Statement,

the accompanying WHITE proxy card and our Annual Report on Form 10-K for

the fiscal year ended April 30, 2023 are available at

https:// www.oceanpowertechnologies.com

 

 

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BACKGROUND OF THE SOLICITATION

 

The following is a chronology of the material contacts and events, including those relating to OPT’s engagement with Paragon, leading up to the filing of this Proxy Statement:

 

Beginning in 2020, reflecting the Board’s continuing commitment to recruit new independent and highly qualified directors that have perspectives, insights, experiences, and competencies that expand the depth and breadth of the Board, the Board was substantially refreshed such that five of its six members have joined the Board within the past three years. In 2020, three new directors were added to the Board. In 2021, two new directors were added to the Board. Collectively, the refreshed OPT Board possess a broad and diverse set of skills and experiences critical to OPT’s business and future success, including in the energy, maritime, and government sectors as well as the areas of engineering design, manufacturing, operations, government contracting and procurement, information technology, finance, governance, mergers and acquisitions, capital markets, capital allocation, capital structure, risk management, and strategic planning. All of OPT’s directors bring to the Board executive leadership and/or board experience from their service as executives and/or directors of OPT and/or other entities.

 

In 2021, to execute on OPT’s strategy for driving sustainable value creation by being a leader in innovative, cost-effective, and autonomous low-carbon marine data, power, and consulting service solutions, our recently refreshed Board brought in an entirely new executive management team. On June 21, 2021, OPT appointed Dr. J. Philipp Stratmann, an experienced executive with a proven track record of developing and executing scalable business strategies, as President and Chief Executive Officer. Dr. Stratmann also serves on the Board and, other than Dr. Stratmann, all members of the Board have been determined to be independent for purposes of the NYSE American’s listing standards. On December 13, 2021, OPT further enhanced its management team by appointing Robert Powers as Senior Vice President and Chief Financial Officer. Mr. Powers brought to OPT more than twenty-five years of experience in finance and strategy.

 

On December 15, 2022, Mr. Hesham M. Gad, the Executive Chairman and Chief Executive Officer of Paragon, sent an email to OPT’s Investor Relations email address, stating “My firm is a shareholder of OPT...we own approximately 2%. We are looking forward to the future of company and the direction it is heading. Would like to email Dr. Stratmann with a few questions regarding the business as well as the possibility of providing additional capital to OPT.”

 

On April 14, 2023, Mr. Gad and Dr. Stratmann participated in a telephone call, in which Mr. Gad informed Dr. Stratmann that Paragon was considering sending a letter to the Board.

 

On May 19, 2023, Paragon emailed a letter to OPT and demanded that the Board move quickly to name to our six-member Board each of the three current members of the Paragon Board of Directors: Hesham M. Gad, Jack H. Jacobs, and Samuel S. Weiser. Paragon also indicated it wanted three incumbent OPT directors to resign from the Board (but did not identify any specific directors that it wanted to resign) so the size of the Board would remain at six directors, thus ensuring Paragon could dominate and effectively control the Board. In its letter, Paragon also disclosed that it had first invested in OPT in 2020 and became interested in the business again when OPT brought in a new management team in 2021.

 

On May 22, 2023, OPT responded to Paragon’s May 19, 2023 letter and indicated that Paragon’s letter had been shared with the other members of the Board. In its letter, OPT noted that, once it had the chance to discuss Paragon’s letter with each of the members of the Board, OPT would get back in touch with Paragon.

 

On June 6, 2023, OPT responded again to Paragon’s May 19, 2023 letter and indicated that it had discussed Paragon’s letter with the other members of the Board and that, if Paragon had director candidates that it believed the Board should consider, the Board and its Nominating and Corporate Governance Committee would be receptive to reviewing their backgrounds and qualifications. In that regard, OPT requested that Paragon submit resumes and bios for each such candidate. OPT also enclosed a directors’ questionnaire as well a form of consent to authorize a background check of each of Paragon’s proposed candidates and requested that Paragon have each of the candidates complete and sign both documents. Further, OPT indicated that, once it receives this information, OPT was prepared to move expeditiously to have the Board and its Nominating and Corporate Governance Committee review the credentials and other information with respect to Paragon’s proposed candidates and schedule telephone and/or in person interviews with them.

 

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On June 8, 2023, Paragon responded to OPT’s June 6, 2023 letter. In its letter, Paragon indicated that it was not willing to have its director candidates participate in any interview or vetting process until OPT agreed to have Paragon’s three directors join the six-member OPT Board. In addition, Paragon indicated it was not willing to have its director candidates complete the questionnaires requested by OPT.

 

On June 9, 2023, the OPT Board adopted the OPT Bylaws which amended and restated OPT’s bylaws as last amended and restated on June 17, 2016.

 

On June 16, 2023, Mr. Gad, Paragon’s Chairman and CEO, sent an email to Mr. Cryan, OPT’s Chairman, and Dr. Stratmann, OPT’s CEO and President, and informed OPT that Paragon was planning a proxy contest against OPT and intended to nominate candidates for election to the Board at the 2023 Annual Meeting. In his email, Paragon’s Chairman and CEO did not specify how many candidates Paragon was intending to nominate or that it intended to seek control of the Board. In his email, Paragon’s Chairman and CEO requested that OPT provide Paragon with copies of the following documents required to be provided by Section 1.10 of Article 1 of the OPT Bylaws: (i) the written questionnaire with respect to the background and qualifications of director candidates, (ii) the written representation and agreement required to be signed by director candidates, and (iii) all guidelines and policies of OPT generally applicable to directors.

 

On June 26, 2023, Nicholas Day, OPT’s General Counsel and Corporate Secretary, responded via email to Mr. Gad’s email of June 16, 2023 and, with his response, attached copies of OPT’s directors’ and officers’ questionnaire and the form of written representations and agreement required to be signed by director candidates. In his email, Mr. Day noted that OPT’s guidelines and policies generally applicable to members of the Board can be found in the investor relations section of OPT’s website and provided Mr. Gad with a link to such website section.

 

On July 6, 2023, Paragon sent a demand letter to OPT requesting the right to inspect OPT’s confidential books and records (the “First Section 220 Books and Record Demand”) pursuant to Section 220 of the Delaware General Corporation Law, as amended (the “DGCL”).

 

On July 7, 2023, Paragon issued an open letter to OPT’s stockholders in which Paragon disclosed therein, for the first time publicly, that it planned to solicit proxies from the stockholders of OPT to elect a slate of nominees to our Board at the 2023 Annual Meeting. In its letter, Paragon did not disclose how many candidates Paragon was intending to nominate or that it intended to seek control of the Board. In its letter, Paragon also touted, among other things, that it had a “plan to fix OPT” and was “supremely confident [it] can execute that plan.” To date, no such “plan to fix OPT” has ever been publicly disclosed by Paragon or shared with OPT, despite OPT asking Paragon multiple times to share such plan.

 

Also on July 7, 2023, Paragon filed with the SEC a voluntary Schedule 13D. In this filing, Paragon disclosed that it beneficially owned only 3.9% of the Common Stock, significantly below the more than 5% ownership threshold that would have caused Paragon to be required to file a Schedule 13D pursuant to Rule 13d-1 of the Exchange Act. Paragon referenced in Item 4 of its Schedule 13D its July 7, 2023 letter to OPT’s stockholders and attached such letter as an exhibit to the Schedule 13D.

 

On July 11, 2023, Paragon issued its second letter to OPT’s stockholders. In its letter, Paragon again touted, among other things, that it had a “plan to fix OPT” and was “supremely confident [it] can execute that plan.”

 

On July 12, 2023, OPT announced financial results for its fiscal fourth quarter and full year ended April 30, 2023. In its earnings press release, OPT highlighted, among other things, that total orders for fiscal year 2023 were $6.3 million, a 250% increase when compared to total orders of $1.8 million for the fiscal year ended April 30, 2022 and that revenues for fiscal year 2023 increased 55.3% to $2.7 million, over fiscal year 2022. OPT also noted in its press release some recent contract wins it had achieved, including contracts with the U.S. Navy and the U.S. Department of Homeland Security.

 

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On July 14, 2023, Paragon filed with the SEC Amendment No. 1 to its Schedule 13D (“Amendment No.1”) and reported in Item 4 that it had submitted the First Section 220 Books and Records Demand on July 6, 2023. Paragon also disclosed that, if OPT did not fully comply with the First Section 220 Books and Records Demand, Paragon intended to file litigation in the State of Delaware to compel OPT to comply with such demand.

 

Also on July 14, 2023, OPT sent Paragon a letter rejecting the First Section 220 Books and Records Demand. In its letter to Paragon, OPT noted that it believed that the demands made in the First Section 220 Books and Records Demand for access to OPT’s confidential books and records were extraordinarily overbroad, patently inappropriate, unduly burdensome, and devoid of a proper purpose, and, as such, represented an abuse of the Section 220 demand process. Moreover, OPT noted that it did not believe that the First Section 220 Books and Records Demand complied with Section 220’s form and manner requirements.

 

Also on July 17, 2023, Paragon sent a second demand letter to OPT requesting the right to inspect OPT’s confidential books and records (the “Second Section 220 Books and Records Demand”) pursuant to Section 220 of the DGCL.

 

On July 20, 2023, Paragon submitted a written request to OPT for an exemption from our Tax Benefits Preservation Plan so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply to the holder of 4.9% or more of the Common Stock.

 

On July 24, 2023, OPT sent Paragon a letter rejecting the Second Section 220 Books and Records Demand. In its letter to Paragon, OPT noted that it believed that the demands made in the Second Section 220 Books and Records Demand for access to OPT’s confidential books and records were extraordinarily overbroad, patently inappropriate, unduly burdensome, and devoid of a proper purpose, and, as such, represented an abuse of the Section 220 demand process.

 

On July 27, 2023, Paragon filed a complaint against OPT in the Delaware Court of Chancery to enforce the Second Section 220 Books and Records Demand (the “Section 220 Demand Complaint”).

 

On July 28, 2023, OPT timely filed with the SEC its Annual Report on Form 10-K for the fiscal year ended April 30, 2023 (the “OPT Form 10-K”).

 

On August 14, 2023, OPT filed with the Delaware Court of Chancery its Answer to the Section 220 Demand Complaint. In its Answer, OPT responded to the allegations in the Section 220 Demand Complaint and asserted various defenses, including, among others, that OPT believed that (i) Paragon lacked a proper purpose for seeking the requested inspection of books and records, and (ii) Paragon had an improper purpose for seeking the requested inspection of books and records.

 

Also, on August 25, 2023, Paragon submitted the Purported Nominating Notice to OPT. The Purported Nominating Notice was over 1,000 pages in length and incorporated by reference therein numerous attached exhibits, including (i) the press releases, letters to OPT’s stockholders, and SEC filings that Paragon had made relating to OPT, and (ii) periodic reports that Paragon had previously made available to its stockholders.

 

On August 28, 2023, OPT sent a letter to Paragon. In its letter, OPT acknowledged receipt of the Purported Nominating Notice and indicated that it was just beginning its review thereof and, accordingly, was unable to confirm whether the Purported Nominating Notice complied with the OPT Bylaws.

 

Also, on August 28, 2023, Paragon submitted to OPT a demand to inspect and copy OPT’s stockholder list and related records pursuant to Section 220 of the DGCL and the common law of the State of Delaware (the “Paragon Stockholder List Inspection Demand”).

 

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On August 29, 2023, Paragon submitted a second request to OPT for an exemption from our Tax Benefits Preservation Plan so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply to the holder of 4.9% or more of the Common Stock.

 

On August 30, 2023, Paragon sent a letter to OPT requesting that OPT appoint an independent inspector of elections in connection with the 2023 Annual Meeting.

 

On September 4, 2023, Paragon sent a letter to OPT indicating that Paragon had not yet received a response from OPT with respect to the Purported Nominating Notice, even though only ten (10) days had elapsed since Paragon had submitted the Purported Nominating Notice. In its letter, Paragon, without citing any authoritative support from the OPT Bylaws or applicable law, asserted that, since OPT had not responded to Paragon within ten (10) days of receiving the Purported Nominating Notice, OPT had waived its rights to assert any deficiencies in the Purported Nominating Notice and that Paragon was “deeming” the Purported Nominating Notice to be accepted. In its letter, Paragon also noted that it had not yet received a decision from OPT with respect to Paragon’s request for an exemption from our Tax Benefits Preservation Plan such that it would be permitted to acquire a controlling stake in OPT without triggering any consequences under such Plan.

 

On September 5, 2023, OPT responded to Paragon’s Stockholder List Inspection Demand and indicated its willingness to provide such stockholder records to Paragon as OPT is required to provide pursuant to Delaware law, provided that Paragon confirm its agreement to various conditions, including the execution of a confidentiality agreement with OPT to safeguard the confidentiality of OPT’s stockholder records.

 

On September 6, 2023, OPT responded to Paragon’s September 4, 2023 letter with respect to the Purported Nominating Notice. In its letter, OPT noted that its advance notice window opened on Wednesday, August 16, 2023, and would not be closing until 5pm ET on Friday, September 15, 2023. OPT also noted its belief that Paragon had deliberately prepared and submitted to OPT the Purported Nominating Notice, which was more than 1,000 pages in length, using an ill-advised “needle-in-the-haystack” approach, intended to impede OPT’s expedited review of the Purported Nominating Notice. Accordingly, OPT advised Paragon that it was engaging in a painstaking review of the Purported Nominating Notice’s voluminous content to assess, among other things, whether there were any deficiencies. OPT further noted that its review of Purported Nominating Notice was continuing and that, at such time, OPT had not determined whether the Purported Nominating Notice had been submitted in accordance with the OPT Bylaws and applicable law and that OPT expressly reserved all rights and defenses that it may have with respect to such matter. OPT also informed Paragon that none of OPT, the Board, or any committee of the Board had made any decision with respect to the Purported Nominating Notice. Commenting on Paragon’s attempt to arbitrarily impose a specific timetable for OPT’s review of the Purported Nominating Notice, and Paragon’s argument that OPT had waived its right to assert any deficiencies in the Purported Nominating Notice and was “deemed” to have accepted the Purported Nominating Notice, OPT noted that such an argument had no basis in the OPT Bylaws or in applicable law. Accordingly, OPT informed Paragon that it strongly rejected its arguments and assertions, including, without limitation, Paragon’s assertions that OPT has waived any rights, objections, or defenses, or that the Purported Nominating Notice had been deemed to be accepted. OPT also noted that its review of Paragon’s request for an exemption from our Tax Benefits Preservation Plan was continuing and advised Paragon that none of OPT, the Board, or any committee of the Board had made any decision with respect to Paragon’s exemption request.

 

On September 8, 2023, OPT sent a letter to Paragon to inform Paragon of various deficiencies in the Purported Nominating Notice that caused OPT to question Paragon’s compliance with the advance notice provisions in the OPT Bylaws. OPT also noted that its review of Purported Nominating Notice was continuing and that, at such time, the Board had not determined whether the Purported Nominating Notice had been submitted in accordance with the OPT Bylaws and applicable law and that OPT expressly reserved all rights and defenses that it may have with respect to such matter.

 

On September 11, 2023, the Board met to consider, together with its tax and legal advisors, Paragon’s request for an exemption from our Tax Benefits Preservation Plan that Paragon submitted to OPT on July 20, 2023 and again on August 29, 2023 so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply under such Plan to the holder of 4.9% or more of the Common Stock.

 

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On September 12, 2023, Paragon filed with the SEC Amendment No. 2 to its Schedule 13D (“Amendment No. 2”), its first Schedule 13D Amendment since July 14, 2023. In Amendment No. 2, Paragon publicly disclosed for the first time that it was seeking, through its intended proxy contest, control of the Board and that it had submitted to OPT on August 25, 2023 the Purported Nominating Notice. Paragon also disclosed in Amendment No. 2, the first time in its Schedule 13D, that it is was considering acquiring a controlling stake in OPT and had submitted to OPT a request for an exemption from our Tax Benefits Preservation Plan so it could acquire up to 19.9% of OPT without triggering the dilution that would otherwise occur pursuant to the Plan to a person that, without the Board’s consent, acquirers 4.9% of more of the Common Stock. Further, Paragon disclosed in Amendment No. 2, the first time in its Schedule 13D, that it had brought suit against OPT to enforce the Second Section 220 Books and Records Demand.

 

Also, on September 12, 2023, Paragon sent a letter to OPT, in response to OPT’s letter questioning Paragon’s compliance with the advance notice provisions in the OPT Bylaws. In its letter, Paragon indicated to OPT that such letter should be construed as a Supplement to the Purported Nominating Notice. In its letter, Paragon noted that it was unwilling to have Mr. Gad execute the requested verification under oath.

 

On September 13, 2023, OPT announced financial results for its fiscal first quarter ended July 31, 2023, including year-over-year revenue, gross profit, and pipeline growth. In its earnings press release, OPT highlighted, among other things, that its pipeline at July 31, 2023 was approximately $85 million, representing a 215% year-over-year increase over the pipeline of approximately $27 million for the prior year comparable timeframe and noted that OPT’s pipeline continued to grow, reflecting a significant increase in defense and security activity as well as an expansion of commercial opportunities, due to growing interest from offshore wind companies for autonomous monitoring, surveillance and survey-related services during various stages of the project development cycle. OPT also noted in its press release that, on September 1, 2023, it was awarded a 3-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract with a total contract value up to $10 million (not included in the pipeline figure noted above) from the U.S. Department of Commerce’s National Oceanic and Atmospheric Administration (NOAA).

 

Also, on September 13, 2023, OPT filed with the SEC a Form 8-K in response to the Schedule 13D/A filing made by Paragon on September 12, 2023. In this Form 8-K, OPT confirmed receipt of the Purported Nominating Notice. OPT also publicly disclosed that its review of the Purported Nominating Notice was ongoing and that, accordingly, at such time, OPT had not decided to accept or reject the Purported Nominating Notice.

 

On September 14, 2023, OPT responded to Paragon’s September 12, 2023 letter and informed Paragon that, having reviewed Paragon’s letter, OPT continued to believe that the Purported Nominating Notice contained various deficiencies and, accordingly, may not comply with the OPT Bylaws. OPT also requested that Mr. Gad, acting in his capacity as Chairman and CEO of Paragon, verify, under oath, among other things, the truthfulness of all information included, and all assertions and other statements made by Paragon, in the Purported Nominating Notice, including those incorporated by reference from Paragon’s letters to OPT’s stockholders, press releases, and SEC filings. OPT again noted that no decision had been made regarding the Purported Nominating Notice.

