STRI STR Holdings Inc (CE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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April 21, 2010

Dear Stockholder:

        It is my pleasure to invite you to STR Holdings, Inc's. first Annual Meeting of Stockholders. The meeting will be held on Thursday, June 3, 2010, at 10:00 a.m., local time, at the Hartford/Windsor Marriott Airport Hotel, 28 Day Hill Road, Windsor, Connecticut, 06095 (Tel. No. (860) 688-7500).

        Details regarding admission to the meeting and the business to be conducted are described in the Notice of 2010 Annual Meeting of Stockholders and Proxy Statement following this letter. We have also made available a copy of our 2009 Annual Report to Stockholders and Proxy Card with this proxy statement.

        For our first set of proxy materials, we have chosen to follow the Securities and Exchange Commission's full set delivery option, however, in accordance with the new "e-proxy" rules, we have also provided access to our proxy materials over the Internet. We will evaluate the option of providing only a Notice of Internet Availability of Proxy Materials to some or all of our stockholders in the future.

        We encourage you to access and review all the important information contained in the proxy materials before voting. If you want more information, please see the Questions and Answers section of this proxy statement or visit the Investor Relations section of our website at www.strholdings.com.

        Whether or not you plan to attend the meeting, your vote is important and we encourage you to vote promptly. You may vote your shares via a toll-free telephone number or over the Internet. If you received a paper copy of the Proxy Card by mail, you may vote by signing, dating and mailing the Proxy Card in the envelope provided. Instructions regarding these three methods of voting are contained in the accompanying Proxy Statement and Proxy Card.

        Thank you for supporting STR Holdings, Inc. We look forward to seeing you at our first Annual Meeting.

		Sincerely,
		Dennis L. Jilot Chairman, President and Chief Executive Officer

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STR HOLDINGS, INC.
10 Water Street
Enfield, Connecticut 06082

NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS

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		Barry A. Morris Executive Vice President, Chief Financial Officer and Secretary

Important Notice Regarding the Internet Availability of Proxy Materials

        For our first set of proxy materials, we have chosen to follow the Securities and Exchange Commission's full set delivery option, however, in accordance with the new "e-proxy" rules, we have also provided access to our proxy materials over the Internet. We will evaluate the option of providing only a Notice of Internet Availability of Proxy Materials to some or all of our stockholders in the future.

The Company's Proxy Materials for the 2010 Annual Meeting of Stockholders and Form 10-K for the fiscal year ended December 31, 2009 are available at the Investor Relations Section of our website at www.strholdings.com.

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STR HOLDINGS, INC.
10 Water Street
Enfield, Connecticut 06082

PROXY STATEMENT

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

General Information

        Why am I receiving these materials?     STR Holdings, Inc. ("STR" or "the Company" or "we") have made these materials available to you on the Internet and has delivered printed proxy materials to you, in connection with the solicitation of proxies for use at our first Annual Meeting of Stockholders, which will take place on Thursday, June 3, 2010 at 10:00 a.m., local time, at the Hartford/Marriott Airport Hotel, 28 Day Hill Road, Windsor, Connecticut, 06095 (Tel. No. (860) 688-7500). On approximately May 5, 2010, STR will begin mailing proxy materials to its stockholders. On that date, all stockholders of record and beneficial owners will have the ability to access all of the proxy materials on STR's investor relations website at www.strholdings.com. The proxy materials are available free of charge. As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this proxy statement.

        What information is contained in this proxy statement?     The information in this proxy statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of our directors and most highly paid executive officers, corporate governance and information about our board of directors, and certain other required information.

        I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?     We have adopted a procedure called "householding," which the Securities and Exchange Commission ("SEC") has approved. Under this procedure, we are delivering a single copy of the proxy materials and the 2009 Annual Report to Stockholders to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs and fees. Stockholders who participate in householding will continue to be able to access and receive separate Proxy Cards. Upon written request, we will deliver promptly a separate copy of proxy materials and the 2009 Annual Report to Stockholders to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of these proxy materials or the 2009 Annual Report to Stockholders, stockholders may write, email or call us at the following address and email address and telephone number:

Investor Relations
STR Holdings, Inc.
10 Water Street
Enfield, CT 06082
Email: investorinfo@strus.com
(860) 749-8371

        Stockholders who hold shares in street name (as described below) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.

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        How do I get electronic access to the proxy materials?     To view our proxy materials and the 2009 Annual Report online, please go to the investor relations section of our website at www.strholdings.com.

        What items of business will be voted on at the Annual Meeting?     The items of business scheduled to be voted on at the Annual Meeting are:

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The election of Dennis L. Jilot, Scott S. Brown, John A. Janitz, Andrew M. Leitch, Jason L. Metakis, Dominick J. Schiano, Susan C. Schnabel and Ryan M. Sprott as directors.



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The ratification of PricewaterhouseCoopers LLP as STR's independent registered public accounting firm for the fiscal year ending December 31, 2010.

        We will also consider any other business that may properly come before the Annual Meeting.

        How does the board of directors recommend that I vote?     Our board of directors recommends that you vote your shares (1) "FOR" each of the nominees to the board of directors, and (2) "FOR" the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2010.

        What shares can I vote?     Each share of STR common stock issued and outstanding as of the close of business on the Record Date (April 21, 2010) for the 2010 Annual Meeting of Stockholders, is entitled to be voted on all items being voted on at the Annual Meeting. You may vote all shares owned by you as of the Record Date, including (1) shares held directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner in street name through a broker, bank, trustee or other nominee. On the Record Date, we had 41,349,710 shares of common stock issued and outstanding.

        How many votes am I entitled to per share?     Each holder of shares of common stock is entitled to one vote for each share of common stock held as of the Record Date.

        What is the difference between holding shares as a stockholder of record and as a beneficial owner?     Most STR stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Stockholder of Record

        If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the proxy materials were sent directly to you by STR. As the stockholder of record, you have the right to grant your voting proxy directly to STR or to vote in person at the Annual Meeting. You may also vote by mail, on the Internet or by telephone. Please follow the voting instructions on the Proxy Card included with these proxy materials.

Beneficial Owner

        If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust or other similar organization, like the vast majority of our stockholders, you are considered the beneficial owner of shares held in street name and the proxy materials were forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee or nominee on how to vote your shares, and you are also invited to attend the Annual Meeting.

        Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you first obtain a "legal proxy" from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares at the meeting. If you do not

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wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. You may vote by proxy over the Internet or by telephone, as described in the Notice and below under the heading "How can I vote my shares without attending the Annual Meeting?"

        How can I attend the Annual Meeting?     You are entitled to attend the Annual Meeting only if you were a STR stockholder as of the Record Date or you hold a valid proxy for the Annual Meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you should provide proof of beneficial ownership as of the Record Date, such as your most recent account statement issued prior to April 21, 2010, a copy of the voting instruction card provided by your broker, bank, trustee or nominee or other similar evidence of ownership.

        If you do not comply with the procedures outlined above, you may not be admitted to the Annual Meeting.

        Please let us know if you plan to attend the Annual Meeting by marking the appropriate box on the enclosed Proxy Card, or, if you vote by telephone or Internet, by indicating your plans when prompted.

        The Meeting will begin promptly at 10:00 a.m., local time. Check-in will begin at 9:00 a.m., and you should allow ample time for the check-in procedures.

        How can I vote my shares in person at the Annual Meeting?     Shares held in your name as the stockholder of record may be voted by you in person at the Annual Meeting. Shares held beneficially in street name may be voted by you in person at the Annual Meeting only if you first obtain a legal proxy from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the Meeting.

        How can I vote my shares without attending the Annual Meeting?     Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting.

        If you are a stockholder of record, you may vote by proxy by using one of the following methods:

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CALL (1-800-652-8683) from the U.S., Canada and Puerto Rico (this call is toll free) to vote by telephone anytime up to 7:00 a.m., local time, on June 3, 2010 and follow the simple instructions provided in the recorded message.



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GO TO THE WEBSITE: (www.investorvote.com/STR) to vote over the Internet anytime up to 7:00 a.m., local time, on June 3, 2010, and follow the simple instructions provided on that site.



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COMPLETE, SIGN, DATE AND MAIL your Proxy Card in the enclosed postage-prepaid envelope. Your Proxy Card must be received by Computershare Trust Company, N.A., STR's transfer agent, prior to the commencement of the Annual Meeting at 10:00 a.m., local time, on June 3, 2010, unless you attend the meeting, in which event you may deliver your Proxy Card, or vote by ballot, at the meeting. If you are voting by telephone or by the Internet, please do not return your Proxy Card.

        If you hold shares beneficially in street name, you may also vote by proxy over the Internet, by telephone or you can also vote by mail by following the voting instructions provided to you by your broker, bank, trustee or nominee.

        Can I change my vote?     You may change your vote at any time prior to the taking of the vote at the Annual Meeting. If you are the stockholder of record, you may change your vote by (1) granting a

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new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (2) providing a written notice of revocation to STR's Corporate Secretary at STR Holdings, Inc., 10 Water Street, Enfield, CT 06082 prior to your shares being voted, or (3) attending the Annual Meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided, or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.

        Is my vote confidential?     Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within STR or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide on their Proxy Card written comments, which are then forwarded to STR management.

        How many shares must be present or represented to conduct business at the Annual Meeting?     The quorum requirement for holding the Annual Meeting and transacting business is that the holders of record of a majority of the voting power of the issued and outstanding shares of common stock of STR entitled to vote at the meeting must be present in person or represented by proxy. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum.

        How may I vote on each of the proposals?     In the election of directors, you may vote "FOR" all or some of the nominees or your vote may be "WITHHOLD" with respect to one or more of the nominees. For the other items of business, you may vote "FOR," "AGAINST" or "ABSTAIN."

        If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If no instructions are indicated, the shares will be voted as recommended by the board of directors.

        What is the voting requirement to approve each of the proposals?     Under our Bylaws, we have adopted a "majority voting" standard for the election of directors. Under this standard, each of the eight nominees for election as a director shall be elected to the board of directors if the votes cast for each nominee's election exceed the votes cast (which includes votes "WITHHOLD") against each nominee's election; provided, however, that directors shall be elected by a plurality of the votes to be cast at any meeting of stockholders for which the election of the directors is "contested" by one or more stockholders, as specified in our Bylaws. Our Corporate Governance guidelines describe the policies and procedures that the board of directors will follow if one or more nominees fails to receive the required vote in an uncontested director election. See "Corporate Governance—Board of Directors—Director Elections."

        Proxies marked "WITHHOLD" authority for the election of any director nominee will be included in the tally of "votes cast" with respect to that nominee for purposes of our majority voting Bylaw. Accordingly, a vote to withhold authority for the election of any director nominee will have the same effect as a negative vote with respect to the nominee(s).

        Under our Bylaws, the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2010 will be approved by the stockholders if the proposal receives the affirmative vote of the majority of the shares of STR common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal.

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        How are "broker-non-votes" and "abstentions" counted with respect to each of the proposals?     If you hold shares beneficially in street name and do not provide your bank or broker with voting instructions on one or more proposals, your shares may constitute "broker non-votes." Generally, broker non-votes occur on a matter when a bank or broker is not permitted, pursuant to the New York Stock Exchange ("NYSE") rules, to vote on that matter without instructions from the beneficial owner and instructions are not given by the owner. In tabulating the voting results for any particular proposal, shares that constitute broker non-votes will not be considered to be "votes cast" on that proposal. Thus, broker non-votes will not affect the outcome of either the proposals being voted on at the Annual Meeting, assuming that a quorum is obtained.

        Under Delaware law, an "abstention" is a stockholder's affirmative choice to decline to vote on a proposal submitted to a vote of stockholders, (other than the election of directors). Proxies marked to abstain from voting with respect to any proposal to be voted upon at the Annual Meeting (other than the election of directors) generally are not considered for purposes of determining the tally of votes cast for or against any proposal that under applicable law requires either a majority or other specified percentage of the votes cast and, therefore, will not affect the outcome of the voting with regard to any such proposal. For any proposals that under applicable law require either a majority or other specified percentages of the votes entitled to be cast, an abstention will have the same effect as a vote against any such proposal.

        Is cumulative voting permitted for the election of directors?     No. You may not cumulate your votes for the election of directors.

        What happens if additional matters are presented at the Annual Meeting?     Other than the two items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Dennis L. Jilot and Barry A. Morris, or either of them, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason any of the nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the board of directors.

        Who will serve as inspector of elections?     The inspector of elections will be a representative from Computershare Trust Company, N.A.

        Who will bear the cost of soliciting votes for the Annual Meeting?     STR will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. We have engaged Georgeson Inc. to assist us in the distribution of proxy materials described above for a service fee and the reimbursement of customary out-of-pocket disbursements.

