R. Stephen Harshbarger

About R. Stephen Harshbarger

R. Stephen Harshbarger is Chief Executive Officer and President of Sono‑Tek Corporation (SOTK) since January 1, 2024 and has served as a Director since 2013; he joined Sono‑Tek in 1993 and became President in 2012 . He holds a degree from Bentley University (Finance major, Marketing minor) and is recognized for deep domain expertise in ultrasonic coating across electronics, medical, and advanced energy end markets . Under his leadership roles at Sono‑Tek, the sales organization built a global distributor network in 40+ countries and achieved a reported revenue surge of over 300% (per company biography) . Pay-versus-performance disclosures show PEO Compensation Actually Paid of $384,758 for FY2025 and company‑reported cumulative TSR of 0 for FY2024 and FY2025, with net income of $1,273,414 in FY2025 .

Past Roles

External Roles

Fixed Compensation

Notes:

• Mr. Harshbarger’s FY2025 annualized salary rate was $265,000 .
• Bonus payments are “based on the achievement of certain operating objectives”; specific metrics and weightings were not disclosed .

Performance Compensation

Program safeguards and policies:

• Clawback: Recoupment policy consistent with Exchange Act Rule 10D‑1 and Nasdaq listing standards for restatements and for fraud/intentional misconduct .
• Insider trading/hedging: Prohibits trading on MNPI and prohibits hedging, monetization transactions, puts/calls/short sales by directors, officers, employees, and covered persons .

Equity Ownership & Alignment

• Pledging: No explicit disclosure of share pledging by Mr. Harshbarger; the insider trading policy prohibits hedging/derivative/monetization transactions, but the proxy does not state a specific pledging prohibition .

Outstanding options as of Feb 28, 2025:

Plan mechanics (vesting/terms):

• 2023 Stock Incentive Plan authorizes up to 2,500,000 options/shares; strike price ≥ closing market price on grant date; typical vesting one‑year cliff then remaining in cumulative installments over three years; 10‑year option life .

Employment Terms

• CEO appointment: Became CEO/PEO on January 1, 2024 .
• Severance (without cause): Separate “severance agreements” provide two weeks of compensation per full year of service if terminated other than for cause .
• Change‑of‑Control (double‑trigger): Executive Agreements (as amended) provide two years of the executive’s annual base, commissions and bonus paid in the prior calendar year upon a change of control followed by qualifying termination; illustrative amounts based on last year’s salary arrangements: Harshbarger $659,000 .
• Clawback: Applies to performance‑based awards in event of restatement or specified misconduct .
• Benefits/perquisites: Company 401(k) with Company contributions (reflected in “All Other Compensation”) .
• Non‑compete / non‑solicit / term / auto‑renewal: Not disclosed in the proxy.

Performance & Track Record

Company operating trajectory (fiscal years ended Feb):

Values with asterisk (*) retrieved from S&P Global.

Pay versus performance (company‑reported):

Notable achievements and experience:

• Built global distribution network across 40+ countries and oversaw a reported >300% revenue surge during commercial leadership tenure (per company biography) .

Board Governance

• Role: CEO & Director (non‑independent); Executive Chairman is Dr. Christopher L. Coccio (also non‑independent). Board has six independent directors and two employee directors .
• Committee memberships: Compensation (O’Donnell—Chair, Strasburg, Riemer); Audit (Haskell—Chair, O’Donnell, Strasburg); Nominating (Riemer—Chair, O’Donnell). Mr. Harshbarger is not listed on any board committee .
• Meetings/attendance: Board held four meetings in FY2025; all directors attended at least 75% of meetings. Independent directors generally meet in executive session following regularly scheduled meetings .
• Director compensation: Non‑employee directors receive $2,500 per meeting; employee directors receive no additional compensation for board service .
• Say‑on‑Pay: Advisory vote on NEO compensation solicited; Board recommends “FOR.” Board also seeks feedback on frequency, indicating preference for a three‑year cadence .

Dual‑role implications:

• While CEO and Chair roles are separated (Executive Chairman is a different person), both are insiders, which concentrates leadership among management. Mitigants include a majority‑independent board and routine executive sessions of independent directors .

Director Compensation (Board Service)

• As an employee‑director, Mr. Harshbarger receives no additional director fees; non‑employee directors were paid per meeting and received option grants in FY2025 as disclosed in the Director Compensation table .

Compensation Structure Analysis

• Mix and trend: FY2025 total comp increased to $385.5k from $331.5k in FY2024; option grant value rose to $60k from $15k, increasing equity weighting year‑over‑year .
• Equity design: Options only (no RSUs/PSUs disclosed), with service‑based vesting (1‑year cliff then cumulative over 3 years), aligning rewards with multi‑year value creation but offering less metric‑linked rigor than PSUs .
• Bonus construct: Cash bonuses tied to “operating objectives,” but specific metrics, weightings, or threshold/target levels are not disclosed, reducing transparency into pay‑for‑performance sensitivity .
• Governance safeguards: Clawback aligned to Rule 10D‑1; hedging and monetization prohibited under insider trading policy. No external compensation consultant used in FY2025; compensation set relative to perceived market comparables for similar businesses .

Related‑Party Transactions and Other Red Flags

• Related‑party transactions: None disclosed; no family relationships among directors and officers .
• Hedging/derivatives: Prohibited under the insider trading policy .
• Pledging: No explicit pledging disclosure/policy in the proxy .
• Say‑on‑Pay: Advisory vote solicited; no historical approval percentages provided .

Equity Ownership & Alignment — Detail

Employment Terms — Summary

Company Operating Profile (for context)

Values with asterisk (*) retrieved from S&P Global.

Investment Implications

• Alignment: Harshbarger owns ~1.86% of shares outstanding (includes exercisable options), and equity awards are service‑vested options, supporting multi‑year alignment; no pledging disclosure, and hedging is prohibited — net positive for alignment .
• Pay design and transparency: Equity weighting increased in FY2025 (options value $60k vs $15k), but absence of disclosed bonus metrics/weights reduces visibility into pay‑for‑performance calibration; clawback is in place .
• Retention and selling pressure: Meaningful unvested option tranches (e.g., 23,166 @ $4.12 exp. 2034) indicate continued vesting‑linked retention; monitor Form 4s around vesting dates for potential selling pressure given option‑heavy mix .
• Governance: CEO and Chair roles are separated but both are insiders; nevertheless, a majority‑independent board, established committees, and executive sessions are in place — adequate but worth monitoring as the company scales .
• Performance context: Revenues have grown over FY2023–FY2025, while Pay‑vs‑Performance shows 0 TSR for FY2024–FY2025 and net income of $1.27M in FY2025; investors should track whether equity awards and cash bonuses respond proportionally to sustained earnings and TSR improvement over Harshbarger’s CEO tenure .