def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
þ Definitive Proxy
Statement
o Definitive
Additional Materials
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Soliciting Material Pursuant to §240.14a-12 |
LIGHTBRIDGE, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
o Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1) |
Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined): |
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(4) |
Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials: |
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing. |
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(1) |
Amount Previously Paid: |
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(2) |
Form, Schedule or Registration Statement No.: |
LIGHTBRIDGE, INC.
30 Corporate Drive
Burlington, Massachusetts 01803
NOTICE OF SPECIAL MEETING IN LIEU OF 2005 ANNUAL MEETING OF
STOCKHOLDERS
Dear Stockholder:
We invite you to attend our Special Meeting in Lieu of 2005
Annual Meeting of Stockholders, which is being held as follows:
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Date: |
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Monday, June 20, 2005 |
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Time: |
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9:00 a.m. |
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Location: |
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Lightbridge, Inc.
30 Corporate Drive
Burlington, Massachusetts 01803 |
At the meeting, we will ask you and our other stockholders to:
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elect two Class III directors, each for a three-year
term; and |
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consider any other business properly presented at the meeting. |
You may vote on these matters in person or by proxy. Whether or
not you plan to attend the meeting, we ask that you complete and
return the enclosed proxy card promptly in the enclosed
addressed, postage-paid envelope, so that your shares will be
represented and voted at the meeting in accordance with your
wishes. If you attend the meeting, you may withdraw your proxy
and vote your shares in person. Only stockholders of record at
the close of business on April 22, 2005 may vote at the
meeting.
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By order of the Board of Directors, |
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Eugene J. DiDonato |
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Secretary |
May 6, 2005
PROXY STATEMENT
FOR THE
LIGHTBRIDGE, INC.
SPECIAL MEETING IN LIEU OF
2005 ANNUAL MEETING OF STOCKHOLDERS
Table of
Contents
INFORMATION ABOUT THE MEETING
The Meeting
Lightbridge, Inc.s Special Meeting in Lieu of 2005 Annual
Meeting of Stockholders will be held at 9:00 a.m. on
Monday, June 20, 2005 at Lightbridges corporate
offices, 30 Corporate Drive, Burlington, Massachusetts 01803. At
the meeting, stockholders who are present or represented by
proxy will have the opportunity to vote on the election of two
Class III directors, each for a three-year term, and any
other business properly presented at the meeting.
This Proxy Solicitation
We have sent you this proxy statement and the enclosed proxy
card because our Board of Directors is soliciting your proxy to
vote at the meeting (including any adjournment or postponement
of the meeting).
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This proxy statement summarizes information about the
proposals to be considered at the meeting and other information
you may find useful in determining how to vote. |
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The proxy card is the means by which you actually
authorize another person to vote your shares at the meeting in
accordance with your instructions. |
We will pay the cost of soliciting these proxies. Our directors,
officers and employees may solicit proxies in person, by
telephone or by other means. We will reimburse brokers and other
nominee holders of shares for expenses they incur in forwarding
proxy materials to the beneficial owners of those shares. At
present, we do not plan to retain the services of a proxy
solicitation firm to assist us in this solicitation.
We are mailing this proxy statement and the enclosed proxy card
to stockholders for the first time on or about May 6, 2005.
In this mailing, we are including a copy of our 2004 Annual
Report, which includes our Annual Report on Form 10-K for
the year ended December 31, 2004 (excluding exhibits), as
filed with the Securities and Exchange Commission.
How to Vote
You are entitled to one vote at the meeting for each share of
common stock registered in your name at the close of business on
April 22, 2005. You may vote your shares at the meeting in
person or by proxy.
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To vote in person, you must attend the meeting, and then
complete and submit the ballot provided at the meeting. |
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To vote by proxy, you must complete and return the
enclosed proxy card. Your proxy card will be valid only if you
sign, date and return it before the meeting. By completing and
returning the proxy card, you will direct the persons named on
the proxy card to vote your shares at the meeting in the manner
you specify. If you complete all of the proxy card except the
voting instructions, then the designated persons will vote your
shares FOR the election of the nominated directors. If any other
business properly comes before the meeting, then the designated
persons will have the discretion to vote in any manner. |
If you vote by proxy, you may revoke your proxy at any time
before it is exercised by taking one of the following actions:
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sending written notice to our Secretary at our address set forth
on the notice of meeting appearing on the cover of this proxy
statement; |
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voting again by proxy on a later date; or |
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attending the meeting, notifying our Secretary that you are
present, and then voting in person. |
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Shares Held by Brokers or Nominees
If a broker or nominee holds shares of our common stock for you
in its name, then this proxy statement may be forwarded to you
with a voting instruction card, which allows you to instruct the
broker or nominee how to vote your shares on the proposals
described herein. To vote by proxy, you should follow the
directions provided with the voting instruction card. If your
shares are held by a broker and you do not provide timely voting
instructions, the broker may have discretionary authority to
vote your shares on matters which are considered routine. For
non-routine matters, if you do not provide instructions, the
broker will not vote your shares, which results in a
broker non-vote. To vote your shares in person, you
must obtain a properly executed legal proxy from the record
holder of the shares which identifies you as a Lightbridge
stockholder and authorizes you to act on behalf of the record
holder with respect to a specified number of shares.
Quorum Required to Transact Business
At the close of business on April 22, 2005,
26,596,867 shares of common stock were outstanding. Our
by-laws require that a majority of our common stock be
represented, in person or by proxy, at the meeting in order to
constitute the quorum we need to transact business. We will
count abstentions and broker non-votes in determining whether a
quorum exists.
Multiple Stockholders Sharing the Same Address
If you and other residents at your mailing address own shares of
common stock through a broker or other nominee, you may have
received only one copy of this proxy statement and our 2004
Annual Report if you so elected. If you and other residents at
your mailing address own shares of common stock in your own
names, you may have received only one copy of this proxy
statement and our 2004 Annual Report unless you provided our
transfer agent with contrary instructions.
This practice, known as householding, is designed to
reduce our printing and postage costs. You may promptly obtain
an additional copy of this proxy statement and our 2004 Annual
Report by sending a written request to Lightbridge, Inc.
Investor Relations, 30 Corporate Drive, Burlington,
Massachusetts 01803 or by calling our Investor Relations
department at 781-359-4000. If you hold your shares through a
bank or other nominee and wish to discontinue householding or
change your householding election, you may do so by calling
1-800-542-1061 or writing to ADP, 51 Mercedes Way, Englewood, NY
11717. If you hold your shares in your own name and wish to
discontinue householding or change your householding election,
you may do so by calling 1-877-777-0800 or writing to American
Stock Transfer & Trust Company, 59 Maiden Lane, New
York, NY 10038.
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PROPOSAL 1: ELECTION OF TWO DIRECTORS
The first proposal on the agenda for the meeting is the election
of two people to serve as Class III directors, each for a
three-year term beginning at the meeting and ending at our 2008
annual meeting of stockholders. Our Board of Directors currently
has six members and is divided into three classes. We currently
have one Class I director, three Class II directors
and two Class III directors. Members of each class of
directors serve for three-year terms. We stagger these terms so
that the term of only one class expires each year.
Nominees for Election
The nominees for election as Directors are Robert E. Donahue and
Kevin C. Melia for re-election as Class III directors.
Brief biographies of Messrs. Donahue and Melia, as of
April 22, 2005, follow. You will find information about
each nominees holdings of common stock on page 19.
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Robert E. Donahue
Class III Director Nominee
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Mr. Donahue joined our Board of Directors in January 2004,
and has served as our President and Chief Executive Officer
since August 2004. From November 2003 to January 2004,
Mr. Donahue provided financial consulting services to KO
Instruments, Inc., an electronic instruments manufacturer. From
November 2002 until November 2003, Mr. Donahue was Vice
President and General Manager, Americas After Market Solutions
at Celestica Inc., an electronics manufacturing services
provider. From October 2000 to March 2002, Mr. Donahue was
President and Chief Operating Officer of Manufacturers Services
Ltd., an electronic manufacturing services company. From January
1999 to October 2000, Mr. Donahue was President and Chief
Financial Officer at Manufacturers Services Ltd. and from August
1997 to January 1999, he was Chief Financial Officer of that
company. Mr. Donahue currently serves as a director of
Concord Communications, Inc., a network management software
company. Mr. Donahue is 56 years old. |
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Kevin C. Melia
Class III Director Nominee
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Mr. Melia has served on the Board of Directors since
October 2002, and was elected Chairman of the Board in March
2003. From January 2002 through January 2003 and from June 1994
through January 2002 he served as Chairman, and Chairman and
Chief Executive Officer, respectively, of Manufacturers Services
Ltd., an electronic manufacturing services company. He currently
serves as Chairman of the Board of Directors and member of the
Audit Committee of Iona Technologies PLC, a provider of
integration software, a Director of Radisys Corporation, a
hardware design company and Chairman of the Board of Directors
of Manugistics Group, Inc., a software distribution company.