        Where can I find the voting results of the Annual Meeting?     We intend to announce preliminary voting results at the Annual Meeting and publish final results in a current report on Form 8-K filed not later than four (4) business days after the Annual Meeting. We also plan to disclose the preliminary vote results and the final vote results on the Investor Relations section of our website not later than four (4) business days after the Annual Meeting.

        What is the deadline to propose actions for consideration at next year's Annual Meeting of Stockholders or to nominate individuals to serve as directors?     Stockholders may present proper proposals for inclusion in our Proxy Statement and for consideration at the next Annual Meeting of Stockholders by submitting their proposals in writing to STR's Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our Proxy Statement for our 2011 Annual Meeting of Stockholders, the Corporate Secretary of STR must receive the written proposal at our

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principal executive offices no later than December 24, 2010; provided, however, that in the event that we hold our 2011 Annual Meeting of Stockholders more than 30 days before or after the one-year anniversary date of the 2010 Annual Meeting, we will disclose the new deadline by which stockholders proposals must be received under Item 5 of our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably calculated to inform stockholders. In addition, stockholder proposals must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:

STR Holdings, Inc.
Attn: Corporate Secretary
10 Water Street
Enfield, Connecticut 06082

        Our Bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an Annual Meeting of Stockholders but do not intend for the proposal to be included in our Proxy Statement. Our Bylaws provide that the only business that may be conducted at an Annual Meeting is business that is (1) specified in the notice of a meeting given by or at the direction of our board of directors, (2) otherwise properly brought before the meeting by or at the direction of our board of directors, or (3) properly brought before the meeting by a record stockholder entitled to vote at the Annual Meeting who has delivered timely written notice to our Corporate Secretary, which notice must contain the information specified in our Bylaws. To be timely for our 2011 Annual Meeting of Stockholders, our Corporate Secretary must receive the written notice at our principal executive offices:

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not earlier than the close of business on February 4, 2011, and



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not later than the close of business on March 6, 2011.

        In the event that we hold our 2011 Annual Meeting of Stockholders more than 30 days before or more than 60 days after the one-year anniversary date of the 2010 Annual Meeting, then notice of a stockholder proposal that is not intended to be included in our proxy statement must be received not later than the close of business on the earlier of the following two dates:

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the 10th day following the day on which notice of the meeting date is mailed, or



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the 10th day following the day on which public disclosure of the meeting date is made.

        If a stockholder who has notified us of his or her intention to present a proposal at an Annual Meeting does not appear to present his or her proposal at such meeting, we are not required to present the proposal for a vote at such meeting.

        Can I nominate candidates for director?     You may propose director candidates for consideration by our nominating and corporate governance committee. Any such recommendations should include the nominee's name, qualifications for membership on our board of directors and should be directed to the Corporate Secretary of STR at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see "Corporate Governance" and "Meetings and Committees of the Board—Committees of the Board—Nominating and Corporate Governance Committee."

        In addition, our Bylaws permit stockholders to nominate directors for election at an Annual Meeting of Stockholders. To nominate a director, the stockholder must provide the information required by our Bylaws. In addition, the stockholder must give timely notice to our Corporate Secretary in accordance with our Bylaws, which, in general, require that the notice be received by our Corporate Secretary within the time periods described above under "—What is the deadline to propose actions

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for consideration at next year's Annual Meeting of Stockholders or to nominate individuals to serve as directors?" for stockholder proposals that are not intended to be included in our Proxy Statement.

        Where can I find a copy of STR's Bylaws?     A copy of our Bylaws is available in the Investor Relations section of our website at www.strholdings.com. You may also contact our Corporate Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.

Available Information

        STR stockholders are invited to visit the "Corporate Governance" portion of our corporate website, located at www.strholdings.com, on the "Investor Relations" page under the link "Corporate Governance." At this page, we have provided copies of the following documents:

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Charter of the Audit Committee



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Charter of the Compensation Committee



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Charter of the Nominating and Corporate Governance Committee



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Certificate of Incorporation



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Bylaws



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Corporate Governance Guidelines



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Code of Business Conduct and Ethics



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Code of Ethics for the CEO, CFO and Other Senior Officers



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Regulation FD Policy



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Related Person Transaction Policy



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Complaint Procedures for Accounting and Auditing Matters

Information contained on any of the Company's web sites is not deemed to be a part of this Proxy Statement.

         The Company is subject to the reporting requirements of the Exchange Act and files an Annual Report on Form 10-K with the SEC, quarterly reports on Form 10-Q, current reports on Form 8-K and other required reports and information. Additional copies of the 2009 Annual Report on Form 10-K filed by the Company, including the financial statements and schedules, but without exhibits, will be mailed to any stockholder upon written request without charge. The exhibits are obtainable from the Company upon payment of the reasonable cost of copying such exhibits. Stockholders can request this information by phone at 1-860-749-8371, ext. 257., by email to investorinfo@strus.com, or by mail to Yujia Zhai, Investor Relations, STR Holdings, Inc., 10 Water Street, Enfield, CT 06082.

CORPORATE GOVERNANCE

Overview

        We are committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently, serving our stockholders well and maintaining our integrity in the marketplace. We have adopted a code of business conduct and ethics for directors, officers and employees, known as the STR Code of Business Conduct and Ethics. We have also adopted Corporate Governance Guidelines, which, in conjunction with our certificate of incorporation, Bylaws and board committee charters, form the framework for STR's corporate governance. The STR Code of Business Conduct and Ethics and our Corporate Governance Guidelines

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are available at www.strholdings.com on the "Investor Relations" page under the link "Corporate Governance."

Board of Directors

         Composition.     Our business and affairs are managed under the direction of our board of directors (the "Board"). Our Bylaws provide that our Board will consist of between three and fifteen directors. Our Board is composed of eight directors. Each of our executive officers has been appointed by our Board and will serve until his or her successor is duly appointed and qualified.

         Independence.     Our Board affirmatively determined that Messrs. Brown, Leitch, Metakis and Sprott and Ms. Schnabel are independent directors under the applicable rules of the NYSE and that Messrs. Brown and Leitch are also independent directors as such term is defined in Rule 10A-3(b)(1) under the Exchange Act. In accordance with NYSE rules, a majority of our directors are independent.

