DEF 14A of Sono Tek Corp
Filed Jul 20, 2023 · FY20230001171520-23-000232
ITEM 1: ELECTION OF DIRECTORS
ITEM 1: ELECTION OF DIRECTORS The Board of Directors is currently comprised of seven seats and is divided into two classes of three and four seats, respectively. The Directors in each class serve for a term of two years, and until their respective successors are duly elected and qualify. The Board of Directors has nominated Dr. Christopher L. Coccio, Dr. Joseph Riemer, R. Stephen Harshbarger and Philip A. Strasburg, CPA, all current Directors, for election at the Annual Meeting by plurality vote to hold office until the Company’s 2025 Annual Meeting of Shareholders and until their successors shall be duly elected and shall qualify. All nominees have consented to be named as such and to serve if elected. Management intends to vote the accompanying Proxy FOR election as Directors of the Company, the nominees named below, unless the Proxy contains contrary instructions. Proxies that direct the Proxy holders to withhold voting in the matter of electing Directors will not be voted as set forth above. Proxies cannot be voted for a greater number of persons than the number of nominees named in the Proxy Statement. Management has no reason to believe that any of the nominees will not be a candidate or will be unable to serve. However, in the event that any of the nominees should become unable or unwilling to serve as a Director, the Proxy will be voted for the election of such person or persons as shall be designated by the Directors.
NOMINEES FOR DIRECTOR
NOMINEES FOR DIRECTOR Nominees for election to term expiring 2025 The following four persons are nominated for election as Directors of the Company to hold office until the Company’s 2025 Annual Meeting of Shareholders. DR. CHRISTOPHER L. COCCIO was appointed President and Chief Executive Officer of Sono-Tek on April 30, 2001, has been a Director of the Company since June 1998, and was appointed Chairman in August 2007. From 1964 to 1996, he held various engineering, sales, marketing and management positions at General Electric Company, with P&L responsibilities for up to $100 million in sales and 500 people throughout the United States. He also won an ASME Congressional Fellowship and served with the Senate Energy Committee in 1976. His business experience includes both domestic and international markets and customers. He founded a management consulting business in 1996 and was appointed a legislative Fellow on the New York State Assembly’s Legislative Commission on Science and Technology from 1996 to 1998. From 1998 to 2001, he worked with Accumetrics Associates, Inc., a manufacturer of digital wireless telemetry systems, as Vice President of Business Development and member of the Board of Advisors. Dr. Coccio received a B.S.M.E. from Stevens Institute of Technology, an M.S.M.E. from the University of Colorado, and a Ph.D. from Rensselaer Polytechnic Institute in Chemical Engineering. Key attributes, Experience and Skills: Dr. Coccio brings his strategic vision for our Company to the Board together with his leadership, business experience and investor relations skills. Dr. Coccio has an immense knowledge of the Company and its related applications which is beneficial to the Board. Dr. Coccio’s service as Chairman and CEO bridges a critical gap between the Company’s management and the Board, enabling the Board to benefit from management’s perspective on the Company’s business while the Board performs its oversight function. DR. JOSEPH RIEMER joined the Company in January 2007 as Vice President of Engineering and has been a Director since August 2007. Dr. Riemer served as President from September 2007 until August 2012 when he became Vice President of Food Business Development, which position he held until June 2016. Dr. Riemer holds a Ph.D. in Food Science and Technology from the Massachusetts Institute of Technology (MIT), focusing on food technology, food chemistry, biochemical analysis, and food microbiology. His experience includes seven years with Pfizer in its Adams Confectionary Division, where he was Director, Global Operations Development. Dr. Riemer has also held leading positions with several food, food ingredients, and personal care products companies. He has served in the capacities of research and development, operations, and general management. Prior to joining the Company, he was a management consultant serving clients in the food, biotech and pharmaceutical industries. Key attributes, Experience and Skills: Dr. Riemer’s extensive research and management experience enables him to bring valuable insights to the Board. His considerable experience in the biotech, food and pharmaceutical industries bring specific product application insights to the Board. Dr. Riemer’s previous service as Vice President of Food Business Development helps to provide focus to the Board on this important marketing area. Dr. Riemer also brings leadership and oversight experience to the Board. R. STEPHEN HARSHBARGER joined Sono-Tek in 1993. He was appointed President of the Company in 2012 and became a Director in August 2013. As President, he directs the Company’s Sales, Marketing, Engineering, Service, and Manufacturing Operations. Prior to assuming his present position, Mr. Harshbarger served as Sales Engineer, World-Wide Sales and Marketing Manager, Vice President & Director of Electronics and Advanced Energy (E&AE) and Executive Vice President. In his years managing the sales organization, he established a worldwide distribution and representative network in more than 40 countries consisting of more than 300 people, with revenue growth of greater than 300%. He has over 30 years of experience in ultrasonic coating equipment for the electronics, medical device and advanced energy industries. Prior to joining Sono-Tek, Mr. Harshbarger