Mr. Melia is 57 years old. |
Mr. Donahue is being nominated for election pursuant to the
terms of his employment agreement, dated January 7, 2005,
under which Lightbridge has agreed to nominate him and recommend
him for election as a director during the term of his
employment. If for any reason Mr. Donahue or Mr. Melia
becomes unavailable for election, the persons designated in the
proxy card may vote the shares represented by proxy for the
election of a substitute. Messrs. Donahue and Melia have
each consented to serve as a director if elected, and we
currently have no reason to believe that either of them will be
unable to serve.
The two people receiving the greatest number of votes cast will
be elected as Class III directors.
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Our Board of Directors recommends that you vote FOR the
election of Messrs. Donahue and Melia as Class III
Directors.
OUR BOARD OF DIRECTORS
Background Information About Directors Continuing in
Office
The Class I and Class II directors will continue in
office following the meeting, and their terms will expire in
2006 (Class I) and 2007 (Class II). Brief biographies
of these directors, as of April 22, 2005, follow. You will
find information about their holdings of common stock on
page 19.
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Gary E. Haroian
Class I Director
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Mr. Haroian was elected to our Board of Directors in
February 2005. Mr. Haroian is currently a consultant to
emerging technology companies. From April 2000 to October 2002,
Mr. Haroian served in various positions at Bowstreet, Inc.,
a provider of software application tools, including as Chief
Financial Officer, Chief Operating Officer and Chief Executive
Officer. From 1997 to 2000, Mr. Haroian served as Senior
Vice President of Finance and Administration and Chief Financial
Officer of Concord Communications, Inc., a network management
software company. Mr. Haroian served as a Certified Public
Accountant for a major public accounting firm prior to his
career as an executive in the technology industry.
Mr. Haroian is a member of the Board of Directors and
Chairman of the Audit Committee of Network Engines, Inc., a
developer and manufacturer of security and storage appliances.
Mr. Haroian also currently serves as a member of the Board
of Directors and Chairman of the Audit Committee of Aspen
Technology, Inc., a provider of software and implementation
services to the process industries, and currently serves as a
member of the Board of Directors and Chairman of the Audit
Committee of Embarcadero Technologies, Inc., a provider of data
lifecycle management solutions. Mr. Haroian is
53 years old. |
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Rachelle B. Chong
Class II Director
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Ms. Chong has served as one of our directors since February
2001. She joined our board under the terms of our merger
agreement with Corsair Communications, Inc. Ms. Chong had
served as a director of Corsair since December 1998. Since July
2001, she has been President of Carina Jewelry Inc., a retail
jewelry business and
e-commerce company.
From January 2000, she served as General Counsel and Vice
President, Government Affairs, of BroadBand Office, Inc. (BBO),
a provider of communications, Internet and ebusiness solutions
in large office buildings. BBO filed a petition under
Chapter 11 of the US Bankruptcy Code in May 2001. Prior to
BBO, she was a partner specializing in communications and
Internet matters with the multinational law firm of Coudert
Brothers in San Francisco and Palo Alto. From May 1994 to
November 1997, she served as a Commissioner of the Federal
Communications Commission in Washington, D.C. Prior to her
federal government service, Ms. Chong was a partner with
the law firms of Graham & James and Coudert Brothers.
Ms. Chong is 45 years old. |
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Andrew G. Mills
Class II Director
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Mr. Mills has served as one of our directors since May
2000. Mr. Mills was the founder of Intego Solutions, Inc. a
company formed to seek opportunities for buyouts and major
recapitalizations in the business-to- business information
services sector. Mr. Mills served as Chairman of Intego
Solutions, Inc. from January 1999 to April 2001. From January
1996 to December 1998, Mr. Mills was President and Chief
Executive Officer of Thomson Financial and Professional
Publishing Group, a provider of financial, legal, regulatory and
human resource information products and work solutions. From
1990 to December 1995, Mr. Mills was President of Thompson
Financial Services, a provider of investment research.
Mr. Mills is 52 years old. |
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David G. Turner
Class II Director
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Mr. Turner joined our Board of Directors in January 2004.
Since February 2004, Mr. Turner has been Group Executive of
Research and Development of MBNA. From July 2003 to February
2004, Mr. Turner was Senior Executive Vice President,
eBusiness Channels and Internet Operations and a member of the
Senior Operating Committee of MBNA. From November 2002 to June
2003, Mr. Turner was Executive Vice President of Gateway
Business at Gateway, Inc. From November 2001 to November 2002,
he was Senior Vice President of Sales and Marketing at Gateway.
From April 2000 to November 2001, Mr. Turner was Vice
President of Marketing and CMO at Gateway. From 1986 to January
2000, Mr. Turner held various positions at AT&T,
including most recently that of Vice President, eBusiness.
Mr. Turner is a member of the Board of Directors of the
United States Chamber of Commerce. Mr. Turner is
40 years old. |
Independent Directors
A majority of our directors qualify as independent directors
under the rules of the Nasdaq Stock Market for purposes of their
Board and Committee services. Our Board of Directors has
determined that our independent directors are Ms. Chong,
Mr. Haroian, Mr. Melia, Mr. Mills, and
Mr. Turner. At least four times a year, the independent
directors meet in sessions at which only the independent
directors are present.
Meetings and Committees of the Board of Directors
Our Board of Directors held 19 meetings and acted by unanimous
written consent 8 times during the year ended December 31,
2004. All of our directors attended at least 75% of the meetings
of the Board of Directors and committees of the Board on which
they served in 2004.
Policy Regarding Board Attendance
Our Directors are expected to attend meetings of the Board and
meetings of committees on which they serve. Our Directors are
expected to spend the time needed at each meeting and to meet as
frequently as necessary to properly discharge their
responsibilities. It is our policy that the Chairman of the
Board or, if the Chairman is unavailable or not independent,
another independent director shall attend every annual meeting
of stockholders. Three of our directors at the time,
Mr. Donahue, Mr. Melia and Pamela D.A. Reeve, attended
the Special Meeting in Lieu of 2004 Annual Meeting of
Stockholders.
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Standing Committees
Our Board of Directors has three standing committees: the Audit
Committee, the Nominating and Governance Committee and the
Compensation Committee. All of the members of the Audit
Committee, the Nominating and Governance Committee and the
Compensation Committee meet the applicable independence
requirements of the Nasdaq Stock Market for the committees on
which they serve. Our Board of Directors has adopted written
charters for each of these committees. Copies of each of these
charters are posted on the Investor Relations section of our web
site at www.lightbridge.com and written copies may be
requested by contacting Investor Relations, Lightbridge, Inc.,
30 Corporate Drive, Burlington, MA 01803, Telephone:
781-359-4000.
The membership of each committee of our Board is as follows:
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Audit Committee: |
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Nominating and Governance Committee: |
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Compensation Committee: |
Gary E. Haroian, Chair
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Andrew G. Mills, Chair |
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Rachelle B. Chong, Chair |
Kevin C. Melia
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Kevin C. Melia |
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David G. Turner |
Andrew G. Mills
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Rachelle B. Chong |
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Kevin C. Melia |
Audit Committee
Our Audit Committee is currently composed of
Messrs. Haroian, Melia and Mills. The Audit Committee met
16 times and acted by unanimous written consent one time during
the year ended December 31, 2004. Our Audit Committee
provides direct contact between our independent registered
public accounting firm and members of our Board of Directors,
and our independent registered public accounting firm reports
directly to the committee. The primary role of the Audit
Committee is to assist our Board of Directors in fulfilling its
oversight responsibilities by reviewing the financial
information proposed to be provided to shareholders and others,
the internal control systems and disclosure controls established
by management and the Board, the audit process and the
qualifications, independence and performance of our independent
registered public accounting firm. The Audit Committee is
directly responsible for selecting, compensating, evaluating
and, when necessary, replacing our independent registered public
accounting firm. Our Audit Committee has adopted procedures for
the treatment of complaints regarding accounting, internal
accounting controls or auditing matters, including procedures
for the confidential and anonymous submission by our employees
of concerns regarding questionable accounting, internal
accounting controls or auditing matters. These procedures are
set forth in our Code of Ethics.
