UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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|_| Soliciting Material Pursuant to ss.240.14a-12
SUTRON CORPORATION
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(Name of Registrant as Specified In Its Charter)
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Page 1
SUTRON CORPORATION
21300 RIDGETOP CIRCLE
STERLING, VIRGINIA 20166
(703) 406-2800
April 19, 2007
Dear Sutron Shareholder:
You are cordially invited to our Annual Meeting of Shareholders on
Wednesday, May 16, 2007, beginning at 1:30 p.m., local time, at Sutron's
corporate headquarters, 21300 Ridgetop Circle, Sterling, Virginia. The enclosed
notice of annual meeting sets forth the proposals that will be presented at the
meeting, which are described in more detail in the enclosed proxy statement. The
Board of Directors recommends that shareholders vote "FOR" these proposals.
It is important that you use this opportunity to take part in Sutron's
affairs by voting on the business to come before this meeting. Whether or not
you expect to attend the meeting, please complete, date, sign and promptly
return the accompanying proxy card in the enclosed postage-paid envelope so that
your shares may be represented at the meeting. Returning the Proxy card does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you there.
Very truly yours,
/s/ Raul S. McQuivey
---------------------------
Raul S. McQuivey
Chairman of the Board, President and
Chief Executive Officer
Page 2
SUTRON CORPORATION
21300 RIDGETOP CIRCLE
STERLING, VIRGINIA 20166
(703) 406-2800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2007
TO THE HOLDERS OF COMMON STOCK OF SUTRON CORPORATION,
Notice is hereby given that the Annual Meeting of Shareholders of
Sutron Corporation will be held at 21300 Ridgetop Circle, Sterling, Virginia, on
Wednesday, May 16, 2007, at 1:30 p.m., local time, for the following purposes:
1. To elect five directors to hold office until the next annual
election of directors and until their successors shall have been
duly elected and qualified;
2. To ratify the appointment of Thompson, Greenspon & Co., P.C. as
independent accountants for fiscal year 2007; and
3. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Shareholders of record at the close of business on Tuesday, March 27,
2007, are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, we urge you to complete,
sign, date and return the enclosed proxy card in the enclosed envelope as
promptly as possible. If you attend the meeting, you may vote in person even if
you have returned a proxy.
By Order of the Board of Directors,
/s/ Thomas N. Keefer
--------------------------
Thomas N. Keefer
Secretary
April 19, 2007
Page 3
SUTRON CORPORATION
21300 RIDGETOP CIRCLE
STERLING, VIRGINIA 20166
(703) 406-2800
PROXY STATEMENT
The enclosed Proxy is solicited on behalf of the Board of Directors of
Sutron Corporation (the "Company") for use at its Annual Meeting of Shareholders
to be held on Wednesday, May 16, 2007, at 1:30 p.m., local time, and at any
adjournments thereof. The purposes of the meeting are set forth herein and in
the accompanying Notice of Annual Meeting of Shareholders. The meeting will be
held at the principal executive offices of the Company, 21300 Ridgetop Circle,
Sterling, Virginia 20166. The approximate date on which this Proxy Statement and
the Proxy Card were first sent to shareholders of the Company is April 19, 2007.
After the enclosed Proxy Card is duly executed and returned, a
shareholder may revoke the proxy at any time by written request that is received
by the Secretary of the Company prior to the meeting or by voting in person at
the meeting or by executing a later dated Proxy Card. The Proxy Card is in
ballot form so that a specification may be made to vote for, or to withhold
authority to vote for, the nominees for election as directors, or any of them,
and to indicate whether the shareholder wishes to vote for or against or abstain
from voting upon the other proposal.
RECORD DATE AND VOTING RIGHTS
Shareholders of record at the close of business on Tuesday, March 27,
2007 are entitled to notice of and to vote at the meeting. On March 27, 2007,
the Company had outstanding and entitled to vote 4,512,884 shares of Common
Stock. Each share of Common Stock entitles the holder to one vote on each matter
to be voted upon at the meeting.
The By-laws of the Company require that the holders of a majority of
the outstanding shares of the Company's Common Stock entitled to vote at the
Annual Meeting be present in person or represented by proxy in order for a
quorum to exist for the transaction of business at that meeting. Abstentions and
"broker non-votes" (which occur if a broker or other nominee does not have
discretionary authority and has not received voting instructions from the
beneficial owner with respect to the particular item) are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business. Assuming that a quorum is present for the Annual Meeting, the five
nominees for director who receive the highest number of votes cast will be
elected. Abstentions and broker non-votes will have no effect on the outcome of
the election of directors.