 

On September 15, 2023, Paragon sent a letter to OPT responding to OPT’s letter dated September 14, 2023, and indicated that such letter should be construed as a Supplement to the Purported Nominating Notice. In its letter, Paragon refused OPT’s request to verify, under oath, among other things, that all information included in the Purported Nominating Notice (and all assertions and other statements made by Paragon), including those incorporated by reference therein from Paragon’s letters to OPT’s stockholders, press releases, and SEC filings, are true and correct and that OPT was entitled to rely on such verification. Instead, Paragon returned a revised, and much more limited, verification that was not made under oath and that deleted the provision that indicated that OPT was entitled to rely on the verification.

 

On October 4, 2023, the Delaware Court of Chancery held a trial with respect to the Section 220 Demand Complaint.

 

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On October 4, 2023, the Board’s Nominating and Corporate Governance Committee met to consider the Purported Nominating Notice.

 

On October 6, 2023, the Delaware Court of Chancery informed OPT and Paragon that a ruling with respect to the Section 220 Demand Complaint would be delivered on October 20, 2023.

 

On October 9, 2023, Paragon initiated litigation in the Delaware Court of Chancery against OPT and the members of the Board alleging claims for breach of fiduciary duty and seeking declaratory and injunctive relief, including an injunction to prevent OPT from rejecting the Purported Nominating Notice and requiring OPT to approve Paragon’s request for an exemption from our Tax Benefits Preservation Plan so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply to the holder of 4.9% or more of the Common Stock.

 

On October 10, 2023, Paragon’s counsel emailed OPT’s General Counsel in connection with Paragon’s Stockholder List Inspection Demand. In its letter, Paragon’s counsel requested more specificity as to the documents that OPT was prepared to make available to Paragon, requested documentary support for the expense reimbursement sought by OPT, and indicated that Paragon and the other intended recipients of the stockholder records were not prepared to sign the form of confidentiality agreement that had been included with OPT’s September 5, 2023 letter responding to the Stockholder List Inspection Demand.

 

On October 11, 2023, the Board, at its regularly scheduled quarterly meeting, determined, following consultation with its legal advisors, that Paragon had failed to submit to OPT a proper and timely advance notice of nominations in accordance with the OPT Bylaws.

 

Also on October 11, 2023, the Board, at its regularly scheduled quarterly meeting, following consultation with its tax and legal advisors, completed its review of Paragon’s request for an exemption from our Tax Benefits Preservation Plan that Paragon submitted to OPT on July 20, 2023 and again on August 29, 2023 so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply under such Plan to the holder of 4.9% or more of the Common Stock. Based upon such review, and in accordance with Section 27 of the Tax Benefits Preservation Plan, the Board determined not to approve Paragon’s exemption request.

 

On October 12, 2023, OPT sent a letter to Paragon. In its letter, OPT informed Paragon that the Board had determined, following consultation with its legal advisors, that Paragon had failed to submit to OPT a proper and timely advance notice of nominations in accordance with the OPT Bylaws and, accordingly, in accordance with the OPT Bylaws, any attempt by Paragon at the 2023 Annual Meeting to nominate persons for election to the Board would be disregarded.

 

Also on October 12, 2023, OPT sent Paragon a letter with respect to the request for an exemption from OPT’s Section 382 Tax Benefits Preservation Plan. In its letter, OPT notified Paragon that it had completed its review of Paragon’s exemption request following consultation with its tax and legal advisors and that, based upon such review, and in accordance with Section 27 of the Tax Benefits Preservation Plan, the Board had determined not to approve Paragon’s exemption request.

 

On October 18, 2023, responding to the litigation that Paragon had initiated in the Delaware Court of Chancery on October 9, 2023, OPT filed its answer and various counterclaims against Paragon.

 

Also on October 18, 2023, OPT sent a letter to Paragon’s counsel responding to his October 10, 2023 email. In OPT’s letter, it indicated that it was prepared to produce all the stockholder records it then had in its possession, which included the following: (i) a registered holder list as of October 18, 2022, (ii) a NOBO list as of October 18, 2022, and (iii) a CEDE breakdown as of October 18, 2022, and (iv) a registered holder list as of July 21, 2023. OPT indicated that, since it would not be incurring any additional out-of-pocket costs to make such records available to Paragon, it would not seek any expense payment related to making those records available to Paragon.

 

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On October 20, 2023, in connection with the litigation that Paragon filed against OPT in the Delaware Court of Chancery on July 27, 2023 to enforce the Second Section 220 Books and Records Demand, a Magistrate of the Delaware Court of Chancery issued a telephonic report regarding the matter indicating that Paragon had asserted a proper purpose for its inspection demand.

 

Also on October 20, 2023, the Board fixed the close of business on December 4, 2023 as the record date for determining stockholders entitled to notice of, and to vote at, the 2023 Annual Meeting.

 

On October 24, 2023, Paragon’s counsel emailed OPT’s Delaware counsel in connection with the Paragon Stockholder List Demand and requested a number of revisions to the draft confidentiality agreement that OPT had provided to Paragon on September 5, 2023.

 

On October 25, 2023, OPT filed a Notice of Exceptions with the Delaware Court of Chancery. In its Notice of Exceptions, OPT detailed the areas of the Magistrate’s report that OPT took exception to, including, but not limited to: (i) the report’s conclusion that Paragon had stated a proper purpose for its books and records demand; (ii) the report’s conclusion that the primary purpose motivating Paragon’s demand was Paragon’s stated purpose; (iii) the report’s conclusion that Paragon’s stated purpose for its demand was not pretextual and that Paragon did not have improper ulterior motives; and (iv) the report’s conclusion as to the scope of inspection to be permitted pursuant to Paragon’s demand.

 

Also on October 25, 2023, OPT filed a Form 8-K with the SEC to publicly disclose that, while as of such date the Board had not yet scheduled the 2023 Annual Meeting, OPT did not expect to schedule the 2023 Annual Meeting to take place on a date that is earlier than January 24, 2024. OPT also disclosed that the Board had fixed the close of business of December 4, 2023 as the record date for determining stockholders entitled to notice of, and to vote at, the 2023 Annual Meeting.

 

Also on October 25, 2023, OPT’s Delaware counsel emailed Paragon’s counsel a revised form of confidentiality agreement to govern the confidentiality of the stockholder records that OPT would be producing in response to the Paragon Stockholder List Demand.

 

On October 26, 2023, Paragon executed a confidentiality agreement governing the confidentiality of the stockholder records that OPT would be producing in response to the Paragon Stockholder List Demand. Later that day, OPT’s Delaware counsel emailed Paragon’s counsel (i) a registered holder list as of October 18, 2022, (ii) a NOBO list as of October 18, 2022, and (iii) a CEDE breakdown as of October 18, 2022, and (iv) a registered holder list as of July 21, 2023.

 

On October 31, 2023, Paragon sent OPT a letter purporting to be a supplement to the Purported Nominating Notice, and purporting to correct the numerous deficiencies in the Purported Nominating Notice, even though the Purported Nominating Notice had already been rejected by the Board due to Paragon’s failure to submit a proper and timely notice in compliance with the OPT Bylaws prior to September 15, 2023, the deadline for the submission of an advance notice of nominations.

 

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On November 1, 2023, OPT issued a press release to announce that Former Senior Pentagon Official and Retired U.S. Navy Rear Admiral Victorino “Vic” G. Mercado had been retained to serve as a special advisor and consultant to the Board. In its press release, OPT noted that Admiral Victorino’s deep security, strategy, and operational experience from his more than 35-year career in the U.S. Navy and service at the U.S. Department of Defense would be invaluable as OPT builds on its momentum in providing intelligent maritime solutions to the U.S. Government and defense and security sectors, and carefully navigates the challenges of securing access to and protecting highly sensitive and confidential information.

 

On November 3, 2023, in further response to the Paragon Stockholder List Demand, OPT’s Delaware counsel emailed Paragon’s counsel (i) a registered stockholder list as of November 2, 2023, and (ii) a CEDE breakdown as of November 2, 2023.

 

On November 6, 2023, the Board determined, in consultation with its legal advisors, that Paragon’s letter of October 31, 2023 was not timely and was not effective to cause the Purported Nominations Notice, which was previously rejected by the Board as not being timely and proper, to be timely and proper.

 

On November 7, 2023, OPT responded to Paragon’s letter of October 31, 2023 and informed Paragon that its letter of October 31, 2023 was not timely and was not effective to cause the Purported Nominations Notice, which was previously rejected by the Board as not being timely and proper, to be timely and proper.

 

Also on November 7, 2023, OPT filed a Form 8-K with the SEC to publicly disclose that the Board had scheduled the 2023 Annual Meeting to be held on January 31, 2024.

 

On November 13, 2023, Paragon sent a letter to OPT. In its letter, Paragon informed OPT that Robert J. Tannor, who had been included in the Purported Nominating Notice as a purported nominee for election to the Board, had withdrawn as a purported nominee, but that it remained Paragon’s intent to seek the election of its remaining four (4) purported nominees for election to the Board at the 2023 Annual Meeting. In its letter to OPT, Paragon did not disclose a reason why Mr. Tannor had withdrawn as a purported nominee.
  
On November 14, 2023, OPT issued a press release to announce several milestones and initiatives it believes will enhance stockholder value, including that (i) OPT is divesting its non-core strategic consulting team; (ii) with its research and development phase substantially completed, OPT now expects to achieve profitability in calendar year 2025; and (iii) OPT had appointed Matthew Burdyny to the newly created role of Chief Commercial Officer to drive commercialization efforts that will support OPT’s financial goals.

 

On November 16, 2023, OPT filed with the SEC the preliminary form of this Proxy Statement and preliminary form of Proxy Card.

 

OUR BOARD URGES YOU TO VOTE ONLY ON THE WHITE PROXY CARD FOR ALL OF OUR BOARD’S HIGHLY QUALIFIED AND VERY EXPERIENCED NOMINEES (TERENCE J. CRYAN, J. PHILIPP STRATMANN, CLYDE W. HEWLETT, NATALIE LORENZ-ANDERSON, DIANA G. PURCEL, AND PETER E. SLAIBY), TO DISREGARD ANY MATERIALS SENT TO YOU BY OR ON BEHALF OF PARAGON, AND NOT TO SIGN, RETURN, OR VOTE ANY PROXY CARD SENT TO YOU BY OR ON BEHALF OF PARAGON.

 

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PROPOSAL ONE

ELECTION OF DIRECTORS

 

The size of our Board is currently set at six (6) directors. Each of our directors is elected annually and serve until the next Annual Meeting of Stockholders or until each director’s respective earlier resignation, removal from office, death, or incapacity.

 

At the 2023 Annual Meeting, six (6) directors are to be elected to the Board. Our Board is pleased to nominate for election as directors, the following six (6) director nominees: Terence J. Cryan, J. Philipp Stratmann, Clyde W. Hewlett, Natalie Lorenz-Anderson, Diana G. Purcel, and Peter E. Slaiby. All of the Board’s nominees are incumbent directors. In selecting the director nominees that we are proposing for election, our Board has focused on selecting experienced board candidates who will work together constructively with a focus on operational excellence, financial strength, and the growth of stockholder value. Other than Dr. Stratmann who currently serves as OPT’s President and Chief Executive Officer, all of our Board’s director nominees are independent. Our Board has been recently refreshed, and five of our Board’s six (6) director nominees first joined our Board within the past three years.

 

We believe our Board’s six (6) director nominees, all of whom currently serve as members of the Board, have the integrity, knowledge, breadth of relevant and diverse experience, and commitment necessary to navigate our company through the complex and dynamic business environment in which we operate. Each of our six (6) director nominees was recommended by our Board’s Nominating and Corporate Governance Committee, which unanimously approved their nomination. Our Board’s recommendations are based on its carefully considered judgment that the experience, record, and qualifications of each of its nominees make them the best candidates to serve on the Board.

 

All of our Board’s six (6) director nominees bring to our Board executive leadership experience from their service as executives and/or directors of OPT and/or other entities. Collectively, our nominees possess a broad and diverse set of skills and experiences, including in the energy, maritime, marine data acquisition, and government sectors as well as the areas of engineering design, manufacturing, operations, government contracting and procurement, information technology, finance, governance, international operations, investor relations, cybersecurity, mergers and acquisitions, capital markets, capital allocation, capital structure, risk management, and strategic planning.

 

Unless otherwise specified, if you sign and return the enclosed WHITE proxy card, it will be voted in favor of the election of each of the Board’s six (6) director nominees: Terence J. Cryan, J. Philipp Stratmann, Clyde W. Hewlett, Natalie Lorenz-Anderson, Diana G. Purcel, and Peter E. Slaiby.

 

Each of the nominees recommended by our Board has consented to serving as nominees for election to our Board, to being named as a nominee of the Board in a proxy statement, and to serving as a member of the Board if elected by OPT’s stockholders.

 

As of the date of this Proxy Statement, our Board has no reason to believe that any of its nominees will be unable or unwilling to serve if elected as a director. However, if, before the election, any of the Board’s nominees is unable to serve or for good cause will not serve if elected (a situation that we do not anticipate), the Board’s proxy holders will vote the proxies for the remaining nominees and for substitute nominees chosen by the Board (unless the Board reduces the number of directors to be elected). If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies each substitute nominee, discloses that such nominee has consented to being named in the amended proxy statement and to serve as directors if elected, and includes certain biographical and other information about such nominee required by the applicable rules of the SEC.

 

Our Board recommends using the enclosed WHITE proxy card to vote FOR ALL six (6) of the Board’s nominees for director. Paragon has notified OPT that it intends to seek your proxy to vote in favor of Paragon’s purported nominees. Accordingly, you may receive solicitation materials from Paragon seeking your proxy to vote in favor of Paragon’s purported nominees.

 

OPT has provided you with the enclosed WHITE proxy card. Our Board unanimously recommends that you vote FOR ALL six (6) of the Board’s highly qualified and very experienced nominees. If you receive any proxy materials other than from OPT, our Board strongly recommends that you DISREGARD any such materials. If you vote, or have already voted, using a proxy card sent to you by Paragon, you have every right to change your vote and we urge you to revoke that proxy by voting FOR ALL six (6) of our Board’s nominees by submitting the enclosed WHITE proxy card. Only your latest dated vote will be counted.

 

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OUR BOARD’S NOMINEES FOR ELECTION AS DIRECTORS

 

Below is biographical information concerning our Board’s nominees, including information regarding the person’s service as a director, business experience, educational background, director positions held currently or at any time during the last five (5) years, and the experiences, qualifications, attributes, and skills that caused the Board’s Nominating and Corporate Governance Committee and our Board to determine that the person should serve as a director of OPT, given our business and structure.

 

In addition to the information set forth below, Annex A sets forth information relating to our directors, nominees to be elected as directors, and certain of our officers who may be considered “participants” in our solicitation under applicable SEC rules by reason of their position as directors of OPT, as nominees to be elected as directors, or because they may be soliciting proxies on our behalf.

 

Name   Age   Position(s) with the Company   Served as Director From
Terence J. Cryan   61   Chairman of the Board and Independent Director   2012
Philipp Stratmann   44   President, Chief Executive Officer, and Director   2021
Clyde W. Hewlett   69   Independent Director   2020
Diana G. Purcel   57   Independent Director   2020
Peter E. Slaiby   65   Independent Director   2020
Natalie Lorenz-Anderson   60   Independent Director   2021

 

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CANDIDATE (AGE)                            KEY EXPERIENCE   ADDITIONAL QUALIFICATIONS
         

Terence J. Cryan, Chairman (61)1

 

 

 

 

 

Company Turnarounds: Successfully enacted strategic pivots as CEO hired specifically to turn around three companies, two of which were public Ocean Power Technologies director since 2012, Chairman of the Board since 2014
Corporate Governance: Held management accountable to shareholders while serving on seven public company boards since 2006, and as chairman of two Managing Director of MACCO Restructuring Group, LLC (provider of interim leadership and advice to middle-market firms facing operational or financial risk)

Energy/Natural Resources Finance, M&A: 20 years in energy and natural resource investment banking, 12 years in energy and natural resource private equity, $6 billion+ in financing raises and transactions over career

Chairman of the Board of Westwater Resources, Inc. (explorer and developer of US-based mineral resources essential to clean energy production)
National Association of Corporate Directors Board Leadership Fellow
Winner of the M&A Advisor’s 2023 Turnround of the Year Award
Master of Science in Economics from The London School of Economics, Bachelor of Arts from Tufts University
   

Philipp Stratmann, CEO (44)2

 

 

 

 

 

 

 

Executive Leadership/Business Development: Approximately ten years of progressively more senior leadership roles in business and corporate development functions for suppliers to marine energy producers Ocean Power Technologies director since 2021
Defense/Engineering: Four years at VT Shipbuilding (currently BAE Systems Surface Fleet Solutions); leadership experience of managing company through U.S. Department of Defense’s Cybersecurity Maturity Model Certification for products President and CEO of Ocean Power Technologies since 2021

 

 

 

 

  Prior roles include Vice President, Biofuels for Velocys and General Manager, Global Development and West Africa for InterMoor (an Acteon Company), as well as positions at E&Y, PRTM and VT Group
National Association of Corporate Directors’ CERT Certificate in Cybersecurity Oversight
Engineering Doctorate, Master of Engineering (Ship Science) from the United Kingdom’s University of Southampton
   

Diana G. Purcel, MBA, CPA (inactive), NACD.DC(57)3

 

Finance, Strategy, M&A, Enterprise Risk Management: 24 years as CFO at three public companies and one pre-IPO company Ocean Power Technologies director since 2020, Chair of the Audit Committee, member of the Compensation Committee and member of the Nominating &
Qualified Audit Committee Financial Expert Corporate Governance Committee since 2020
Corporate Governance: Serves on two public company boards; was corporate secretary for two public companies, refreshed Ocean Power Technologies’ governance upon joining the board, implemented governance best practices as previous employer prepared for IPO Director and Audit Committee Chair of PetMed Express, an online pet pharmacy and retailer in the pet health space that is executing a digital transformation 
Audit: Certified public accountant (inactive), five years at Arthur Andersen & Co., quarterly communication with Ocean Power Technologies auditors and internal control personnel National Association of Corporate Directors’ Director Certification
      Master of Business Administration from University of St. Thomas, Bachelor of Science in Management (Accounting) from Tulane University

 

 

1Terence J. Cryan has been CEO of Medical Acoustics, Inc.; Williams Industrial Services Group, Inc.; and Uranium Resources, Inc. In addition to Ocean Power Technologies and Westwater Resources, Mr. Cryan served on the boards of directors of Uranium Resources, Inc. from 2006 to 2016 (as Chairman of the Board from 2014 to 2016); Global Power Equipment Group Inc. from 2008 to 2017; Superior Drilling Products, Inc. from May 2014 to 2016; Gryphon Gold Corporation from 2009 to 2012; The Providence Service Corporation from 2009 to 2011; and ModivCare Inc. from 2009 to 2011. Prior to joining MACCO Restructuring Group in 2020, Mr. Cryan was at various points Managing Director of Concert Energy Partners (an energy industry focused investment and private equity firm that he co-founded in 2001), Senior Managing Director in the Investment Banking Division at Bear Stearns, Head of the Energy and Natural Resources Group at Paine Webber, and an investment banker at Kidder, Peabody.
  