The Board of Directors determined that the members of our Audit
Committee are not only independent, but also are
financially literate for purposes of NASDAQ rules
(that is, able to read and understand financial statements). In
addition, the Board has found that Messrs. Haroian and
Melia qualify as an audit committee financial
experts. Mr. Haroian served as a Certified Public
Accountant for a major public accounting firm prior to his
career as an executive in the technology industry. He was Chief
Financial Officer at Bowstreet, Inc. and Concord Communications,
Inc. and currently serves on the audit committee of Network
Engines, Inc., Aspen Technologies, Inc. and Embarcadero
Technologies, Inc. Mr. Melia was Chief Financial Officer of
Sun Microsystems Corporation from 1992 to 1994. Mr. Melia
also serves as a member of the Audit Committee of Iona
Technologies, Inc.
Nominating and Governance Committee
The current members of our Nominating and Governance Committee
are Ms. Chong and Messrs. Melia and Mills. Our
Nominating and Governance Committees responsibilities
include providing recommendations to our Board of Directors
regarding nominees for director and membership on the committees
of our Board. An additional function of the Nominating and
Governance Committee is to develop corporate governance
practices to recommend to our Board and to assist our Board in
complying with those practices. Our Nominating and Governance
Committee held ten meetings during the year ended
December 31, 2004.
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Director Candidates and Selection Process
The Nominating and Governance Committee, in consultation with
our Chief Executive Officer and the Chairman of the Board,
identifies and reviews candidates for our Board of Directors and
recommends to our full Board candidates for election to the
Board. In selecting new directors, the committee considers any
requirements of applicable law or listing standards, a
candidates strength of character, judgment, business
experience and specific area of expertise, factors relating to
the composition of the Board (including its size and structure),
principles of diversity, and such other factors as the committee
deems to be appropriate. As part of this responsibility, the
committee is responsible for conducting, subject to applicable
law, any and all inquiries into the background and
qualifications of any candidate for the Board and such
candidates compliance with the independence and other
qualification requirements established by the committee or
imposed by applicable law or listing standards. The Committee
has also used third-party recruiting firms to assist it in
identifying nominees for director.
The Nominating and Governance Committee will consider director
candidates recommended by stockholders. In considering
candidates submitted by stockholders, the Nominating and
Governance Committee will take into consideration the factors
discussed above. The Nominating and Governance Committee may
also take into consideration the number of shares held by the
recommending stockholder and the length of time that such shares
have been held. To have a candidate considered by the Nominating
and Governance Committee, a stockholder must submit the
recommendation in writing and must include the following
information:
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The name and address of the stockholder and the class and number
of shares beneficially owned by the stockholder and owned of
record by the stockholder; and |
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All information relating to the candidate that is required to be
disclosed in solicitation of proxies for election of a director,
or is otherwise required pursuant to Regulation 14A under
the Securities and Exchange Act of 1934 or any other statute,
rule or regulation applicable thereto. |
The stockholder recommendation and information described above
must be sent to our secretary and must be received by our
secretary not less than sixty (60) days prior to the date
of our annual meeting of stockholders as specified in our
By-Laws (the fourth Wednesday in May) and if less than seventy
(70) days notice or prior public disclosure of the
date of such annual or special meeting is given or made, notice
by the stockholder to be timely must be so delivered or received
not later than the close of business on the tenth (10th) day
following the earlier of the day on which notice of the date of
such annual or special meeting was mailed or the day on which
public disclosure was made of the date of such annual or special
meeting.
Our Nominating and Governance Committee is governed by a
charter, a current copy of which is available in the Investor
Relations Section of our web site at www.lightbridge.com.
A copy of the written charter may be requested by contacting
Investor Relations, Lightbridge, Inc., 30 Corporate Drive,
Burlington, MA 01803, Telephone: 781-359-4000.
Compensation Committee
The current members of our Compensation Committee are
Ms. Chong and Messrs. Turner and Melia. The purpose of
the Compensation Committee is to discharge the responsibilities
of our Board of Directors relating to compensation of our
directors and executive officers and related matters, to review
and make recommendations to the Board regarding employee
compensation and benefit plans and programs generally and to
administer our stock option plans and employee stock purchase
plan. The Compensation Committee met 17 times and acted by
unanimous written consent 6 times during the year ended
December 31, 2004.
Compensation Committee Interlocks and Insider
Participation
None of the members of the Compensation Committee during the
year ended December 31, 2004 has ever been one of our
employees. None of our executive officers serves as a member of
the board of
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directors or compensation committee of any entity that has one
or more executive officers serving as members of our Board of
Directors or Compensation Committee.
Communications with our Board of Directors
Our stockholders may communicate directly with the members of
our Board of Directors or the individual chair of standing Board
committees by writing directly to those individuals care of the
Company at 30 Corporate Drive, Burlington, MA 01803. Our
policy is to forward, and not to intentionally screen, any mail
received at our corporate office that is sent directly to an
individual.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our
employees, executive officers and directors. Our Code of Ethics
includes provisions covering conflicts of interest, business
gifts and entertainment, outside activities, compliance with
laws and regulations, insider trading practices, antitrust laws,
payments to government personnel, bribes or kickbacks, corporate
record keeping, accounting records, the reporting of illegal or
unethical behavior and the reporting of accounting concerns. Any
waiver of any provision of the Code of Ethics granted to an
executive officer or director may only be made by the Board of
Directors. A copy of our Code of Ethics is posted on the
Investor Relations section of our web site at
www.lightbridge.com., or written copies may be requested
by contacting Investor Relations, Lightbridge, Inc., 30
Corporate Drive, Burlington, MA 01803, Telephone: 781-359-4000.
Compensation of Directors
Directors who are not our employees receive $2,000 for each
Board meeting they attend and $1,000 for each meeting they
attend of a committee of the Board on which they serve.
Non-employee Directors also receive an annual retainer of
$20,000 for their services as directors. The Audit Committee
Chair receives an annual retainer of $10,000, the Compensation
Committee Chair receives an annual retainer of $6,000 and other
committee chairs receive an annual retainer of $5,000 for their
services as chairperson of a committee. Any non-employee
Director who also serves as Chairman of the Board receives an
annual all-inclusive retainer of $70,000. In 2004, in addition
to an annual retainer of $20,000, Mr. Melia also received
an additional annual retainer of $55,000 for his services as
Chairman of the Board.
It has been our practice that Directors who are not our
employees also receive stock option grants. Upon election to the
Board of Directors, each non-employee director receives options
to purchase 25,000 shares of common stock, which vest
in three equal annual installments. In addition, immediately
following each annual meeting of stockholders (or special
meeting in lieu thereof), each non-employee director re-elected
to or remaining on the Board is granted fully vested options to
purchase 10,000 shares of common stock, provided
that:
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any prior grants held by the director have fully vested; or |
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at least two annual meetings of stockholders (or special
meetings in lieu thereof) have elapsed between any prior grant
made to the director and the meeting upon which the subsequent
grant would occur. |
The exercise price per share of each option grant is equal to
the closing price of our common stock on the date of such grant,
as reported by The Nasdaq Stock Market (National Market System).
In accordance with the foregoing provisions, during the year
ended December 31, 2004, Messrs. Donahue and Turner
each received an option to purchase 25,000 shares of
common stock at a price of $8.80 per share in connection
with their election to the Board of Directors in January 2004,
and Ms. Chong and Mr. Mills each received options to
purchase 10,000 shares of common stock at a price of
$5.39 per share. Directors who are our employees are not
entitled to receive any separate compensation for serving as
directors.
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OUR EXECUTIVE OFFICERS
Background Information About Executive Officers
Brief biographies of our executive officers follow. The ages of
the executive officers are given as of April 22, 2005. You
will find information about their holdings of common stock on
page 19.
