DEF 14A 1 proxystmt01.txt SUTRON CORPORATION 21300 Ridgetop Circle Sterling, Virginia 20166 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 9, 2001 To the Holders of Common Stock of Sutron Corporation, Notice is hereby given that the Annual Meeting of Shareholders of Sutron Corporation (the "Company") will be held at 21300 Ridgetop Circle, Sterling, Virginia, on Wednesday, May 9, 2001, at 4:00 p.m., local time, for the following purposes: (i) To elect four directors to hold office until the next annual election of directors and until their successors shall have been duly elected and qualified; (ii) To approve the appointment of Thompson, Greenspon & Co., P.C. as independent public accountants for the year 2001; and (iii) To transact such other business as may properly come before the meeting and any adjournments thereof. Holders of shares of Common Stock of record at the close of business on Tuesday, March 20, 2001, are entitled to notice of and to vote at the meeting. A Proxy Statement and a Proxy for the meeting are enclosed herewith. We urge you to attend the 2001 Annual Shareholders Meeting. Your vote is important and we would appreciate the prompt return of your signed Proxy in the enclosed envelope. If you attend the meeting in person, you may, if you desire, revoke your Proxy and vote in person. By Order of the Board of Directors, /S/ Daniel W. Farrell Daniel W. Farrell Secretary Sterling, Virginia April 9, 2001 Enclosure SUTRON CORPORATION 21300 Ridgetop Circle Sterling, Virginia 20166 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 9, 2001 at 4:00 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. After the enclosed Proxy 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. The Proxy 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. The holders of shares of Common Stock of record at the close of business on Tuesday, March 20, 2001 are entitled to notice of and to vote at the meeting. On March 20, 2001, the Company had outstanding and entitled to vote 4,293,351 shares of Common Stock, and a majority of such shares, present or represented by proxy, will constitute a quorum. Each share of Common Stock entitles the holder to one vote on each matter to be voted upon at the meeting. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. The affirmative vote of a majority of the shares of Common Stock voting is required for the approval of the appointment of the independent public accountants. The approximate date on which this Proxy Statement and the accompanying Proxy will first be sent or given to shareholders is April 9, 2001. 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 outstanding shares of the Company's Common Stock on March 20, 2001. Name and Address of Number of Shares Percentage Beneficial Owner Beneficially Owned of Class Kenneth W. Whitt 852,000(1) 18.7% 2249 Evans Creek Terrace Reno, Nevada 89509 Raul S. McQuivey, Ph.D. 794,446(2) 17.5% 11211 Lapham Drive Oakton, Virginia 22121 Thomas N. Keefer, Ph.D. 540,775(3) 11.9% Route #4, Box 403 B Leesburg, Virginia 22075 Daniel W. Farrell 251,620(4) 5.5% 2799 Equus Court Herndon, Virginia 22071 Glenn A. Conover 233,508 (5) 5.1% 33 Harbor Circle Diamondhead, Mississippi 39525 (1) The shares are owned by Kenneth W. Whitt and Eva D. Whitt, Mr. Whitt's wife, as Joint Tenants with a Right of Survivorship; Mr. Whitt is deemed the beneficial owner of all the shares since Mr. Whitt shares voting power and investment power over such shares. (2) Includes 713,400 shares owned by Dr. Raul S. McQuivey and Karen T. McQuivey, Dr. McQuivey's wife, as Joint Tenants with a Right of Survivorship; Dr. McQuivey is deemed the beneficial owner of such shares since Dr. McQuivey shares voting power and investment power over such shares. (3) Includes 535,000 shares owned by Dr. Thomas N. Keefer and Sally E. Keefer, Dr. Keefer's wife, as Joint Tenants with a Right of Survivorship; Dr. Keefer is deemed the beneficial owner of such shares since Dr. Keefer shares voting power and investment power over such shares. (4) Includes 214,300 shares owned by Daniel W. Farrell and Jill E. Farrell, Mr. Farrell's wife, as Joint Tenants with a Right of Survivorship; Mr. Farrell is deemed the beneficial owner of such shares since Mr. Farrell shares voting power and investment power over such shares. (5) Includes 175,000 shares owned by Glenn A. Conover and Carol J. Conover, Mr. Conover's wife, as Joint Tenants with a Right of Survivorship; Mr. Conover is deemed the beneficial owner of such shares since Mr. Conover shares voting power and investment power over such shares. ELECTION OF DIRECTORS A board of four directors is to be elected at the 2001 Annual Shareholders Meeting. It is intended that the shares represented by the enclosed Proxy will be voted for the election of the five nominees for directors named in the Proxy unless such Proxy is marked to withhold authority. The term of office of each director will be until the next annual election of directors and until a successor is elected and qualified or until the director's earlier death, resignation or removal. All of the nominees have consented to serve if elected. In the event that any nominees for directors should be unavailable, 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. INFORMATION ABOUT NOMINEES FOR DIRECTORS The following information with respect to each nominee has been furnished to the Company by the respective nominees for director. Raul S. McQuivey, Ph.D., age 62, has served as a Director since 