The ratification of the appointment of the independent public
accountants must be approved by the affirmative vote of a majority of the shares
present in person or by proxy at the Annual Meeting and entitled to vote
thereon. For purposes of this Proposal, abstentions are counted for purposes of
calculating shares entitled to vote but are not counted as shares voting and
therefore have the effect of a vote against such Proposal. For purposes of this
Proposal, broker non-votes are not counted as shares entitled to vote and
therefore have no effect with respect to such Proposal.
Any Proxy Card which is returned by a Shareholder properly completed
and which is not revoked will be voted at the Annual Meeting in the manner
specified therein. Unless contrary instructions are given, the persons
designated as proxy holders in the accompanying Proxy Card (or their
substitutes) will
Page 4
vote "FOR" the election of the Board of Directors' nominees and "FOR" the
ratification of the appointment of Thompson, Greenspon & Co., P.C. as
independent accountants, and in the proxy holders' discretion with regard to all
other matters properly brought before the meeting. Any unmarked proxies,
including those submitted by brokers (other than broker non-votes) or nominees
will be voted in favor of the nominees for the Board of Directors and other
proposals, as indicated in the accompanying Proxy Card. WE URGE YOU TO VOTE YOUR
SHARES WITHOUT DELAY.
The Company will bear the cost of preparing this Proxy Statement and
the other costs of soliciting Proxies for the 2007 Annual Shareholders Meeting.
In addition to solicitation by mail, solicitations may be made by personal
interview or telephone by officers and employees of the Company, acting without
additional compensation. Sutron anticipates that banks, brokerage houses, and
other custodians, nominees, and fiduciaries will forward this material to
beneficial owners of shares of Common Stock entitled to vote at the Annual
Meeting, and such persons will be reimbursed by Sutron for the out-of-pocket
expenses incurred by them.
ELECTION OF DIRECTORS
The nominees for directors are Dr. Raul S. McQuivey, Daniel W. Farrell,
Robert F. Roberts, Jr., Andrew D. Lipman and Thomas R. Porter. All nominees are
presently directors of the Company. Mr. Roberts, Mr. Lipman and Mr. Porter are
non-employees of the Company and are independent as defined by Nasdaq listing
standards and therefore result in a majority of the Company's Board of Directors
being independent in accordance with Nasdaq listing standards.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THE ELECTION OF THE
NOMINEES TO SERVE AS DIRECTORS OF SUTRON UNTIL THE FISCAL YEAR 2008 ANNUAL
MEETING OF SHAREHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND
QUALIFIED OR UNTIL THE DIRECTOR'S EARLIER DEATH, RESIGNATION OR REMOVAL. In the
event that any nominees for directors should be unavailable to serve, which is
not anticipated, the Board of Directors, in its discretion, may designate
substitute nominees, in which event Proxies received by the Board of Directors
will be voted for such substitute nominees.
The five nominees for director who receive the highest number of votes
cast by the holders of shares entitled to vote in the election of directors at
the Annual Meeting will be elected. All duly submitted and unrevoked Proxy Cards
will be voted "FOR" the nominees selected by the Board of Directors except where
authorization to vote is withheld.
NOMINEES FOR DIRECTORS
Set forth below, for each nominee, are his name and age, his positions
with the Company, his principal occupation and business experience during at
least the past five years and the year of the commencement of his term as a
director of the Company:
Raul S. McQuivey, Ph.D., age 68, has served as a director since 1976
and as President, Chief Executive Officer, and Chairman of the Board of
Directors since January 1989. Dr. McQuivey served as Executive Vice President
from September 1980 to January 1989, Treasurer of the Company from March 1983 to
March 1984 and as Secretary from March 1983 until September 1989. Dr. McQuivey
earned a B.S. in Civil Engineering from Utah State University in 1961, an M.S.
in Civil Engineering (Hydraulics) from Colorado State University in 1963, and a
Ph.D. in Civil Engineering (Hydraulics, Hydrology and Fluid Mechanics) from
Colorado State University in 1967. He is a Registered Professional Engineer.
Page 5
Daniel W. Farrell, age 54, has served as a director since May 1988 and
as Vice President of the Company since March 1984. Mr. Farrell has been over the
Company's Research and Development Division since August 1989. Prior to managing
the Research and Development Dision, Mr. Farrell was a Project Manager in the
Water Resources Division. Mr. Farrell joined the Company in September 1976 as a
staff scientist. Mr. Farrell received a B.S. in Chemistry from Brigham Young
University in 1976.