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Robert E. Donahue
President and Chief Executive
Officer
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You will find background information about Mr. Donahue on
page 5. |
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Timothy C. OBrien
Vice President, Finance and
Administration, Chief Financial
Officer and Treasurer
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Mr. OBrien has served as our Vice President, Finance
and Administration, Chief Financial Officer and Treasurer since
June 2004. From June 2001 until April 2003,
Mr. OBrien served as Chief Financial Officer and
board member of E Ink Corporation, a provider of visual
communication technology. From June 2000 until May 2001,
Mr. OBrien served as Chief Financial Officer and
board member of WebCT, Inc., a provider of e-learning systems
for educational institutions. From March 1995 to March 2000,
Mr. OBrien served as Chief Financial Officer and
board member of Ziff-Davis Holdings, Inc., a publishing and
media company. Mr. OBrien is 56 years old. |
|
Roy Banks
President, Authorize.Net
|
|
Mr. Banks has served as President of our Payment Processing
Services business unit since October 2004. From March 2004 until
October 2004, he served as General Manager of Authorize.Net
Corporation. From June 2000 until March 2004, he served as
General Manager of InfoSpace, Inc., a provider and publisher of
mobile content and applications in North America. From August
1999 until June 2000, Mr. Banks served as the Vice
President of Business Development at Go2Net, an internet
infrastructure provider. Mr. Banks is 38 years old. |
|
Eugene J. DiDonato
Vice President and
General Counsel
|
|
Mr. DiDonato has served as our corporate Secretary since
April 2005 and as our Vice President and General Counsel since
December 2000. He joined Lightbridge in November 2000. From July
1997 to November 2000, Mr. DiDonato served as the Vice
President and General Counsel of Peritus Software Services,
Inc., a publicly traded, technology-backed, software services
company. From November 1993 to June 1997, Mr. DiDonato
served as the Vice President and General Counsel of Cayenne
Software, Inc. (formerly Bachman Information Systems, Inc.), a
publicly traded software and services company. Mr. DiDonato
is 48 years old. |
11
Compensation of Executive Officers
|
|
|
Summary Compensation Table for 2004, 2003 and 2002 |
The following table summarizes the annual and long-term
compensation that we paid for the past three fiscal years to:
|
|
|
|
|
Robert E. Donahue and Pamela D.A. Reeve, each of whom served as
our chief executive officer during a portion of 2004; |
|
|
|
our four other most highly compensated executive officers in
2004 who continued to serve as executive officers on
December 31, 2004; and |
|
|
|
two individuals who were among our four most highly compensated
executive officers in 2004 but who were not serving as executive
officers on December 31, 2004. |
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term | |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation | |
|
|
|
|
|
|
|
|
|
|
|
|
Awards | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Annual Compensation | |
|
Other Annual | |
|
Securities | |
|
All Other | |
|
|
|
|
| |
|
Compensation | |
|
Underlying | |
|
Compensation | |
Name and Principal Position(s) |
|
Year | |
|
Salary($) | |
|
Bonus($)(1) | |
|
($)(2) | |
|
Options(#) | |
|
($)(3) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Robert E. Donahue(4)
|
|
|
2004 |
|
|
$ |
157,500 |
|
|
$ |
161,417 |
|
|
|
|
|
|
|
325,000 |
|
|
$ |
3,600 |
|
|
President and Chief Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy C. OBrien(5)
|
|
|
2004 |
|
|
$ |
153,462 |
|
|
$ |
78,333 |
|
|
|
|
|
|
|
250,000 |
|
|
$ |
3,808 |
|
|
Vice President, Finance and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration, Chief Financial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roy Banks(6)
|
|
|
2004 |
|
|
$ |
117,864 |
|
|
$ |
76,000 |
|
|
|
|
|
|
|
100,000 |
|
|
$ |
3,219 |
|
|
President, Authorize.Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judith A. Dumont(7)
|
|
|
2004 |
|
|
$ |
226,729 |
|
|
$ |
95,680 |
|
|
|
|
|
|
|
100,000 |
|
|
$ |
5,736 |
|
|
President, Telecom Decisioning |
|
|
2003 |
|
|
$ |
198,077 |
|
|
$ |
75,000 |
|
|
|
|
|
|
|
50,000 |
|
|
$ |
4,998 |
|
|
Services |
|
|
2002 |
|
|
$ |
190,000 |
|
|
$ |
71,510 |
|
|
|
|
|
|
|
|
|
|
$ |
4,750 |
|
Eugene J. DiDonato
|
|
|
2004 |
|
|
$ |
198,846 |
|
|
$ |
52,000 |
|
|
|
|
|
|
|
75,000 |
|
|
$ |
5,578 |
|
|
Vice President, General Counsel |
|
|
2003 |
|
|
$ |
188,077 |
|
|
$ |
38,000 |
|
|
|
|
|
|
|
|
|
|
$ |
5,229 |
|
|
|
|
2002 |
|
|
$ |
180,000 |
|
|
$ |
33,570 |
|
|
|
|
|
|
|
20,000 |
|
|
$ |
5,400 |
|
Pamela D.A. Reeve(8)
|
|
|
2004 |
|
|
$ |
247,500 |
|
|
|
|
|
|
$ |
35,234 |
|
|
|
200,000 |
|
|
$ |
890,411 |
|
|
Former Chief Executive Officer |
|
|
2003 |
|
|
$ |
390,000 |
|
|
$ |
175,000 |
|
|
$ |
23,930 |
|
|
|
50,000 |
|
|
$ |
6,000 |
|
|
|
|
2002 |
|
|
$ |
390,000 |
|
|
$ |
97,920 |
|
|
$ |
17,302 |
|
|
|
|
|
|
$ |
5,500 |
|
Edward DeArias(9)
|
|
|
2004 |
|
|
$ |
219,615 |
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
308,848 |
|
|
Former Vice President, |
|
|
2003 |
|
|
$ |
225,000 |
|
|
$ |
55,000 |
|
|
$ |
74,250 |
|
|
|
|
|
|
$ |
6,000 |
|
|
Worldwide Sales and Marketing |
|
|
2002 |
|
|
$ |
17,308 |
|
|
$ |
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Harlan B. Plumley(10)
|
|
|
2004 |
|
|
$ |
118,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
255,198 |
|
|
Former Vice President, Finance |
|
|
2003 |
|
|
$ |
225,000 |
|
|
$ |
56,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Administration, Chief |
|
|
2002 |
|
|
$ |
225,000 |
|
|
$ |
105,370 |
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
Financial Officer and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents the bonus amounts earned by the named individuals in
respect of the applicable year. |
|
|
(2) |
Represents sales commissions paid to Mr. DeArias, amounts
for personal use of Company car for Ms. Reeve and tax
reimbursement for use by and transfer to Ms. Reeve of
Company car. |
|
|
(3) |
Represents matching contributions made pursuant to the
Companys 401(k) Plan, severance and related payments paid,
payable or accrued for terminated employees including
outplacement costs, accrued vacation balances and COBRA costs
for Ms. Reeve, Mr. DeArias and Mr. Plumley, the
value of the car transferred to Ms. Reeve, and costs for
life insurance premiums for Ms. Reeve. |
|
|
(4) |
Mr. Donahue became an executive officer of Lightbridge in
August 2004. |
12
|
|
|
|
(5) |
Mr. OBrien joined Lightbridge in June 2004. |
|
|
(6) |
Mr. Banks joined Lightbridge in March 2004 in connection
with our acquisition of Authorize.Net. Corporation. |
|
|
(7) |
Ms. Dumonts employment terminated in January 2005.
Information concerning Ms. Dumonts severance payments
and related benefits is set forth in Employment,
Separation and Change in Control Agreements below. |
|
|
(8) |
Ms. Reeves employment terminated in August 2004. |
|
|
(9) |
Mr. DeArias joined Lightbridge in December 2002 and his
employment terminated in October 2004. |
|
|
(10) |
Mr. Plumleys employment terminated in June 2004. |
The following table sets forth information regarding the options
that we granted to the persons named in the Summary Compensation
Table during the year ended December 31, 2004.
