UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a-101)

Information Required in Proxy Statement

Schedule 14A Information

 

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

 

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

þ  Definitive Proxy Statement

 

o  Definitive Additional Materials

 

o  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)

 

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þ  No fee required.

 

o  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIGHTBRIDGE, INC.

30 Corporate Drive

Burlington, Massachusetts 01803

 

NOTICE OF SPECIAL MEETING IN LIEU OF 2006 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholder:

 

We invite you to attend our Special Meeting in Lieu of 2006 Annual Meeting of Stockholders, which is being held as follows:

 

 

At the meeting, we will ask you and our other stockholders to:

 

 

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 May 3, 2006 may vote at the meeting.

 

By order of the Board of Directors,

 

Eugene J. DiDonato
Secretary

 

May 15, 2006

 

PROXY STATEMENT
FOR THE
LIGHTBRIDGE, INC.
SPECIAL MEETING IN LIEU OF
2006 ANNUAL MEETING OF STOCKHOLDERS

 

Table of Contents

 

 

Lightbridge, Inc.’s Special Meeting in Lieu of 2006 Annual Meeting of Stockholders will be held at 9:00 a.m. on Thursday, June 29, 2006 at Lightbridge’s 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 I directors, each for a three-year term, and any other business properly presented at the meeting.

 

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).

 

 

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 15, 2006. In this mailing, we are including a copy of our 2005 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2005 (excluding exhibits), as filed with the Securities and Exchange Commission.

 

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 May 3, 2006. You may vote your shares at the meeting in person or by proxy.

 

 

If you vote by proxy, you may revoke your proxy at any time before it is exercised by taking one of the following actions:

 

 

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.

 

At the close of business on April 21, 2006, 27,210,202 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.

 

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 2005 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 2005 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 2005 Annual Report by sending a written request to Lightbridge, Inc. Investor Relations, 30 Corporate Drive, Burlington, Massachusetts 01803, by calling our Investor Relations department at 781-359-4000 or by sending an e-mail to lricci@lightbridge.com. 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.

 

The first proposal on the agenda for the meeting is the election of two people to serve as Class I directors, for a three-year term beginning at the meeting and ending at our 2009 annual meeting of stockholders. Our Board of Directors currently has six members and is divided into three classes. In connection with the meeting, our Board reclassified Mr. Mills from a Class II Director to a Class I Director in order to make the classes equal as provided in our By-Laws. We currently have two Class I directors, two 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.

 

The nominees for election as Directors are Gary E. Haroian and Andrew G. Mills for re-election as Class I directors. Brief biographies of Messrs. Haroian and Mills as of April 21, 2006 follow. You will find information about each nominee’s holdings of common stock on page 17.

 

If for any reason Mr. Haroian or Mr. Mills becomes unavailable for election, the persons designated in the proxy card may vote the shares represented by proxy for the election of a substitute. Mr. Haroian and Mr. Mills 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 I directors.

 

Our Board of Directors recommends that you vote FOR the election of Messrs. Haroian and Mills as Class I Directors.

 

The Class II and Class III directors will continue in office following the meeting, and their terms will expire in 2007 (Class II) and 2008 (Class III). Brief biographies of these directors, as of April 21, 2006, follow. You will find information about their holdings of common stock on page 17.

 

 

 

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.

 

Our Board of Directors held twelve meetings and acted by unanimous written consent six times during the year ended December 31, 2005. 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 2005.

 

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. Two (2) of our directors at the time, Mr. Donahue and Mr. Melia, attended the Special Meeting in Lieu of 2005 Annual Meeting of Stockholders.

 

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 or by sending an e-mail to lricci@lightbridge.com.

 

The membership of each committee of our Board is as follows:

 

 

Our Audit Committee is currently composed of Messrs. Haroian, Melia and Mills. The Audit Committee met 16 times and acted by unanimous written consent two times during the year ended December 31, 2005. 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 “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., Concord Communications, Inc. and Stratus Technologies, Inc. and currently serves on the Audit Committees of Network Engines, Inc., Aspen Technologies, Inc., Embarcadero Technologies, Inc. and Phase Forward, 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 Committees of Iona Technologies PLC, Radisys Corporation and Manugistics Group, Inc.

 

The current members of our Nominating and Governance Committee are Ms. Chong and Messrs. Melia and Mills. Our Nominating and Governance Committee’s 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 five meetings and acted by unanimous written consent once during the year ended December 31, 2005.

 

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 candidate’s 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 candidate’s 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:

 

 

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); provided, however, that if our annual meeting is to be held on a date prior to such specified date, 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.