Robert F. Roberts, Jr., age 56, has served as a director since May 2003
and as the Chairman of the Compensation Committee of the Board of Directors
since July 2005 and is also a member of the Corporate Governance and Nominating
and Audit Committees of the Board. Mr Roberts was the founder, CEO and Chairman
of Concept Automation Inc. from 1975 to 1995. Concept Automation, a computer
systems integrator, grew from a one-man operation to employing over 220 people
in six offices. Federal and state government agencies and Fortune 1000 companies
were the primary clients. Sales in 1995 were in excess of $100 million when the
company was sold. Mr. Roberts served as a Director for Colgan Airways, a
regional commuter airline from 1990 to 2005, as a Principal for Foresight
Funding, which manages private investments in tax free bonds, real estate and
corporate obligations from 1995 to 2005, and as Chairman, Trustee of Wakefield
School, a private school that offers a classical curriculum for grades Pre-K to
12 from 1990 to 2005. Mr. Roberts received an Associates degree in Business
Management from Northern Virginia Community College.
Andrew D. Lipman, age 55, has served as a director since June 2005 and
as the Chairman of the Corporate Governance and Nominating Committee of the
Board of Directors since July 2005 and is also a member of the Compensation and
Audit Committees of the Board. Mr. Lipman is a partner and head of the
Telecommunications, Media and Technology Group of Bingham McCutchen LLP,
formerly Swidler Berlin, LLP, an international law firm since 1988. From 1987 to
1997, Mr. Lipman also served as Senior Vice President for Legal and Regulatory
Affairs for MFS Communications, Co., a competitive telecommunications provider.
He also currently serves as a member of the boards of directors of TMNG Inc., a
telecommunications-related consulting firm and Nu Skin Enterprises, a personal
care and nutritional supplements provider. He received a B.A. degree, Summa Cum
Laude, from the University of Rochester and a J.D. degree from Stanford
University.
Thomas R. Porter, age 57, has served as a director since June 2005 and
as the Chairman of the Audit Committee of the Board of Directors since July
2005. He is also a member of the Compensation and Corporate Governance and
Nominating Committees of the Board. Mr. Porter is the managing member of Value
Consultants, LLC, a firm specializing in the provision of expert witness and
litigation consulting services. Mr. Porter worked in the Defense Consulting
Group of Peat, Marwick, Mitchell & Co. from 1978 to 1983. From 1983 to 1989, he
worked for Laventhol & Horwath, CPAs where he rose to the level of principal.
From 1989 to 1993, Mr. Porter was the president of a management company and the
chief financial officer of a privately-held distributor of building products. He
was Director of Litigation Services for the Washington, D.C. office of Grant
Thornton, LLP from 1993 until 1996. In 1996, Mr. Porter co-founded Value
Consultants, LLC. Mr. Porter is a Certified Public Accountant; a licensed
attorney; a Certified Forensic Financial Analyst; and a Certified Valuation
Analyst. He received a B.S. degree, with honor, and a Master of Science degree
in Industrial Engineering from the Georgia Institute of Technology; and a Juris
Doctor, with honor, from the George Washington University.
Each of the nominees has consented to being named in this Proxy Statement and to
serve as a Director if elected. The Company knows of no reason why any nominee
would be unable or unwilling to serve if elected.
Page 6
CODE OF ETHICS
The Company has adopted a Code of Ethics that applies to the Company's
chief executive officer, chief financial officer, principal accounting officer
and persons performing functions similar to a controller, as well as other
officers, directors and employees of the Company. The Code of Ethics is posted
on the Company's website at www.sutron.com under "Investor Information."
BOARD AND COMMITTEE MEETINGS
During fiscal 2006, the Board held three meetings, including telephone
conference meetings, and took thirteen actions by written consent. The three
standing committees of the Board are the Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating Committee. No director
attended fewer than 75% of the aggregate of the total number of meetings of the
Board and the total number of meetings held by all committees of the Board on
which he served.
AUDIT COMMITTEE. Mr. Porter, Mr. Lipman and Mr. Roberts are the current members
of the Audit Committee. Mr. Porter, the Chairman of the Audit Committee, was
elected as Chairman of the Audit Committee in July 2005. The Board has
determined that Mr. Porter is the "audit committee financial expert" as defined
by the rules of the Securities and Exchange Commission. The Audit Committee met
six times during fiscal 2006. The Audit Committee's primary responsibilities are
to provide oversight of the Company's accounting and financial controls, review
the scope of and procedures to be used in the annual audit, review the financial
statements and results of the annual audit, and retain and evaluate the
performance of the independent accountants and the Company's financial and
accounting personnel. Each current member of the Audit Committee meets the
independence and other requirements to serve on our Audit Committee under the
rules of the SEC and listing standards of The Nasdaq Stock Market.
COMPENSATION COMMITTEE. Mr. Roberts, Mr. Lipman and Mr. Porter are the current
members of the Compensation Committee. Mr. Roberts serves as the Chairman of the
Compensation Committee and was appointed to that position in July 2005. The
Compensation Committee met once during fiscal 2006. The principal
responsibilities of the Compensation Committee are to establish the general
compensation policy for Sutron. The Compensation Committee reviews and
establishes base salary levels and target bonuses for the Company's Chief
Executive Officer and other executive officers each year. The Compensation
Committee also administers the Company's 1996, 1997 and 2002 Amended and
Restated Stock Option Plans. The Compensation Committee does not currently have
a formal charter.
