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 11, 2008
Dear Sutron Shareholder:
You are cordially invited to our Annual Meeting of Shareholders on
Wednesday, May 14, 2008, 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 14, 2008
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 14, 2008, 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 2008; 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 Thursday, April 3, 2008,
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 11, 2008
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 14, 2008, 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 11, 2008.
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 Thursday, April 3, 2008
are entitled to notice of and to vote at the meeting. On April 3, 2008, the
Company had outstanding and entitled to vote 4,530,632 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 2008 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 Leland R. Phipps. All nominees are
presently directors of the Company. Mr. Roberts, Mr. Lipman and Mr. Phipps 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.
Mr. Phipps replaces Mr. Thomas R. Porter who passed away unexpectedly in
May 2007. Mr. Porter was elected as a director in June 2005 and served as the
Audit Committee Chairman and on the Compensation and Corporate Governance and
Nominating Committees. Mr. Phipps accepted the appointment to serve as a
Director and as the Audit Committee Chairman on March 6, 2008.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THE ELECTION OF THE
NOMINEES TO SERVE AS DIRECTORS OF SUTRON UNTIL THE FISCAL YEAR 2009 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 69, 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)
Page 5
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.
Daniel W. Farrell, age 55, 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 57, 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 approximately $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 56, 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.
Leland R. Phipps, age 52, has served as a Director and Chairman of the
Audit Committee since March 6, 2008. Mr. Phipps began his career with KPMG Peat
Marwick working in the Private Business Consulting Practice from 1982 to 1983.
He worked as Controller and Chief Financial Officer of Concept Automation, Inc
(CAI) from 1983 to 1989. He was promoted to CAI's President and Chief Operating
Officer in 1989 and remained until 1995 when CAI was acquired by BTG, Inc.
During his tenure at CAI, revenues grew from $500 thousand to approximately $100
million. He was a Senior Vice President over Integration and Network Systems
with BTG from 1995 to 1997 and was responsible for a new business unit that
began with a backlog of $20 million and grew to $60 million of revenue within
two years. Mr. Phipps founded Plexar Corporation, an investment management,
consulting and private equity firm, in 1997. Mr. Phipps is a Certified Public
Accountant. He received a B.S. degree in Accounting and a Masters degree in
Accounting and Information Systems from Brigham Young 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 2007, the Board held four meetings, including telephone
conference meetings, and took eleven 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. Phipps, Mr. Lipman and Mr. Roberts are the current members
of the Audit Committee. Mr. Phipps, the Chairman of the Audit Committee, was
appointed as Chairman of the Audit Committee on March 6, 2008 and replaced Mr.
Thomas R. Porter who passed away unexpectedly in May 2007. The Board has
determined that Mr. Phipps is the "audit committee financial expert" as defined
by the rules of the Securities and Exchange Commission. The Audit Committee met
seven times during fiscal 2007. 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 and Mr. Lipman 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 2007. 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 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 during fiscal
2007. 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 2007 Annual Meeting of Shareholders.
DIRECTOR COMPENSATION
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 $500 for each meeting
attended telephonically. There is no additional compensation when the committee
meeting is held in conjunction
Page 8
with a Board meeting. Travel expenses are reimbursed at actual cost. Employee
directors are not eligible for compensation for their services as directors.
Each independent director also receives a stock option in the amount of 5,000
shares on the shareholder meeting date that vests over a one-year period in
accordance with the Company's approved compensation plan for independent
directors
The following table provides a summary of compensation paid to members of
our Board of Directors during 2007.
FEES
EARNED OR STOCK OPTION ALL OTHER
PAID IN AWARDS AWARDS COMPENSATION TOTAL
NAME CASH ($) ($) ($)(1) ($) ($)
----------------------------------------------------------------------------------------
Andrew D. Lipman 7,500 - 12,998(4) - 20,498
Thomas R. Porter (2) 6,000 - 5,498(3) - 11,498
Robert F. Roberts, Jr. 7,500 - 12,998(5) - 20,498
(1) The amount represents the dollar amount recognized for financial reporting
purposes for the year ended December 31, 2007 of stock options granted to each
of the directors, calculated in accordance with provisions of SFAS 123R. Stock
options in the amount of 5,000 shares of Sutron common stock were granted each
director in 2007. See Note 12, "Stock Option Plans," to the Company's
consolidated financial statements set forth in the Company's Form 10-KSB for the
year ended December 31, 2007 for the assumptions made in determining SFAS 123R
values. This amount reflects the Company's accounting expense for stock options
granted to each of the named directors and is not intended to represent the
value, if any, that is actually realized by the individual.
(2) Mr. Porter passed away in May 2007.
(3) As of December 31, 2007, Mr. Porter had an aggregate of 10,000 shares
subject to outstanding stock options.
(4) As of December 31, 2007, Mr. Lipman had an aggregate of 15,000 shares
subject to outstanding stock options.
(5) As of December 31, 2007, Mr. Roberts had an aggregate of 35,000 shares
subject to outstanding stock options.
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. Leland R. Phipps, 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
Page 9
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.
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, 2007. 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) 114. 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.
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, 2007 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Leland R. Phipps, Chairman
Andrew D. Lipman
Robert F. Roberts, Jr.
Page 10
EXECUTIVE OFFICERS
The biographies for Messrs. McQuivey and Farrell are provided under the
heading "Nominees for Directors."
Sidney C. Hooper, age 49, 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.