 

Mr. Donahue was elected as a director pursuant to the terms of the Donahue Agreement (defined below), under which the Company has agreed to nominate him and recommend him for election as a director during the term of his employment.

 

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 thirteen times and acted by unanimous written consent seven times during the year ended December 31, 2005.

 

None of the members of the Compensation Committee during the year ended December 31, 2005 has ever been one of our employees. None of our executive officers serves as a member of the board of 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.

 

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.

 

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, or by sending an e-mail to lricci@lightbridge.com.

 

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 for the additional services, duties and responsibilities of the 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, 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:

 

 

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 National Market. In accordance with the foregoing provisions, during the year ended December 31, 2005, Mr. Haroian received an option to purchase 25,000 shares of common stock at a price of $6.17 per share in connection with his election to the Board of Directors in February 2005, and Ms. Chong and Messrs. Melia and Mills each received options to purchase 10,000 shares of common stock at a price of $6.55 per share. Directors who are our employees are not entitled to receive any separate compensation for serving as directors.

Option Grants in 2005

 

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, 2005.

 

Option Grants in Last Fiscal Year

 

 

 

 

Aggregated Option Exercises in 2005 and Option Values at December 31, 2005

 

The following table sets forth information as to options exercised during the year ended December 31, 2005, 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

 

 

 

Equity Compensation Plans

 

The equity compensation plans approved by our stockholders as of December 31, 2005 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, 2005 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, 2005, 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.

 

The following table provides information as of December 31, 2005 regarding securities authorized for issuance under our equity compensation plans.

 

Equity Compensation Plan Information

 

 

 

 

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, 2005.

 

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 Lightbridge’s compensation programs, including our 1996 Employee Stock Purchase Plan and 2004 Stock Incentive Plan. The Company’s 1996 Employee Stock Purchase Plan (“ESPP”) was terminated upon expiration of the offering period ended January 31, 2006. The Company decided to terminate the ESPP because of changes in accounting treatment

reducing the discount at which shares could be purchased by employees without the Company incurring compensation expense. 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 Lightbridge’s executive compensation programs and decisions regarding individual compensation:

 

 

Lightbridge’s 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 Lightbridge’s 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 appropriate, the Compensation Committee also considers general economic conditions, Lightbridge’s financial performance and each individual’s performance.

 

Lightbridge’s approach to the Chief Executive Officer’s compensation package in fiscal 2005 was to be competitive with other companies in the Company’s markets and to tie a significant percentage of the Chief Executive Officer’s total compensation package to Lightbridge’s performance.

 

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 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 Company’s 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 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 option vests one-third of the shares upon the achievement of each of a $12.50, $15.00 and $17.50 average closing price of the Company’s common stock as reported by The NASDAQ National Market over any 20 consecutive trading day period within four years of the date of grant and during Mr. Donahue’s employment by the Company.

 

The Donahue Agreement provides for payment of twelve months’ salary (plus specified benefit continuation costs) in the event of Mr. Donahue’s termination without cause (as defined in the Donahue Agreement), for one year’s acceleration of the first stock option grant above and for the right to continue to exercise the first and second stock option grants 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. Donahue’s 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. Donahue’s base salary and one and a half times his prior year’s bonus, for acceleration of vesting of any unvested shares under the first stock option grant 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.

 

In determining the terms of the Donahue Agreement, the Compensation Committee considered the qualifications of other candidates, the performance of Mr. Donahue while acting as interim President and Chief Executive Officer, the Company’s operating circumstances and challenges and market data regarding CEO compensation. The Donahue Agreement superseded a prior employment agreement during Mr. Donahue’s tenure as interim President and Chief Executive Officer, which ended in January 2005.

 

Executive bonuses generally are considered and granted on an annual basis. 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 Lightbridge’s financial results for the year are available, the Compensation Committee evaluates or reviews the evaluation of 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 management’s recommendations. In accordance with these procedures, in early 2005 Lightbridge adopted its 2005 target bonus plan. In early 2006, the Compensation Committee determined the extent to which bonuses would be paid to officers out of the 2005 target bonus plan. In January 2006, the Compensation Committee approved a bonus of $395,000 for Mr. Donahue for 2005, based on the level of achievement of the financial and qualitative management business objectives previously established for him.

 

Generally, Lightbridge’s 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 2005, options were granted to Robert E. Donahue, Timothy C. O’Brien, Roy Banks, and Eugene J. DiDonato.

 

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 Lightbridge’s 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.