NOMINATING COMMITTEE. Mr. Lipman, Mr. Porter and Mr. Roberts are the current
members of the Corporate Governance and Nominating Committee ("Nominating
Committee"). Mr. Lipman is the Chairman of the Nominating Committee and was
appointed to that position in July 2005. The Nominating Committee met three
times in fiscal 2006. The principal responsibilities of the Nominating Committee
are to identify and recommend to the Board of Directors individuals qualified to
become Board of Directors' members, to recommend to the Board of Directors
corporate governance principles, and to lead the Board of Directors in complying
with its corporate governance principles. Each current member of the Corporate
Governance and Nominating Committee meets the independence and other
requirements to serve on our Corporate Governance and Nominating Committee under
the rules of the SEC and listing standards of The Nasdaq Stock Market. The
Nominating Committee has a formal charter that is available on the Company's web
site at www.sutron.com under "Investor Information."
Page 7
DIRECTOR NOMINATION PROCESS
The Company did not engage a third party to assist in identifying and
evaluating the individuals nominated for election as directors at this meeting.
Historically, the Nominating Committee has relied on recommendations from its
members to identify nominees. In considering whether to nominate any particular
candidate for election to the Board, the Nominating Committee uses various
criteria to evaluate each candidate, including an evaluation of each candidate's
integrity, business acumen, knowledge of the Company's business and industry,
experience, diligence, conflicts of interest and the ability to act in the
interests of the Company's shareholders. The Nominating Committee evaluates
biographical information and interviews selected candidates. The Nominating
Committee also considers whether a potential nominee would satisfy the Nasdaq
listing standards for "independence" and the SEC's definition of "audit
committee financial expert." The Nominating Committee does not assign specific
weights to particular criteria and no particular criterion is a prerequisite for
each prospective nominee. The Nominating Committee believes that the backgrounds
and qualifications of its directors, considered as a group, should provide a
composite mix of experience, knowledge and abilities that will allow the Board
to fulfill its responsibilities.
The Company does not have a formal policy with regard to the
consideration of director candidates recommended by its shareholders; however
shareholder recommendations relating to director nominees may be submitted in
accordance with the procedures set forth below under the heading "Communicating
with the Board of Directors."
COMMUNICATING WITH THE BOARD OF DIRECTORS
Shareholders who wish to send communications to the Board may do so by
writing to the Secretary of the Company, Sutron Corporation, 21300 Ridgetop
Circle, Sterling, Virginia 20166. The mailing envelope must contain a clear
notation indicating that the enclosed letter is a "Shareholder-Board
Communication." All such letters must identify the author as a shareholder and
must include the shareholder's full name, address and a valid telephone number.
The name of any specific intended Board recipient should be noted in the
communication. The Secretary will forward any such correspondence to the
intended recipients; however, prior to forwarding any such correspondence, the
Secretary or his designee will review such correspondence, and in his or her
discretion, may not forward communications that relate to ordinary business
affairs, communications that are primarily commercial in nature, personal
grievances or communications that relate to an improper or irrelevant topic or
are otherwise inappropriate for the Board's consideration.
DIRECTOR ATTENDANCE AT ANNUAL MEETING OF SHAREHOLDERS
Although the Company does not have a policy with regard to Board
members' attendance at the Company's annual meeting of shareholders, all
directors are encouraged to attend the annual meeting. All five members of the
Board of Directors attended the 2006 Annual Meeting of Shareholders.
DIRECTOR COMPENSATION
The following table provides a summary of compensation paid to members
of our Board of Directors during 2006.
Page 8
FEES EARNED
OR PAID IN STOCK OPTION ALL OTHER
NAME CASH($)(1) AWARDS($) AWARDS($)(2) COMPENSATION($) TOTAL($)
---------------------- ----------- --------- ------------ --------------- --------
Andrew D. Lipman 5,500 -- 12,027 -- 17,527
Thomas R. Porter 7,500 -- 12,027 -- 19,527
Robert F. Roberts, Jr. 6,500 -- 12,027 -- 18,527
(1) Each independent director is paid an attendance fee of $1,500 for each
meeting of the Board of Directors where the director is physically present and
$500 for each meeting attended telephonically. Also, each independent director
is paid an attendance fee of $1,000 for each committee meeting of the Board of
Directors where the director is physically present and $500 for each meeting
attended telephonically. There is no additional compensation when the committee
meeting is held in conjunction with a Board meeting. Travel expenses are
reimbursed at actual cost. Employee directors are not eligible for compensation
for their services as directors.