1976, as President, Chief Executive Officer, and Chairman of the Board of Directors since January 1989, and as Chief Operational Officer since September 1980. Dr. McQuivey also 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. Thomas N. Keefer, Ph.D., age 56, has served as Vice President, and as Director of the Company, since March 1981. He joined the Company in January 1977, as a Project Engineer and served as the Vice President of the Water Resources and then 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. Daniel W. Farrell, age 48, has served as a Director since 1988 and as Vice President of the Company since March 2, 1984 and Secretary since September 1, 1989. Mr. Farrell joined the Company in September 1976 as a staff scientist. He was promoted to the position of Director of Engineering in August 1989. Mr. Farrell received a B.S. in Chemistry from Brigham Young University in 1976. Ronald C. Dodson, age 63, has served as a Director since 1993. He has served as President of R.C. Dodson & Company, a management consulting firm, since 1984. Mr. Dodson received a B.A. from Brigham Young University in 1964 and a M.B.A. from California State University Long Beach in 1967. MANAGEMENT OWNERSHIP OF COMMON STOCK Set forth below is information concerning stock ownership of each director and nominee, and all directors and officers of the Company as a group, as of March 20, 2001. The statements 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. Name of Amount of Beneficial Owner Ownership Percent of Class Raul S. McQuivey, Ph.D. 794,466 (1) 17.5% Thomas N. Keefer, Ph.D. 540,775 (2) 11.9% Daniel W. Farrell 251,620 (3) 5.5% Sidney C. Hooper 82,160 (5) 1.8% Ronald C. Dodson 42,500 (6) 1.0% All officers and directors as a group (6 in number) 1,711,521 37.7% (1) See Note 2 under "PRINCIPAL SHAREHOLDERS". (2) See Note 3 under "PRINCIPAL SHAREHOLDERS". (3) See Note 4 under "PRINCIPAL SHAREHOLDERS". (4) The shares are owned by Sidney C. Hooper and Malissa C. Hooper, Mr. Hooper's wife, as Joint Tenants with a Right of Survivorship; Mr. Hooper is deemed the beneficial owner of all the shares since Mr. Hooper shares voting power and investment power over such shares. BOARD MEETINGS AND COMMITTEES During the year December 31, 2000, the Board of Directors held two Meetings. The Board has a compensation committee consisting of Raul S. McQuivey and Ronald C. Dodson which did not meet in 2000. The Compensation Committee reviews and establishes compensation practices and policies of Company including total salary and fringe benefit programs. Each director attended the two meetings of the Board. EXECUTIVE OFFICERS The Company currently has three executive officers. Two of those officers, Dr. Raul S. McQuivey and Daniel W. Farrell also serve as directors of the Company. Their offices and business experience are described herein under the heading "INFORMATION ABOUT NOMINEES FOR DIRECTORS." The following information with respect to the remaining officer has been furnished to the Company by that officer: Sidney C. Hooper, age 42, has served as Treasurer of the Company since May 14, 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. in Accounting from Brigham Young University in 1983 and a Master of Accountancy from Brigham Young University in 1984. The term of office of all executive officers is until the next annual meeting of the Board of Directors or until the executive officer's earlier death, resignation or removal. EXECUTIVE COMPENSATION The following table sets forth information concerning the annual and long-term compensation of the Named Officers for services rendered in all capacities to the Company for the fiscal years ended December 31, 2000, 1999 and 1998.
Long Term Compensation Annual Compensation Awards Payouts Other Restricted All Name and Annual Stock LTIP Other Principal Compen-Awards Options/Payouts Position Year Salary Bonus sation (1) SARs(#) ($) ($)(2) Raul McQuivey 2000 $152,090 $7,233 CEO 1999 147,026 $650 16,696 1998 135,195 14,073 Daniel Farrell 2000 $128,690 $3,916 Vice President 1999 125,151 $650 13,674 1998 114,818 12,903 Sidney Hooper 2000 $102,391 $4,366 Treasurer 1999 94,760 $650 4,539 1998 84,454 4,455
(1) As of December 31, 2000, Raul S. McQuivey was the beneficial owner of 775,746 shares of common stock with a market value of $1,066,651, Glenn A. Conover held 223,008 shares of common stock with a market value of $306,636 and Daniel W. Farrell held 243,580 shares of common stock with a market value of $334,923. (2) All other compensation in 1999 consists of the following items:
Mr. McQuivey Mr. Farrell Mr. Hooper Dollar value of auto Allowance relating to Personal use $4,085 $3,531 $4,011 Dollar value of term life insurance premiums 3,148 385 355 Total $7,233 $3,916 $4,366
Option/SAR Grants in Last Fiscal Year There were no option grants to the Named Officers in fiscal 2000.
Potential Realizable Value at Assumed Annual Rates of Stock Price Alternative to (f) Appreciation for and (g): Option Term Grant Date Value Individual Grants Number of % of Total Securities Options/ Underlying SARs Exercise Options/ Granted to of Base Grant Date SARs Employees in Price Expiration Present Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($) Value ($)
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Value The Company's Named Officers did not exercise any stock options or freestanding stock appreciation rights (SARs) during the year 2000. Outstanding stock options or SARs at fiscal year end are shown below.