Option Grants in Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value | |
|
|
Individual Grants | |
|
at Assumed Annual Rate of | |
|
|
| |
|
Stock Price Appreciation | |
|
|
|
|
% of Total | |
|
Exercise | |
|
|
|
for Option Term(3) | |
|
|
|
|
Options | |
|
Price Per | |
|
Expiration | |
|
| |
Name |
|
# of Shares | |
|
Granted(1) | |
|
Share(2) | |
|
Date | |
|
5%($) | |
|
10%($) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Robert E. Donahue
|
|
|
25,000 |
|
|
|
0.85 |
% |
|
$ |
8.80 |
|
|
|
1/14/2014 |
|
|
$ |
138,357 |
|
|
$ |
350,623 |
|
|
|
|
300,000 |
|
|
|
10.33 |
% |
|
|
3.76 |
|
|
|
8/3/2014 |
|
|
|
709,393 |
|
|
|
1,797,741 |
|
Timothy C. OBrien
|
|
|
250,000 |
|
|
|
8.61 |
% |
|
|
5.50 |
|
|
|
6/30/2014 |
|
|
|
864,730 |
|
|
|
2,191,396 |
|
Roy Banks
|
|
|
15,000 |
|
|
|
0.52 |
% |
|
|
4.67 |
|
|
|
9/14/2014 |
|
|
|
44,054 |
|
|
|
111,642 |
|
|
|
|
25,000 |
|
|
|
0.86 |
% |
|
|
4.90 |
|
|
|
9/30/2014 |
|
|
|
77,040 |
|
|
|
195,233 |
|
|
|
|
60,000 |
|
|
|
2.07 |
% |
|
|
6.36 |
|
|
|
3/31/2014 |
|
|
|
239,986 |
|
|
|
608,172 |
|
Judith A. Dumont
|
|
|
80,000 |
|
|
|
2.75 |
% |
|
|
7.70 |
|
|
|
2/8/2014 |
|
|
|
387,399 |
|
|
|
981,745 |
|
|
|
|
20,000 |
|
|
|
0.69 |
% |
|
|
4.67 |
|
|
|
9/14/2014 |
|
|
|
58,739 |
|
|
|
148,856 |
|
Eugene J. DiDonato
|
|
|
60,000 |
|
|
|
2.07 |
% |
|
|
7.70 |
|
|
|
2/8/2014 |
|
|
|
290,549 |
|
|
|
736,309 |
|
|
|
|
15,000 |
|
|
|
0.52 |
% |
|
|
4.67 |
|
|
|
9/14/2014 |
|
|
|
44,054 |
|
|
|
111,642 |
|
Pamela D.A. Reeve
|
|
|
200,000 |
|
|
|
6.89 |
% |
|
|
7.85 |
|
|
|
2/18/2014 |
|
|
|
987,365 |
|
|
|
2,502,176 |
|
Edward DeArias
|
|
|
50,000 |
|
|
|
1.72 |
% |
|
|
7.70 |
|
|
|
3/31/2014 |
|
|
|
242,124 |
|
|
|
613,591 |
|
|
|
(1) |
Percentages are calculated based on a total of 2,904,430 options
granted in the year ended December 31, 2004. |
|
(2) |
All options were granted at fair market value, which was
determined by the Compensation Committee to be the closing price
of our common stock on the date of grant, as reported by The
Nasdaq Stock Market (National Market System). |
|
(3) |
The amounts shown represent hypothetical values that could be
achieved for the respective options if exercised at the end of
their option terms. These gains are based on assumed rates of
stock appreciation of five percent and ten percent, compounded
annually from the date the respective options were granted to
the date of their expiration. The gains shown are net of the
option price, but do not include deductions for taxes or other
expenses that may be associated with the exercise. Actual gains,
if any, on stock option exercises will depend on future
performance of the common stock, the optionholders
continued employment through the option period, and the date on
which the options are exercised. |
13
|
|
|
Aggregated Option Exercises in 2004 and Option Values at
December 31, 2004 |
The following table sets forth information as to options
exercised during the year ended December 31, 2004, and
unexercised options held at the end of such fiscal year, by the
persons named in the Summary Compensation Table.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised | |
|
|
Shares | |
|
|
|
Underlying Unexercised | |
|
In-the-Money Options | |
|
|
Acquired | |
|
Value | |
|
Options at Fiscal Year-End | |
|
at Fiscal Year-End($)(2) | |
|
|
On | |
|
Realized | |
|
| |
|
| |
Name |
|
Exercise(#) | |
|
($)(1) | |
|
Exercisable(#) | |
|
Unexercisable(#) | |
|
Exercisable($) | |
|
Unexercisable($) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Robert E. Donahue
|
|
|
|
|
|
$ |
|
|
|
|
100,000 |
|
|
|
225,000 |
|
|
$ |
228,000 |
|
|
$ |
456,000 |
|
Timothy C. OBrien
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
225,000 |
|
|
|
13,500 |
|
|
|
121,500 |
|
Roy Banks
|
|
|
|
|
|
|
|
|
|
|
10,562 |
|
|
|
89,438 |
|
|
|
5,675 |
|
|
|
43,375 |
|
Judith A. Dumont
|
|
|
|
|
|
|
|
|
|
|
99,161 |
|
|
|
79,839 |
|
|
|
3,768 |
|
|
|
23,633 |
|
Eugene J. DiDonato
|
|
|
|
|
|
|
|
|
|
|
70,626 |
|
|
|
64,374 |
|
|
|
2,825 |
|
|
|
17,725 |
|
Pamela D.A. Reeve
|
|
|
200,000 |
|
|
$ |
1,454,000 |
|
|
|
700,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward DeArias
|
|
|
|
|
|
|
|
|
|
|
53,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The values in this column are based on the last reported sale
prices of the common stock on the respective dates of exercise
as reported by The Nasdaq Stock Market (National Market System),
less the respective option exercise prices. |
|
(2) |
The closing sale price for the common stock as reported by The
Nasdaq Stock Market (National Market System) on
December 31, 2004 was $6.04. Value is calculated on the
basis of the difference between the option exercise price and
$6.04, multiplied by the number of shares of common stock
underlying the option. |
|
|
|
Equity Compensation Plans |
The equity compensation plans approved by our stockholders as of
December 31, 2004 were our 1990 Incentive and Nonqualified
Stock Option Plan, our 1996 Incentive and Non-Qualified Stock
Option Plan, our 1996 Employee Stock Purchase Plan and our 2004
Stock Incentive Plan. In addition, we assumed the Coral Systems,
Inc. Stock Option Plan and the Coral Systems, Inc. Amended and
Restated Stock Option Plan in connection with our acquisition of
Coral Systems, Inc. in November 1997, and the Corsair
Communications, Inc. 1997 Stock Incentive Plan and the
Subscriber Computing, Inc. 1997 Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan in
connection with our acquisition of Corsair Communications, Inc.
in February 2001.
The only equity compensation plan that we had adopted as of
December 31, 2004 and which had not been approved by our
stockholders was our 1998 Non-Statutory Stock Plan. Our Board of
Directors adopted the 1998 Nonqualified Stock Option Plan in May
1998. The plan authorized the grant of nonqualified stock
options to directors, officers and other employees of
Lightbridge or its subsidiaries, and also to consultants and
other service providers.
As of December 31, 2004, the only equity compensation plan
under which we could make additional grants or awards was our
2004 Stock Incentive Plan. All of the other plans we have
adopted remain in effect solely with respect to prior grants and
awards that remain outstanding.
14
The following table provides information as of December 31,
2004 regarding securities authorized for issuance under our
equity compensation plans.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares | |
|
|
|
Number of shares remaining | |
|
|
to be issued upon | |
|
Weighted-average | |
|
available for future issuance | |
|
|
exercise of | |
|
exercise price of | |
|
under equity compensation | |
|
|
outstanding options, | |
|
outstanding options, | |
|
plans (excluding shares | |
Plan category |
|
warrants and rights | |
|
warrants and rights | |
|
reflected in column (a)) | |
|
|
| |
|
| |
|
| |
|
|
(a) | |
|
(b) | |
|
(c) | |
Equity compensation plans approved by stockholders
|
|
|
4,194,675 |
(1) |
|
$ |
7.75 |
|
|
|
2,499,857 |
|
Equity compensation plans not approved by stockholders
|
|
|
487,901 |
|
|
|
10.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,682,576 |
|
|
$ |
8.00 |
|
|
|
2,499,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
This table includes shares of common stock issuable pursuant to
stock option plans that we assumed in connection with our
acquisitions of Coral Systems, Inc. in November 1997 and Corsair
Communications, Inc. in February 2001. |
Compensation Committee Report
The following is a report of the Compensation Committee
describing the compensation policies and rationales that the
Compensation Committee used to determine the compensation paid
to our executive officers for the year ended December 31,
2004.
The purpose of the Compensation Committee is to discharge the
responsibilities of our Board of Directors relating to
compensation of our directors and executive officers and related
matters and to review and make recommendations to the Board
regarding employee compensation and benefit plans and programs
generally. In addition, the Compensation Committee is
responsible for administering Lightbridges compensation
programs, including our 1996 Employee Stock Purchase Plan and
2004 Stock Incentive Plan. The Compensation Committee also
performs other duties that the Board of Directors periodically
assigns to it.
The Compensation Committee seeks to achieve three broad goals in
connection with Lightbridges executive compensation
programs and decisions regarding individual compensation:
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structuring executive compensation programs in a manner that
will enable Lightbridge to attract and retain key executives; |
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rewarding executives for Lightbridges achievement of
financial goals or other business objectives, in order to create
a performance-oriented environment; and |
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providing executives with an equity interest in Lightbridge so
as to link a portion of their compensation with the performance
of the common stock. |
Lightbridges executive compensation program generally
consists of three elements: base salary, annual cash bonus, and
a stock-based equity incentive in the form of participation in
Lightbridges stock option plans. The executive officers
are also eligible to participate in other employee benefit
plans, including health and life insurance plans and a 401(k)
retirement plan, on substantially the same terms as other
employees who meet applicable eligibility criteria, subject to
any legal limitations on the amounts that may be contributed or
on the benefits that may be payable under these plans. In
establishing base salaries for executives, the Compensation
Committee monitors salaries at other companies, particularly
those companies in similar markets and companies located in
similar geographic areas as Lightbridge. In addition, for each
executive, the Compensation Committee considers historic salary
levels, work responsibilities and base salary relative to other
executives at Lightbridge. To the extent determined to be
15
appropriate, the Compensation Committee also considers general
economic conditions, Lightbridges financial performance
and each individuals performance.