2Philipp Stratmann was Ocean Power Technologies’ Vice President – Global Business Development from 2019 to his appointment as CEO. Dr. Stratmann is a naturalized US citizen.
  
3Diana G. Purcel was CFO of iMedia Brands from 2018 to 2019, Cooper’s Hawk Winery & Restaurants from 2014 to 2017, BBQ Holdings, Inc. (fka Famous Dave’s of America) from 2003 to 2014, and Paper Warehouse from 1999 to 2003. Ms. Purcel was the corporate secretary for BBQ Holdings, Inc. and Paper Warehouse, Inc.

 

26
 

 

CANDIDATE (AGE)                                KEY EXPERIENCE   ADDITIONAL QUALIFICATIONS
         

Clyde W. Hewlett (69)4

 

 

 

 

 

 

 

 

 

 

Operations: 41 years in engineering for marine energy applications, culminating in four years as Chief Operating Officer at Oceaneering International, a provider of engineered services and products to the marine energy industry Ocean Power Technologies director since 2020, Chair of the Health and Safety Committee since 2021
Health & Safety: Developed behavior-based safety policies to ensure customers’ safety requirements are met, essential to winning and retaining business from mature marine companies and government agencies Published two papers that were presented at the Offshore Technology Conference (the premier conference focused on the advancement of technology for the offshore industry)
Manufacturing: Developed and implemented industry-leading practices for manufacturing quality and operational excellence, critical to improving first pass yield, minimizing waste and increasing marine operational efficiency Author of three papers presented at the Marine Technology Conference (the premier organization to enable and grow marine resource development)
   

Bachelor of Science, Mechanical Engineering from Memorial University of Newfoundland, Canada

 

    Select course work at Rice and Harvard Universities in Accounting, Finance and International Business
         

Peter E. Slaiby (65)

 

 

 

 

 

 

 

 

International Energy Business: More than 37 years at Shell focused on performance turnarounds, field development and operations, and decommissioning in Syria, Brazil, Cameroon, the United Kingdom, Brunei, Alaska and the Gulf of Mexico Ocean Power Technologies Director since 2020, Chair of the Environmental and Sustainability Committee since 2021
Executive Management: Roles of increasing seniority at Shell, including as Vice President, Alaska, and Vice President, Decommissioning and Restoration and various start-ups post Shell Managing Partner of Floris Energy LLC (business improvement consultant for oil and gas development and operations)
 

Managing Director Quartz Energy Partners – Upstream

 

  Bachelor of Engineering (Mechanical Engineering) from Vanderbilt University and INSEAD International Directors Program
       

Natalie Lorenz-Anderson (60)

 

 

 

 

 

 

 

 

 

 

 

Government Contracting/Information Technology: Over 38 years contracting with government entities regarding various technology fields, including 33 years working at Booz Allen Hamilton on cybersecurity and network engineering policy, design, development and operations in roles including Partner, Senior Vice President, Program Manager, and Chief Scientist

 

 

Ocean Power Technologies director since 2021 and NACD –Director Certified

 

Vice President for Operations and Special Projects of 247Solar Inc (provider of modular thermal solar energy and overnight storage systems)

Previous TS/SCI clearance plus compartments (currently inactive)

Past Chair, current Member of the Executive Committee for AFCEA International

 

   

Member of the MIT Visiting Committee for the Institute of Data, Systems and

 

   

Society (data science, artificial intelligence and machine learning advances)

Master of Science (Electrical Engineering) from John Hopkins University, Bachelor of Science (Electrical Engineering) from MIT

     

 

 

 

4Clyde W. Hewlett worked at Oceaneering International, Inc. from 1988 to 2019; prior to that, Mr. Hewlett worked with Vetco Gray, Inc., Hughes Marine, CanOcean Resources, Ltd., and, beginning in 1978, with Esso Canada. Mr. Hewlett’s papers for the Marine Technology Conference were 1) Multi-Service Vessel Well Intervention With New SILS, 2) Design, Conversion and Installation of an FPSO Vessel for Zafiro Field, and 3) Petrojarl I – Subsea Systems Installation Experience.

 

27
 

 

As part of our governance practices, the Nominating and Corporate Governance Committee identified the set of skills, knowledge, capabilities, and experiences desired to oversee OPT’s strategy, manage risk, and meet the organization’s current and future challenges. As part of this process, we applied those desired attributes to our slate of independent director candidates. The following skill matrix summarizes those results:

 

SKILLS, EXPERIENCE & ATTRIBUTES   Cryan   Purcel   Hewlett   Slaiby   Lorenz-Anderson
                     
Business Strategy & Operations   ü   ü   ü   ü   ü
Accounting & Financial   ü   ü            
Global Business / International Operations   ü       ü   ü    
Public Company   ü   ü   ü   ü   ü
Additional Public Boards   ü   ü            
C-Suite / Management Experience   ü   ü   ü   ü   ü
Mergers & Acquisitions   ü   ü   ü   ü    
Corporate Governance   ü   ü       ü    
Industry Experience   ü       ü   ü   ü
Technology / Cyber       ü           ü
Risk Management   ü   ü   ü   ü   ü
Quality, Health & Safety   ü       ü   ü    
Environmental & Sustainability   ü           ü   ü
Commercial Sales / Marketing   ü       ü       ü
Compensation / HR   ü   ü           ü
Government Contracting           ü   ü   ü
Ethnic, Gender, National Origin or Other Diversity       ü           ü

 

Executive Officers

 

We have three executive officers who are not directors:

 

Name   Age   Position(s) with the Company
Robert Powers   52   Senior Vice President & Chief Financial Officer
Joseph DiPietro   57   Principal Accounting Officer, Corporate Controller, & Treasurer
Matthew Burdyny   40   Chief Commercial Officer

 

Robert Powers (Senior Vice President & Chief Financial Officer)

 

Mr. Powers joined OPT in December 2021 as Senior Vice President & Chief Financial Officer.

 

Prior Experience: Mr. Powers has more than 25 years of experience providing domestic and international leadership to entrepreneurial, privately owned, and founder-led companies, as well as SEC registrants and private equity backed companies. Prior to joining OPT, Bob was Chief Financial Officer of Constellation Advisors, a private equity-owned provider of outsourced back-office operations and compliance services. He has held financial leadership roles with Sterling Talent Solutions, Wood Group PPS – a division of Wood Group, GTE, SABIC Innovative Plastics, and Plug Power. He has also provided financial consulting services to various companies. Bob began his career at PricewaterhouseCoopers, LLP.

 

Licenses and Certifications: Certified Public Accountant.

 

Educational Background: Mr. Powers received a Bachelor of Science in Accounting degree from Fordham University and an MBA in Business Administration from Rensselaer Polytechnic Institute.

 

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Joseph DiPietro (Principal Accounting Officer, Corporate Controller, and Treasurer)

 

Mr. DiPietro has served as OPT’s Controller since August 2021 and was appointed to the additional positions of OPT’s Treasurer and Principal Accounting Officer in September 2021.

 

Prior Experience: Prior to joining OPT, Mr. DiPietro spent the prior five years as Vice President - Finance and Corporate Controller of Myos Corp. In addition, he also served in various finance roles at Juno Online, Audible, Celgene, Pfizer, and Zoetis.

 

Licenses and Certifications: Certified Public Accountant.

 

Educational Background: Mr. DiPietro holds a Bachelor of Science in Finance degree from St. John’s University.

 

Matthew Burdyny (Chief Commercial Officer)

 

Mr. Burdyny has served as OPT’s Chief Commercial Officer since November 9, 2023 He previously served as OPT’s Vice President, Global Sales & Marketing since March 2022.

 

Prior Experience: Prior to working with OPT, Mr. Burdyny had thirteen years with Teledyne Marine, a segment of Teledyne Technologies, bringing strong experience in sales, business development, marketing, and product development. Most recently Mr. Burdyny was Vice President, Strategy & Business Development at Teledyne Marine, a group of leading-edge undersea technology companies, where he drove segment growth, defining key market opportunities and acquisitions, while leading a sales organization.

 

Educational Background: Mr. Burdyny received a Bachelor of Mechanical Engineering degree from University of Victoria and a Master’s degree in Management from Harvard University.

 

29
 

 

Director Compensation

 

The Nominating and Corporate Governance Committee oversees, reviews, and reports to the Board on director compensation and is assisted in performing its duties by NFP Compensation Consulting (“NFP”), the Compensation Committee’s independent compensation consultant.

 

NFP’s recent review in November 2023, consisting of an analysis of competitive market data for each board role from a selected peer group of companies approved by the Compensation Committee, confirmed that OPT’s director compensation remains below the market 50th percentile.

 

For Board service year 2023, our Board approved, for each non-employee director, an annual payment of $70,000 and restricted shares of the Common Stock equal in value to $75,000. Each non-employee director also receives a per annum supplement ranging from $8,000 to $30,000 for each committee that they belong to or chair. In addition, the Chairman of the Board annually receives an additional $75,000.

 

We reimburse each non-employee director for out-of-pocket expenses incurred in connection with attending our Board and Board committee meetings. Compensation for our directors, including cash and equity compensation, is determined, and remains subject to adjustment, by the Nominating and Corporate Governance Committee of our Board.

 

The following table summarizes compensation paid to each of our non-employee directors who served during fiscal year 2023.

 

Name 

Fees Earned or

Paid in Cash

($)

  

Stock Awards

($)

  

Option Awards

($)

  

Total

($)

 
Terence J. Cryan  $202,000   $75,000   $   $277,000 
Clyde W. Hewlett  $90,000   $75,000   $   $165,000 
Diana G. Purcel  $116,000   $75,000   $   $191,000 
Peter E. Slaiby  $110,000   $75,000   $   $185,000 
Natalie Lorenz-Anderson  $78,000   $75,000   $   $153,000 

 

The following table summarizes stock grants during fiscal year 2023.

 

Name  Stock Awards (1)   Option Awards   Total 
Terence J. Cryan   110,294        110,294 
Clyde W. Hewlett   110,294        110,294 
Diana G. Purcel   110,294        110,294 
Peter E. Slaiby   110,294        110,294 
Natalie Lorenz-Anderson   110,294        110,294 

 

(1)During fiscal year 2023, each non-executive Board member was granted 110,294 restricted stock units for Board service.

 

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Corporate Governance

 

Our Board believes that good corporate governance is important to ensure that OPT is managed for the long-term benefit of our stockholders. This section describes key corporate governance guidelines and practices that our Board has adopted. In addition, the Compensation Clawback Policy adopted by our Board is described below under “Executive Compensation.” Complete copies of our corporate governance guidelines, committee charters, and code of business conduct and ethics are available on the corporate governance section of our website, www.oceanpowertechnologies.com. Alternatively, you can request a copy of any of these documents by writing to our Secretary at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.

 

 

31
 

 

Board Diversity

 

Our Board believes in the power of diversity to drive innovation, foster creativity, and enhance the overall strength of our organization. We are committed to creating an inclusive and welcoming environment that embraces the unique perspectives, backgrounds, and talents of every individual. Our commitment to diversity extends beyond mere representation; it is about creating a culture of respect, equity, and inclusion. We recognize that a diverse board of directors leads to better decision-making, increased innovation, and ultimately, better outcomes for our organization and the communities we serve.

 

In striving for diversity, we are dedicated to:

 

Inclusive Leadership: We actively seek and value diverse perspectives at all levels of leadership within our organization, including our board of directors. We believe that a range of voices and experiences enhances our ability to navigate the complexities of our industry.

 

Equitable Opportunities: We are committed to providing equal opportunities for all individuals, regardless of race, ethnicity, gender, age, sexual orientation, disability, or other characteristics. Our selection processes and decision-making reflect this commitment to fairness.

 

Education and Awareness: We will foster a culture of continuous learning and awareness around diversity and inclusion. This includes educating our board members, employees, and stakeholders on the importance of diversity and the role each person plays in promoting an inclusive environment.

 

By embracing diversity and inclusion, we are not only reflecting the rich tapestry of the global community but also positioning ourselves for long-term success. Together, as a diverse and united board of directors, we will drive positive change and lead by example in fostering a culture that values and celebrates our differences.

 

 

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Stock Ownership and Holding Guidelines

 

At the recommendation of the Nominating and Corporate Governance Committee, the Board has adopted stock ownership and holding guidelines, for all named executive officers and all independent directors, that are designed to increase stock ownership over time and thereby better align their interests with the interests of stockholders. For the CEO, the guidelines provide for the achievement of stock ownership of five (5) times base salary over a period of 5 years. For the CFO, the guidelines provide for the achievement of stock ownership of three (3) times base salary over a period of 5 years. For the independent directors, the guidelines provide for the achievement of stock ownership of one (1) times times the annual cash retainer for each full year of service over a period of five (5) years. All named executive officers and independent directors were in compliance with our stock holding guidelines as of December [●], 2023.

 

Board Determination of Independence

 

Our Board has determined that all of our current directors are “independent directors” within the meaning of the applicable listing standards of the NYSE American, except for J. Philipp Stratmann who is our President and Chief Executive Officer.

 

 

Meetings of the Board of Directors

 

As of the date of this Proxy Statement, our Board has six (6) members. The Board held seven (7) meetings during fiscal 2023. During fiscal 2023, each director attended 100% of meetings of (a) the Board and (b) the committees on which such director served.

 

Our corporate governance guidelines provide that directors are expected to attend the 2023 Annual Meeting. All current directors attended our 2022 Annual Meeting of Stockholders.

 

Board Leadership Structure

 

Our Board is led by the Chairman, and Mr. Cryan is currently serving in that role. The Board has established the position of President and Chief Executive Officer (CEO), and currently Dr. Stratmann is serving as President and CEO. Our Board recognizes that, depending on the circumstances, other leadership structures might be appropriate, and as such, the Board periodically reviews and evaluates its leadership structure.

 

Board Committees

 

As of the date of this Proxy Statement, our Board has established five standing committees: an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, a Health and Safety Committee, and an Environmental and Sustainability Committee. Each committee operates under a charter that has been approved by the Board. The charters of all Board committees are available on our website at www.oceanpowertechnologies.com.

 

Our Board has determined that all of the current members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are “independent directors” within the meaning of the applicable rules of NYSE American. Our Board has also determined that all current Audit Committee members meet the independence requirements contemplated by Section 803 of the NYSE American Listing Rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

33
 

 

AUDIT
Function
Our Audit Committee assists our Board in its oversight of the integrity of our consolidated financial statements, our independent registered public accounting firm’s qualifications, independence, and performance. The charter of the Audit Committee can be found on OPT’s website. Our Audit Committee’s responsibilities include: appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; approving any material expenses not part of the budget, overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from our independent registered public accounting firm; reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly consolidated financial statements and related disclosures; monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics; establishing procedures for the receipt and retention of accounting related complaints and concerns; meeting independently with our independent registered public accounting firm and management; and preparing the Audit Committee report required by SEC regulations. In addition, the Audit Committee oversees OPT’s internal audit functions and meets separately with OPT’s  outsourced internal audit services provider.
 
Members
Diana G. Purcel*
Terence J. Cryan
Peter E. Slaiby
Meetings
4

 

COMPENSATION
Function

 

Our Compensation Committee assists our Board in the discharge of its responsibilities relating to the compensation of our executive officers.  Our Compensation Committee’s responsibilities include: establishing the goals and objectives for OPT and evaluating OPT’s performance against those goals and objectives; reviewing and approving, or making recommendations to our Board with respect to our CEO and other executive officers’ compensation; evaluating the performance of our executive officers and reviewing and approving, or making recommendations to the Board with respect to overseeing and administering, monitoring holding guidelines in compliance with policies, and making recommendations to the Board with respect to, our cash and equity incentive plans. The charter of the Compensation Committee can be found on OPT’s website.

 
Members
Terence J. Cryan*
Diana G. Purcel
Meetings
2

 

CORPORATE GOVERNANCE & NOMINATING
Function

 

Our Nominating and Corporate Governance Committee’s responsibilities include: recommending to our Board the persons to be nominated for election as directors or to fill vacancies on the Board and to be appointed to each of the Board’s committees; overseeing an annual review by the Board with respect to management succession planning; developing and recommending to the Board corporate governance principles and guidelines, such as the Corporate Governance Guidelines discussed above and the Compensation Clawback Policy discussed at page 56 below; overseeing periodic evaluations of the Board; developing stockholder surveys; and reviewing and making recommendations to the Board with respect to director compensation. The charter of the Nominating and Corporate Governance Committee can be found on OPT’s website.

 
Members
Terence J. Cryan*
Diana G. Purcel
Meetings
1

 

34
 

 

QUALITY, HEALTH & SAFETY
Function

 

In September 2021, at the recommendation of the Nominating and Corporate Governance Committee, the Board restructured the Health, Safety and Environmental Committee to concentrate its focus on health and safety matters (including environmental matters that could impact safety),and renamed the Committee accordingly. The Quality, Health and Safety Committee assists the Board in fulfilling its oversight responsibilities by assessing the effectiveness and promoting industry best practices for OPT’s programs and initiatives that support health, safety and security policies, programs, and practices of OPT.

 
Members
Clyde W. Hewitt *
Peter E. Slaiby
Meetings
4

 

ENVIRONMENTAL & SUSTAINABILITY
Function

 

In September 2021, at the recommendation of the Nominating and Corporate Governance Committee, our Board created a new committee, the Environmental and Sustainability Committee. The Board’s decision was made in furtherance of its commitments to adopt best practices in promotion of environmentally sound and socially responsible corporate governance. The Environmental and Sustainability Committee will assist the Board in fulfilling its oversight responsibilities by assessing the effectiveness of OPT’s programs and initiatives that support environmental stewardship, social responsibility, and sustainability policies, programs, and practices of OPT. In addition, the Environmental and Sustainability Committee will advise the Board on matters impacting OPT’s environmental stewardship and sustainability responsibilities and OPT’s public reputation. The Board agreed that the Environmental and Sustainability Committee can utilize external consultants to assist the Committee in its deliberations, and currently Terry D. Garcia has been selected to provide that assistance. In addition to almost 40 years of experience in government and business, Mr. Garcia previously served as General Counsel for the National Oceanic and Atmospheric Administration (NOAA), was Chief Science and Exploration Officer at National Geographic, and was also appointed by President Barack Obama to serve on the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.