Number of Securities Value of Unexercised Underlying Unexercised In-the- Money Shares Options/SARs Options/SARs at FY- Acquired on Value at FY-End (#) End ($) Name Exercise (#) Realized ($)Exercisable/Unexercisable Exercisable/Unexercisable Raul McQuivey 74,880/18,720 $0/$0 Daniel Farrell 32,160/8,040 $0/$0 Sidney Hooper 32,160/8,040 $0/$0
Long-Term Incentive Plans - Awards in Last Fiscal Year The Company's Named Officers were not awarded long-term incentive plans during the year 2000. Compensation of Directors The Company has no arrangement by which any of its officers are compensated for their services as directors and, therefore, Mr. Farrell and Mr. Conover and Drs. McQuivey and Keefer will not receive any additional remuneration for their services as directors. Mr. Dodson will be reimbursed by the Company for expenses incurred by him in connection with the performance of his duties as a director of the Company and will receive $1,000 for each meeting. The Company has no plan or arrangement which would result in any executive officer receiving compensation as a result of their resignation, retirement or any other termination of employment with the Company, or from a change in control of the Company or a change in responsibilities following a change in control of the Company. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In 1994, the Company restructured its debt with the bank. An aspect of the restructuring was that the bank would readvance an amount not to exceed $100,000 contingent on the Company obtaining additional funds from the issuance of either debt or equity securities. The Company obtained $100,000 in additional funds by issuing promissory notes totaling $100,000 payable on demand to four officers and directors of the Company. The promissory notes are summarized below. Name Relationship Promissory Interest Note Amount Rate Raul S. McQuivey Officer/Director $55,000.00 10.75% Thomas N. Keefer Officer/Director $25,000.00 10.75% Glenn A. Conover Officer/Director $10,000.00 10.75% Daniel W. Farrell Officer/Director $10,000.00 10.75% Repayment of the promissory notes to the four officers and directors was prohibited until the readvance of the term note was repaid in full in February, 1995. Repayment was made in full to Daniel W. Farrell in October 1995, to Glenn A. Conover in January 1996 and to Thomas N. Keefer in February 1998 and Raul McQuivey in August 1999. 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 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 2000. There were no failures to file in 2000. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS Subject to ratification by the shareholders, the Board of Directors has appointed Thompson, Greenspon & Co., P.C. as independent accountants of the Company for the year 2001. Thompson, Greenspon & Co., P.C. has certified the Company's financial statements for all years beginning with 1976. Representatives of Thompson, Greenspon & Co. P.C., will be present at the 2001 Annual Shareholders Meeting and will be afforded an opportunity to make a statement, if they desire, and to respond to appropriate questions from shareholders. THE BOARD OF DIRECTORS FAVORS A VOTE FOR THIS PROPOSAL. Proxies solicited by the Board of Directors will be so voted unless shareholders specify in their Proxies a contrary choice. OTHER BUSINESS WHICH MAY COME BEFORE THE MEETING 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 which may come before the 2001 Annual Shareholders Meeting in addition to the scheduled items of business. As of the date of this Proxy Statement, the Board of Directors knows of no other business which will be presented for consideration at the 2001 Annual Shareholders Meeting. SHAREHOLDERS PROPOSALS Shareholder proposals to be considered for inclusion in the Proxy Statement for the 2002 Annual Shareholders Meeting must be received by the Company no later than December 7, 2001. OTHER INFORMATION A copy of the Company's Annual Report for 2000, which includes financial statements and other information concerning the Company, is included with this Proxy material. Upon the written request by any shareholder entitled to vote at the 2001 Annual Shareholders Meeting, the Company will furnish that person without charge a copy of the Company's Form 10-KSB Annual Report for 2000 which is filed with the Securities and Exchange Commission, including the financial statements and schedules thereto, but excluding the exhibits thereto. The copy of the Form 10-KSB Annual Report will be accompanied by a list briefly describing all the exhibits not contained therein and will indicate that the Company will furnish a copy of any exhibit upon payment of a fee of $.20 per page. Requests should be addressed to Sidney C. Hooper, Treasurer, Sutron Corporation, 21300 Ridgetop Circle, Sterling, Virginia 20166. The Company will bear the cost of preparing this Proxy Statement and the other costs of soliciting Proxies for the 2001 Annual Shareholders Meeting. All solicitations will be made by mail. The Company does not intend to pay any compensation for this solicitation, but may reimburse brokers, and other persons holding stock in their names, for their expenses for sending Proxy material to principals and obtaining their Proxies. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE ENCLOSED PROXY. HOWEVER, IT IS NOT NECESSARY TO MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS; MERELY SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN PROVIDED. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THE ENCLOSED PROXY. YOUR PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED. By Order of the Board of Directors, /s/ Daniel W. Farrell Daniel W. Farrell Secretary April 9, 2001