was the Sales and Marketing Manager for Plasmaco Inc., a world leader in the development of flat panel displays. In that position, he established their distribution network, participated in venture capital funding, and introduced the first flat panel technology to Wall Street trading floors. He is a graduate of Bentley University, with a major in Finance and a minor in Marketing. Key attributes, Experience and Skills: Mr. Harshbarger is among a small handful of ultrasonic coating experts in the world. He has a proven track record of identifying, developing and implementing the technology for new markets and applications. His expertise in establishing strong distribution networks and knowledge of ultrasonic coating for new product developments, targeted at specific advanced technology applications, bring insights to the Board. Mr. Harshbarger also brings leadership and oversight experience to the Board. PHILIP STRASBURG, CPA, has been a Director since August 2004. He is a retired partner from the firm of Anchin Block and Anchin, LLP and has 40 years of experience in auditing. He has served as Audit Committee Chairman since 2005. He was the lead partner on the Sono-Tek account from fiscal 1994 to fiscal 1996. Mr. Strasburg is a certified public accountant in New York State. He has a Master of Science in economics from The London School of Economics and Political Science and a Bachelor of Science degree from Lehigh University, where he majored in business administration. Key attributes, Experience and Skills: Mr. Strasburg’s training and extensive experience in auditing provide the Board with valuable insights and skills necessary to lead the Audit Committee. Mr. Strasburg’s strong operational and business background complement his accounting and finance experience, and are valuable resources to the Board as it exercises its oversight duties and support of the Company’s growth strategies.
DIRECTORS CONTINUING AS DIRECTORS WITH TERMS EXPIRING IN 2024
DIRECTORS CONTINUING AS DIRECTORS WITH TERMS EXPIRING IN 2024 ERIC HASKELL, CPA has been a Director since August 2009. He has over 40 years of experience in senior financial positions at several public and private companies. He has significant expertise in the areas of acquisitions and divestitures, strategic planning and investor relations. From December 2005 through March 2008, Mr. Haskell served as the Executive Vice President and Chief Financial Officer of SunCom Wireless Holdings, Inc., a company providing digital wireless communications services which was publicly traded until its merger with a wholly-owned subsidiary of T-Mobile USA, Inc. in February 2008. He also served as a member of SunCom’s Board of Directors from November 2003 through May 2007. From 1989 until April 2004, Mr. Haskell served as the Chief Financial Officer of Systems & Computer Technology Corp., a NASDAQ listed software and services corporation. Mr. Haskell received a Bachelors Degree in Business Administration from Adelphi University in 1969. Key attributes, Experience and Skills: Mr. Haskell’s training and extensive experience in financial management at both public and private companies provide the Board with valuable insights. Mr. Haskell’s significant experience in acquisitions and divestitures and investor relations bring strategic judgment and experience to the Board. Mr. Haskell’s strong operational and business background complement his accounting and finance experience and are valuable resources to the Board as it exercises its oversight duties and support of the Company’s growth strategies. DR. DONALD F. MOWBRAY has been a Director since August 2003. He has been an independent consultant since August 1997. From September 1992 to August 1997, he was the Manager of the General Electric Company’s Corporate Research and Development Mechanical Engineering Laboratory. From 1962 to 1992 he worked for the General Electric Company in a variety of engineering and managerial positions. Dr. Mowbray received a B.S. in Aeronautical Engineering from the University of Minnesota in 1960, a Master of Science in Engineering Mechanics from the University of Minnesota in 1962 and a Ph.D. from Rensselaer Polytechnic Institute in Engineering Mechanics in 1968. Key attributes, Experience and Skills: Dr. Mowbray’s extensive research and managerial experience enables him to bring valuable insights to the Board. His knowledge of the Company’s products and the materials sciences technology underlying them has enabled him to contribute to the Company’s advanced products development and designs. Dr. Mowbray also brings leadership and oversight experience to the Board from his General Electric management background. CAROL O’DONNELL has been a Director since November 2018. Ms. O’Donnell joined Protégé Partners, an industry leading firm investing in and seeding smaller and emerging hedge fund managers in 2016 and has served as Chief Executive Officer since 2018. Prior to joining Protégé Partners, Ms. O’Donnell was the Director of Legal and Compliance with DARA Capital US, Inc., a Swiss-owned boutique registered investment advisory and wealth management firm from 2013 to 2016. She also served as General Counsel to Boothbay Fund Management LLC, a registered investment adviser, from December 2019 through May 2021, and was General Counsel and Chief Compliance Officer of each of the Permal Group and Framework Investment Group from 2004 through 2011 and from 2002 to 2004, respectively. Key attributes, Experience and Skills: Ms. O’Donnell’s extensive experience as an attorney enables her to bring valuable strategic insights to the Board in the areas of corporate governance, finance and securities law. Ms. O’Donnell also brings leadership and oversight experience to the Board. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO ELECT THE FOUR NOMINEES LISTED ABOVE.