         Lead Director.     Annually, the Board shall appoint from among its independent members an individual to serve as Lead Director. Susan C. Schnabel currently serves as our Lead Director. The Lead Director performs the following roles and functions:

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serves as a member of the nominating and corporate governance committee;



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serves as Chair of the Board's executive sessions of independent directors;



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serves as Chair of the Board's meetings at which the Chairman/CEO is not in attendance;



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serves as a liaison between the Chairman/CEO and the independent directors, which shall include facilitating communications and assisting in the resolution of conflicts, if any, between the independent directors and the Company's management;



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oversees the Board's annual self evaluation;



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consults with each Committee with respect to their annual evaluations;



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provides counsel to the Chairman/CEO, including provision of appropriate feedback regarding effectiveness of Board meetings, and otherwise as needed or requested; and



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such other responsibilities as the Board may delegate from time to time.

         Executive Sessions of Independent Directors.     The independent directors of the Board will hold at least two regularly scheduled executive sessions each year without non-independent directors present, with the Lead Director presiding as Chair.

         Director Qualification Standards.     The Board is responsible for selecting its own members and in recommending them for election by the stockholders. The Board delegates the screening process involved to the nominating and corporate governance committee which considers candidates to fill newly created directorships or vacancies on the Board, and then consults with the Chairman/CEO after which it provides recommendations to the full Board. These recommendations are reviewed and approved by the full Board before an invitation is extended to the candidate. The Board seeks members with diverse business and professional backgrounds with outstanding integrity, judgment and such other skills and experience that will enhance the Board's ability to serve the best interests of STR and its stockholders. Once the Board has made the determination to add a new director, the invitation to join the Board should be extended by the Chairman/CEO. The Board does not believe it should establish term limits for directors.

         Board Diversity.     The Board seeks a diverse group of candidates who at a minimum possess the background, skills, expertise and time to make a significant contribution to the Board, the Company and its stockholders. The nominating and corporate governance committee makes recommendations to

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the Board concerning the composition of the Board and its committees including size and qualifications for membership. The nominating and corporate governance committee evaluates prospective nominees against the standards and qualifications set forth in the Company's Corporate Governance Guidelines, as well as other relevant factors as it deems appropriate, including: the need for the Board, as a whole, to be diverse and consist of individuals with various and relevant career experience, relevant technical skills, industry knowledge and experience, financial expertise, local or community ties and minimum individual qualifications, including strength of character, mature judgment, familiarity with the Company's business and industry, independence of thought and an ability to work collegially. The nominating and corporate governance committee also may consider the extent to which the candidate would fill a present need on the Board.

        Our directors and nominating and corporate governance committee considers these criteria each year as it determines the slate of directors to recommend to the Board for election at our Annual Meeting. It also considers these criteria each time a new director is recommended for election to the Board. The Board believes that its implementation of this policy is effective in considering the diversity of the members of the Board.

         Director Elections.     In accordance with the Company's Bylaws, if none of our stockholders provides the Company notice of an intention to nominate one or more candidates to compete with the Board's nominees in an election for directors, or if our stockholders have withdrawn all such nominations not later than the day before the Company mails its notice of meeting to our stockholders, a director election is not "contested" and a majority voting standard applies, whereby a nominee must receive more votes cast for than against his or her election or re-election in order to be elected or re-elected to the Board. For purposes of this policy, the term "votes cast" includes votes to withhold authority and excludes abstentions with respect to that director's election. The policies of the Company with respect to a failure to receive the required vote in an uncontested election are as follows:

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the Board shall nominate for election or re-election as director only candidates who agree to tender, promptly following the meeting at which they are elected or re-elected as director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the next meeting at which they face re-election and (ii) Board acceptance of such resignation.



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in addition, the Board shall fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors described above.



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If an incumbent director fails to receive the required vote for re-election, the nominating and corporate governance committee will act on an expedited basis to determine whether to accept the director's resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any direction regarding that resignation. The nominating and corporate governance committee and the Board may consider any factors they deem relevant in deciding whether to accept a director's resignation, including the director's qualifications, the director's past and expected future considerations to the Company, the overall composition of the Board and whether accepting the tender registration would cause the Company to fail to meet any applicable rule or regulation (including securities exchange listing requirements and federal securities laws). The Board will act on the tender resignation, and publicly disclose its decision and rationale, within 90 days following certification of the stockholder vote, in a press release and through the filing of a Form 8-K with the SEC.



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If no directors receive the requisite vote in an uncontested election, the incumbent Board will nominate a new slate of director candidates and hold a special meeting for the purpose of electing those nominees within 180 days after the certification of the stockholder vote unless the incumbent directors determine that holding such election is not in the best interests of the

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Company and its stockholders. If such a special meeting is held in accordance with the preceding sentence, the incumbent directors shall resign with their resignations to be effective at the time that new directors are elected and qualified.

        The foregoing policies are subject to change if the directors believe changes to the policy are in the best interests of the Company and its stockholders.

         Communications with Directors.     Interested persons may communicate directly with any director, the independent directors as a group or the Board as a whole by sending such communication by fax, telephone or regular mail to the Company, attention: Corporate Secretary, who will forward the communication to the intended recipient. Communications may also be sent via electronic mail to the following email address: STR.Board@strus.com, which is accessible via a link at the Company's corporate website. Such communications may also be forwarded to them by mail in a sealed envelope addressed to an individual director, the non-management directors or the Board c/o the Company's Secretary. The Secretary will deliver the envelope unopened (1) if addressed to a director, to the director, (2) if addressed to the Board, to the Chairman of the Board who will report thereon to the Board, or (3) if addressed to the non-employee directors, to the Lead Director who will report thereon to the non-employee directors.

         Selection of Chairman and CEO.     The Board will determine whether the positions of Chairman and CEO should be held by the same person based on what it reasonably determines to be in the Company's best interests at a given point in time. Therefore, the Board does not have a policy on whether or not the role of the CEO and Chairman should be separate and, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee.

        Currently, the Company's leadership structure does not separate the role of the CEO and Chairman. The Board believes that the Company's CEO is best suited to serve as Chairman of the Board because he is the director most experienced in the Company's business and industry, and most capable of effectively identifying strategic priorities and leading discussions on and execution of the Company's strategy. However, as the Company's operations continued to expand, the Board will continually reassess the Company's leadership structure.