(2) Each independent director received a stock option in the amount of 5,000
shares on May 17, 2006 that vest over a one-year period in accordance with the
Company's approved compensation plan for independent directors. Options awards
represents the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2006 in accordance with SFAS
123(R), which requires companies to expense the fair value of equity awards over
the period in which the recipient is required to provide service in exchange for
the awards. The reported amounts represent the amount of compensation expense
recognized by Sutron in 2006 pertaining to stock options granted in 2006.
REPORT OF THE AUDIT COMMITTEE
This Report of the Audit Committee of the Company's Board of Directors
(the "Audit Committee") is required by the Securities and Exchange Commission
and shall not be deemed to be incorporated by reference into any filing under
the Securities Act or under the Exchange Act by any general statement
incorporating by reference this Proxy Statement, and shall only be incorporated
into other filings to the extent that the Company specifically incorporates this
information by reference, and shall not be deemed soliciting material or filed
under the Securities Act or Exchange Act.
The Audit Committee is composed of three independent directors and
operates under a written charter approved by the Audit Committee and adopted by
the Board. Thomas R. Porter, Andrew D. Lipman and Robert F. Roberts, Jr. are the
current members of the Audit Committee. The Audit Committee's primary
responsibilities are to provide oversight of the Company's accounting and
financial controls, review the scope of and procedures to be used in the annual
audit, review the financial statements and results of the annual audit, and
retain and evaluate the performance of the independent accountants and the
Company's financial and accounting personnel.
The Company's management has the primary responsibility for the
financial statements and reporting process, which includes the Company's systems
for internal control. Thompson, Greenspon & Co., the Company's independent
auditor, is responsible for performing an independent audit of the Company's
financial statements in accordance with standards established by the Public
Company Accounting Oversight Board, expressing an opinion, based on its audit,
as to the conformity of such financial statements with accounting principles
generally accepted in the United States. The Audit Committee's responsibility is
to monitor and oversee these processes, including by engaging in discussions
with management and the Company's independent registered public accounting firm.
Page 9
The Audit Committee members are not professional accountants or
auditors, and their role is not intended to duplicate or certify the activities
of management and the independent registered public accounting firm, nor can the
Committee certify that the independent registered public accounting firm is
"independent" under applicable rules. The Committee serves a board-level
oversight role, in which it provides advice, counsel and direction to management
and the independent registered public accounting firm on the basis of the
information it receives, discussions with management and the independent
registered public accounting firm, and the experience of the Committee's members
in business, financial and accounting matters.
In carrying out its oversight responsibilities, the Board met with
management and reviewed with management the audited consolidated financial
statements included in the Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2006. The review included a discussion of the quality and
acceptability of the Company's financial reporting and controls, including the
reasonableness of significant judgments and the clarity of disclosures in the
consolidated financial statements.
The Board also reviewed with Thompson, Greenspon & Co., who are
responsible for expressing an opinion on the conformity of the Company's audited
financial statements with generally accepted accounting principles, their
judgments as to the quality and the acceptability of the Company's financial
reporting and such other matters as are required to be discussed with the Board
under generally accepted auditing standards and SAS (Statement on Auditing
Standards) 61 as amended by Statement on Auditing Standards No. 90 (Audit
Committee Communications). In addition, the Board discussed with Thompson,
Greenspon & Co. their independence from management and the Company, including
the matters in their written disclosures required by the Independence Standards
Board, including Standard No. 1, and received written disclosures required by
that standard. The Board has considered whether the independent auditors'
provision of non-audit services to the Company is compatible with the auditors'
independence. The Board held a private session with the Company's independent
auditors, Thompson, Greenspon & Co., at which candid discussions of financial
management, accounting and internal controls took place.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended that the audited consolidated financial statements be
included in the Annual Report on Form 10-KSB for the fiscal year ended December
31, 2006 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Thomas R. Porter, Chairman
Andrew D. Lipman
Robert F. Roberts, Jr.
EXECUTIVE OFFICERS
The biographies for Messrs. McQuivey and Farrell are provided under the
heading "Nominees for Directors."
Sidney C. Hooper, age 48, has served as the Chief Financial Officer of
the Company since 2003 and as Treasurer since 1993. Mr. Hooper joined the
Company in August 1989 and was promoted to the position of Controller in January
1990. Prior to joining the Company, Mr. Hooper served as a Senior Accountant
with Arthur Andersen & Company. Mr. Hooper received a B.S. degree in Accounting
from Brigham Young University in 1983 and a Master of Accountancy degree from
Brigham Young University in 1984.