Director Compensation
Director Compensation Each non-employee director receives $2,500 for each meeting attended. Directors who are employees of the Company receive no additional compensation for serving as directors. For the year ended February 28, 2023, director compensation was as follows:
2023 Director Compensation
2023 Director Compensation
2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | Eric Haskell | 10,000 | — | 9,900(1) | — | — | — | 19,900 | | Donald F. Mowbray | 10,000 | — | 9,900(2) | — | — | — | 19,900 | | Carol O’Donnell | 10,000 | — | 9,900(3) | — | — | — | 19,900 | | Philip Strasburg | 10,000 | — | 9,900(4) | — | — | — | 19,900 | | Joseph Riemer | 10,000 | — | 9,900(5) | — | — | — | 19,900 |
2023 Director Compensation
| (1) During fiscal 2023, Mr. Haskell received a grant of 3,300 options exercisable at $5.50 per share. At the end of fiscal 2023, Mr. Haskell held an aggregate of 19,350 stock options. | | (2) During fiscal 2023, Dr. Mowbray received a grant of 3,300 options exercisable at $5.50 per share. At the end of fiscal 2023, Dr. Mowbray held an aggregate of 19,350 stock options. | | (3) During fiscal 2023, Ms. O’Donnell received a grant of 3,300 options exercisable at $5.50 per share. At the end of fiscal 2023, Ms. O’Donnell held an aggregate of 9,350 stock options. | | (4) During fiscal 2023, Mr. Strasburg received a grant of 3,300 options exercisable at $5.50 per share. At the end of fiscal 2023, Mr. Strasburg held an aggregate of 6,627 stock options. | | (5) During fiscal 2023, Dr. Riemer received a grant of 3,300 options exercisable at $5.50 per share. At the end of fiscal 2023, Dr. Riemer held an aggregate of 11,350 stock options. |
2023 Director Compensation
Option awards in the above table are calculated using the Black-Scholes options pricing model which is further discussed in Note 4 – Stock Based Compensation, in the Company’s financial statements.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards | Option Awards ($) | All Other Compensation ($) | Total ($) | | Christopher L. Coccio | 2023 | 192,200 | 20,200 | 0 | 15,000 | 6,373 | 233,773 | | CEO, Chairman and Director | 2022 | 150,000 | 42,200 | 0 | 54,520 | 5,766 | 252,486 | | R. Stephen Harshbarger | 2023 | 249,200 | 23,000 | 0 | 15,000 | 8,167 | 295,367 | | President and Director | 2022 | 227,500 | 48,700 | 0 | 3,667 | 8,286 | 288,153 | | Stephen J. Bagley | 2023 | 174,800 | 18,500 | 0 | 7,500 | 5,799 | 206,599 | | Chief Financial Officer | 2022 | 165,000 | 38,900 | 0 | 6,383 | 6,117 | 216,400 |
Summary Compensation Table
All Other Compensation represents Company contributions to the Company’s 401K plan. Option awards in the above table are calculated using the Black-Scholes options pricing model which is further discussed in Note 4 – Stock Based Compensation, in the Company’s consolidated financial statements. Officer Compensation Arrangements During fiscal 2023, Dr. Coccio was compensated at the rate of $150,000 per annum, until May 2022, at which time his annual base compensation increased to $200,000. During fiscal 2023, Mr. Harshbarger was compensated at the rate of $235,000 per annum, until November 2022, at which time his annual base compensation increased to $250,000. During fiscal 2023, Mr. Bagley was compensated at the rate of $165,000 per annum, until November 2022, at which time his annual base compensation increased to $175,000. In addition, each named officer earned bonus compensation based on the achievement of certain operating objectives. Description of Equity Compensation Plans: 2013 Stock Incentive Plan Under the 2013 Stock Incentive Plan (the "2013 Plan"), up to 2,500,000 options and shares can be granted to officers, directors, consultants and employees of the Company and its subsidiaries . Under the 2013 Plan options expire ten years after the date of grant. As of February 28, 2023, there were 250,759 options outstanding under the 2013 plan. No additional options may be granted under the 2013 Plan. 2023 Stock Incentive Plan In May 2023, the Company’s Board of Directors authorized the creation of the 2023 Stock Incentive Plan (the “2023 Plan”) pursuant to which the Company may grant up to 2,500,000 options or shares to officers, directors, employees and consultants of the Company and its subsidiaries. The 2023 Plan is intended to replace the 2013 Plan and is more fully described in Item 4 of this Proxy Statement. The following table sets forth information regarding outstanding options held as of February 28, 2023 by each named executive officer.