         Board Leadership Structure and Role in Risk Oversight.     STR is led by Dennis L. Jilot, who has served as our President and Chief Executive Officer since 1997 and our Chairman, President and Chief Executive Officer since 2002. Each of the standing committees of the Board is chaired by an independent director and each of our compensation and nominating and corporate governance committees is comprised entirely of independent directors under NYSE rules. The audit committee is comprised of three directors, two of whom are independent and Andrew M. Leitch is the Chair. Under our Corporate Governance Guidelines, a copy of which is available on our website at www.strholdings.com, if the Chairman of the Board is an executive officer or employee of the Company, then the Board shall appoint, from among the independent directors, a Lead Director.

        Our Board has discussions with the Company's management to understand opportunities and threats to the Company's objectives and long term vitality. Such discussions entail a detailed review of the current business environment, financial results and the overall competitive landscape. The Board also discusses with management, the Company's policies and procedures regarding risk assessment, risk appetite and overall risk management. The Board also discusses the processes management has taken to monitor, manage and communicate such exposures.

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        Risk management is an integral part of Board and Committee deliberations throughout the year. As a part of its oversight function, the Board monitors how management manages the Company. When making any decisions and approving strategies the Board considers, among other things, the risks and vulnerabilities the Company faces, including operational and regulatory risks, their relative magnitude and management's plan for mitigating these risks. The audit committee considers risk issues associated with the Company's overall financial reporting, disclosure process and legal compliance. In addition to its regularly scheduled meetings, the audit committee meets with the Chief Financial Officer, Controller and Principal Accounting Officer, the Presidents of each the Company's operating segments, Chief Compliance Director and the independent registered public accounting firm in executive sessions at least quarterly. The nominating and corporate governance committee discuss legal compliance risks and issues at its regularly scheduled meetings and meets with the outside legal counsel and officers of the Company during such meetings. The audit committee and the Board annually review an assessment of the primary operational and regulatory risks facing the Corporation, their relative magnitude and management's plan for mitigating these risks. In addition, the Board discusses risks related to the Corporation's business strategy at periodic strategic planning meetings and at other meetings as appropriate.

        We determined our current Board leadership structure is appropriate and helps ensure proper risk oversight for the Company, for a number of reasons, the most significant of which are the following:

•

a combined Chairman and Chief Executive Officer role allows for more productive meetings. The chief executive officer is the individual selected by the Board to manage the Company on a day to day basis, and his direct involvement in the Company's operations makes him best positioned to lead productive strategic planning sessions and determine the time allocated to each agenda item in discussions of the Company's short- and long-term objectives.



•

our Board structure provides strong oversight by independent directors and in addition a majority of our operations are subject to extensive regulation. Our Lead Director's responsibilities include leading executive sessions of the Board during which our independent directors meet without management.



•

recognizing there may be a circumstance where a stockholder or other interested party's interest should be represented independent of management, a key responsibility of the Lead Director is to receive, review and, where necessary, act upon direct communications from stockholders and other interested parties.

MEETINGS AND COMMITTEES OF THE BOARD

Committees of the Board

        Our Board has the authority to appoint committees to perform certain management and administration functions. Our Board has three committees: the audit committee, the compensation committee and the nominating and corporate governance committee. Each Board committee operates pursuant to a written charter. Copies of the committee charters are available on the Investor Relations section of STR's website at www.strholdings.com on the "Corporate Governance" page under the respective committee charter links.

        In 2009, the full Board met five (5) times; the audit committee met seven (7) times, the compensation committee met four (4) times and the nominating and corporate governance committee did not meet but will begin meeting on a regular basis starting in 2010. Directors are strongly encouraged, but not required, to attend the 2010 Annual Meeting of Stockholders.

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        The following table shows the membership of these committees. All of the directors attended at least 75% of the total of all the meetings of the Board and Board committees on which he or she served during fiscal year 2009.

         Audit Committee.     We have an audit committee consisting of Messrs. Leitch, Brown and Schiano, with Mr. Leitch serving as Chair of the audit committee. The audit committee has responsibility for, among other things:

•

overseeing management's maintenance of the reliability and integrity of our accounting policies and financial reporting processes, our disclosure practices and the audits of our financial statements;



•

overseeing management's establishment and maintenance of processes to assure that an adequate system of internal control is functioning;



•

overseeing management's establishment and maintenance of processes to assure our compliance with all applicable laws, regulations and corporate policy;



•

engaging independent counsel and other advisers as the audit committee deems necessary;



•

reviewing our annual and quarterly financial statements prior to their filing and prior to the release of earnings;



•

reviewing and assessing the adequacy of a formal written charter on an annual basis;



•

preparing the audit committee report required by SEC rules to be included in our annual report;



•

reviewing and approving all related person transactions for potential conflict of interest situations on an ongoing basis;



•

determining compensation of and reviewing the performance of the independent accountants and appointing or terminating the independent accountants and considering and approving, in advance, any non-audit services proposed to be performed by the independent accountants; and



•

handling such other matters that are specifically delegated to the audit committee by our Board from time to time.

        The SEC rules and the NYSE rules require us to have at least one independent audit committee member upon the listing of our common stock on the NYSE, a majority of independent audit committee members within 90 days of the effective date of our registration statement and all independent audit committee members within one year of the effective date of our registration statement for our initial public offering, which will be November 6, 2010. Our board of directors affirmatively determined that Messrs. Leitch and Brown meet the definition of "independent directors" for purposes of serving on an audit committee under applicable SEC and NYSE rules, and we intend to comply with these independence requirements within the time periods specified. Mr. Schiano has been determined by the Board to not be an "independent" director under SEC and NYSE rules because of the relationships between the Company and Mr. Schiano described below under the heading "Certain Relationships and Related Party Transactions—Advisory Services and Monitoring

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Agreements." Accordingly, we expect Mr. Schiano to step down from his position on the audit committee in favor of an independent director later this year in accordance with phase-in rules applicable to newly public companies. In addition, our Board has determined that each member of our audit committee is financially literate and Mr. Leitch qualifies as our "audit committee financial expert."

         Compensation Committee.     We have a compensation committee consisting of Messrs. Sprott and Metakis and Ms. Schnabel, with Mr. Sprott serving as Chair of the compensation committee. The compensation committee has responsibility for, among other things:

•

recommending to our Board for consideration the compensation and benefits of our executive officers and key employees;



•

monitoring and reviewing our compensation and benefit plans;



•

administering our stock and other incentive compensation plans and programs and preparing recommendations and periodic reports to the Board concerning these matters;



•

preparing the compensation committee report required by SEC rules to be included in our annual report;



•

preparing recommendations and periodic reports to the Board as appropriate; and



•

handling such other matters that are specifically delegated to the compensation committee by our Board from time to time.