Page 10
Thomas N. Keefer, Ph.D., age 62, has served as Vice President of
Software Support Services since 1997. He joined the Company in January 1977, as
a Project Engineer and served as the Vice President of the Water Resources
Division and the Integrated Systems Division from 1981 to 1997. Dr. Keefer has
earned three degrees from Colorado State University, a B.S. in Civil Engineering
in 1967, an M.S. in Civil Engineering (Hydraulics) in 1969 and a Ph.D. in Civil
Engineering (Hydraulics, Hydrology and Fluid Mechanics) in 1971. He is a
Registered Professional Engineer.
EMPLOYMENT AND OTHER AGREEMENTS
The Company does not have any Employment Agreements and has no other
plan or arrangement that would result in any executive officer receiving
compensation as a result of their resignation, retirement or any other
termination of employment with the Company. Option agreements provide for the
immediate vesting of all unvested stock options in the event of a change in
control of the Company.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning cash and other
compensation paid to or earned by our chief executive officer, and other
executive officers, whom we refer to as our "Named Executive Officers" for the
most recent year as follows:
STOCK OPTION ALL OTHER
NAME AND SALARY BONUS AWARDS AWARDS COMPENSATION TOTAL
PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($) ($)
----------------------------- ---- ------- ------ ------ ------ ------------ -------
Raul S. McQuivey 2006 170,000 30,000 0 0 12,566 (1) 212,566
Chief Executive Officer 2005 177,000 20,000 17,098 (2) 214,098
Daniel W. Farrell 2006 150,000 25,000 0 0 9,796 (3) 184,796
Vice President of R&D 2005 146,854 14,420 14,011 (4) 175,285
Sidney C. Hooper 2006 145,000 25,000 0 0 13,372 (5) 183,372
Chief Financial Officer 2005 143,910 15,000 15,254 (6) 174,164
Thomas N. Keefer 2006 110,000 5,000 0 0 6,150 (7) 121,150
Vice President and Secretary 2005 104,234 7,500 7,203 (8) 118,937
(1) Consists of (i) $3,148 for life insurance premiums on term life insurance
(ii) a profit sharing contribution of $6,280 to the Company's 401k Profit
Sharing Plan and (iii) Company's 401k matching contribution of $3,138.
(2) Consists of (i) $3,148 for life insurance premiums on term life insurance
and (ii) a profit sharing contribution of $13,950 to the Company's 401k
Profit Sharing Plan.
(3) Consists of (i) $630 for life insurance premiums on term life insurance
(ii) profit sharing contribution of $6,280 to the Company's 401k Profit
Sharing Plan (iii) auto allowance relating to personal use of $117 and (iv)
Company's 401k matching contribution of $2,769.
(4) Consists of (i) $630 for life insurance premiums on term life insurance
(ii) profit sharing contribution of $11,310 to the Company's 401k Profit
Sharing Plan and (iii) auto allowance relating to personal use of $2,071.
Page 11
(5) Consists of (i) $355 for life insurance premiums on term life insurance
(ii) profit sharing contribution of $6,280 to the Company's 401k Profit
Sharing Plan (iii) auto allowance relating to personal use of $4,060 and
(iv) Company's 401k matching contribution of $2,677.
(6) Consists of (i) $355 for life insurance premiums on term life insurance
(ii) profit sharing contribution of $10,739 to the Company's 401k Profit
Sharing Plan and (iii) auto allowance relating to personal use of $4,160.
(7) Consists of (i) $743 for life insurance premiums on term life insurance
(ii) profit sharing contribution of $3,376 to the Company's 401k Profit
Sharing Plan and (iii) Company's 401k matching contribution of $2,031.
(8) Consists of (i) $743 for life insurance premiums on term life insurance and
(ii) profit sharing contribution of $6,460 to the Company's 401k Profit
Sharing Plan.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth certain information concerning the value
of outstanding equity awards held by the Name Executive Officers as of December
31, 2006.
NUMBER OF NUMBER OF MARKET VALUE
SECURITIES SECURITIES NUMBER OF OF SHARES OR
UNDERLYING UNDERLYING SHARES OF UNITS OF
UNEXERCISED UNEXERCISED OPTION OPTION UNITS OF STOCK STOCK THAT
OPTIONS (#) OPTIONS (#) EXERCISE EXPIRATION THAT HAVE NOT HAVE NOT
NAME EXERCISABLE UNEXERCISABLE PRICE DATE VESTED(#) VESTED($)
--------------------- ------------ ------------- -------- ---------- -------------- ------------
Raul S. McQuivey 110,000 (1) 0 $ .55 10/17/2012 0 0
Daniel W. Farrell 90,000 (1) 0 $ .55 10/17/2012 0 0
Sidney C. Hooper 120,000 (1) 0 $ .55 10/17/2012 0 0
Thomas N. Keefer 15,000 (1) 0 $ .55 10/17/2012 0 0
(1) All options are fully vested.