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | | Christopher L. Coccio | 2,617 | 3,198 | 6.05 | 11/18/2031 | | CEO, Chairman and Director | 16,340 | - | 6.26 | 02/17/2032 | | | 16,340 | - | 6.26 | 02/17/2032 | | | - | 4,505 | 5.96 | 11/17/2032 | | R. Stephen Harshbarger | 2,617 | 3,198 | 6.05 | 11/18/2031 | | President | 7,353 | 8,987 | 6.26 | 02/17/2032 | | | - | 3,937 | 5.96 | 11/17/2032 | | Stephen J. Bagley | 1,750 | 1,000 | 4.45 | 01/15/2031 | | Chief Financial Officer | 4,412 | 5,392 | 6.26 | 02/17/2032 | | | - | 1,969 | 5.96 | 11/17/2032 |
Pay Versus Performance
Pay Versus Performance Pursuant to the Securities Exchange Act of 1934, as amended, the Company is required to disclose in this proxy statement certain information comparing the total compensation actually paid (“CAP”) to the Company’s Principal Executive Officer (the “PEO”) and the average total compensation paid to the Company’s other named executive officers (“Non-NEOs”) and certain financial performance metrics of the Company using a methodology that has been prescribed by the SEC. In accordance with the transitional relief under the SEC rules for smaller reporting companies, only two years of information is required as this is the Company’s first year of disclosure under Item 402(v) of Regulation S-K.
Pay Versus Performance
| | | | Average | Value of | Initial Fixed | | | | | | Summary | Average | $100 | | | | Summary | | Compensation | Compensation | Investment | | | | Compensation | | Table Total | Actually | Based on | | | | Table Total | Compensation | for Non-PEO | to Non-PEO | Cumulative | Net Income | | Year | (2) | Actually Paid | NEOs (3) | NEOs (4) | TSR (5) | (6) | | 2023 | $233,773 | $241,435 | $250,983 | $256,483 | $4.85 | $635,905 | | 2022 | $252,486 | $318,259 | $252,277 | $305,866 | $21.18 | $2,542,573 |
Pay Versus Performance
| (1) For the fiscal years ended February 28, 2023 and 2022, the Company’s Chief Executive Officer was Dr. Christopher L. Coccio. |
Pay Versus Performance
| (2) The values reflected in this column reflect the “Total” compensation set forth in the Summary Compensation Table (“SCT”) in the Company’s most recently filed Form 10-K. See the footnotes to the SCT for further detail regarding the amounts in this column. |
Pay Versus Performance
| (3) The dollar amounts reported in this column represent the average of the amounts reported for Non-PEO NEOs in the “Total” column of the SCT in each applicable year. The names of each of the Non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are R. Stephen Harshbarger and Stephen J. Bagley. |
Pay Versus Performance
| (4) The dollar amounts reported in this column represent the average amount of CAP to Non-PEO NEOs as a group, as computed in accordance with SEC rules described below. |
Pay Versus Performance
| (5) The cumulative total shareholder return (“TSR”) amounts reported in this column are calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. The Company did not issue dividends during either of the covered periods. |
Pay Versus Performance
| (6) The dollar amounts reported in this column are the Company’s net income amounts reflected in the Company’s audited financial statements for the applicable year. |
Pay Versus Performance
SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine CAP as reported in the Pay versus Performance table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. A significant portion of the CAP amounts shown relate to changes in values of unvested awards over the course of the applicable reporting year. The Company’s NEOs do not participate in a defined benefit plan so no adjustment for pension benefits is included in the table below. The following tables below detail these adjustments to compensation as reported in the Summary Compensation Table:
Pay Versus Performance