         Compensation Committee Interlocks and Insider Participation.     None of our executive officers serves, or in the past year has served, as a member of the Board or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board or compensation committee. No interlocking relationship exists between any member of the compensation committee (or other committee performing equivalent functions) of any other company.

         Nominating and Corporate Governance Committee.     We have a nominating and corporate governance committee consisting of Ms. Schnabel and Messrs. Metakis and Sprott, with Ms. Schnabel serving as Chair of the nominating and corporate governance committee. The nominating and corporate governance committee has responsibility for, among other things:

•

recommending persons to be selected by our Board as nominees for election as directors and to fill any vacancies on the Board;



•

reviewing annually Board composition, including independence, judgment, business specialization, technical skills, diversity and other desired qualities;



•

considering and recommending to our Board qualifications for the position of director and policies concerning the composition of the Board;



•

monitoring our performance in meeting our obligations of fairness in internal and external matters and our principles of corporate governance;



•

considering and recommending to our Board other actions relating to corporate governance; and



•

handling such other matters that are specifically delegated to the nominating and corporate governance committee by our Board from time to time.

         Nomination of Director Candidates.     The Board is responsible for selecting director candidates and in recommending them for election by stockholders. The Board delegates the screening process involved to the nominating and corporate governance committee which considers candidates in light of

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the qualification standards and Board diversity objectives discussed above under the headings "Director Qualification Standards" and "Board Diversity." The Board's policy is that all director candidates, including those who may be recommended to the Board by STR's stockholders, will be evaluated on the same basis. In connection with our initial public offering in November 2009, Scott S. Brown and Andrew M. Leitch were elected to our Board. Mr. Brown was recommended by an executive of the Company and Mr. Leitch was recommended by a security-holder.

        STR stockholders may recommend director candidates for consideration by the nominating and corporate governance committee. If a stockholder wishes to recommend a candidate for consideration by the nominating and corporate governance committee, the stockholder should provide the candidate's name and qualifications for membership on our Board, as well as the information specified in Article II, Section 10 of our Bylaws with respect to the candidate, to the Corporate Secretary at the address set forth above.

PROPOSAL 1: ELECTION OF DIRECTORS

Directors Elected Annually

        STR's directors are elected each year by the stockholders at the Annual Meeting. Eight directors are nominated for election at this year's Annual Meeting. Each director's term will last until the 2011 Annual Meeting of Stockholders or until he or she is succeeded by another director who has been elected.

Information about the Nominees for Election to the Board

        The following information is furnished with respect to each nominee for election as a director. All of the nominees currently are serving as directors. If a nominee is unavailable to serve as a director, your proxies may vote for another nominee proposed by the Board, or the Board may reduce the number of directors to be elected at the Annual Meeting. The ages of the nominees are as of April 21, 2010.

        The biographies of each of the nominees and continuing directors below contains information regarding the person's service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the nominating and corporate governance committee and the Board to determine that the person should serve as a director for the Company in 2010.

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		Dennis L. Jilot, 63, has been our President and Chief Executive Officer and a director since 1997 and has been our Chairman since 2002. Prior to joining us, Mr. Jilot was Executive Vice President of Corning Clinical Laboratories, President and Chief Executive Officer of Corning Nichols Institute and President and Chief Operating Officer of MetPath Incorporated. Mr. Jilot holds a B.S. from the University of Wisconsin at Stevens Point and completed the Executive M.B.A. program at the University of Virginia Darden School of Business. Mr. Jilot was selected to serve on our Board in light of his substantial experience as a director and our Chairman, his long history of senior executive leadership positions at other large companies, his in-depth understanding of our business and the markets in which we compete and the continuity his service provides to our Board as a whole.
		Scott S. Brown, 53, has served on our Board since our initial public offering in November 2009. Mr. Brown is the Chief Executive Officer of New Energy Capital LLC, which invests in, owns and operates renewable energy and distributed generation projects. He has held that position since January 2004. Between 2001 and December 2003, Mr. Brown was Chief Executive Officer of Sinclair Brown Associates, a management and investment consulting firm. Previously, Mr. Brown was on the founding management team of First Solar and President and Chief Executive Officer of Glasstech Solar, Inc., a manufacturer of semiconductor equipment for the photovoltaic industry. Between 1998 and 2005, Mr. Brown was a member of the National Advisory Board of the National Renewable Energy Laboratory. He holds a B.A. from Dartmouth College and a J.D. from Harvard Law School. Mr. Brown was selected to serve on our Board in light of his extensive experience in the fields of renewable energy, corporate governance and project development, his experience as a well-known industry speaker for clean energy and his in-depth understanding of the solar business and the markets in which we compete.
		John A. Janitz, 67, has served on our Board since June 2007. Since March 2007, Mr. Janitz has been a Principal at Evergreen Capital Partners LLC, an investment firm that provides advisory services to and co-invests with DLJ Merchant Banking Partners, an affiliate of Credit Suisse. From October 2003 to March 2007, he served as Co-Managing Principal for Questor Management Company, a turnaround capital investment firm based in Michigan. Mr. Janitz engaged in various advisory and consulting arrangements with several private equity firms from October 2001 until February 2003. Prior to joining Questor, from 1996 to 2001 Mr. Janitz was President and Chief Operating Officer of Textron, a NYSE-listed multi-industry company with over $12 billion in worldwide sales. Before Textron, Mr. Janitz was an Executive Vice President with TRW, an international company providing advanced technology products and services. In addition, he served as President of Wickes Manufacturing Company ("Wickes"), and held a number of key executive positions with Wickes' predecessor company, Gulf & Western Industries, Inc. Mr. Janitz serves as chairman of RathGibson, Inc.'s Board and as a director of RG Tube Holdings LLC, the parent company of RathGibson, Inc. Mr. Janitz holds a B.S. from Villanova University and an M.B.A. from Eastern Michigan University. Mr. Janitz was selected to serve on our Board in light of his valuable leadership experience, his extensive experience serving as a director for both public and private companies, his prior senior executive experience and his significant operational and strategic business expertise.