 
Members
Peter E. Slaiby*
Clyde W. Hewitt
Natalie Lorenz-Anderson
J. Philipp Stratmann
Meetings
4

 

35
 

 

Risk Oversight

 

Our Board, with support at the committee level, is actively engaged in overseeing management of OPT’s risks. At each Board meeting, the directors review OPT’s significant risks along with management’s plans for addressing or mitigating those risks. The Board regularly reviews information regarding OPT’s financial position and operations, as well as the potential risks associated with each. While the Board is ultimately responsible for risk oversight, including strategic and operational risks, our Board committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls, cyber security, and compliance with legal and regulatory requirements. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Corporate Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with the organization, membership and structure of the Board, succession planning for our directors and executive officers, and corporate governance. Our Quality, Health and Safety Committee assists the Board in fulfilling its oversight responsibilities with respect to OPT’s health, safety and employee and facility security policies, programs, and practices. Our Environmental and Sustainability Committee assists the Board in fulfilling its oversight responsibilities with respect to OPT’s environmental, social, and sustainability policies, programs, and practices.

 

Communicating with the Independent Directors

 

Our Board will give appropriate attention to written communications that are submitted by stockholders and will respond, if and as appropriate. The Chair is an independent director and primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he or she considers appropriate.

 

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments considered to be important for the directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we receive repetitive or duplicative communications.

 

Stockholders who wish to send communications on any topic to our Board should address such communications to the Board of Directors of Ocean Power Technologies, Inc. c/o Secretary, Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.

 

Code of Business Conduct and Ethics

 

We have adopted a Code of Business Conduct and Ethics that applies to our employees, officers (including our principal executive officer and principal financial officer) and directors. The Code of Business Conduct and Ethics is posted on our website at www.oceanpowertechnologies.com and can also be obtained free of charge by sending a request to our Secretary at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831. Any changes to or waivers under the Code of Business Conduct and Ethics as it relates to our chief executive officer, chief financial officer, principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions must be approved by our Board and will be disclosed in a Current Report on Form 8-K within four business days of the change or waiver.

 

36
 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Pursuant to Section 16(a) of the Exchange Act and the rules issued thereunder, our executive officers and directors are required to file with the SEC reports of ownership and changes in ownership of our Common Stock. Copies of such reports are required to be furnished to OPT. Based solely on a review of the copies of such reports furnished to us, or written representations that no other reports were required, we believe that all required reports were filed in fiscal 2023 in a timely manner.

 

Restrictions on Stock Trading Activities

 

OPT’s Insider Trading Policy applies to directors, officers (including but not limited to named executive officers), and employees, as well as family members of directors, officers and employees that share the same address or are financially dependent on that person. The policy contains the following restrictions on the buying or selling of OPT’s securities for the identified individuals:

 

No one may purchase or sell OPT securities on the basis of material nonpublic information concerning OPT or disclose material nonpublic information to others where it is reasonably foreseeable that they might trade on the basis of that information.

 

No one may purchase or sell OPT securities during a corporate news blackout period, or a regulation blackout trading restriction period, or disclose to others that OPT is in either a corporate news blackout period or a regulation blackout trading restriction period.

 

No one may purchase or sell OPT securities unless a written approval to do so is obtained from OPT’s CFO and OPT’s General Counsel prior to such purchase or sale.

 

No one may engage in the following types of transactions: (i) short sales of OPT securities; or (ii) purchases of sales or puts or calls for speculative purposes.

 

37
 

 

PROPOSAL TWO

APPROVAL OF AN AMENDMENT TO THE

OCEAN POWER TECHNOLOGIES, INC. 2015 OMNIBUS INCENTIVE PLAN

 

General

 

As of November 8, 2023, the 2015 Plan had 583,954 shares remaining that are available for future issuances of awards. Our Board has approved and adopted an amendment to the 2015 Plan, subject to stockholder approval, to increase the number of shares available for grant under the 2015 Plan by 2,900,000 shares to ensure that adequate shares will be available for future grants and to amend the aggregate number of shares available for incentive awards.

 

We believe that substantial equity participation by employees is important in creating an environment in which employees will be motivated to remain employed and be productive for long periods of time in helping us to achieve our goals. We further believe that the attraction, motivation, and retention of highly qualified personnel is essential to our continued growth and success and that continued awards under the 2015 Plan are necessary for us to remain competitive in our compensation practices. The current environment for sourcing talented employees is highly competitive, which has put a premium on attracting and retaining key employees. In addition, we believe that the 2015 Plan is an effective way to ensure alignment of employees’ and stockholders’ interests and believe all such equity incentives are in the best interest of the stockholders. For Board service year 2023 and beyond, independent directors to are expected to receive an annual grant of equity in the form of restricted stock units, or RSUs. Additional shares are needed under the 2015 Plan to ensure that grants, principally to our employees, as well as to directors, can continue to be made on an annual basis.

 

Additional Considerations for the Approval the Amendment to the 2015 Plan

 

Corporate Governance Best Practices

 

The 2015 Plan has been designed to incorporate certain corporate governance best practices to align our equity compensation program with the interests of our stockholders. The following is a list of some of these best practices, which are intended to protect the interests of our stockholders:

 

  No evergreen provision. The 2015 Plan does not contain an “evergreen” feature pursuant to which the shares authorized for issuance under the plan can be increased automatically without stockholder approval.
  Complete change in control vesting disclosure. OPT has provided complete change in control vesting disclosure in order to allow our stockholders to assess the potential impact of an event on their investment.
  No broad discretion to accelerate vesting. The 2015 Plan limits the instances where vesting can be accelerated in order to align the interests of executives and the interests of stockholders.
  No repricing. Repricing is not permitted without stockholder approval, except for adjustments with respect to certain specified extraordinary corporate transactions.

 

Historical Burn Rate. We are committed to managing the use of our equity incentives prudently to balance the benefits equity compensation brings to our compensation program with the dilution it causes our stockholders. As part of our analysis when considering the proposed share increase, we considered the 2015 Plan’s three-year average “burn rate,” or the number of shares subject to equity awards granted for fiscal years 2021 through 2023 and found our burn rate be below the benchmark for the average burn rate for Non-Russell 3000 companies included in GICS code 2010 (Capital Goods).

 

Stockholder Value Transfer Test (SVT). When evaluating the appropriate number of shares to reserve under the 2015 Plan, we reviewed the stockholder value transfer of the proposed increase, calculated as the value of available shares and plan awards as a percentage of our market capitalization, and determined that the share reserve accorded by the proposed amendment was reasonable based upon comparison to historical benchmarks used in the evaluation of SVT.

 

Expected Duration. We calculated estimated plan duration as the sum of all new shares requested plus shares remaining available for issuance, divided by the average annual unadjusted burn rate over the prior three years, noting an expected plan duration well below five years. Expectations regarding future share usage could be impacted by a number of factors such as hiring and promotion activity at the executive level; the rate at which shares are returned to the 2015 Plan reserve upon awards’ expiration, forfeiture, or cash settlement; the future performance of our stock price; consequences of acquisitions or dispositions; and other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations. If, however, the stockholders do not approve the 2015 Plan amendment, there may not be a sufficient number of shares of our Common Stock available to achieve our recruiting and retention objectives.

 

Attract and Retain Talent. We grant equity incentive awards to a broad spectrum of our employees, not only executives and named executive officers. Approving the 2015 Plan amendment will enable us to continue to recruit, retain and motivate top talent at many levels within OPT necessary to our success.

 

A copy of the amendment is attached to this proxy statement as Annex B. The amendment to the 2015 Plan is being submitted for your approval pursuant to the rules and regulations of the SEC and the NYSE American.

 

Description of 2015 Plan

 

A summary description of the 2015 Plan is included in this proxy statement under “Executive Compensation – Stock Option and Other Compensation Plans – 2015 Omnibus Incentive Plan”.

 

Plan Benefits

 

No determination has been made as to any awards that will be made to directors, officers, or other employees upon approval of the proposed amendment of the 2015 Plan.

 

Board Recommendation

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 2015 PLAN.

 

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PROPOSAL THREE

RATIFICATION OF THE SECTION 382 TAX BENEFITS PRESERVATION PLAN

 

Stockholders are being asked to ratify the adoption by our Board of the Tax Benefits Preservation Plan, a copy of which is attached as Annex C to this Proxy Statement. Stockholder ratification of the Tax Benefits Preservation Plan is not required by applicable law or by our Certificate of Incorporation, the OPT Bylaws, or our other governing documents. Accordingly, the vote on this proposal is advisory and nonbinding on our Board. Our Board has determined to request stockholder ratification of the adoption of the Tax Benefits Preservation Plan to determine the viewpoint of stockholders on the advisability of the Tax Benefits Preservation Plan and as a matter of good corporate governance.

 

Background

 

Like many companies, OPT has generated net operating losses that, under federal tax laws, can be “carried forward” to offset OPT’s federal income tax obligations in future years. Through the end of OPT’s fiscal year ended April 30, 2023, and including OPT’s net loss of $26.3 million for such fiscal year, OPT estimates that it had approximately $218.3 million of federal net operating loss carryforwards (“NOLs”). Of those NOLs, $126 million will expire unused. OPT believes, after consultation with its tax advisors, that, as of April 30, 2023, it has approximately $92.3 million of NOLs, including NOLs that are already subject to some limitation, that could potentially be utilized in certain circumstances to offset OPT’s future taxable income and reduce its federal income tax liability. These and future NOLs are intended to be protected by the Tax Benefits Preservation Plan. Assuming the current federal corporate tax rate of 21%, as of April 30, 2023, such NOLs could represent a potential tax savings to OPT of approximately $19 million. Additional information with respect to these NOLs is contained in OPT’s Annual Report on Form 10-K for the fiscal year ended April 30, 2023, which OPT filed with the SEC on July 28, 2023.

 

Our Board believes that our NOLs have the potential to be a valuable asset. However, because the amount and timing of our future taxable income, if any, cannot be accurately predicted, we cannot predict the amount of NOLs that will ultimately be used to reduce our federal income tax liability. Although we are unable to quantify an exact value for the benefits that the NOLs may ultimately provide us with, we believe that the NOLs are a potentially valuable asset and the Board believes it is in OPT’s best interests to attempt to protect this asset by preventing the imposition of limitations on their use. The benefits of the NOLs would be reduced, and our use of the NOLs would be substantially delayed or potentially lost, if we experience an “ownership change,” as determined under Section 382 of the Internal Revenue Code (as now in effect or later amended and any successor thereto, the “IRC”) and the applicable Treasury Regulations promulgated thereunder (“Section 382”).

 

Under Section 382, an “ownership change” occurs if a stockholder or a group of stockholders that is deemed to own at least 5% of our Common Stock increases their ownership (individually, or collectively with other such “5-percent stockholders”) by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. If an ownership change occurs, Section 382 would impose an annual limit on the amount of our NOLs that we can use to offset income taxes equal to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced by certain items specified in Section 382) and the federal long-term tax-exempt interest rate in effect for the month of the ownership change. A number of complex rules apply to calculating this annual limit. If an ownership change were to occur, the limitations imposed by Section 382 could result in a substantial delay in the timing of the usage of our NOLs or in a material amount of our NOLs expiring unused and, therefore, significantly impair the value of our NOLs.

 

After careful consideration, and after consulting with our tax, financial, and legal advisors, on June 29, 2023, our Board acted to preserve the potential benefits of our NOLs by adopting the Tax Benefits Preservation Plan, which is similar to tax benefits preservation plans adopted by other public companies seeking to preserve the potential benefits of their NOLs. The Tax Benefits Preservation Plan, pursuant to which we have issued certain preferred stock purchase rights (the “Rights”) with terms designed to deter transfers of our Common Stock that could result in an ownership change, is described below, and its full terms can be found in the accompanying Annex C. The Board urges stockholders to carefully read this proposal, the items discussed below under the heading “Certain Considerations Related to the Tax Benefits Preservation Plan,” and the full terms of the Tax Benefits Preservation Plan.

 

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It is important to note that the Tax Benefits Preservation Plan does not offer a complete solution to protecting our NOLs. The Tax Benefits Preservation Plan is intended to reduce the likelihood of an ownership change by deterring a person or group from acquiring beneficial ownership of 4.99% of our Common Stock. However, the Tax Benefits Preservation Plan does not block any transfers of our Common Stock so, ultimately, an ownership change can still occur. The limitations of the Tax Benefits Preservation Plan are described in more detail below.

 

The Board believes that the Tax Benefits Preservation Plan serves as an important tool to help prevent an ownership change that could substantially reduce or eliminate the potential benefits of our NOLs and, accordingly, protect these potentially valuable assets. Accordingly, our Board unanimously recommends that stockholders ratify the adoption of the Tax Benefits Preservation Plan.

 

Description of the Tax Benefits Preservation Plan

 

The following description of the Tax Benefits Preservation Plan is qualified in its entirety by reference to the complete text of the Tax Benefits Preservation Plan, which is attached to this Proxy Statement as Annex C. We urge you to carefully read the Tax Benefits Preservation Plan in its entirety as the discussion below is only a summary.

 

The Tax Benefits Preservation Plan is intended to act as a deterrent to any person acquiring beneficial ownership of 4.99% or more of our outstanding shares of Common Stock within the meaning of Section 382, other than with the approval of the Board, in an effort to diminish the risk that OPT’s ability to utilize its NOLs may become substantially limited, which could therefore significantly impair the value of those assets. As more fully discussed below, a person who acquires, without the approval of the Board, beneficial ownership (other than as a result of repurchases of stock by OPT, dividends or distributions by OPT or certain inadvertent actions by stockholders) of 4.99% or more of the outstanding Common Stock (including any ownership interest held by that person’s Affiliates and Associates as defined under the Tax Benefits Preservation Plan), after the first public announcement by OPT of the Board’s adoption of the Tax Benefits Preservation Plan, could be subject to significant dilution.

 

The Rights. On June 29, 2023, the Board authorized the issuance and declared a dividend of one Right per each outstanding share of the Common Stock payable to OPT’s stockholders of record as of the close of business on July 11, 2023 (the “Tax Benefits Plan Record Date”). One Right will also be issued together with each share of the Common Stock issued after the Tax Benefits Plan Record Date, but before the Distribution Date (as defined below) and, in certain circumstances, after the Distribution Date.

 

The Series A Preferred Stock. Subject to the terms, provisions, and conditions of the Tax Benefits Preservation Plan, if the Rights become exercisable, each Right would initially represent the right to purchase from OPT one one-thousandth of a share (a “Unit”) of a newly designated series of preferred stock, Series A Participating Preferred Stock, par value $0.001 per share, of OPT (the “Series A Preferred Stock”) for a purchase price of $4.00 (the “Purchase Price”). If issued, each Unit of Series A Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of the Common Stock and the value of one Unit of Series A Preferred Stock is expected to approximate the value of one share of Common Stock. However, prior to exercise, a Right does not give its holder any rights as a stockholder of OPT, including, without limitation, any dividend, voting, or liquidation rights.

 

Acquiring Person. Under the Tax Benefits Preservation Plan, an “Acquiring Person” is any person, other than certain exempted persons, who or which, together with all Affiliates and Associates of such person, from and after the first public announcement by OPT of the adoption of the Tax Benefits Preservation Plan, is or becomes the beneficial owner of 4.99% or more of the shares of Common Stock outstanding, subject to various exceptions and provided that no person shall become an “Acquiring Person” as a result of repurchases of stock by OPT, dividends, distributions by OPT, or certain inadvertent actions by stockholders.

 

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Beneficial Ownership. Under the Tax Benefits Preservation Plan, beneficial ownership of shares is determined in accordance with the applicable rules of Section 382 of the IRC. Subject to the specific definition of “beneficial ownership” included in the Tax Benefits Preservation Plan and the various exceptions to such definition that are provided therein, beneficial ownership generally includes any securities which such person would otherwise be deemed to actually or constructively own for purposes of Section 382. Accordingly, a person will be treated as the beneficial owner of 4.99% or more shares of the Common Stock if, in the determination of the Board, that person (individually, or together with other persons) would be treated as a “5-percent stockholder” for purposes of Section 382 (substituting “4.99” for “5” each time “five” or “5” is used in or for purposes of Section 382).

 

Existing Holders. The Tax Benefits Preservation Plan also provides that any person who beneficially owned 4.99% or more of the Common Stock immediately prior to the first public announcement by OPT of the adoption of the Tax Benefits Preservation Plan (each an “Existing Holder”), shall not be deemed to be an “Acquiring Person” for purposes of the Tax Benefits Preservation Plan unless and until an Existing Holder becomes the beneficial owner of additional Common Stock after the first public announcement by OPT of the adoption of the Tax Benefits Preservation Plan (other than pursuant to a dividend or distribution paid or made by OPT on the outstanding Common Stock, pursuant to a split, reclassification, or subdivision of the outstanding Common Stock or pursuant to the acquisition of beneficial ownership of Common Stock upon the vesting or exercise of any options, warrants or other rights, or upon the initial grant or vesting of restricted stock, granted or issued by OPT to its directors, officers and employees, pursuant to a compensation or benefits plan or arrangement adopted by the Board). However, if upon acquiring beneficial ownership of additional Common Stock after the first public announcement by OPT of the adoption of the Tax Benefits Preservation Plan, the Existing Holder does not beneficially own 4.99% or more of the Common Stock then outstanding, the Existing Holder will not be treated as an “Acquiring Person” for purposes of the Tax Benefits Preservation Plan.

 

Discretionary Authority of the Board to Exempt a Transaction. The Tax Benefits Preservation Plan grants discretion to the Board to exempt a specific acquisition of the Common Stock from being deemed a triggering event under the Tax Benefits Preservation Plan. While the Board has such discretion pursuant to the terms of the Tax Benefits Preservation Plan, any such exemption would not negate the impact that such acquisition of Common Stock could have on causing, or hastening the occurrence of, an ownership change for purposes of Section 382 of the IRC.

 

Initial Exercisability. Initially the Rights will not be exercisable, certificates will not be sent to stockholders, and the Rights will automatically trade with the Common Stock. The Rights will be evidenced by Common Stock certificates, and Rights relating to any uncertificated shares of Common Stock that are registered in book entry form will be represented by a notation in book entry on the records of OPT, until the close of business on the earlier to occur of:

 

  the tenth (10th) calendar day (or if such tenth (10th) calendar occurs before the Tax Benefits Plan Record Date, then the close of business on the Tax Benefits Plan Record Date) after the earliest of the date of (i) the public announcement by OPT or an Acquiring Person indicating that an Acquiring Person has become an Acquiring Person (which, for purposes of this definition, shall include, without limitation, the filing of a report or an amendment thereto with the SEC pursuant to the Exchange Act, or pursuant to a comparable successor statute), (ii) the public disclosure of facts by OPT or an Acquiring Person that reveals the existence of an Acquiring Person or indicating that an Acquiring Person has become an Acquiring Person, and (iii) the Board becoming aware of the existence of an Acquiring Person (the “Stock Acquisition Date”); provided that, if such Person is determined by the Board, in its sole and absolute discretion, not to be or have become an Acquiring Person, then no Stock Acquisition Date shall be deemed to have occurred; and
     
  the tenth (10th) calendar day (or if such tenth (10th) calendar occurs before the Tax Benefits Plan Record Date, then the close of business on the Tax Benefits Plan Record Date) after the date of the commencement (within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act) by any person (other than certain exempted persons) of, or first public announcement of the intent of any person (other than certain exempted persons) to commence, a tender or exchange offer, upon the successful consummation of which any person (other than certain exempted persons) would become an Acquiring Person.