PRINCIPAL SHAREHOLDERS
The following table sets forth the names and addresses of all persons
who beneficially owned, to the knowledge of the Company, more than 5% of the
issued and outstanding shares of the Company's Common Stock on March 27, 2007.
PERCENTAGE
NAME AND ADDRESS OF NUMBER OF SHARES OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING(1)
--------------------------------------------------------------------------------
Raul S. McQuivey, Ph.D. 894,436 (2) 19.3%
Kenneth W. Whitt 481,071 (3) 10.7%
Thomas N. Keefer, Ph.D. 355,000 (4) 7.8%
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(1) As of March 27, 2007, the Company had 4,512,884 shares of Common Stock
outstanding. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock, that such
person could purchase by exercising outstanding options and options that will
become exercisable within 60 days of March 27, 2007, are deemed outstanding.
Such shares, however, are not deemed outstanding for the purpose of computing
the percentage ownership of any other person. Each natural person named in the
table above has an address in care of Sutron Corporation, 21300 Ridgetop Circle,
Sterling, Virginia 20166.
(2) Dr. McQuivey's holdings consist of 700,836 shares held by Dr. Raul S.
McQuivey and Karen T. McQuivey, Dr. McQuivey's wife, as Trustees for the Raul S.
McQuivey Trust and the Karen T. McQuivey Trust, 83,600 shares held by Raul
McQuivey and 110,000 shares subject to options exercisable within 60 days after
March 27, 2007.
(3) Mr. Whitt's holdings consist of 459,071 shares held by Kenneth Whitt and Eva
D. Whitt, Mr. Whitt's wife, as Trustees for the Whitt Family Living Trust and
22,000 shares owned by Kenneth W. Whitt and Eva D. Whitt as Joint Tenants with a
Right of Survivorship.
(4) Dr. Keefer's holdings consist of 340,000 shares that are held by Dr. Thomas
N. Keefer and Sally E. Keefer, Dr. Keefer's wife, as Joint Tenants with a Right
of Survivorship and 15,000 shares subject to options exercisable within 60 days
after March 27, 2007.
MANAGEMENT OWNERSHIP OF COMMON STOCK
Set forth below is information concerning stock ownership of each named
executive officer, director and director nominee, and all directors and
executive officers of the Company as a group, as of March 27, 2007. The
information as to securities beneficially owned are, in each instance, based
upon information furnished by each individual. As to the shares shown to be
beneficially owned, the owner has sole investment and voting power, unless
otherwise indicated.
NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
--------------------------------------------------------------------------------
Raul S. McQuivey, Ph.D. (2) 894,436 19.3%
Thomas N. Keefer, Ph.D. (3) 355,000 7.8%
Daniel W. Farrell (4) 226,808 4.9%
Sidney C. Hooper (5) 188,700 4.1%
Robert F. Roberts, Jr. (6) 30,000 .7%
Andrew D. Lipman (7) 10,000 .2%
Thomas R. Porter (8) 10,000 .2%
All executive officers and directors
as a group (7 in number) 1,714,944 37.2%
(1) See Note 1 under "PRINCIPAL SHAREHOLDERS."
(2) See Note 2 under "PRINCIPAL SHAREHOLDERS."
(3) See Note 4 under "PRINCIPAL SHAREHOLDERS."
(4) Mr. Farrell's holdings consist of 96,448 shares that are held by Daniel W.
Farrell and Jill E. Farrell, Mr. Farrell's wife, as Joint Tenants with a Right
of Survivorship, 40,360 held by Mr. Farrell and 90,000 shares subject to options
exercisable within 60 days after March 27, 2007.
Page 13
(5) Includes 36,000 shares owned by Sidney C. Hooper and Malissa C. Hooper, Mr.
Hooper's wife, as Joint Tenants with a Right of Survivorship, 32,700 shares
owned by Mr. Hooper and 120,000 shares subject to options exercisable within 60
days after March 27, 2007.
(6) Reflects 30,000 shares subject to options exercisable within 60 days after
March 27, 2007.
(7) Reflects 10,000 shares subject to options exercisable within 60 days after
March 27, 2007.
(8) Reflects 10,000 shares subject to options exercisable within 60 days after
March 27, 2007.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 2006, the Company did not have any related transactions with
officers or directors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors
and its executive officers are required to report ownership of shares of the
company's Common Stock and any changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to disclose in this proxy statement any failure to
file by these dates during 2006.
o Mr. McQuivey was delinquent in filing four reports on Form 4.
o Mr. Keefer was delinquent in filing four reports on Form 4.
o Mr. Farrell was delinquent in filing two reports on Form 4.
o Mr. Hooper was delinquent in filing one report on Form 4.
o Mr. Lipman, Mr. Porter and Mr. Roberts were each delinquent in
filing one report on Form 3.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors considers it desirable that its appointment of
the firm of Thompson, Greenspon & Co. as independent registered public
accounting firm of the Company for fiscal year 2007 be ratified by the
shareholders. Thompson, Greenspon & Co. has certified the Company's financial
statements for all years beginning in 1976.