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		Andrew M. Leitch, 66, has served on our Board since our initial public offering in November 2009. Mr. Leitch was a senior partner with Deloitte & Touche LLP for over 27 years, last serving as the Vice Chairman of the Management Committee, Hong Kong from September 1997 through his retirement in March 2000. Mr. Leitch has served as a director and chairman of the board of Blackbaud Inc. and as a director and chairman of the audit committee of Cardium Therapeutics Inc. since February 2004 and August 2007, respectively. Mr. Leitch served as director and chairman of the audit committee of Aldila, Inc. from May 2004 through February 2010. Mr. Leitch also serves as a director of various private companies. He is a Certified Public Accountant in the state of New York, and a Chartered Accountant in Ontario, Canada. Mr. Leitch was selected to serve on our Board in light of his extensive experience as a director of various public and private companies, serving as the chairman of certain boards and audit committees and as a member of certain compensation committees and governance committees, and his extensive understanding of U.S. and international financial accounting principles, systems of internal control and corporate governance principles.
		Jason L. Metakis, 33, has served on our Board since June 2007. Mr. Metakis joined Donaldson, Lufkin and Jenrette's Investment Banking Division in 1999 and DLJ Merchant Banking Partners in 2001, and is currently a Vice President of DLJ Merchant Banking Partners. Mr. Metakis received an A.B. from Harvard College and an M.B.A. from Harvard Business School. Mr. Metakis was selected to serve on our Board in light of his substantial business background in finance, capital markets, strategic planning and mergers and acquisitions.
		Dominick J. Schiano, 55, has served on our Board since June 2007. Since March 2007, Mr. Schiano has been a Principal at Evergreen Capital Partners LLC, an investment firm that provides advisory services to and co-invests with DLJ Merchant Banking Partners. From September 2003 to March 2007, he served as a Managing Director of Questor Management Company. From September 1997 to January 2003, he served at Textron, Inc. as Executive Vice President and Chief Financial Officer of Textron Fastening Systems, Inc. and most recently, as Executive Vice President and General Manager at Textron Fastening Systems, Inc.—Threaded Products Group. Prior to that, Mr. Schiano held roles of increasing responsibility in finance, mergers and acquisitions and operations at Emerson Electric Co., Gulf+Western Industries Inc., Wickes Companies, Inc. and TRW Inc. Mr. Schiano serves as a director and member of the audit committee of Material Sciences Corporation and RG Tube Holdings LLC, the parent company of RathGibson, Inc. Mr. Schiano attended Long Island University. Mr. Schiano was selected to serve on our Board in light of his significant experience in senior management and directorships with senior executive responsibilities in the areas of finance, mergers and acquisitions, operations and business strategy development and his extensive business acumen.

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		Susan C. Schnabel, 48, has served on our Board since June 2007. Ms. Schnabel is a Partner at DLJ Merchant Banking Partners where she has served as a Managing Director since 1998. Ms. Schnabel joined Donaldson, Lufkin and Jenrette's Investment Banking Division in 1990. In 1997, she left Donaldson, Lufkin and Jenrette's Investment Banking Division to serve as Chief Financial Officer of PetSmart, Inc., a specialty retailer of pet products and supplies, and joined DLJ Merchant Banking Partners in her present capacity in 1998. Ms. Schnabel is also a director of Pinnacle Gas Resources, Inc. and Rockwood Holdings, Inc. as well as other private portfolio companies. Ms. Schnabel received a B.S. from Cornell University and an M.B.A. from Harvard Business School. Ms. Schnabel was selected to serve on our Board in light of her leadership, business experience, experience serving as a director on eleven public and private boards in the past five years, extensive knowledge of various industries and significant expertise in corporate governance principles.
		Ryan M. Sprott, 37, has served on our Board since June 2007. Mr. Sprott joined CSFB Private Equity in 1998 and DLJ Merchant Banking Partners in 2001 and is currently a Managing Director and Partner of DLJ Merchant Banking Partners. From 1996 to 1998, he worked in the Natural Resources Group of Credit Suisse's Investment Banking Division. Mr. Sprott is also a director of Healthmarkets, Inc., a provider, through its insurance subsidiaries, of health protection products to the self-insured and of Hard Rock Hotel Holdings, LLC, an operator of the Hard Rock Hotel and Casino in Las Vegas, as well as various private companies. Mr. Sprott received a B.S. and an M.B.A. from the University of Kansas. Mr. Sprott was selected to serve on our Board in light of his sound energy industry experience, vast understanding of our industry and experience serving as a director of two other public companies and eight other private companies in the past five years.

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Named Executive Officers

        For 2009, our named executive officers were:

•

Dennis L. Jilot, Chairman, President and Chief Executive Officer;



•

Barry A. Morris, Executive Vice President and Chief Financial Officer;



•

Robert S. Yorgensen, Vice President and President, STR Solar;



•

Mark A. Duffy, Vice President and President, STR Quality Assurance, who we hired in August 2009; and



•

John F. Gual, our former Vice President and Chief Operating Officer, who retired in April 2009.

Overview and Process

        Our compensation approach is necessarily tied to our stage of development. Historically, our Board approved the compensation of our executive officers in part in reliance on the recommendations of our Chairman/CEO and the compensation committee of our Board, which includes the input of our largest equity holders. Prior to the DLJ Transactions as described below under the heading "Certain Relationships and Related Person Transactions—Corporate Reorganization and Initial Public Offering", only Mr. Jilot had an employment agreement with us that provided for an annual base salary with annual increases in the sole discretion of our Board. Our other named executive officers' compensation was determined in the sole discretion of our Board in reliance on recommendations made by our Chairman/CEO and our compensation committee. Bonus payments and grants of options and restricted stock were determined in the sole discretion of our Board.

        In connection with the DLJ Transactions, Messrs. Morris, Yorgensen and Gual entered into employment agreements with us and in August 2009, Mr. Duffy entered into an employment agreement with us, in each case that provide for annual base salary increases that are in the sole discretion of our Board, bonus compensation pursuant to our management incentive plan based upon mutually agreed upon goals with the Board and eligibility to receive incentive units in the discretion of management. We entered into a new employment agreement with Mr. Jilot in July 2008 that provides for annual base salary increases in the sole discretion of our Board and, consistent with past practice, bonus compensation pursuant to our management incentive plan based upon mutually agreed upon goals with the Board and eligibility to receive incentive units in the discretion of management.