| | PEO | | Reported Summary Compensation Table Total for 2023 | $233,773 | | Less: Amounts reported under option awards column in SCT for the covered year | (15,000) | | Plus: Year end fair value of stock option awards granted during the covered year that remain unvested as of year end. | 15,092 | | Change (positive or negative) in fair value from prior year end to covered year end of option awards granted prior to covered year that were outstanding and unvested as of covered year end. | 608 | | Change (positive or negative) in fair value from prior year end to vesting date of stock option awards granted prior to covered year that vested during covered year. | 6,962 | | Compensation Actually Paid for 2023 | $241,435 | | Reported Summary Compensation Table Total for 2022 | $252,486 | | Less: Amounts reported under option awards column in SCT for the covered year | (54,520) | | Plus: Year end fair value of stock option awards granted during the covered year that remain unvested as of year end. | 68,985 | | Fair value of stock option awards granted during the covered year that vest during the covered year | 51,308 | | Compensation Actually Paid for 2022 | $318,259 |
Pay Versus Performance
| | Average Non-PEO NEOs | | Average Reported Summary Compensation Table Total for 2023 | $250,983 | | Less: Amounts reported under option awards column in SCT for the covered year | (11,250) | | Plus: Year end fair value of stock option awards granted during the covered year that remain unvested as of year end. | 11,280 | | Change (positive or negative) in fair value from prior year end to covered year end of option awards granted prior to covered year that were outstanding and unvested as of covered year end. | 2,972 | | Change (positive or negative) in fair value from prior year end to vesting date of stock option awards granted prior to covered year that vested during covered year. | 2,498 | | Average Compensation Actually Paid for 2023 | $256,483 | | Reported Summary Compensation Table Total for 2022 | $252,277 | | Less: Amounts reported under option awards column in SCT for the covered year | (5,025) | | Plus: Year end fair value of stock option awards granted during the covered year that remain unvested as of year end. | 58,456 | | Change (positive or negative) in fair value from prior year end to covered year end of option awards granted prior to covered year that were outstanding and unvested as of covered year end. | 124 | | Change (positive or negative) in fair value from prior year end to vesting date of stock option awards granted prior to covered year that vested during covered year. | 34 | | Average Compensation Actually Paid for 2022 | $305,866 |
Pay Versus Performance
For purposeses of the adjustments to determine ”compensation actually paid”, we computed the fair value of stock option awards in accordance with FASB ASC Topic 718 as of the end of the relevant fiscal year, other than the fair values of equity awards that vested in the Covered Year, which are valued as of the applicable vesting date. The valuation assumptions used in the calculation of such amounts (as updated for purposes of this disclosure to reflect the relevant dates for purposes of calculating fair value) are based on the Company’s Black-Scholes option pricing model, the assumptions of which are described in Note 4 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2023.
Pay Versus Performance Relationship Disclosures
Pay Versus Performance Relationship Disclosures Compensation Actually Paid and Cumulative Total Shareholder Return The graph below compares the compensation actually paid to the Company’s PEO and the average of the compensation actually paid to the Company’s remaining NEOs, with the cumulative total stockholder return on the Company’s common stock for the fiscal years ended February 28, 2023 and 2022. Total stockholder return amounts reported in the graph assume an initial fixed investment of $100 on March 1, 2021. Compensation Actually Paid and Net Income The graph below compares the compensation actually paid to the Company’s PEO and the average of the compensation actually paid to the Company’s remaining NEOs, with the Company’s net income for the fiscal years ended February 28, 2023 and 2022. Description of 401 (k) Plan Effective April 1, 2000, the Company instituted the Sono-Tek Corporation 401(k) Plan (“401(k) Plan”) for employees of the Company, its subsidiaries and affiliates pursuant to the Internal Revenue Code. Under the 401(k) Plan, an eligible employee can elect to make a salary reduction of up to 20% of his or her compensation as defined in the plan.