 

The earlier of these dates is referred to as the “Distribution Date.” Until the Distribution Date (or the earlier redemption, exchange, termination, or expiration of the Rights), Common Stock certificates or the ownership statements issued with respect to uncertificated shares of Common Stock will also evidence the associated Rights. Until the Distribution Date (or the earlier redemption or expiration of the Rights), the surrender for transfer of any shares of Common Stock will also constitute the transfer of the associated Rights. After the Distribution Date, separate rights certificates will be issued and the Rights may be transferred other than in connection with the transfer of the underlying shares of Common Stock unless and until the Board has determined to effect an exchange pursuant to the Tax Benefits Preservation Plan (as described below).

 

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Effect of a Triggering Event. In the event that a person becomes an Acquiring Person and a Distribution Date occurs, then, from and after the time that the Rights are no longer redeemable by OPT, each holder of a Right, other than Rights that are or, under certain circumstances, were beneficially owned by the Acquiring Person or any of its Affiliates or Associates (which will thereupon become void and nontransferable), will thereafter have the right to receive upon exercise of a Right and payment of the Purchase Price, and subject to the terms, provisions and conditions of the Tax Benefits Preservation Plan, a number of shares of the Common Stock having a market value (as determined immediately prior to such triggering event whether or not such Right was then exercisable) equal to two times the Purchase Price. After such an event, to the extent that insufficient shares of Common Stock are available for the exercise in full of the Rights, holders of Rights will receive upon exercise a number of shares of Common Stock to the extent available and then Units or other securities of OPT, other assets, cash, or any combination of the foregoing, in proportions determined by OPT, such that the aggregate value received is equal to two times the Purchase Price.

 

Exchange. The Board may, at its option, at any time after the later of the Stock Acquisition Date or the Distribution Date, cause OPT to exchange all or part of the outstanding Rights (other than those Rights that have become null and void pursuant to the terms of the Tax Benefits Preservation Plan, including those beneficially held by an Acquiring Person or any of Affiliates or Associates) for shares of Common Stock at an exchange rate of one share of Common Stock for each Right (subject to adjustment). Notwithstanding the foregoing, the Board shall not be empowered to effect an exchange at any time after any Person (other than any Person deemed an “Exempt Person” pursuant to the Tax Benefits Preservation Plan), together with its Affiliates and Associates (as defined in the Tax Benefits Preservation Plan), shall have become the Beneficial Owner of 50% or more of the Common Stock then outstanding. The exchange of the Rights by the Board may be made effective at such time, on such a basis, and subject to such conditions as the Board in its sole and absolute discretion may establish. Immediately upon the action of the Board authorizing the exchange of the Rights, the right to exercise the Rights will terminate, and the only right of the holders of Rights will be to receive Common Stock or other consideration issuable in connection with the exchange.

 

Redemption. At any time until the close of business on the tenth (10th) calendar day after the Stock Acquisition Date (or, if the tenth (10th) calendar day following the Stock Acquisition Date occurs before the Tax Benefits Plan Record Date, the close of business on the Tax Benefits Plan Record Date), OPT may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”), payable in cash, Common Stock, or other form of consideration, as determined by the Board, in the exercise of its sole and absolute discretion. The redemption of the Rights may be made effective at such time, on such a basis, and with such conditions as the Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate, and the only right of the holders of Rights will be to receive the Redemption Price.

 

Expiration. The Rights and the Tax Benefits Preservation Plan will expire no later than the close of business on June 29, 2026, but may expire earlier upon the earliest of (i) the date on which all of the Rights are redeemed, (ii) the date on which the Rights are exchanged, (iii) the consummation of a reorganization transaction entered into by OPT resulting in the imposition of stock transfer restrictions that the Board determines, in its sole and absolute discretion, will provide protection for OPT’s tax attributes similar to that provided by the Tax Benefits Preservation Plan, (iv) the effective time of the repeal of Section 382, or any other change, if the Board determines, in its sole and absolute discretion, that the Tax Benefits Preservation Plan, is no longer necessary or desirable for the preservation of OPT’s tax attributes, (v) such time that the Board determines, in its sole and absolute discretion, that the Tax Benefits Preservation Plan is no longer necessary to preserve OPT’s tax attributes, (vi) the beginning of a taxable year of OPT to which the Board determines, in its sole and absolute discretion, that none of OPT’s tax attributes may be carried forward, and (vii) such time that the Board determines, in its sole and absolute discretion, prior to the time any person becomes an Acquiring Person, that the Tax Benefits Preservation Plan and the Rights are no longer in the best interests of OPT and its stockholders.

 

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Preferred Stock Purchasable Upon Exercise of Rights. After the Distribution Date, subject to the terms, provisions and conditions of the Tax Benefits Preservation Plan, each Right will entitle the holder to purchase, for the Purchase Price, one one-thousandth of a share of the Series A Preferred Stock (a “Unit”) having economic and other terms similar to that of one share of Common Stock. Each Unit is intended to provide a stockholder with approximately the same dividend, voting, and liquidation rights as would be provided by one share of Common Stock, and should approximate the value of one share of Common Stock.

 

Anti-Dilution Provisions. The Board may, from time to time, adjust the Purchase Price, the number of Units issuable, the number of outstanding Rights, and the number of shares of Common Stock or other securities or property issuable upon exercise of the Rights to prevent the dilution that may occur as a result of certain events.

 

Amendments. At any time prior a person becoming an Acquiring Person, OPT may, in its sole discretion, supplement, or amend any provision of the Tax Benefits Preservation Plan in any manner without the approval of any holders of the Rights or shares of Common Stock, including, without limitation, in order to cure any ambiguity contained therein, to correct or supplement any provision contained therein that may be defective or inconsistent with any other provisions contained therein, to make any change to or delete any provision thereof, or to adopt any other provisions with respect to the Rights which OPT may deem necessary or desirable. From and after such time as any person becomes an Acquiring Person, the Tax Benefits Preservation Plan may not be amended or supplemented in any manner which would (a) adversely affect the interests of the holders of Rights (other than those Rights that have become null and void pursuant to the terms of the Tax Benefits Preservation Plan, including those beneficially held by an Acquiring Person or any of Affiliates or Associates), (b) cause the Rights again to become redeemable, or (c) cause the Tax Benefits Preservation Plan to become amendable other than in accordance with its terms.

 

Certain Considerations Related to the Tax Benefits Preservation Plan

 

The Board believes that attempting to protect the tax benefits of our NOLs as described above is in our stockholders’ best interests. However, stockholders should consider the factors discussed below in voting on whether to ratify the Tax Benefits Preservation Plan.

 

Continued Risk of Ownership Change

 

It is important to note that the Tax Benefits Preservation Plan does not offer a complete solution to protecting our NOLs. The Tax Benefits Preservation Plan is intended to reduce the likelihood of an ownership change by deterring a Person or group from acquiring beneficial ownership of 4.99% of our Common Stock. However, the Tax Benefits Preservation Plan does not block any transfers of our Common Stock so, ultimately, an ownership change can still occur.

 

Risk of the IRS Challenging the NOLs

 

The United States’ Internal Revenue Service (“IRS”) could challenge the amount of our NOLs or take a position different than our tax advisors as to whether we experienced an ownership change, which could reduce the amount of our NOLs that we can use or eliminate our ability to use them altogether.

 

The IRS has not audited or otherwise validated the amount of our NOLs. The IRS could challenge the amount of our NOLs, which could limit our ability to use our NOLs to reduce our future income tax liability. In addition, the complexity of Section 382’s provisions and the limited knowledge any public company has about the ownership of its publicly traded stock make it difficult to determine whether an ownership change has occurred. Therefore, we cannot assure you that the IRS will not take a position different than our tax advisors as to whether we experienced an ownership change and attempt to reduce or eliminate the benefit of our NOLs even if the Tax Benefits Preservation Plan is in place.

 

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Potential Impact on the Value of the Common Stock

 

The Tax Benefits Preservation Plan could depress the value of our Common Stock by reducing demand for our Common Stock if investors object to holding our Common Stock subject to the terms of the Tax Benefits Preservation Plan.

 

Potential Anti-Takeover Impact

 

The principal reason the Board adopted the Tax Benefits Preservation Plan is that we believe that the NOLs are a potentially valuable asset and the Board believes it is in OPT’s best interests to attempt to protect this asset by preventing the imposition of limitations on their use. While the Tax Benefits Preservation Plan is not principally intended to prevent a takeover, it does have a potential anti-takeover effect because an Acquiring Person may be diluted upon the occurrence of a triggering event. Accordingly, the overall effects of the Tax Benefits Preservation Plan may be to render more difficult, or discourage a merger, tender offer, or assumption of control by a substantial holder of our securities. The Tax Benefits Preservation Plan, however, should not interfere with any merger or other business combination approved by the Board.

 

SEC Registration

 

Since the Rights are not exercisable immediately, registration of the Series A Preferred Stock issuable upon exercise of the Rights with the SEC under the Securities Act of 1933, as amended, is not required until the Rights become exercisable.

 

United States Federal Income Tax Consequences

 

The United States federal income tax consequences of stockholder rights agreements have not been definitively established by Congress or the courts, and the only revenue ruling issued by the Internal Revenue Service to date addresses the adoption of a stockholder rights agreement, but not any later tax consequences. The following discussion of probable tax consequences is subject to changes in the law, as well as clarification and interpretation of existing law that may have retroactive as well as prospective effect.

 

Based on our interpretation of Revenue Ruling 90-11, the adoption of the Tax Benefits Preservation Plan and the subsequent distribution of the Rights to stockholders should not be a taxable event for us or our stockholders under federal income tax laws. Although not addressed in the revenue ruling, the physical distribution of rights certificates upon the Rights becoming exercisable should not result in any tax.

 

After such physical distribution, the Rights would probably be treated for tax purposes as capital assets in the hands of most stockholders and each right would probably have a basis of zero and a holding period which relates back to the holding period of the stock with respect to which such Rights were issued. Upon the Rights becoming Rights to purchase acquirer common stock, holders of Rights probably would be taxed even if the Rights were not exercised. Upon the Rights being redeemed for cash or the Rights being exchanged for our Common Stock, holders of the Rights would probably have a taxable event. Upon the Rights becoming Rights to purchase our Common Stock, holders of Rights would probably not have a taxable event. The Rights may have an impact on any tax-free reorganizations we may undergo. Several types of tax-free transactions can still be structured, although the Rights may not be subject to tax-free treatment.

 

Accounting Treatment

 

The issuance of the Rights as a dividend to stockholders of record as of the Tax Benefits Plan Record Date had no financial accounting or reporting impact. The fair value of the Rights was zero because the Rights were “out of the money” when issued and no value is attributable to them. Additionally, the Rights do not meet the definition of a liability under generally accepted accounting principles in the United States and are therefore not accounted for as a long-term obligation.

 

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Effect of Stockholder Vote on the Tax Benefits Preservation Plan

 

None of our Certificate of Incorporation, the OPT Bylaws, or other governing documents or applicable law requires stockholder ratification of the adoption of the Tax Benefits Preservation Plan. Accordingly, the vote on this proposal is non-binding on the Board. Although non-binding, if the stockholders do not ratify the adoption of the Tax Benefits Preservation Plan, the Board will consider whether to continue the Tax Benefits Preservation Plan in its current form, to amend one or more of its provisions, or to terminate it by redeeming the Rights or otherwise. In weighing such alternatives, the Board will likely take into account a number of factors, including the nature of stockholders’ objections to the Tax Benefits Preservation Plan (to the extent discernable), then current market conditions, whether the Board believes there is a need to defend the ability of its stockholders to fairly and equally participate in a potential change-of-control transaction, and whether the Board believes that, despite the failure of stockholders to ratify the Tax Benefits Preservation Plan, in the exercise of its fiduciary duties, it is appropriate and in the best interests of stockholders to continue the Tax Benefits Preservation Plan.

 

Although the Board will carefully consider the stockholders’ vote as expressed at the 2023 Annual Meeting, because the Board owes fiduciary duties to all stockholders, it must make an independent decision in the exercise of its fiduciary duties whether it is in the best interests of OPT and all of its stockholders to terminate the Tax Benefits Preservation Plan, and may not rely solely on the stockholder vote in making this decision. Accordingly, the Board may decide that its fiduciary duties require it to leave the Tax Benefits Preservation Plan in place, with or without amending one or more of its provisions, notwithstanding the failure of stockholders to ratify its adoption. Likewise, even if stockholders ratify the adoption of the Tax Benefits Preservation Plan, the Board may, at any time during the term of the Tax Benefits Preservation Plan, determine, in the exercise of its fiduciary duties, that the Tax Benefits Preservation Plan should be terminated.

 

The Board unanimously recommends that stockholders vote FOR the ratification of the Tax Benefits Preservation Plan and show they support the Board’s decision to protect a potentially valuable asset and preserve OPT’s future ability to use its NOLs.

 

Paragon’s Exemption Request

 

On July 20, 2023, Paragon submitted a written request to OPT for an exemption from our Tax Benefits Preservation Plan so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply to the holder of 4.9% or more of the Common Stock. On August 29, 2023, Paragon reiterated its exemption request. On October 11, 2023, our Board, at its regularly scheduled quarterly meeting, following consultation with its tax and legal advisors, completed its review of Paragon’s request for an exemption from our Tax Benefits Preservation Plan that Paragon submitted to OPT on July 20, 2023, and reiterated on August 29, 2023, so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply under such Plan to the holder of 4.9% or more of the Common Stock. Based upon such review, and in accordance with Section 27 of the Tax Benefits Preservation Plan, the Board determined not to approve Paragon’s exemption request. Prior to being notified of the Board’s decision with respect to Paragon’s exemption request, on October 9, 2023, Paragon initiated litigation in the Delaware Court of Chancery against OPT and the members of the Board alleging claims for breach of fiduciary duty and seeking declaratory and injunctive relief, including an injunction to require OPT to approve Paragon’s exemption request. The Delaware Court of Chancery has scheduled a hearing on November 28, 2023 to determine whether to grant Paragon its requested relief.

 

Board Recommendation

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SECTION 382 TAX BENEFITS PRESERVATION PLAN.

 

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PROPOSAL FOUR

RATIFICATION OF THE SELECTION OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee has appointed EisnerAmper, LLP as OPT’s independent registered public accounting firm for OPT’s fiscal year ended April 30, 2022. EisnerAmper, LLP’s PCAOB firm ID is 274. EisnerAmper LLP has served as our independent registered public accounting firm since September 2020.

 

Stockholder approval or ratification of the selection of EisnerAmper LLP is not required by applicable law, our Certificate of Incorporation, or the OPT Bylaws. However, as a matter of good corporate practice, our Board is requesting that stockholders ratify this selection as a means of soliciting input from our stockholders. If this proposal is not approved at the 2023 Annual Meeting, the Board will reconsider its selection of EisnerAmper.

 

We expect representatives of EisnerAmper LLP to attend the 2023 Annual Meeting, to be available to respond to appropriate questions from stockholders, and to have the opportunity to make a statement if so desired by the stockholders.

 

Fees of Independent Registered Public Accounting Firm

 

The following table summarizes the fees of EisnerAmper, LLP, billed to us for each of the last two fiscal years.

 

   Fiscal Year 2023   Fiscal Year 2022 
         
Audit Fees (1)  $319,000   $308,044 
Audit-Related Fees        
Tax Fees (2)   3,000    31,200 
All Other Fees        
           
Total Fees  $322,000   $339,244 

 

(1) Audit Fees consist of fees for the audit and quarterly reviews of our consolidated financial statements and other professional services provided in connection with the statutory and regulatory filings or engagements.

 

(2) Tax Fees include fees for tax consulting and tax return preparation assistance and review for OPT.

 

Pre-Approval Policies and Procedures

 

The Audit Committee’s policy is that all audit services and all non-audit services to be provided to us by our independent registered public accounting firm must be approved in advance by our Audit Committee. The Audit Committee’s approval procedures include the review and approval of a description of the services that documents the fees for all audit services and non-audit services, primarily tax advice and tax return preparation and review.

 

All audit services and all non-audit services in fiscal years 2023 and 2022 were pre-approved by the Audit Committee. The Audit Committee has determined that the provision of the non-audit services for which these fees were rendered is compatible with maintaining the independent auditor’s independence.

 

Board Recommendation

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE SELECTION OF EISNERAMPER LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDED APRIL 30, 2024.

 

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REPORT OF AUDIT COMMITTEE

 

The Audit Committee has reviewed OPT’s audited consolidated financial statements for the fiscal year ended April 30, 2023 and discussed them with OPT’s management and OPT’s independent registered public accounting firm. Management represented to the Audit Committee that the consolidated financial statements of OPT were prepared in accordance with U.S. generally accepted accounting principles.

 

The Audit Committee has also received from, and discussed with, OPT’s independent registered public accounting firm various communications that OPT’s independent registered public accounting firm is required to provide to the Audit Committee, including the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board. These matters included a discussion of the independent registered public accounting firm’s judgments about the quality (not just the acceptability) of the accounting practices of OPT and accounting principles as applied to the financial reporting of OPT.

 

The Audit Committee has received the written disclosures and the letter from OPT’s independent registered public accounting firm required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communications with Audit Committees Concerning Independence, and has discussed with OPT’s independent registered public accounting firm their independence.

 

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in OPT’s Annual Report on Form 10-K for the fiscal year ended April 30, 2023. We have concluded that the independent registered public accounting firm for fiscal 2023 is independent from OPT and its management.

 

By the Audit Committee of the Board of Directors of Ocean Power Technologies, Inc.

 

  Diana G. Purcel, Chair
  Terence J. Cryan
  Peter E. Slaiby

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding the beneficial ownership of Common Stock as of November 8, 2023 by (a) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (b) each executive officer, (c) each director and nominee for director, and (d) all executive officers and directors as a group.

 

The percentage of Common Stock beneficially owned is based on 58,788,770 shares of our Common Stock outstanding as of November 8, 2023. For purposes of the table below, and in accordance with the rules of the SEC, we deem shares of Common Stock subject to options that are currently exercisable or exercisable within sixty days of November 8, 2023 to be outstanding and to be beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, each of the persons or entities in this table has sole voting and investing power with respect to all of the shares of Common Stock beneficially owned by such person, subject to community property laws, where applicable. The street address of each beneficial owner shown in the table below is c/o Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.