        Our compensation committee, which consists entirely of independent directors, has overall responsibility for evaluating and approving the compensation of our executive officers and overseeing and administering our executive compensation programs and initiatives. As we continue to gain experience as a public company since our initial public offering in November 2009, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve. For example, over time we may reduce our reliance upon subjective determinations made by our Board in favor of a more empirically based approach that involves benchmarking against peer companies.

Principles of Our Executive Compensation Program

        We have sought to create an executive compensation program that balances short-term versus long-term payments and awards, cash payments versus equity awards and fixed versus contingent

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payments and awards in ways that we believe are most appropriate to motivate our executive officers. Our executive compensation program is designed to:

•

attract and retain talented and experienced executives in the competitive solar manufacturing and quality assurance industries;



•

motivate and reward executives whose knowledge, skills and performance are critical to our success;



•

align the interests of our executive officers and stockholders by motivating executive officers to increase stockholder value and rewarding executive officers when stockholder value increases;



•

ensure fairness among the executive management team by recognizing the contributions each executive makes to our success;



•

foster a shared commitment among executives by aligning their individual goals with the goals of the executive management team and our Company; and



•

compensate our executives in a manner that incentivizes them to manage our Company to meet our long-range objectives.

        Our compensation committee meets outside the presence of all of our executive officers, including the named executive officers, to consider appropriate compensation for our Chairman/CEO. For all other named executive officers, the compensation committee meets outside the presence of all executive officers except our Chairman/CEO. Since our initial public offering, our Chairman/CEO reviews annually each other named executive officer's performance with the compensation committee and recommends appropriate base salary, cash performance awards and grants of long-term equity incentive awards for all other executive officers. Based on these recommendations from our Chairman/CEO and in consideration of the objectives described above and the principles described below, the compensation committee approves the annual compensation packages of our executive officers other than our Chairman/CEO. The compensation committee also annually analyzes our Chairman/CEO's performance and determines his base salary, cash performance awards and grants of long-term equity incentive awards based on its assessment of his performance with input from any consultants engaged by the compensation committee.

        In determining the compensation of our executive officers, we are guided by the following key principles:

•

Competition.   Compensation should reflect the competitive marketplace, so we can retain, attract and motivate talented executives.



•

Accountability for Business Performance.   Compensation should be tied to our financial performance to hold executives accountable for their contributions to our performance as a whole through the performance of aspects of our business for which they are responsible.



•

Accountability for Individual Performance.   Compensation should be tied to the individual's performance to encourage and reflect individual contributions to our performance. We consider individual performance as well as performance of the businesses and responsibility areas that an individual oversees, and we weigh these factors as we consider appropriate in assessing a particular individual's performance.

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•

Alignment with stockholder Interests.   Compensation should be tied to our financial performance through equity awards to align the interests of our executive officers and key employees with those of our stockholders.



•

Fair and Equitable Compensation.   The total compensation program should be fair and equitable to both our executive officers and our stockholders and should be fair relative to the compensation paid to other professionals in our organization.

Components of Our Executive Compensation Program

        Our executive compensation program currently consists of:

•

base salary;



•

cash incentive awards linked to corporate and business segment performance under our management incentive plan;



•

periodic grants of long-term equity-based compensation, such as restricted stock and stock options;



•

other executive benefits and perquisites; and



•

employment agreements, which contain termination and change of control benefits.

        We combine these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives and align the interests of our executive officers and other senior personnel with those of our stockholders.

        Base Salary.     The primary component of compensation of our executives has historically been base salary. We believe that the base salary element is required in order to provide our executive officers with a stable income stream that is commensurate with their responsibilities and competitive market conditions. The base salary of our named executive officers is reviewed on an annual basis.

        Mr. Jilot's 2009 base salary was $500,000 pursuant to the terms of his employment agreement.

        For 2009, each of Messrs. Morris and Yorgensen received a base salary of $254,038, which included increases to their 2008 base salaries based on merit and cost of living adjustments.

        Mr. Duffy's 2009 annual base salary pursuant to his employment agreement is $250,000, which was determined to be equal to the 2009 base salary of his predecessor, Mr. Gual. Mr. Duffy's base salary of $81,731 in 2009 was the pro rata share of his annual salary amount based on his start date in August 2009. Mr. Gual's base salary of $81,731 in 2009 was based on his pro rata share of his annual salary amount based on his retirement date in April 2009.

        For the year ended December 31, 2008 and the period from June 15 to December 31, 2007, the base salaries of Messrs. Morris, Yorgensen and Gual were established in their respective employment agreements that they entered into in connection with the DLJ Transactions. For 2008, our compensation committee made recommendations to the non-employee members of our Board as to the base salary to be paid to Mr. Jilot, our Chairman, President and Chief Executive Officer, based on:

•

his background and circumstances, including his experience and skills;



•

our knowledge of the competitive factors within the industries in which we operate;



•

his job responsibilities; and



•

our expectations as to the performance and contributions of Mr. Jilot and our judgment as to his potential future value to us.

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        Historically, we have not applied specific formulas to set base salaries, nor have we sought to benchmark base salaries against similarly situated companies.

        The base salaries paid to our named executive officers in 2009, 2008 and 2007 are set forth below in the Summary Compensation Table.

        Cash Incentive Awards.     We believe that cash incentive awards focus our executive officers' efforts and reward executive officers for annual results of operations that help create value for our stockholders. For 2009, our cash incentive awards for our named executive officers were tied to the achievement of free cash flow and EBITDA targets set forth for each named executive officer pursuant to our management incentive plan. Pursuant to Mr. Jilot's individual targets set forth pursuant to our management incentive plan, Mr. Jilot was eligible to receive a bonus payment of up to 100% of his base salary as of January 1, 2009, and each of Messrs. Morris and Yorgensen were eligible to receive a bonus payment of up to 80% of such officer's base salary as of January 1, 2009. In 2009, Mr. Duffy was guaranteed to receive a bonus payment of not less than a pro-rata share for the portion of the year ended December 31, 2009 in which he was employed by us of 40% of his base salary as of August 24, 2009. In 2010, each of Messrs. Jilot, Morris and Yorgensen will be eligible to receive a bonus payment equal to the same percentage of such officer's base salary as of January 1, 2010 as he was eligible to receive in 2009. In 2010, Mr. Duffy will be eligible to receive a bonus payment of up to 80% of his base salary as of January 1, 2010.

        The financial performance criteria established for the named executive officers in connection with the management incentive plan for 2009 were as follows:

Dennis L. Jilot

Barry A. Morris

Robert S. Yorgensen

Mark A. Duffy

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