Lightbridges approach to the Chief Executive
Officers compensation package in fiscal 2004 was to be
competitive with other companies in the Companys markets
and to tie a significant percentage of the Chief Executive
Officers total compensation package to Lightbridges
performance.
During her tenure as Chief Executive Officer, Pamela D.A. Reeve
was party to an employment agreement with Lightbridge that
established her annual base salary during the term of the
agreement, subject to increase (but not decrease) at the
discretion of the Board of Directors. Ms. Reeves base
salary was designed to give her assurance of a base level of
compensation, commensurate with her position and duration of
employment with Lightbridge. Ms. Reeve received a base
salary at an annual rate of $390,000 in 2004, and also received
use of a company car. In August 2004, Ms. Reeve entered
into a separation agreement with Lightbridge pursuant to which
she resigned as an officer and director of Lightbridge, and she
was entitled to receive, as severance payments,
(i) $390,000 as a lump sum, (ii) a continuation of her
then-current base salary on Lightbridges normal payroll
cycle for a period of one year, and (iii) the right to
retain the Lightbridge-owned automobile, which had a total book
value of approximately $33,000, laptop computer and wireless
telephone used by her. The agreement also provided for the
extension of the exercise period of options to purchase shares
of common stock held by her through February 2, 2006, for
up to $50,000 in outplacement services and for certain other
benefits. In determining the terms of Ms. Reeves
separation agreement, the Compensation Committee considered her
length of service to the Company (more than ten
(10) years), separation benefits offered to the
Companys other terminated executive officers, and market
data regarding CEO separation benefits.
In August 2004, Lightbridge entered into an employment agreement
with Robert E. Donahue, pursuant to which he served as
Lightbridges interim President and Chief Executive
Officer. Mr. Donahues employment agreement provided
for the following principal compensation components: (a) a base
salary at the rate of $390,000 per year; (b) a bonus
of up to 100% of base salary, subject to achievement of
management business objectives determined by the Board of
Directors and Mr. Donahue; and (c) an option to
purchase 300,000 shares of Lightbridges common
stock at a price of $3.76 per share, which was the closing
price of Lightbridges common stock on the date of grant.
The option was vested as to 100,000 shares on the date of
grant. The remaining 200,000 shares vest in full on the
fourth anniversary of the date of grant, provided, however, that
the vesting of such remaining shares is subject to acceleration
as follows: (i) in the event that the average closing price
of the common stock (as reported by the Nasdaq National Market)
over any 20 consecutive trading day period beginning on or after
the date of grant and ending on or before the date
Mr. Donahues employment as President and Chief
Executive Officer terminates equals or exceeds $7.50, the option
shall immediately vest as to 100,000 of the remaining shares;
and (ii) in the event that such average closing price
equals or exceeds $10.00, the Stock Option shall immediately
vest in full. The option has a term of 10 years and
terminates 90 days after Mr. Donahue ceases to serve
as President and Chief Executive Officer. In determining the
terms of Mr. Donahues employment agreement, the
Compensation Committee considered the Companys operating
circumstances and challenges and market data regarding CEO
compensation. Mr. Donahues employment agreement was
superseded by a new employment agreement when his period as
interim President and Chief Executive Officer ended in January
2005.
Executive bonuses generally are considered and granted on an
annual basis. Payment of each bonus installment is generally
subject to the continued employment of the bonus recipient.
Lightbridge adopts a target bonus plan for officers shortly
after the beginning of each year, with targets typically based
on financial goals for the year and/or individual goals and
objectives established for an executive in a given year. The
target bonus plan may be modified during the year in certain
circumstances. After Lightbridges financial results for
the year are available, the Compensation Committee evaluates the
performance of the officers and determines the extent to which
bonuses are to be paid from the target bonus plan. In certain
circumstances, the Compensation Committee may also approve
discretionary bonus payments for officers based on
managements recommendations. In accordance with these
procedures, in early 2004 Lightbridge adopted its 2004 target
bonus plan. In early 2005, the Compensation Committee determined
the extent to
16
which bonuses would be paid to officers out of the 2004 target
bonus plan or on a discretionary basis. In February 2005, the
Compensation Committee approved a bonus of $161,417 for
Mr. Donahue for 2004, based on the level of achievement of
the financial and qualitative management business objectives
previously established for him.
Generally, Lightbridges policy with respect to option
grants to executive officers is to create a performance
incentive for such officers by providing them the ability to
acquire or increase a proprietary interest in Lightbridge and
its success. In determining the size of each stock option grant,
the Compensation Committee emphasized the seniority,
responsibilities and performance of the executive, as well as
equity compensation arrangements at other companies and in the
same geographic area. In 2004, options were granted to Robert E.
Donahue, Timothy C. OBrien, Roy Banks, Judith A. Dumont,
Eugene J. DiDonato, Pamela D.A. Reeve and Edward DeArias.
Section 162(m) of the Internal Revenue Code of 1986
generally disallows a tax deduction to public companies for
compensation over $1,000,000 paid to its chief executive officer
and its four other most highly compensated executive officers.
Qualifying performance-based compensation is not subject to the
deduction limit if certain requirements are met. In this regard,
Lightbridge has limited the number of shares subject to stock
options that may be granted to Lightbridge employees in a manner
that complies with the performance-based requirements of
Section 162(m). Based on the compensation awarded to
Lightbridges executive officers, it does not appear that
the Section 162(m) limitation will have a significant
impact on Lightbridge in the near term. While the Compensation
Committee does not currently intend to qualify its executive
bonus awards as a performance-based plan, it will continue to
monitor the impact of Section 162(m) on Lightbridge.
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Rachelle B. Chong, Chair |
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David G. Turner |
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Kevin C. Melia |
Employment, Separation and Change in Control Agreements
During 2004, we were party to an employment agreement with
Pamela D.A. Reeve under which Ms. Reeve was employed as our
Chief Executive Officer. The employment agreement was terminable
at will, but provided for severance payments to Ms. Reeve
if we terminated her employment without cause. In August 2004 we
entered into a separation agreement and release with
Ms. Reeve pursuant to which she resigned as an officer and
director of Lightbridge, and she was entitled to receive, as
severance payments, (i) $390,000 as a lump sum, (ii) a
continuation of her then-current base salary on our normal
payroll cycle for a period of one year and (iii) the right
to retain the Lightbridge-owned automobile, which had a total
book value of approximately $$33,000, laptop computer and
wireless telephone used by her. The agreement also provided for
the extension of the exercise period of options to purchase
shares of common stock held by her through February 2,
2006, for up to $50,000 in outplacement services and for certain
other benefits. During 2004, Ms. Reeves son, Stephen
Reeve, served as one of our employees and received total cash
compensation of approximately $82,000. He also participated in
our employee benefit plans.
In August 2004, we entered into an employment agreement with one
of our directors, Robert E. Donahue, pursuant to which he agreed
to serve as our interim President and Chief Executive Officer.
Mr. Donahues employment agreement provided for him to
receive a base salary at the rate of $390,000 per year, a
bonus of up to 100% of base salary, subject to achievement of
management business objectives determined by the Board of
Directors and Mr. Donahue, and an option to purchase
300,000 shares of our common stock at a price of
$3.76 per share, as described in the Compensation Committee
Report above. The August 2004 Employment Agreement with
Mr. Donahue was superseded by the employment agreement
entered into on January 7, 2005 described below.
On January 7, 2005, we entered into an employment agreement
with Mr. Donahue (the Donahue Agreement) after
his period as interim President and Chief Executive Officer
ended, which provides for
17
payment of an annual base salary of $395,000 and a bonus of up
to 100% of base salary upon achievement of goals and objectives
established annually by Compensation Committee. The Donahue
Agreement also provides that the Company shall nominate and
recommend to its stockholders the election of Mr. Donahue
as a member of the Companys Board of Directors.
The Donahue Agreement provides for two stock option grants, the
first for 250,000 shares, and the second for
150,000 shares. Each stock option has an exercise price of
$6.11 per share. The 250,000 share option vests over
four years: 10% on grant, 3.75% per quarter during year
one, and 6.25% per quarter during years two through four.
The 150,000 share option vests
1/3
of the shares upon achievement of each of $12.50, $15.00 and
$17.50 average share price within four years of grant and during
Mr. Donahues employment by the Company.