 

Name of Beneficial Owner 

Number of Shares

Beneficially Owned

  

Percentage of Share

Beneficially Owned

 
         
Philipp Stratmann (1)   93,750    * 
Terence J. Cryan (2)   148,595    * 
Clyde W. Hewlett (3)   71,577           * 
Diana G. Purcel (3)   71,577    * 
Peter E. Slaiby (4)   96,577    * 
Natalie Lorenz-Anderson (5)   52,448    * 
Robert Powers (6)   28,888    * 
Joseph DiPietro (7)   2,409    * 
Matthew Burdyny (8)   50,000    * 
           
All director and executive officers as a group (9 individuals)   615,821    1%

 

* Represents a beneficial ownership of less the one percent of our outstanding Common Stock

 

(1) Beneficial ownership includes 84,417 shares of our Common Stock and 9,333 shares issuable upon the exercise of options that are currently exercisable or exercisable within sixty days of November 8, 2023.

 

(2) Beneficial ownership includes 97,696 shares of our Common Stock and 50,899 shares issuable upon the exercise of options that are currently exercisable or exercisable within sixty days of November 8, 2023.

 

(3) Beneficial ownership includes 52,448 shares of our Common Stock and 19,129 shares issuable upon the exercise of options that are currently exercisable or exercisable within sixty days of November 8, 2023.

 

(4) Beneficial ownership includes 77,448 shares of our Common Stock and 19,129 shares issuable upon the exercise of options that are currently exercisable or exercisable within sixty days of November 8, 2023.

 

(5) Beneficial ownership includes 52,448 shares of our Common Stock as of November 8, 2023.

 

(6) Beneficial ownership includes 28,888 shares of our Common Stock as of November 8, 2023.

 

(7) Beneficial ownership includes 2,409 shares of our Common Stock as of November 8, 2023.

 

(8) Beneficial ownership includes 50,000 shares of our Common Stock as of November 8, 2023.

 

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Equity Compensation Plan Information

 

The following table summarizes the total number of outstanding options and shares available for other future issuances of options under all of our equity compensation plans as of April 30, 2023.

 

Plan Category  Number of Shares to be Issued Upon Exercise of Outstanding Options and Restricted Stock   Weighted-Average Exercise Price of Outstanding Options   Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in First Column) 
             
Equity compensation plans approved by stockholders:               
Stock Options   1,595,852   $        1.70    221,445(1)
Restricted Stock Units   1,935,994    N/A      
                
Equity compensation plans not approved by stockholders:               
Stock Options            
Restricted Stock Units   50,000    N/A    161,487(2)

 

(1) Consists of shares of our Common Stock available for issuance under the 2015 Plan.

 

(2) Consists of shares of our Common Stock available for issuance under the 2018 Employee Inducement Incentive Award Plan.

 

Our equity compensation plans consist of the 2006 Stock Incentive Plan and the 2015 Plan which were approved by our stockholders, and the 2018 Employee Inducement Incentive Award Plan which was not approved by our stockholders. Once the 2015 Plan was approved by the stockholders on October 22, 2015, no further stock options or other awards were awarded under the 2006 Stock Incentive Plan and it was terminated. Shares that are forfeited under the 2006 Stock Incentive Plan on or after October 22, 2015 will become available for issuance under the 2015 Plan.

 

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

Review and Approval of Related Person Transactions

 

The Audit Committee is charged with the responsibility of reviewing and approving all related person transactions (as defined in SEC regulations), and periodically reassessing any related person transaction entered into by OPT to ensure continued appropriateness. This responsibility is set forth in our Audit Committee charter. A related party transaction will only be approved if the members of the Audit Committee determine that the transaction is in the best interests of OPT after conducting a reasonable prior review. If a director is involved in the transaction, he or she will recuse himself or herself from all decisions regarding the transaction.

 

49
 

 

EXECUTIVE COMPENSATION

 

Overview of Executive Compensation

 

ü Pay-for-Performance. A significant portion of executive pay is tied to key financial and operating measures that are disclosed to our stockholders.
   
ü Compensation Consultant. The Compensation Committee engages an independent compensation consultant, NFP.
   
ü Balanced Compensation Structure. We utilize a balanced approach to compensation, which combines fixed and variable, short-term and long-term, and cash and equity compensation.
   
ü Certify Performance. The Compensation Committee certifies performance based upon pre-established financial and operating measures before any incentive award payouts are made.
   
ü Capped Award Payouts. Cash payments that can be earned under the Short-Term Incentive programs, as well as shares under the Long-Term Incentive programs, are capped.
   
ü Consistent Equity Award Policy. Equity awards are generally made on a consistent schedule (with exceptions for newly hired executives and promotions) and are not made in anticipation of significant developments that may impact the price of our common shares.
   
ü Clawback provisions. Our Short-term and Long-term Incentive program awards are subject to recoupment and forfeiture that allows the Company to cancel all or any outstanding portion of equity awards and recover the payouts.
   
ü Talent Management. We engage in an ongoing, rigorous review of executive talent and succession plans for key operating and corporate roles.

 

 

No Significant Perquisites. The form of health insurance, life insurance and Company matching contributions to the 401(k) Plan are the same benefits available to all of our employees.
   
No Hedging, Pledging or Short Sales Transactions Permitted. We prohibit directors and executive officers from pledging Common Stock as collateral, trading in derivative securities of OPT common shares, engaging in short sales of OPT securities, or purchasing any other financial instruments that are designed to hedge or offset any decrease in the market value of any OPT securities.
   
No Single-Trigger for Change-in-Control Severance Payments. Cash severance payments to our CEO and CFO require a qualifying termination of employment and a “double-trigger” - a change-in-control and involuntary termination without cause or termination by the executive officer for Good Reason.
   
No Share Repricing. We prohibit repricing of underwater stock options and other awards without stockholder approval.
   
No Automatic Vesting. We require a minimum vesting period of at least one year for all types of equity awards.

 

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Our Compensation Committee is responsible for overseeing the compensation of our named executive officers (NEOs), including the design, review, approval, and implementation of all compensation programs. The goal of the Compensation Committee is to ensure that our compensation practices are aligned with our business strategies and objectives and that the total compensation paid to each of our named executive officers is fair, reasonable, and competitive. During fiscal year 2023, our Company had three NEOs: (1) the President and Chief Executive Officer (CEO); (2) the Senior Vice President and Chief Financial Officer (CFO), and (3) the Principal Accounting Officer, Controller, and Treasurer.

 

The Compensation Committee is composed entirely of independent, non-management members of the Board. Each member of the Compensation Committee is both a “non-employee director” within the meaning of Rule 16b3 of the Exchange Act, and an “outside director” within the meaning of Section 162(m) of the IRC. No Compensation Committee member participates in any of OPT’s employee compensation programs. Each year OPT reviews any and all relationships that each director has with OPT, and the Board subsequently reviews these findings. The responsibilities of the Compensation Committee, as stated in its charter, include the following:

 

  review and make such recommendations to the Board as the Compensation Committee deems advisable with regard to all incentive-based compensation plans and equity-based plans;
     
  review and approve the corporate goals and objectives that may be relevant to the compensation of NEOs;
     
  evaluate the performance of the NEOs in light of the goals and objectives that were set and determine and approve the compensation of the NEOs based on such evaluation; and
     
  review and approve the recommendations of the CEO with regard to the compensation of all officers of OPT other than the CEO.

 

The Compensation Committee and the Board determine the compensation of the CEO without any management input. The Compensation Committee does take into consideration input from the CEO when making compensation decisions for the CFO as it believes that this input is useful because the CEO reviews and observes the performance of the CFO. The CFO is not present or privy to the recommendations of the CEO to the Compensation Committee. The full Board also conducts an annual evaluation of the CEO, which is designed to help assess the CEO’s performance against established goals and objectives, and provide additional feedback for the Compensation Committee.

 

Compensation Clawback Policy

 

In 2023, the Board adopted a Compensation Clawback Policy which is compliant with the recently adopted requirements of the NYSE American and the SEC. Under the policy, if OPT is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, OPT would recover from any current or former executive officers incentive-based compensation that was erroneously awarded during the three years preceding the date such a restatement was required. The recoverable amount is the amount of incentive-based compensation received in excess of the amount that otherwise would have been received had it been determined based on the restated financial measure. This would apply even if the executive officer did not engage in any misconduct or had no responsibility for the errors. The Compensation Committee has the full and final authority to make all determinations under this policy.

 

51
 

 

Compensation Objectives and Philosophy

 

OPT’s compensation program is centered around a philosophy that focuses on alignment of interests between management and its stockholders, retention of key personnel, and pay-for-performance compensation. OPT believes this philosophy allows OPT to compensate its executive officers competitively, while simultaneously ensuring support of its strategy and continued development and achievement of key business goals. The Compensation Committee firmly believes that a pay-for-performance philosophy should recognize both short- and long-term performance and should include both cash and equity compensation arrangements that are supported by strong corporate governance, including active and effective oversight by the Compensation Committee.

 

Our compensation programs are intended to reward executives for the achievement of specified predetermined quantitative and qualitative goals aligned with the interests of stockholders and designed to increase stockholder value. Our compensation programs are also designed to attract and retain qualified executives and reward them for attaining superior short-term and long-term performance.

 

Total Compensation Program Elements and Relationship to Performance

 

Key elements of these programs include:

 

  Base salary that is fixed cash compensation designed to reward annual achievements, with consideration given to the executive’s qualifications, scope of responsibility, leadership abilities and management experience and effectiveness;
     
  Short-term incentive (STI) programs that provide yearly cash bonus awards, where warranted, designed to incentivize, and reward executives for executing against predetermined business objectives with demonstrated performance; and
     
  Long-term incentive (LTI) programs that provide equity-based incentive compensation, over a multi-year period, which further align executive and stockholder interests. Grants prior to fiscal year 2022 had been primarily in the form of NQSOs. For fiscal year 2022 NEOs received equity grants in the form of RSUs instead of NQSOs. For fiscal year 2023 and beyond, we will issue equity grants in the form of RSUs to NEO’s. The value of LTI compensation is based upon the market value of our Common Stock and is subject to multi-year vesting that requires continued service and/or the attainment of certain performance goals.

 

Determining and Setting Compensation

 

The Compensation Committee has been working closely with key members of management to set the compensation for OPT’s executives. Under direction by, and oversight from, the Compensation Committee, management develops recommendations for OPT’s compensation plans by utilizing market data sourced from publicly available compensation sources. This includes reputable on-line compensation surveys for comparable executive positions that review a broad selection of national and regional companies, which OPT believes it may compete with for executive talent. These companies are considered to be comparable to OPT in terms of public ownership, organizational structure, size, and stage of development.

 

The Compensation Committee reviews the results of any compensation analyses, and recommendations by management are reviewed with and approved by the Compensation Committee annually; however, if OPT becomes aware within the year that a market adjustment is required based on market or other data, the Compensation Committee can make changes, as necessary.

 

In early 2021, the Compensation Committee engaged NFP to provide consulting services related to executive compensation, including a review of OPT’s compensation practices and compensation programs to ensure that OPT’s practices and programs are commensurate with current industry best practices for similarly situated companies. The Compensation Committee generally targets compensation for our executives within a competitive range, generally at the market 50th percentile. Other considerations, including the unique nature of our business, the experience level of an executive, performance, tenure, and other market and/or relevant factors may dictate variations to this general target. NFP’s recent review in November 2023, consisting of an analysis of competitive market data for each board role from a selected peer group of companies approved by the Compensation Committee, confirmed that OPT’s director compensation remains below the market 50th percentile.

 

52
 

 

Our business is characterized by a long development cycle, including a lengthy engineering and product-testing period. In addition to traditional benchmarking metrics, such as product sales, revenues and profits, the additional factors the Compensation Committee typically considers when determining the STI and LTI compensation our NEOs’ compensation include:

 

    key product and solution development initiatives;
       
    technology advancements;
       
    achievement of commercial milestones;
       
    establishment and maintenance of key strategic relationships;
       
    implementation of appropriate financing strategies; and
       
    financial and operating performance.

 

Results of Recent Annual Meeting Votes on Executive Compensation

 

The results of the voting on the executive compensation proposals at our last three Annual Meetings of Stockholders is presented in the following table.

 

   For   Against   Abstain 
2022 Annual Meeting   70%   22%   8%
2021 Annual Meeting   78%   12%   10%
2020 Annual Meeting   76%   18%   6%

 

The Board and Compensation Committee continue to focus on driving NEO performance against specific goals and ensuring that the interests of management and stockholders are aligned properly. Accordingly, as part of our governance processes, we continually review our incentive programs, including equity vehicles that better align with our stockholders, in addition to our governance policies.

 

Compensation Considerations and Decisions for Fiscal Year 2022

 

In May 2022, the Compensation Committee held a meeting to address management’s recommendation for fiscal year 2023 salary changes and fiscal year 2022 STI bonus pool and STI bonus alternatives for the NEOs. The Compensation Committee assessment included a review of OPT’s scorecard for the fiscal year, the performance reviews of high performing individuals, and the performance review of the NEOs. The Compensation Committee determined that the overall performance of OPT in terms of meeting the commercial targets for the fiscal year included in the scorecard (particularly sales and bookings) had significantly improved from the previous fiscal year, but still did not reached the full score as determined in the scorecard. The Committee also considered that fiscal year 2022 product development and safety targets had been met.

 

Considering the overall performance of OPT for the fiscal year, and particularly the performance reviews of high performing individuals within the staff, the Compensation Committee approved management’s recommendation for salary adjustments and STI pool for the fiscal year. The salary adjustment resulted in an average 3.3% pay increase across OPT, and the STI pool resulted in a total of $245,811 in bonus awards across OPT.

 

In terms of NEOs compensation and STI bonus, the Compensation Committee considered the following: (i) that all NEOs had been recently named; (ii) that in their term in their respective offices their efforts were already positively impacting OPT’s performance; and, (iii) that OPT had met the product development and safety targets in the scorecard (representing 25% of the STI goals). Hence, the Compensation Committee resolved to approve that the NEOs receive 20% of their respective target bonuses for fiscal year 2022, pro-rated for any partial year of service. Since the NEOs had not had a complete year of service as of this assessment, no salary increases were approved at this time, with the exception of the CFO who received a 4% increase.

 

53
 

 

Compensation Goals and Objectives for Fiscal Year 2023

 

In January 2022, OPT adopted a new program for LTI awards. Pursuant to the new program NEOs, vice presidents, and select other direct reports to the Chief Executive Officer receive restricted stock units (“RSUs”) while the rest of OPT’s employees receive non-qualified stock options (“NQSOs”). NQSOs are subject to time-based vesting, while RSUs are subject to both time-based and performance-based vesting criteria. Performance-based vesting is subject to a total stockholder return (“TSR”) formula, which allows for vesting in the second year if the TSR metric is not achieved in the first year, and for vesting in the third year if the TSR metric is not achieved for the second year. The TSR metric has two components – an absolute TSR metric that evaluates the performance of our Common Stock year-over-year, and a relative TSR metric that evaluates the performance of our Common Stock against a defined index, currently the Russell 3000 Microcap index. One-third of RSU awards vest over time, one-third vest as absolute TSR metrics are achieved and one-third vest as relative TSR metrics are achieved.

 

In May 2022, the Compensation Committee developed objectives for the STI plan for the NEOs for fiscal year 2023. The Compensation Committee established objectives across three main categories; financial performance, operational performance, and safety performance as reflected in the following table. For Operational and Safety and Quality metrics management has identified specific measurement criteria which has been approved by the Compensation Committee.

 

Category  Metric  Measurement  Target Points 
Financial  New Bookings  $5.3M OPT new bookings   25 
Financial  New Bookings  $2.5M MAR new bookings   25 
Financial  New Bookings  $1.5M Consulting new bookings   10 
Operational  Manufacturing      10 
Operational  Demonstrations      10 
Operational  PB2.0      10 
Safety and Quality  Proactive Measures Implementation      5 
Safety and Quality  Lost Time Incidents      5 
Total         100 

 

In addition, the Compensation Committee established a threshold for obtaining any STI award for fiscal year 2023. A 75 point threshold was established, and upon attainment, a 50% award would be made. Between 75 points and 100 points, the award would be linearly interpolated increasing the award by 2% for every 1 point above the 75 point threshold (resulting in 100% award payment at attainment of 100 points). Similarly, between 100 points and 200 points, the award would be interpolated by increasing the award by 1% for each additional point earned (up to the maximum award of 200% for achievement of 200 points).

 

Compensation Considerations and Decisions for Fiscal Year 2023/2024

 

In May 2023, the Compensation Committee held a meeting to address management’s recommendation for fiscal year 2024 in terms of salary changes and the fiscal year 2023 STI bonus pool. The Compensation Committee assessment included a review of OPT’s scorecard for the fiscal year, the performance reviews of high performing individuals, and the performance review of the NEOs. The Compensation Committee determined that the overall performance of OPT in terms of meeting the targets for the fiscal year included in the scorecard had resulted in the attainment of 81 points out of a total 100 possible points. Accordingly, based upon the formula noted above, the Business portion of the bonus was paid at the rate of 62% of target bonus for the majority of OPT’s eligible employees. A small number of employees received 100% of their target bonus based upon outstanding performance.

 

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Considering the overall performance of OPT for the fiscal year, and particularly the performance reviews of high performing individuals within the staff, the Compensation Committee approved management’s recommendation for salary adjustments and STI pool for the fiscal year. The salary adjustment resulted in a blended 3.5% pay increase across OPT, prorated based on date of hire, and the STI pool resulted in a total of $1,652,578 in bonus awards across OPT.

 

In addition, the Compensation Committee approved a one-time discretionary contribution to OPT’s 401K plan at the rate of 1.5% of base pay for all eligible employees. This discretionary contribution totaled $134,958.

 

In terms of NEOs compensation and STI bonus, the Compensation Committee resolved to approve that the NEOs receive 62% of their respective target bonuses for fiscal year 2023, and 3.5% pay increases.

 

Compensation Goals and Objectives for Fiscal Year 2024

 

In the May 2023 meeting, the Compensation Committee also developed objectives for the STI plan for the NEOs for fiscal year 2024. The Compensation Committee established objectives across three main categories; financial performance, operational performance, and safety and quality performance as reflected in the following table. For Operational and Safety and Quality metrics management has identified specific measurement criteria which has been approved by the Compensation Committee.