Thomas N. Keefer, Ph.D., age 63, 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 2007 190,000 28,500 0 0 12,003 (1) 230,503
Chief Executive Officer 2006 170,000 30,000 0 0 12,566 (1) 212,566
Daniel W. Farrell 2007 165,000 24,750 0 0 9,402 (3) 199,152
Vice President of R&D 2006 150,000 25,000 0 0 9,796 (3) 184,796
Sidney C. Hooper 2007 159,500 24,000 0 0 11,873 (5) 195,373
Chief Financial Officer 2006 145,000 25,000 0 0 13,372 (5) 183,372
Thomas N. Keefer 2007 120,000 - 0 0 5,743 (7) 125,743
Vice President and Secretary 2006 110,000 5,000 0 0 6,150 (7) 121,150
(1) Consists of (i) $3,148 for life insurance premiums on term life insurance,
(ii) auto allowance relating to personal use of $1,897 and (iii) Company's
401k matching contribution of $6,958.
(2) 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
Page 11
Profit Sharing Plan and (iii) Company's 401k matching contribution of
$3,138.
(3) Consists of (i) $630 for life insurance premiums on term life insurance,
(ii) auto allowance relating to personal use of $2,739 and (iii) Company's
401k matching contribution of $6,033.
(4) 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.
(5) Consists of (i) $355 for life insurance premiums on term life insurance
(ii) auto allowance relating to personal use of $4,093 and (iv) Company's
401k matching contribution of $7,425.
(6) 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.
(7) Consists of (i) $743 for life insurance premiums on term life insurance
and (ii) Company's 401k matching contribution of $5,000.
(8) 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 $2,031.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth certain information concerning the value of
outstanding equity awards held by the Name Executive Officers as of December 31,
2007.
NUMBER OF NUMBER OF MARKET VALUE
SECURITIES SECURITIES NUMBER OF OF SHARES OR
UNDERLYING UNDERLYING SHARES OF UNITS OF
UNEXERCISED UNEXERCISED OPTION OPTION UNITS OF STOCK STOCK THAT
OPTIONS(#) OPTIONS(#) EXERCISE EXPIRATION THAT HAVE NOT HAVE NOT
NAME EXERCISABLE UNEXERCISABLE PRICE DATE VESTED(#) VESTED($)
------------------------------- ------------- --------------- ---------- ------------ ---------------- ---------------
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 April 3, 2008.
Page 12
PERCENTAGE
NAME AND ADDRESS OF NUMBER OF SHARES OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING(1)
------------------------------------------- ------------------ --------------
Raul S. McQuivey, Ph.D. 889,436 (2) 19.2%
Kenneth W. Whitt 352,931 (3) 7.8%
Thomas N. Keefer, Ph.D. 260,000 (4) 5.7%
(1) As of April 3, 2008, the Company had 4,530,632 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 April 3, 2008, 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 695,836 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
April 3, 2008.
(3) Mr. Whitt's holdings consist of 352,931 shares held by Kenneth Whitt and
Eva D. Whitt, Mr. Whitt's wife, as Trustees for the Whitt Family Living Trust.
(4) Dr. Keefer's holdings consist of 260,000 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 April 3, 2008.
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 April 3, 2008. 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) 889,436 19.2%
Thomas N. Keefer, Ph.D. (3) 260,000 5.7%
Daniel W. Farrell (4) 224,308 4.9%
Sidney C. Hooper (5) 178,000 3.8%
Robert F. Roberts, Jr. (6) 35,000 .8%
Andrew D. Lipman (7) 15,000 .3%
All executive officers and directors
as a group (7 in number) 1,601,744 34.7%
(1) See Note 1 under "PRINCIPAL SHAREHOLDERS."
(2) See Note 2 under "PRINCIPAL SHAREHOLDERS."
(3) See Note 4 under "PRINCIPAL SHAREHOLDERS."
Page 13
(4) Mr. Farrell's holdings consist of 93,948 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 April 3, 2008.
(5) Includes 34,000 shares owned by Sidney C. Hooper and Malissa C. Hooper,
Mr. Hooper's wife, as Joint Tenants with a Right of Survivorship, 24,000 shares
owned by Mr. Hooper and 120,000 shares subject to options exercisable within 60
days after April 3, 2008.
(6) Reflects 35,000 shares subject to options exercisable within 60 days after
April 3, 2008.
(7) Reflects 15,000 shares subject to options exercisable within 60 days after
April 3, 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 2007, the Company did not have any related party 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 2007.
o Mr. McQuivey was delinquent in filing one report on Form 4.
o Mr. Lipman 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 2008 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, 2007 and
2006 are summarized in the table below.
Page 14
2007 2006
---------------- ---------------
Audit $68,000 $65,000
Audit-related 0 0
Tax 9,500 8,000
All other 500 1,000
---------------- ---------------
Total $78,000 $74,000
================ ===============
Audit fees for the years ended December 31, 2007 and 2006, respectively,
were for professional services rendered for the audits of the financial
statements of the Company and review of the Company's quarterly financial
statements.
Tax fees as of the years ended December 31, 2007 and 2006, respectively,
were for services related to tax compliance, including the preparation of tax
returns, tax planning and tax advice.
All other services were for out-of-pocket expenses incurred by Thompson,
Greenspon & Co.
There were no fees for audit-related work.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
During Fiscal 2007, 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 2008 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 2008
Annual Meeting of Shareholders in addition to the scheduled items of business.
SHAREHOLDERS PROPOSALS
Any shareholder proposals intended to be presented at Sutron's 2009 Annual
Meeting of Shareholders must be received by Sutron at its offices at 21300
Ridgetop Circle, Sterling, Virginia 20166, on or before December 7, 2008, for
consideration for inclusion in the proxy material for such meeting.
If a shareholder of the Company wishes to present a proposal before the
2009 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, 2009, and if a
shareholder fails to provide such timely notice of a proposal to be presented at
the 2009 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 2008 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, 2007 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 11, 2008
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 14, 2008 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, Leland R. Phipps
(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: ________________________________________________2008
_________________________________________________________
(Signature)
_________________________________________________________
(Signature if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Page 17