The Donahue Agreement provides for payment of twelve
months salary (plus specified benefit continuation costs)
in the event of Mr. Donahues termination without
cause (as defined in the Donahue Agreement), for one years
acceleration of the first option above and for the right to
continue to exercise the first and second option above, to the
extent each is vested, until 90 days following the end of
the salary continuation period. In the event that within two
years following a change of control (as defined in the Donahue
Agreement), Mr. Donahues employment is terminated
without cause or Mr. Donahue terminates his employment for
good reason (as defined in the Donahue Agreement), the Donahue
Agreement provides for the payment of one and half times
Mr. Donahues base salary and one and a half times his
prior years bonus, for acceleration of vesting of any
unvested shares under the first option above and under the
300,000 share option granted to Mr. Donahue in August
2004 and for payment of specified benefit continuation costs for
eighteen months.
During 2004, we were party to an employment agreement with
Harlan B. Plumley, under which we agreed to employ
Mr. Plumley as our Vice President, Finance &
Administration, Chief Financial Officer and Treasurer. The
employment agreement was terminable at will, but provided for
severance payments to Mr. Plumley if we terminated his
employment without cause. In May 2004, we entered into a
separation agreement and release with Mr. Plumley pursuant
to which he received a severance payment of $233,000 and was
permitted to retain the Lightbridge-owned laptop computer used
by him. The agreement also provided for the extension of the
exercise period of options to purchase shares of common stock
held by him through December 31, 2004, for up to $25,000 in
outplacement services and for certain other benefits.
On November 8, 2004 we entered into a separation agreement
and release with Edward DeArias, who was then serving as one of
our executive officers. Under Mr. DeAriass agreement,
his services as Vice President, Worldwide Sales and Marketing
terminated on October 31, 2004 and he was entitled to
receive, as severance payments, a continuation of his
then-current base salary through October 31, 2005, subject
to reduction by the amount of any income he received from new
employment during the salary continuation period. During 2004,
we made payments totaling approximately $58,000 to
Mr. DeArias under his severance agreement. The agreement
also provided for the extension of the exercise period of
options to purchase shares of common stock held by him through
January 29, 2005, for up to $10,000 in outplacement
services and for certain other benefits.
On January 7, 2005, we entered into a Separation Agreement
and Release with Judith Dumont, its former President of
Telecommunications Decisioning Services. The Agreement provides
for (i) the termination of Ms. Dumonts
employment effective January 31, 2005, (ii) the
payment of Ms. Dumonts base salary for a period of up
to eleven (11) months after the termination of her
employment (iii) outplacement assistance of up to $10,000;
(iv) the extension of the time to exercise any vested
options through May 1, 2005; and (v) certain other
benefits and restrictions as set forth in the Agreement.
On April 27, 2005, the Compensation Committee of the Board
of Directors authorized us to enter into agreements with
Messrs. Banks, DiDonato and OBrien providing, in the
event of a change in control and termination of employment
without good reason, for the payment of one times base salary
and one times prior years bonus. These agreements are
expected to be finalized and executed in the second quarter of
2005.
18
INFORMATION ABOUT COMMON STOCK OWNERSHIP AND PERFORMANCE
Stock Owned by Directors, Executive Officers and
Greater-Than-5% Stockholders
The following table sets forth information as of April 22,
2005 with respect to the beneficial ownership of our common
stock by (i) each person that we know owns of record or
beneficially more than 5% of the outstanding common stock,
(ii) the persons named in the Summary Compensation Table,
(iii) each director, including each nominee for
re-election, and (iv) all current executive officers and
directors as a group. As of April 22, 2005, there were
26,596,867 shares of common stock outstanding.
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Number of | |
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Total Shares | |
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Shares | |
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Right to | |
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Beneficially | |
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Names and Addresses of Beneficial Holders(1) |
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Owned(2) | |
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Acquire(3) | |
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Owned | |
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Percent | |
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Wells Fargo & Company(4)
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420 Montgomery Street
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San Francisco, CA 94104
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Wells Capital Management Incorporated
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Wells Fargo Funds Management, LLC
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3,742,070 |
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3,742,070 |
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14.07 |
% |
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525 Market Street
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San Francisco, CA 94105
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Sidus Investment Partners, L.P.
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Sidus Investments, Ltd.
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Sidus Investment Management, LLC
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Al Tobia
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Mike Barone(5)
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1,945,000 |
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1,945,000 |
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7.31 |
% |
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767 Third Avenue, 15th Floor
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New York, NY 10017
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Conus Partners, Inc.(6)
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Andrew Zacks
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1,489,369 |
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1,489,369 |
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5.60 |
% |
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One Rockefeller Plaza, 19th Floor
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New York, NY 10020
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Pamela D.A. Reeve
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36,826 |
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700,000 |
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736,826 |
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2.70 |
% |
Harlan B. Plumley
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* |
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Judith A. Dumont
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99,161 |
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99,161 |
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* |
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Eugene J. DiDonato
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88,340 |
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88,340 |
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* |
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Edward DeArias
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* |
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Timothy C. OBrien
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32,500 |
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32,500 |
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Roy Banks
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36,312 |
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36,312 |
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Rachelle B. Chong
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8,684 |
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50,219 |
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58,903 |
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* |
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Andrew G. Mills
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17,500 |
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53,333 |
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70,833 |
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* |
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Kevin C. Melia
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23,900 |
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16,665 |
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40,565 |
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* |
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Gary Haroian
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* |
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Robert E. Donahue
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142,708 |
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142,708 |
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* |
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David G. Turner
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11,850 |
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8,333 |
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20,183 |
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* |
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All current directors and executive officers as a group
(9 persons)
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61,934 |
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428,410 |
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490,344 |
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1.81 |
% |
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* |
Less than one percent. |
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(1) |
The address of our executive officers and directors is in care
of Lightbridge, Inc. at 30 Corporate Drive, Burlington,
Massachusetts 01803. |
19
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(2) |
Unless otherwise noted, each person or group identified
possesses sole voting and investment power with respect to the
shares listed, subject to community property laws where
applicable. Excludes shares that may be acquired through the
exercise of stock options or other rights. The shares shown as
beneficially owned by Messrs. Plumley and DeArias and
Madams. Reeve and Dumont are based on information available to
the Company or provided by the holder. |
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(3) |
Represents shares that can be acquired through the exercise of
stock options or other rights through June 21, 2005. |
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(4) |
The Number of Shares Owned is based on information
contained in a report on Schedule 13G, filed with the
Securities and Exchange Commission on February 22, 2005.
The report states that |
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Wells Fargo & Company has sole voting power with
respect to 3,728,700 shares and sole dispositive power with
respect to 3,525,075 shares |
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Wells Fargo Capital Management, LLC has sole voting power with
respect to 834,630 shares and sole dispositive power with
respect to 3,525,075 shares |
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Wells Fargo Funds Management, LLC has sole voting power with
respect to 2,818,070 shares. |
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(5) |
The Number of Shares Owned is based on information
contained in a report on Schedule 13G, filed with the
Securities and Exchange Commission on February 11, 2005.
The report states that Sidus Investment Partners, L.P., Sidus
Investments, Ltd., Sidus Investment Management, LLC, Al Tobia
and Mike Barone each have shared voting power and shared
dispositive power with respect to the shares indicated. |
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(6) |
The Number of Shares Owned is based on information
contained in an amendment to a report on Schedule 13G,
filed with the Securities and Exchange Commission on
February 11, 2005. The report states that Conus Partners,
Inc. and Andrew Zacks each have shared voting power and shared
dispositive power with respect to the shares indicated. |
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors, and persons who
own more than ten percent of a registered class of our equity
securities, to report to the Securities and Exchange Commission
their stock ownership at the time they become an executive
officer, director or ten-percent stockholder and any subsequent
changes in ownership. These executive officers, directors and
ten-percent stockholders are also required by SEC rules to
furnish us with copies of all Section 16(a) reports they
file. Based solely on our review of the copies of these reports,
we believe that all Section 16(a) reports applicable to our
executive officers, directors and ten-percent shareholders
during the fiscal year ended December 31, 2004 were filed
on a timely basis.
20
Performance Graph
The following graph compares the cumulative total return to
stockholders of our common stock for the period from
December 31, 1999 to December 31, 2004, to the
cumulative total return of the Nasdaq 100 Stock Market Index and
the Nasdaq Computer & Data Processing Services Index
for the same period.