 

Category  Metric  Measurement  Target Points 
Financial  New Bookings  Multi System Orders (10 points per multi-buoy [3 or more], 5 points per multi-vehicle [3 or more])   10 
Financial  New Bookings  $7.8M Buoy new bookings   15 
Financial  New Bookings  $6M Vehicles new bookings   15 
Financial  New Bookings  $1.3M Consulting new bookings   5 
Operational  Manufacturing      30 
Operational  Technology      10 
Operational  Cyber      5 
Safety and Quality  Proactive Measures Implementation      5 
Safety and Quality  Total Recordable Incident Rate      5 
Total         100 

 

Consistent with fiscal year 2023, a 75 point threshold was established, and upon attainment, a 50% award would be made. Between 75 points and 100 points, the award would be linearly interpolated increasing the award by 2% for every 1 point above the 75 point threshold (resulting in 100% award payment at attainment of 100 points). Similarly, between 100 points and 200 points, the award would be interpolated by increasing the award by 1% for each additional point earned (up to the maximum award of 200% for achievement of 200 points).

 

Also consistent with fiscal year 2023, NEOs, vice presidents, and select other direct reports to the Chief Executive Officer will receive RSUs while the rest of OPT’s employees will receive NQSOs. NQSOs are subject to time-based vesting, while RSUs are subject to both time-based and performance-based vesting criteria. Performance-based vesting is subject to the same TSR formula as in 2023.

 

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Summary Compensation Table

 

The following table sets forth the compensation paid or accrued during the fiscal years ended April 30, 2023 and April 30, 2022 to our NEOs.

 

Name and

Principal Position

  Year  

Salary

($) (1)

  

Bonus

($) (2)

  

Stock Awards

($) (3)

  

Option Awards

($) (4)

  

All Other Compensation

($) (5)

  

Total

($)

 
                             
Philipp Stratmann   2023   $360,000   $167,400   $319,493   $   $21,175   $868,068 
President and Chief Executive Officer   2022   $344,945   $54,000   $349,269   $116,534   $103,162   $967,910 
                                    
Robert Powers   2023   $291,200   $90,272   $172,290   $   $8,736   $562,498 
Senior Vice President and Chief Financial Officer   2022   $108,182   $11,667   $284,140   $   $   $403,989 
                                    
Joseph DiPietro   2023   $190,000   $29,450   $30,659   $   $3,325   $253,434 
Principal Accounting Officer, Controller, and Treasurer   2022   $133,076   $6,729   $47,190   $   $   $186,995 

 

(1) Salary represents actual salary earned during each fiscal year. The amounts in this column may be different from the amounts listed below under description of employment agreements due to increases in salary levels and mid-year hire dates.

 

(2) This amount represents bonuses earned by the NEOs for fiscal years 2023 and 2022. For fiscal year 2023 the Compensation Committee awarded bonuses in accordance with performance results. For fiscal year 2022, the Compensation Committee exercised discretion to award bonuses based on OPT’s results of operations and other performance metrics.

 

(3) The amounts in the “Stock Awards” column are subject to the vesting criteria described above and reflect the aggregate grant date fair value of restricted stock units granted during the year computed in accordance with the provisions of Accounting Standards Codification (ASC) No. 718, “Compensation- Stock Compensation.” The assumptions used in calculating these amounts are incorporated by reference to Note 13 to the financial statements in OPT’s Annual Report on Form 10-K for the year ended April 30, 2023.

 

(4) The amounts in the “Option Awards” column reflect the aggregate grant date fair value of stock options granted during the year computed in accordance with the provisions of Accounting Standards Codification (ASC) No. 718, “Compensation- Stock Compensation.” The assumptions used in calculating these amounts are incorporated by reference to Note 13 to the financial statements in OPT’s Annual Report on Form 10-K for the year ended April 30, 2023.

 

(5) For J. Philipp Stratmann in fiscal year 2022, the amount of $103,162 includes $94,124 of relocation expenses and $9,038 for OPT’s matching contributions to the 401(K) Plan. All other amounts in fiscal 2023 were related to OPT’s matching contributions to the 401(K) Plan. For fiscal year 2023 OPT elected to make a discretionary contribution to the 401(K) plan equal to 1.5% of base compensation for all eligible employees. This discretionary contribution is included in the matching contribution to the 401(K) noted above.

 

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Employment Agreements

 

J. Philipp Stratmann – President, Chief Executive Officer, and Director

 

Effective June 18, 2021, in connection with his appointment as Chief Executive Officer and President, Dr. Stratmann entered into an Employment Agreement with OPT. Pursuant to the Employment Agreement Dr. Stratmann is eligible for an annual, discretionary, performance-based bonus targeted at 75% of base salary on such terms and conditions as may be determined by the Board or its Compensation Committee, and is eligible to receive long-term incentive equity based awards, pursuant to OPT’s 2015 Omnibus Incentive Plan, as amended, subject to such terms and conditions as may be determined by the Board or its Compensation Committee. At the time of signing the Employment Agreement, Dr. Stratmann received a one-time grant of 100,000 restricted stock units that vest, if at all, equally over two years with 1/3 of each vesting based on time and 2/3 of each vesting based on positive total stockholder return. The unvested shares which would have vested based on positive total stockholder return expired on June 18, 2023. Dr. Stratmann will receive an annual base salary of $372,600 for fiscal year 2024.

 

If he is terminated other than for cause, he will receive 12 months of salary as severance. Dr. Stratmann is also subject to covenants regarding non-competition, non-solicitation, and confidentiality.

 

Robert Powers - Senior Vice President and Chief Financial Officer

 

Effective December 13, 2021, in connection with his appointment as Senior Vice President and Chief Financial Officer, Mr. Powers entered into an Employment Agreement with OPT. Pursuant to the Employment Agreement, Mr. Powers is eligible for an annual, discretionary, performance-based bonus targeted at 50% of base salary on such terms and conditions as may be determined by the Board or its Compensation Committee, and is eligible to receive long-term incentive equity based awards, pursuant to OPT’s 2015 Omnibus Incentive Plan, subject to such terms and conditions as may be determined by the Board or its Compensation Committee. Mr. Powers will receive an annual base salary of $301,392 for fiscal 2024.

 

If Mr. Powers is terminated other than for cause (or Mr. Powers quits for good reason) , he will receive six months of salary as severance. Mr. Powers is also subject to covenants regarding non-competition, non-solicitation, and confidentiality.

 

Joseph DiPietro – Principal Accounting Officer, Controller, and Treasurer

 

In connection with his promotion in September 2021, Mr. DiPietro entered into a new employment letter. His annual salary was increased to $190,000 and he is eligible for an annual bonus at a target of 25% of his annual salary. Mr. DiPietro’s will receive an annual base salary of $196,650 for fiscal 2024.

 

Stock Option and Other Compensation Plans

 

2015 Omnibus Incentive Plan

 

On August 17, 2015, our Board approved, subject to the receipt of stockholder approval, the 2015 Plan. On October 22, 2015, the stockholders approved the 2015 Plan, and the 2006 Stock Incentive Plan was terminated.

 

The 2015 Plan is administered by a committee of the Board, which consists of not fewer than two directors of OPT designated by the Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act, an “outside director” within the meaning of Section 162(m) of the IRC and, for so long as our Common Stock is listed on the NYSE American, an “independent director” within the meaning of the NYSE American rules. Among other things, the committee administering the 2015 Plan has full power and authority to take all actions and to make all determinations required or provided for under the 2015 Plan, any award under the 2015 Plan or any award agreement under the 2015 Plan, not inconsistent with the specific terms and conditions of the 2015 Plan, which the committee deems to be necessary or appropriate to the administration of the 2015 Plan. The committee administering the 2015 Plan, may amend, modify, or supplement the terms of any outstanding award, provided that no amendment, modification, or supplement of the terms of any outstanding award shall impair a grantee’s rights under an award without the consent of the grantee. The committee administering the 2015 Plan is also authorized to construe the award agreements and may prescribe rules relating to the 2015 Plan. Notwithstanding the foregoing, our full Board will conduct the general administration of the 2015 Plan with respect to all awards granted to our non-employee directors. In addition, in its sole discretion, our Board may at any time and from time to time exercise any and all rights and duties of the committee under the 2015 Plan except with respect to matters which are required to be determined in the sole discretion of the committee under Rule 16b-3 of the Exchange Act or Section 162(m) of the IRC, or any regulations or rules issued thereunder.

 

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The 2015 Plan provides for the grant of stock options, SARs, restricted stock awards, restricted stock unit awards and unrestricted stock awards, dividend equivalent rights, performance share awards or other performance-based awards, other equity-based awards or cash to eligible employees, officers and non-employee directors of OPT or any affiliate of OPT, or any consultant or adviser to OPT or an affiliate who is currently providing services to OPT or an affiliate, or to any other individual whose participation in the 2015 Plan is determined to be in the best interests of OPT by the committee administering the 2015 Plan. If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2015 Plan. The limitation on the amount of shares of stock issuable under the 2015 Plan is subject to adjustment in the event of certain changes in our capital stock, such as recapitalization, reclassifications, stock splits, reverse stock splits, spin-offs, combinations of our stock, exchanges of our stock and other increases or decreases in our stock without receipt of consideration.

 

Between October 2015 and December 2022, the stockholders approved a number of amendments to the 2015 Plan each of which increased the number of shares available for grant under the 2015 Plan. On November 15, 2023, our Board approved and adopted an amendment to the 2015 Plan, subject to stockholder approval to increase the number of shares available for grant under the 2015 Plan from 4,382,036 to 7,282,036, to ensure that adequate shares will be available for future grants. That proposal is part of this Proxy Statement (see page 38) and pending for stockholder approval at the 2023 Annual Meeting.

 

As of April 30, 2023, options to purchase 1,529,185 shares of our Common Stock at a weighted average exercise price of $1.75 were outstanding under our 2015 Plan.

 

As of April 30, 2023, we had 1,985,994 restricted stock units issued and unvested under our 2015 Omnibus Incentive Plan.

 

The 2015 Plan will terminate automatically on October 22, 2025, which is ten years after the date on which stockholders approved the 2015 Plan. As of November 8, 2023, there are 583,954 shares available for grant under the 2015 Plan.

 

2018 Employment Inducement Incentive Award Plan

 

On January 18, 2018, the Board adopted the Ocean Power Technologies, Inc. Employment Inducement Incentive Award Plan (the “Inducement Plan”) and, subject to the adjustment provisions of the Inducement Plan, reserved 25,000 shares of our Common Stock for issuance pursuant to equity awards granted under the Inducement Plan.

 

The Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules. In June 2021, OPT transferred its stock listing from Nasdaq to NYSE American, and the Inducement Plan continued in effect. The Inducement Plan provides for the grant of equity-based awards, including restricted stock units, restricted stock, performance shares and performance units, and its terms are substantially similar to OPT’s 2015 Plan, including with respect to treatment of equity awards in the event of a “change in control” as defined under the Inducement Plan, but with such other terms and conditions intended to comply with the Nasdaq inducement award exception.

 

In accordance with the applicable NYSE American Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of OPT (or following such individuals’ bona fide period of non-employment with OPT), as an inducement material to the individuals’ entry into employment with OPT. An award is any right to receive our Common Stock pursuant to the Inducement Plan, consisting of a performance share award, restricted stock award, a restricted stock unit award or a stock payment award. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and in no event may any Award be granted under the Plan after the tenth (10th) anniversary of the date of its adoption. Any Awards that are outstanding on the Expiration Date, or the date of termination of the Plan (if earlier), shall remain in force according to the terms of the Plan and the applicable Award Agreement. On February 9, 2022, the 2018 Inducement Plan was amended to increase the authorized shares by 250,000 to 275,000. As of November 8, 2023, there were 50,000 shares issued, but not yet vested, and 111,487 shares available for grant under the Inducement Plan.

 

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Outstanding Equity Awards at Fiscal Year End Table

 

The following table contains certain information regarding equity awards held by the named executive officers as of April 30, 2023:

 

   Option Awards   Stock Awards

Name and

Principal Position

  Numbers of Shares Underlying Unexercised Options (#) Exercisable   Numbers of Shares Underlying Unexercised Options (#) Unexercisable   Option Exercise Price ($)   Option Expiration Date  

Number of Shares or Units of Stock That Have Not Vested

(#)

 

Market Value of Shares or Units of Stock That Have Not Vested

($)

 
                        
Philipp Stratmann       66,667   $0.62    6/18/2031(1)        
President and Chief Executive Officer   9,333       $2.93    1/14/2031(2)        
                       600,431 (3)  $           306,220 
                             
Robert Powers                  374,251 (4)  $190,868 
Senior Vice President and Chief Financial Officer                            
                             
Joseph DiPietro                  68,079 (5)  $34,720 
Principal Accounting Officer, Controller and Treasurer                            

 

(1) Represents stock options, with market based conditions, granted on June 18, 2021 relating to an aggregate of 66,667 shares which vest over a two- year period when certain market price targets are met.

 

(2) Represents stock options granted January 14, 2021 relating to an aggregate of 9,333 shares which vest over a two-year period based on service requirements.

 

(3) Represents restricted stock units, with market based conditions, (A) granted on June 18, 2021 relating to an aggregate 16,667 of which vest over a two year period when certain market price targets are met, (B) granted on January 14, 2022 relating to an aggregate 147,000 of which vest over a three- year period when certain market price targets are met, and (C) granted on January 19, 2023 relating to an aggregate 436,765 of which vest over a three- year period when certain market price targets are met.

 

(4) Represents restricted stock units, with market based conditions, (A) granted on December 13, 2021 relating to an aggregate 62,500 of which vest over a two year period when certain market price targets are met, (B) granted on January 14, 2022 relating to an aggregate 76,221 of which vest over a three-year period when certain market price targets are met, and (C) granted on January 19, 2023 relating to an aggregate 235,530 of which vest over a three-year period when certain market price targets are met.

 

(5) Represents restricted stock units, with market based conditions, (A) granted on January 14, 2022 related to an aggregate 25,667 which vest over a three-year period when certain market price targets are met, (B) granted on January 19, 2023 relating to an aggregate 41,912 of which vest over a three-year period when certain market price targets are met, and (C) granted on July 14, 2022 related to an aggregate of 500 which vest after a one-year period.

 

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Potential Payments upon Termination of Employment or Change in Control

 

The following information sets forth the terms of potential payments to each of our NEOs in the event of a termination of employment. The terms cause, good reason and change of control have the meanings given such terms in the executive’s employment agreement. Mr. DiPietro’s employment agreement does not contain any provision for payments in the event of a termination of employment.

 

Termination by OPT without Cause; Termination by Executive for Good Reason. Our employment agreement with each of Messer’s. Stratmann and Powers provide, upon the termination of employment other than for cause, or if terminated for good reason, that they have the right to receive severance payments of twelve months of base salary (for Dr. Stratmann) or six months of base salary (for Mr. Powers).

 

Termination by OPT for Cause; Termination by Executive without Good Reason. Neither Dr. Stratmann nor Mr. Powers is entitled to any benefits in the event of a termination of OPT for cause or by the executive without good reason.

 

Change in Control. The agreements for Dr. Stratmann and Mr. Powers include a double trigger severance clause. In the event of a termination by OPT in connection with a change of control, or by the executive within 90 days of a change of control, the employment agreements for Dr. Stratmann and Mr. Powers provide for a payment of twelve and three months, respectively, of base salary. The restricted stock unit agreement provides for accelerated stock vesting upon a change in control.

 

Termination upon Failure to Renew by OPT. In the event that OPT elects not to renew the employment agreement, and the executive terminates their employment within 30 days of notice of non-renewal, the employment agreements for Dr. Stratmann and Mr. Powers provide for a payment of twelve and three months, respectively, of base salary.

 

Qualifying retirement. Under our restricted stock unit agreements with the NEOs, upon a Qualifying Retirement, 50% of unvested restricted shares will vest immediately. A “Qualifying Retirement” means retirement by the recipient after satisfaction of the conditions in either clause (A) or clause (B): (A) the recipient has both (1) attained the age of 55 and (2) completed at least ten years of employment with OPT; or (B) the sum of the recipient’s age plus the number of years he or she has been employed by OPT equals or exceeds 75 years. In addition, the agreements of Messrs. Stratmann and Powers extend the exercisability of vested options to 90 days after any termination event.

 

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Pay vs Performance

 

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and in accordance with Item 402(v) of Regulation S-K, the table below sets forth information about the relationship between compensation actually paid to our NEOs, calculated in accordance with SEC regulations, and certain financial performance measures of the Company for fiscal years 2023, 2022 and 2021.

 

Fiscal Year   Summary Compensation Table Total for Current PEO (Stratmann)1   Summary Compensation Table Total for Former PEO (Kirby)1   Compensation Actually Paid to Current PEO (Stratmann)1   Compensation Actually Paid to Former PEO (Kirby)1   Average Summary Compensation Total for Non-PEO NEOs1   Average Compensation Actually Paid to Non-PEO NEOs1   Value of Initial Fixed $100 Investment Based on Total Shareholder Return   Net Income (millions) 
2023   $868,068   $   $477,551   $   $407,966   $284,986   $48   $(26,326,062)
2022   $967,910   $505,480   $502,107   $505,480   $237,143   $126,700   $42   $(18,874,649)
2021   $   $826,230   $   $451,311   $504,440   $288,577   $558   $(14,759,793)

 

(1) Amounts represent compensation actually paid to our PEOs and the average compensation actually paid to our Non-PEO NEOs for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year:

 

Fiscal Year  PEO(s)  Non-PEO NEOs
2023  Philip Stratmann  Robert Powers, Joseph DiPietro
2022  Philip Stratmann; George H. Kirby III(a)  Robert Powers, Joseph DiPietro
2021  George H. Kirby III  Matthew T. Shafer

 

(a) Effective June 18, 2021, Mr. Stratmann was appointed as our PEO upon the resignation of Mr. Kirby.

 

Compensation actually paid to our NEOs represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year (“FY”), as adjusted as follows:

 

  2021   2022   2023 
Equity
Adjustments(a)
 

PEO

(Kirby)

   Average Non-PEO NEOs  

PEO

(Kirby)

  

PEO

(Stratmann)

   Average Non-PEO NEOs  

PEO

(Stratmann)

   Average Non-PEO NEOs 
Summary Compensation Table Total  $826,230   $504,440   $505,480   $967,910   $237,143   $868,068   $407,966 
Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY  $(374,919)  $             (215,863)  $   $(465,803)  $             (110,443)  $(319,493)  $             (101,475)
Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End  $   $   $   $   $   $   $ 
Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date  $   $   $   $   $   $   $ 
Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End  $   $   $   $   $   $   $ 
Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date  $   $   $   $   $   $(43,514)  $(11,971)
Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End  $   $   $   $   $   $(27,510)  $(9,534)
Increase based on Incremental Fair Value of Options Modified during Applicable FY  $   $   $   $   $   $   $ 
Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the Summary Compensation Table for Applicable FY  $   $   $   $   $   $   $ 
Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans  $   $   $   $   $   $   $ 
Total Equity Adjustments  $(374,919)  $(215,863)  $   $(465,803)  $(110,443)  $(390,517)  $(122,980)
Compensation Actually Paid  $451,311   $288,577   $505,480   $502,107   $126,700   $477,551   $284,986 

 

(a) Fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns was determined by reference to (1) for performance stock units (and RSUs, if any), the average of the high and low values of our common stock on applicable year-end date(s) or, in the case of vesting dates, the closing price on the applicable vesting date(s) multiplied by the probability of achievement as of the applicable date, and (2) for stock options, a value derived using the Black-Scholes option pricing model and the present value of dividends we expect to pay over the expected term of the award as of the applicable year-end or vesting date(s), determined based on the same methodology as used to determine grant date fair value of such stock options for financial statement purposes modified to obtain the values as of the relevant valuation dates. The Black-Scholes option pricing model assumptions were determined as follows: a) the average of the high and low values of our common stock on the applicable valuation date as of the current market price, b) in the case of in the money options, an expected term equal to the original ratio of expected term relative to the contractual term multiplied times the remaining term as of the applicable valuation date, and in the case of underwater stock options, an expected term set equal to the remaining term of the award, c) volatility based on the historical volatility of our stock price over a period equal to the expected term, and d) risk-free interest rates based on the implied yield on recently-issued U.S. Treasury zero-coupon bonds with a term comparable to the expected term. In all cases, these amounts were calculated in accordance with Accounting Standards Codification Topic No. 718, Compensation – Stock Compensation. For additional information on the assumptions used to calculate the valuation of the awards, see the Notes to the Company’s audited financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2023 and prior fiscal years.