 

Rachelle B. Chong, Chair
David G. Turner
Kevin C. Melia

 

In August 2004, we entered into an employment agreement with Robert E. Donahue, pursuant to which he served as Lightbridge’s interim President and Chief Executive Officer. Mr. Donahue’s 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 Lightbridge’s common stock at a price of $3.76 per share, which was the closing price of Lightbridge’s 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. Donahue’s 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.

 

On January 7, 2005, we entered into the Donahue Agreement described above after Mr. Donahue’s period as interim President and Chief Executive Officer ended.

 

On May 23, 2005, the Company entered into executive retention agreements with Messrs. Banks, DiDonato and O’Brien. The retention agreements provide that, in the event that within two (2) years following a change of control (as defined in the retention agreement), the executive’s employment is terminated without cause, or the executive terminates his employment for good reason (as defined in the retention agreement), then the executive shall be entitled to the payment of an amount equal to the sum of (a) one times the executive’s base salary plus (b) an amount equal to one times the executive’s prior year’s bonus. The executive is also entitled to acceleration of vesting of any unvested shares under any option granted to the executive, and to the payment of specified benefit continuation costs for a period of 12 months.

 

 

The following table sets forth information as of April 21, 2006 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 21, 2006, there were 27,210,202 shares of common stock outstanding.

 

 

 

 

 

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, 2005 were filed on a timely basis.

 

The following graph compares the cumulative total return to stockholders of our common stock for the period from December 31, 2000 to December 31, 2005, 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

 

 

The following is a report of the Audit Committee describing the policies and procedures that it employed in reviewing Lightbridge’s financial statements for the year ended December 31, 2005 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 Lightbridge’s financial statements. Lightbridge’s independent registered public accounting firm, Deloitte & Touche LLP, is responsible for performing an integrated audit of its consolidated financial statements and management’s assessment of the effectiveness of its internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing opinions on the financial statements and management’s assessment of the effectiveness of its internal controls over financial reporting. The Audit Committee has met and held discussions with management and the independent registered public accounting firm regarding Lightbridge’s internal controls, financial reporting practices and audit process.

The Audit Committee has reviewed and discussed Lightbridge’s audited consolidated financial statements and the Company’s internal controls over financial reporting for the fiscal year ended December 31, 2005 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 firm’s 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 firm’s provision of consultation and other non-audit services to Lightbridge is compatible with maintaining the registered public accounting firm’s 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 Lightbridge’s audited consolidated financial statements and assertions on internal controls over financial reporting be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for filing with the Securities and Exchange Commission.

 

Gary E. Haroian, Chair
Kevin C. Melia
Andrew G. Mills

 

Deloitte & Touche LLP has been selected by the Audit Committee of the Board of Directors as the independent registered public accounting firm to perform an integrated audit of our consolidated financial statements and internal controls over financial reporting for the year ending December 31, 2006. Deloitte & Touche LLP also served as our independent registered public accounting firm in 2005. We expect that representatives of Deloitte & Touche LLP 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.

 

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, 2005 and December 31, 2004:

 

 

Audit Fees.  Audit Fees represent fees for professional services performed by Deloitte & Touche LLP for the integrated audit of our annual financial statements and the Company’s internal controls over financial reporting 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 2005, audit fees included fees incurred in connection with the previously disclosed restatement of our 2004 annual financial statements and the filing of a related amendment to our Annual Report on Form 10-K for the year ended December 31, 2004.

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. Audited-related 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.

 

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.

 

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 such 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 2005 was obtained in reliance on the waiver of the pre-approval requirement afforded in SEC regulations.

 

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.

 

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.

 

A stockholder who intends to present a proposal at the 2007 Annual Meeting of Stockholders for inclusion in our 2007 proxy statement must submit the proposal by January 5, 2007. 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 2007 Annual Meeting of Stockholders must deliver notice of the item of business to us at our offices no later than March 24, 2007, even if the item is not to be included in our proxy statement.

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   þ

1.  Election of Directors:

If this proxy is properly executed and returned, the shares represented hereby will be voted. If a choice is specified with respect to the matters to

NOMINEES:

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

¡ ¡

Gary E. Haroian Andrew G. Mills

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

PLEASE MARK, SIGN, DATE AND RETURN CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

FOR ALL NOMINEES

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FOR ALL EXCEPT (See instructions below)

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:   l

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

Date:

Signature of Stockholder

Date:

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.

LIGHTBRIDGE, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

Special Meeting in Lieu of 2006 Annual Meeting of Stockholders — June 29, 2006

     The undersigned stockholder of Lightbridge, Inc. (the “Company”) hereby appoints John D. Patterson, Jr., Timothy C. O’Brien 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 2006 Annual Meeting of Stockholders of the Company to be held on Thursday, June 29, 2006, 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 2006 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.