Representatives of Thompson, Greenspon & Co. will be present at the
Annual Meeting, will be given an opportunity to make a statement if they so
desire, and will be available to respond to appropriate questions from the
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF THOMPSON, GREENSPON & CO. AND THE ENCLOSED PROXY WILL BE SO VOTED
UNLESS A VOTE AGAINST THE PROPOSAL OR AN ABSTENTION IS SPECIFICALLY INDICATED.
If this proposal is not approved at the Annual Meeting, the Audit Committee may
reconsider its selection of Thompson, Greenspon & Co.
Aggregate fees for professional services rendered to the Company by
Thompson, Greenspon & Co. as of or for the years ended December 31, 2006 and
2005 are summarized in the table below.
Page 14
2006 2005
------- -------
Audit $65,000 $55,000
Audit-related 0 0
Tax 8,000 7,500
All other 1,000 1,500
------- -------
Total $74,000 $64,000
======= =======
Audit fees for the years ended December 31, 2006 and 2005,
respectively, were for professional services rendered for the audits of the
financial statements of the Company, income tax provision procedures and
assistance with review of documents filed with the SEC.
Tax fees as of the years ended December 31, 2006 and 2005,
respectively, were for services related to tax compliance, including the
preparation of tax returns, tax planning and tax advice.
All other services were for research on stock option expense
requirements under SFAS No. 123(R).
There were no fees for audit-related work.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
During Fiscal 2006, the Board pre-approved all services (audit and
permitted non-audit services) provided to Sutron by the Company's independent
auditor. The Board however has not adopted written policies and procedures in
regards to pre-approval of audit and permitted non-audit services.
OTHER MATTERS
The Board of Directors knows of no other business that will be
presented for consideration at the 2007 Annual Meeting of Shareholders. The
enclosed Proxy confers upon the person or persons entitled to vote the shares
represented thereby discretionary authority to vote such shares in accordance
with their best judgment with respect to other business that may come before the
2007 Annual Meeting of Shareholders in addition to the scheduled items of
business.
SHAREHOLDERS PROPOSALS
Any shareholder proposals intended to be presented at Sutron's 2008
Annual Meeting of Shareholders must be received by Sutron at its offices at
21300 Ridgetop Circle, Sterling, Virginia 20166, on or before December 6, 2007,
for consideration for inclusion in the proxy material for such meeting.
If a shareholder of the Company wishes to present a proposal before the
2008 Annual Meeting, but does not wish to have the proposal considered for
inclusion in the Company's proxy statement and proxy card, such shareholder must
also give written notice to the Secretary of the Company at the address noted
above. The Secretary must receive such notice by March 12, 2008, and if a
shareholder fails to provide such timely notice of a proposal to be presented at
the 2008 Annual Meeting, the proxies designated by the Company's Board of
Directors will have discretionary authority to vote on any such proposal.
Page 15
REPORT TO SHAREHOLDERS
Rules promulgated by the SEC require us to provide an Annual Report to
Shareholders who receive this Proxy Statement. We will also provide copies of
the Annual Report to brokers, dealers, banks, voting trustees and their nominees
for the benefit of their beneficial owners of record. Upon the written request
by any shareholder entitled to vote at the 2007 Annual Meeting of Shareholders,
the Company will furnish that person without charge additional copies of the
Annual Report along with copies of the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2006 which is filed with the Securities
and Exchange Commission, including the financial statements and schedules
thereto, but excluding the exhibits or documents incorporated by reference.
By Order of the Board of Directors,
/s/ Thomas N. Keefer
---------------------------
Thomas N. Keefer
Secretary
April 19, 2007
Page 16
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SUTRON CORPORATION
The undersigned hereby appoints Thomas Keefer and Sidney C. Hooper
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of stock of Sutron Corporation standing in the
name of the undersigned with all powers which the undersigned would possess if
present at the Annual Meeting of Stockholders of the Company to be held at 21300
Ridgetop Circle, Sterling, Virginia at 1:30 p.m. on May 16, 2007 or any
adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS
NOMINEES: Raul S. McQuivey, Daniel W. Farrell, Robert F. Roberts, Jr.,
Andrew D. Lipman, Thomas R. Porter
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
For all nominees listed to the right (except as marked to the contrary)
WITHHOLD AUTHORITY to vote for all nominees listed to the right
2. Ratification of Thompson, Greenspon & Co., P.C. as the independent public
accountants of the corporation.
FOR AGAINST ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ________________________________________________2007
______________________________________________________
(Signature)
______________________________________________________
(Signature if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Page 17