 

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PROPOSAL FIVE

ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION PRACTICES

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, requires that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. Consistent with our stockholders’ preference expressed in voting at the 2011 Annual Meeting of Stockholders, the Board determined that an advisory vote on the compensation of our NEOs will be conducted every year. In this proposal we are asking stockholders to approve the following advisory resolution at the 2023 Annual Meeting:

 

RESOLVED, that the compensation paid to OPT’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion in OPT’s proxy statement for its 2023 Annual Meeting of Stockholders, is hereby APPROVED.

 

The Board unanimously recommends a vote FOR this resolution because it believes that the policies and practices described in the Executive Compensation section are effective in achieving our goals of rewarding sustained financial and operating performance and leadership excellence, aligning the executives’ long-term interests with those of our stockholders and motivating our executives to remain with us for long and productive careers. Named executive officer compensation over the past two years reflects amounts of cash and equity compensation consistent with our stated goals and objectives. We urge stockholders to read the Executive Compensation section beginning on page 50 of this proxy statement, including the 2023 Summary Compensation Table and related tables and narrative, appearing on pages 56 through 61 which provide information on our compensation policies and practices and the compensation of our NEOs.

 

This advisory resolution, commonly referred to as a “say-on-pay” resolution, is nonbinding on the Board. Although nonbinding, the Board will review and consider the voting results when evaluating our executive compensation program.

 

Board Recommendation

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

OTHER MATTERS

 

Solicitation of Proxies

 

The solicitation of proxies pursuant to this Proxy Statement is being made on behalf of the Board. Proxies may be solicited by mail, facsimile, telephone, email, internet, including social media, other electronic means, in person, and by advertisements. As a result of the potential proxy solicitation by Paragon, we may incur additional costs in connection with our solicitation of proxies. OPT has retained Morrow Sodali, a proxy solicitation firm, to assist OPT with the solicitation of proxies. Under our agreement with Morrow Sodali, Morrow Sodali will receive a fee of up to $100,000 plus the reimbursement of reasonable expenses. Morrow Sodali expects that approximately twenty (20) of its employees will assist in OPT’s solicitation of proxies. In addition, officers, directors, and certain other regular employees of OPT named herein may solicit proxies as part of their duties in the normal course of their employment without any additional compensation.

 

OPT will bear the costs of calling and holding the 2023 Annual Meeting and its, the Board’s, and its other participants’ solicitation of proxies therefor as well as all costs incurred by OPT to respond to Paragon’s numerous actions in connection with its efforts to gain control of the Board and, ultimately OPT.

 

These costs to be borne by OPT will include OPT’s expenses related to (i) responding to Paragon’s initial request on May 19, 2023 to have its three (3) directors added to our six-member Board, (ii) responding to Paragon’s request for an exemption from the Tax Benefits Preservation Plan so that it could purchase up to 19.9% of the Common Stock without triggering the dilution that would otherwise apply to the holder of 4.9% or more of the Common Stock, (iii) responding to Paragon’s Purported Nominating Notice and the proxy contest threatened thereby seeking control of the OPT Board and, ultimately, OPT, (iv) defending against the lawsuit Paragon filed against OPT in the Delaware Court of Chancery on July 27, 2023 to enforce its Section 220 inspection demand for access to OPT’s confidential books and records, and (v) defending against the lawsuit Paragon filed against OPT and the Board in the Delaware Court of Chancery on October 9, 2023 alleging claims for breach of fiduciary duty and seeking declaratory and injunctive relief. These expenses are expected to include fees of outside corporate, securities, and litigation counsel and other advisors to advise OPT in connection with the actions of Paragon described in the preceding sentence and our solicitation of proxies; additional fees payable to our proxy solicitor; and the costs of retaining an independent inspector of elections, which was specifically requested by Paragon.

 

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Other costs to be borne by OPT will include OPT’s expense of preparing, assembling, printing, and mailing the proxy materials to stockholders of record and beneficial owners and reimbursements paid to brokerage firms, banks, and other fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to OPT’s stockholders and obtaining voting instructions from beneficial owners.

 

Excluding amounts normally expended by OPT for a solicitation for an election of directors in the absence of a proxy contest and costs represented by salaries and wages of OPT’s employees and officers, our aggregate expenses, including those of Morrow Sodali, related to our response to Paragon, our defense against Paragon’s two litigation matters, and our solicitation of proxies for the 2023 Annual Meeting are expected to be approximately $2.9 million, of which approximately $1.6 million has been incurred as of the date of this Proxy Statement.

 

Deadlines for Notice of Stockholder Actions to be Considered at the 2024 Annual Meeting

 

Stockholder Proposals

 

Pursuant to the various rules promulgated by the SEC, stockholders interested in submitting a proposal to be considered for inclusion in our proxy materials and for presentation at OPT’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. In general, to be eligible for inclusion in our proxy materials, Rule 14a-8 stockholder proposals must be received by OPT’s Corporate Secretary at OPT’s principal executive officers (located at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831) no later than August [●], 2024.

 

Any stockholder of record of OPT who desires to submit a proposal of business (other than stockholder proposals in accordance with Rule 14a-8) for action at the 2024 Annual Meeting must deliver written notice of an intent to make such proposal of business to OPT’s Corporate Secretary at Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831 no earlier than October 3, 2024 and no later than November 2, 2024. However, if the date of the 2024 Annual Meeting is more than twenty (20) days before or sixty (60) days after the first anniversary of the date of the 2023 Annual Meeting, then such notice must be delivered to OPT’s Corporate Secretary no later than the close of business on the later of (A) the ninetieth (90th) day prior to the 2024 Annual Meeting and (B) the tenth (10th) day following the day on which notice of the date of the 2024 Annual Meeting was mailed or public disclosure of the date of the 2024 Annual Meeting was made, whichever first occurs). Any such notice must also comply with the timing, disclosure, procedural, and other requirements as set forth in the OPT Bylaws.

 

Stockholder Nominations for Director Candidates

 

Any stockholder of record of OPT who desires to nominate one or more director candidates at the 2024 Annual Meeting must deliver written notice of an intent to make such director nomination to OPT’s Corporate Secretary at Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831 no earlier than October 3, 2024 and no later than November 2, 2024. However, if the date of the 2024 Annual Meeting is more than twenty (20) days before or sixty (60) days after the first anniversary of the date of the 2023 Annual Meeting, then such notice must be delivered to OPT’s Corporate Secretary no later than the close of business on the later of (A) the ninetieth (90th) day prior to the 2024 Annual Meeting and (B) the tenth (10th) day following the day on which notice of the date of the 2024 Annual Meeting was mailed or public disclosure of the date of the 2024 Annual Meeting was made, whichever first occurs). Any such notice must also comply with the timing, disclosure, procedural, and other requirements as set forth in the OPT Bylaws.

 

In addition to satisfying the requirements under the OPT Bylaws described in the immediately preceding paragraph, to comply with the universal proxy rules under the Exchange Act, any stockholder who intends to solicit proxies in support of director nominees other than the Board’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act in accordance with the time period set forth immediately above for providing notice of stockholder nominations for director candidates.

 

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Annual Report

 

Our 2023 Annual Report is being furnished together with this Proxy Statement. The 2023 Annual Report contains our consolidated financial statements for our fiscal year ended April 30, 2023 and the report thereon of EisnerAmper LLP, which was our independent registered public accounting firm when the audit of our consolidated financial statements for fiscal year 2023 was issued.

 

Our 2023 Annual Report does not constitute, and should not be considered, a part of our proxy solicitation materials. Stockholders can review and download a copy of our 2023 Annual Report by accessing our website, https://investors.oceanpowertechnologies.com/financial-information/sec-filings, or stockholders may request paper copies, without charge, by writing to Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831. OPT’s filings with the SEC also are available to the public at the SEC’s website at www.sec.gov. The information on OPT’s website and the SEC’s website are not part of this Proxy Statement.

 

Householding of Annual Meeting Materials

 

We have adopted the cost saving practice of “householding” proxy statements and annual reports. Some banks, brokers and other nominee record holders are also “householding” the proxy statements and annual reports for their customers. This means that only one copy of our proxy statement, WHITE proxy card or annual report may have been sent to multiple stockholders in your household.

 

We will promptly deliver a separate copy of either document to you if you call or write us at the following address or phone number: Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831, Attention: Secretary or (609) 730-0400. If you want to receive separate copies of the annual report and proxy statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee record holder, or you may contact us at the above address and phone number.

 

Cautionary Note Regarding Forward-Looking Statements

 

This Proxy Statement includes forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction, or disappointment with current prospects, as well as words such as “believes,” “hopes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. OPT’s forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements due to risks, uncertainties, and other factors. OPT urges investors to consider specifically the various risk factors identified in its most recent Form 10-K, and any risk factors or cautionary statements included in any subsequent Form 10-Q or Form 8-K, filed with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Proxy Statement.

 

This Proxy Statement is dated December [●], 2023. You should not assume that the information contained in this Proxy Statement is accurate as of any date other than such date, and the mailing of this Proxy Statement to stockholders shall not create any implication to the contrary. Except as required by law, OPT does not undertake any responsibility to update any forward-looking statements to take into account events or circumstances that occur after the date of this Proxy Statement.

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  /s/ Nicholas Day
  Nicholas Day
  General Counsel and Secretary

 

Dated: December [●], 2023

 

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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR ALL” OF OUR BOARD’S NOMINEES (TERENCE J. CRYAN, J. PHILIPP STRATMANN, CLYDE W. HEWLETT, NATALIE LORENZ-ANDERSON, DIANA G. PURCEL, AND PETER E. SLAIBY) ON PROPOSAL 1, “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, “FOR” PROPOSAL 4, AND “FOR” PROPOSAL 5.

 

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.

WE URGE YOU TO FILL IN, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE PREPAID ENVELOPE PROVIDED, NO MATTER HOW MANY SHARES YOU OWN.

 

WE URGE YOU NOT TO SIGN ANY PROXY CARD OR VOTING INSTRUCTION FORM

SENT TO YOU BY PARAGON

 

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IMPORTANT!

 

PLEASE VOTE THE WHITE PROXY CARD TODAY!

 

Remember, you can vote your shares by telephone or via the Internet.

Please follow the easy instructions on the enclosed WHITE proxy card.

 

If you have any questions or need assistance in voting

 

If you have any questions or require any assistance in voting your shares, please call:

 

 

509 Madison Avenue Suite 1206

New York, NY 10022

 

Stockholders Call Toll Free: (800) 662-5200

Banks, Brokers, Trustees, and Other Nominees Call Collect: (203) 658-9400

Email: OPT@investor.MorrowSodali.com

 

 

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ANNEX A

 

ADDITIONAL INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION

 

Under applicable SEC rules and regulations, members of the Board, the Board’s nominees, and certain officers of OPT are “participants” with respect to OPT’s solicitation of proxies in connection with the 2023 Annual Meeting. The following sets forth certain information about the persons who are “participants.”

 

Directors and Nominees

 

The following table sets forth the names of our current directors and the Board’s nominees, as well as the names and principal business addresses of the corporation or other organization in which the principal occupations or employment of such directors and nominees is carried on. The principal occupations or employment of our current directors and the Board’s nominees are set forth under the heading “Proposal 1 – Election of Directors” in this Proxy Statement. The business address for our current directors and director nominees is c/o Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.

 

Name

 

Terence J. Cryan

J. Philipp Stratmann

Natalie Lorenz-Anderson

Clyde W. Hewlett

Diana G. Purcel

Peter E. Slaiby

 

Certain Officers

 

The following table sets forth the name and principal occupation of OPT’s officers (other than J. Philipp Stratman who is included above as a director) who are “participants.” The principal occupation refers to such person’s position with OPT, and the business address of each such person is c/o Ocean Power Technologies, Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.

 

Name Present Principal Occupation
   
Robert Powers Senior Vice President and Chief Financial Officer
   
Joseph DiPietro Principal Accounting Officer, Corporate Controller, and Treasurer,
   
Matthew Burdyny Chief Commercial Officer

 

Information Regarding Ownership of OPT’s Securities by Participants

 

The number of OPT’s securities beneficially owned by the directors and named executive officers, including those who are “participants” in our solicitation of proxies, as of the Record Date is set forth in the section entitled “Security Ownership of Certain Beneficial Owners and Management” in this Proxy Statement.

 

A-1
 

 

Information Regarding Transactions in OPT’s Securities by Participants

 

The following table sets forth information regarding purchases and sales of OPT’s securities by the by the persons listed above under “Directors and Nominees” and “Certain Officers” in this Annex A within the past two years. No part of the purchase price or market value of these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities.

 

   OPT Securities Purchased or Sold   
   (December 4, 2021 through December 4, 2023)   
Name  Transaction Date  Number of Securities  Transaction Description
Philipp Stratmann  June 20, 2023  3,766.00  Sale of shares to satisfy tax liability in accordance with Rule 16b-3
Philipp Stratmann  September 15, 2023  12,115  Open market purchase
Terence Cryan  September 15, 2023  30,000  Open market purchase
Terence Cryan  September 18, 2023  15,000  Open market purchase
Robert Powers  September 18, 2023  12,345  Open market purchase
Peter Slaiby  September 28, 2023  25,000  Open market purchase

 

Miscellaneous Information Regarding Participants

 

Except as described in this Annex A or in this Proxy Statement, to the knowledge of OPT:

 

  Neither any participant nor any of their respective associates or affiliates (together, the “Participant Affiliates”) is either a party to any transaction or series of transactions since the beginning of OPT’s last fiscal year or has knowledge of any current proposed transaction or series of proposed transactions (i) to which OPT or any of its subsidiaries was or is to be a participant, (ii) in which the amount involved exceeds the lesser of $120,000 or 1% of the average of OPT’s total assets at year-end for the last two completed fiscal years and (iii) in which any participant or Participant Affiliate had, or will have, a direct or indirect material interest.
     
  No participant or Participant Affiliate, directly or indirectly, beneficially owns any securities of OPT or any securities of any subsidiary of OPT, and no participant owns any securities of OPT of record but not beneficially.
     
  No participant has purchased or sold any securities of OPT within the past two years.
     
  No participant or Participant Affiliate has entered into any agreement or understanding with any person with respect to any future employment by OPT or any of its affiliates or with respect to or any future transactions to which OPT or any of its affiliates will or may be a party.
     
  There are no contracts, arrangements or understandings by any participant or Participant Affiliate presently, nor have there been any within the past year, with any person with respect to any securities of OPT, including, but not limited to, joint ventures, loan, or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies.
     
  No participant has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the 2023 Annual Meeting other than an interest, if any, as a stockholder of OPT or, with respect to each of the Board’s nominees, as a nominee for director.

 

  Excluding any director or executive officer of OPT acting solely in that capacity, no person who is a party to an arrangement or understanding pursuant to which a nominee for election as director is proposed to be elected has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the 2023 Annual Meeting other than an interest, if any, as a stockholder of OPT or, with respect to each of the Board’s nominees, as a nominee for director.

 

Other Information

 

  There are no material proceedings to which any director or executive officer of OPT, or any of their associates is a party adverse to, or has a material interest adverse to, OPT or any of its subsidiaries.
     
  Based on representations made to OPT by the participants, no participant has been the subject of a criminal conviction (excluding traffic violations or similar misdemeanors) within the last 10 years.
     
  There are no family relationships between any directors of OPT, the Board’s nominees, and the executive officers of OPT.

 

A-2
 

 

ANNEX B

 

SEVENTH AMENDMENT TO THE

OCEAN POWER TECHNOLOGIES, INC.

2015 OMNIBUS INCENTIVE PLAN

 

WHEREAS, Ocean Power Technologies, Inc. (the “Company”) previously adopted the Ocean Power Technologies, Inc. 2015 Omnibus Incentive Plan effective October 22, 2015 (the “2015 Plan”) and previously amended the 2015 Plan effective October 21, 2016, December 7, 2018, December 20, 2019, December 23, 2020, December 13, 2021, and December 14, 2022; and

 

WHEREAS, the Board of Directors of OPT has authorized an amendment of the 2015 Plan to increase the number of shares authorized for Awards thereunder from 4,382,036 shares to 7,282,036 shares.

 

NOW, THEREFORE, effective as of November 15, 2023, 2023, subject to approval by OPT’s stockholders within twelve (12) months of the effective date of this Amendment, Sections 4.1 and 6.2 of the Plan are amended to replace the number 4,382,036 with the number 7,282,036.

 

IN WITNESS WHEREOF, OPT has caused this Amendment to the Plan to be duly executed in its name and on its behalf by its duly authorized officer.

 

  OCEAN POWER TECHNOLOGIES, INC.
     
  By: /s/ J. Philipp Stratmann
  Name: J. Philipp Stratmann
  Title: President & Chief Executive Officer

 

B-1
 

 

ANNEX C

 

SECTION 382 TAX BENEFITS PRESERVATION PLAN, DATED AS OF JUNE 29, 2023,

BY AND BETWEEN OCEAN POWER TECHNOLOGIES, INC. AND

COMPUTERSHARE TRUST COMPANY, N.A., AS RIGHTS AGENT

 

SECTION 382 TAX BENEFITS PRESERVATION PLAN

 

by and between

 

OCEAN POWER TECHNOLOGIES, INC.

 

and

 

COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent

 

Dated as of June 29, 2023

 

 
 

 

TABLE OF CONTENTS

 

    Page
Section 1. Definitions 2
Section 2. Appointment of Rights Agent 11
Section 3. Issuance of Right Certificates. 12
Section 4. Form of Right Certificate