COMPARISON OF 60 MONTH CUMULATIVE RETURN
Among Lightbridge, Inc., The NASDAQ Stock Market and the
Nasdaq Computer
& Data Processing Services Index
INFORMATION ABOUT OUR AUDIT COMMITTEE AND
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Committee Report
The following is a report of the Audit Committee describing
the policies and procedures that it employed in reviewing
Lightbridges financial statements for the year ended
December 31, 2004 and related matters.
In accordance with its written charter, the primary role of the
Audit Committee is to assist our Board of Directors in
fulfilling its oversight responsibilities by reviewing the
financial information proposed to be provided to shareholders
and others, the internal control systems and disclosure controls
established by management and the Board, and the audit process
and the independent auditors qualifications, independence
and performance.
Management is responsible for the internal controls and
preparation of Lightbridges financial statements.
Lightbridges independent registered public accounting
firm, Deloitte & Touche LLP, is responsible for
performing an audit of its consolidated financial statements in
accordance with the standards of the Public Company Accounting
Oversight Board (United States) (PCAOB) and
issuing an opinion on the financial statements. The Audit
Committee has met and held discussions with management and the
independent registered public accounting firm regarding
Lightbridges internal controls, financial reporting
practices and audit process.
21
The Audit Committee has reviewed and discussed
Lightbridges audited consolidated financial statements for
the fiscal year ended December 31, 2004 with management and
the independent registered public accounting firm. As part of
this review, the Audit Committee discussed with
Deloitte & Touche LLP the communications required by
the standards of the PCAOB, including those described in
Statement on Auditing Standards No. 61, Communication
with Audit Committees.
The Audit Committee has received from Deloitte & Touche
LLP a written statement describing all relationships between
that firm and Lightbridge that might bear on the independent
registered public accounting firms independence,
consistent with Independence Standards Board Standard
No. 1, Independence Discussions with Audit
Committees. The Audit Committee has discussed the written
statement with the independent registered public accounting
firm, and has considered whether the independent registered
public accounting firms provision of consultation and
other non-audit services to Lightbridge is compatible with
maintaining the registered public accounting firms
independence.
Based on the above-mentioned reviews and discussions with
management and the independent registered public accounting
firm, the Audit Committee recommended to the Board of Directors
that Lightbridges audited consolidated financial
statements be included in its Annual Report on Form 10-K
for the fiscal year ended December 31, 2004, for filing
with the Securities and Exchange Commission.
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Gary Haroian, Chair |
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Kevin C. Melia |
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Andrew G. Mills |
Our Independent Registered Public Accounting Firm
Deloitte & Touche LLP has been selected by the Audit
Committee of the Board of Directors as the independent
registered public accounting firm to audit our consolidated
financial statements for the year ending December 31, 2005.
Deloitte & Touche LLP also served as our independent
registered public accounting firm in 2004. We expect that
representatives of Deloitte & Touche will attend the
meeting, will have an opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate
questions.
Fees for Professional Services
The following is a summary of the fees for professional services
billed or expected to be billed by Deloitte & Touche
LLP for the fiscal years ended December 31, 2004 and
December 31, 2003:
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Fees | |
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Fee category |
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2004 | |
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2003 | |
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Audit Fees
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$ |
889,000 |
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$ |
290,000 |
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Audit-Related Fees
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86,000 |
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15,000 |
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Tax Fees
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161,000 |
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70,000 |
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All Other Fees
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87,000 |
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48,000 |
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Total Fees
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$ |
1,223,000 |
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$ |
423,000 |
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Audit Fees. Audit Fees represent fees for professional
services performed by Deloitte & Touche LLP for the
audit of our annual financial statements and the review of our
quarterly financial statements, as well as services that are
normally provided in connection with statutory and regulatory
filings or engagements and related expenses. In 2004, audit fees
also include fees for professional services performed by
Deloitte & Touche LLP for the attestation of
managements report on the effectiveness of internal
controls over financial reporting and a three-year audit of
Authorize.Net Corporations financial statements in
conjunction with regulatory filings related to our acquisition
of Authorize.Net Corporation.
22
Audit-Related Fees. Audit-Related Fees represent fees for
assurance and related services performed by Deloitte &
Touche LLP that are reasonably related to the performance of the
audit or review of our financial statements, including
consultation on accounting standards or accounting for
transactions.
Tax Fees. Tax Fees represent fees for professional
services performed by Deloitte & Touche LLP with
respect to tax compliance, tax advice and tax planning and
related expenses. These services include assistance with the
preparation of federal, state, and foreign income tax returns.
All Other Fees. All Other Fees represent fees for
products and services provided by Deloitte & Touche
LLP, other than those disclosed above. Other fees consist of
fees for audits of and consultation services related to employee
benefit plans and services for due diligence and other
consultation services related to mergers and acquisitions.
Pre-Approval Policies and Procedures
At present, our Audit Committee approves each engagement for
audit or non-audit services before we engage Deloitte &
Touche LLP to provide those services. All audit and non-audit
services require pre-approval by the Audit Committee.
Our Audit Committee has not established any pre-approval
policies or procedures that would allow our management to engage
Deloitte & Touche LLP to provide any specified services
with only an obligation to notify the Audit Committee of the
engagement for those services. None of the services provided by
Deloitte & Touche LLP for fiscal 2004 was obtained in
reliance on the waiver of the pre-approval requirement afforded
in SEC regulations.
Whistleblower Procedures
In our Code of Ethics, our Audit Committee has adopted
procedures for the treatment of complaints regarding accounting,
internal accounting controls or auditing matters, including
procedures for the confidential and anonymous submission by our
Directors, officers and employees of concerns regarding
questionable accounting, internal accounting controls or
auditing matters.
OTHER MATTERS
Other Business
Neither we nor our Board of Directors intends to propose any
matters of business at the meeting other than those described in
this proxy statement. Neither we nor our Board knows of any
matters to be proposed by others at the meeting.
Stockholder Proposals for 2006 Annual Meeting
A stockholder who intends to present a proposal at the 2006
Annual Meeting of Stockholders for inclusion in our 2006 proxy
statement must submit the proposal by January 2, 2006. In
order for the proposal to be included in the proxy statement,
the stockholder submitting the proposal must meet certain
eligibility standards and must comply with certain procedures
established by the Securities and Exchange Commission, and the
proposal must comply with the requirements as to form and
substance established by applicable laws and regulations. The
proposal must be mailed to our Secretary at our address set
forth on the notice of meeting appearing on the cover of this
proxy statement.
In addition, in accordance with our By-Laws, a stockholder
wishing to bring an item of business before the 2006 Annual
Meeting of Stockholders must deliver notice of the item of
business to us at our offices no later than March 25, 2006,
even if the item is not to be included in our proxy statement.
23
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
LIGHTBRIDGE, INC.
Proof #2
Monday June 20, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach along perforated line and mail in the envelope provided. â
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF THE TWO NOMINEES
FOR DIRECTOR.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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1. Election of Directors: |
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If this proxy is properly executed and returned, the shares
represented thereby will be voted. If a choice is specified with
respect to the matters to
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NOMINEES: |
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be acted upon, the shares will be voted
upon the matters in accordance with the specifications made. IN
THE ABSENCE OF ANY SPECIFICATION, THE
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FOR ALL NOMINEES
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¡
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Robert E. Donahue Kevin C. Melia |
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SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR NAMED
ON THIS PROXY.
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WITHHOLD AUTHORITY |
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PLEASE MARK, SIGN, DATE AND RETURN CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. |
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FOR ALL NOMINEES |
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FOR ALL EXCEPT
(See instructions below)
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT and fill in the circle next to each nominee
you wish to withhold, as shown here:
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. |
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date: |
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Note: |
Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |
Proof #3
LIGHTBRIDGE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Special Meeting in
Lieu of 2005 Annual Meeting of Stockholders - June 20, 2005
The undersigned stockholder
of Lightbridge, Inc. (the Company) hereby appoints
Timothy C. OBrien and Eugene J. DiDonato and each or any of them,
proxies, with
full power of substitution to each and to each substitute appointed
pursuant to such power,
of the undersigned to vote all shares of common stock of the Company
that the undersigned may be
entitled to vote at the Special Meeting in Lieu of 2005 Annual Meeting of Stockholders of the
Company to be held on Monday, June 20, 2005, and at any and all adjournments thereof
(the Meeting), with all powers the undersigned would possess
if personally present.
The proxies are authorized to vote as indicated on the reverse side upon the matters set forth
on the reverse side and in their discretion upon all other matters that may properly come before
the Meeting. The undersigned hereby acknowledges receipt of a copy of the accompanying Notice of
Special Meeting in Lieu of 2005 Annual Meeting of Stockholders and Proxy Statement for the Meeting
and hereby revokes all proxies, if any, heretofore given by the undersigned to others for said
Meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)